MAX-CAP FUND
(A PORTFOLIO OF FEDERATED INDEX TRUST)
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
The Institutional Service Shares of Max-Cap Fund (the "Fund") offered by this
prospectus represent interests in the Fund, which is an investment portfolio in
Federated Index Trust (the "Trust"), an open-end, management investment company
(a mutual fund). The investment objective of the Fund is to seek to provide
investment results that correspond to the aggregate price and dividend
performance of publicly traded common stocks as represented by the Standard &
Poor's 500 Composite Stock Price Index (the "Index"). The Fund is neither
affiliated with nor sponsored by the Standard & Poor's Corporation.
THE INSTITUTIONAL SERVICE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR
OBLIGATIONS OF ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD,
OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE SHARES INVOLVES INVESTMENT
RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
This prospectus contains the information you should read and know before you
invest in the Fund. Keep this prospectus for future reference.
The Fund has also filed a Combined Statement of Additional Information for
Institutional Service Shares and Institutional Shares dated December 31, 1993,
with the Securities and Exchange Commission. The information contained in the
Combined Statement of Additional Information is incorporated by reference into
this prospectus. You may request a copy of the Combined Statement of Additional
Information free of charge by calling 1-800-235-4669. To obtain other
information or to make inquiries about the Fund, contact the Fund at the address
listed in the back of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus dated December 31, 1993
TABLE OF CONTENTS
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SUMMARY OF FUND EXPENSES 1
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FINANCIAL HIGHLIGHTS--
INSTITUTIONAL SERVICE SHARES 2
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GENERAL INFORMATION 3
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INVESTMENT INFORMATION 3
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Investment Objective 3
Investment Policies 3
Acceptable Investments 4
U.S. Government Securities 4
Repurchase Agreements 5
Variable Rate U.S. Government
Securities 5
Cash Items 5
Stock Index Futures and Options 5
Index Participation Contracts 6
Lending of Portfolio Securities 6
When-Issued and Delayed Delivery
Transactions 6
Investment Limitations 7
FEDERATED INDEX TRUST INFORMATION 7
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Management of the Trust 7
Board of Trustees 7
Fund's Manager 7
Management Fees 8
Manager's Background 8
Sub-Manager 8
Sub-Management Fees 8
Sub-Manager's Background 9
Distribution of Institutional
Service Shares 9
Distribution Plan 9
Administration of the Fund 10
Administrative Services 10
Custodian 10
Transfer Agent and Dividend
Disbursing Agent 10
Legal Counsel 10
Independent Auditors 10
Brokerage Transactions 10
Expenses of the Fund and Institutional
Service Shares 11
NET ASSET VALUE 11
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INVESTING IN INSTITUTIONAL SERVICE SHARES 11
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Share Purchases 11
By Wire 12
By Mail 12
Minimum Investment Required 12
What Shares Cost 12
Subaccounting Services 12
Certificates and Confirmations 13
Dividends 13
Capital Gains 13
REDEEMING INSTITUTIONAL SERVICE SHARES 13
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Telephone Redemption 13
Written Requests 13
Signatures 14
Receiving Payment 14
Redemption Before Purchase
Instruments Clear 14
Accounts with Low Balances 14
SHAREHOLDER INFORMATION 14
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Voting Rights 14
Massachusetts Partnership Law 15
TAX INFORMATION 15
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Federal Income Tax 15
Pennsylvania Corporate and
Personal Property Taxes 16
PERFORMANCE INFORMATION 16
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OTHER CLASSES OF SHARES 16
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FINANCIAL HIGHLIGHTS--
INSTITUTIONAL SHARES 18
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STANDARD & POOR'S CORPORATION 19
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FINANCIAL STATEMENTS 20
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REPORT OF ERNST & YOUNG,
INDEPENDENT AUDITORS 49
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ADDRESSES Inside Back Cover
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SUMMARY OF FUND EXPENSES
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<TABLE>
<S> <C>
INSTITUTIONAL SERVICE SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price).................................................................. None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price).................................................................. None
Deferred Sales Load (as a percentage of original
purchase price or redemption proceeds, as applicable)................................................ None
Redemption Fee (as a percentage of amount redeemed, if applicable)..................................... None
Exchange Fee........................................................................................... None
ANNUAL INSTITUTIONAL SERVICE SHARES OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver) (1)...................................................................... 0.21%
12b-1 Fee.............................................................................................. 0.30%
Other Expenses......................................................................................... 0.10%
Total Institutional Service Shares Operating Expenses (2)..................................... 0.61%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The Manager can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.30%.
(2) The Total Institutional Service Shares Operating Expenses would have been
0.70% absent the voluntary waiver of a portion of the management fee.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF INSTITUTIONAL SERVICE SHARES OF
THE FUND WILL BEAR, EITHER DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE
DESCRIPTIONS OF THE VARIOUS COSTS AND EXPENSES OF THE FUND, SEE "INVESTING IN
INSTITUTIONAL SERVICE SHARES" AND "FEDERATED INDEX TRUST INFORMATION."
Wire-transferred redemptions of less than $5,000 may be subject to additional
fees.
Long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales charges permitted under the rules of the National
Association of Securities Dealers, Inc.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years
<S> <C> <C>
You would pay the following expenses on a $1,000
investment assuming (1) 5% annual return and
(2) redemption at the end of each time period. As noted in
the table above, the Fund charges no redemption fees.......................................... $6 $20
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The information set forth in the foregoing table and example relates only to
the Institutional Service Shares of the Fund. The Fund offers another class of
shares called Institutional Shares. Institutional Service Shares and
Institutional Shares are subject to certain of the same expenses; however,
Institutional Shares are not subject to a 12b-1 fee. See "Other Classes of
Shares."
MAX-CAP FUND
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
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(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
Reference is made to the Report of Ernst & Young, Independent Auditors, on page
49.
<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31,
1993*
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.12
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INCOME FROM INVESTMENT OPERATIONS
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Net investment income 0.07
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Net realized and unrealized gain on investments 0.12
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Total from investment operations 0.19
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LESS DISTRIBUTIONS
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Dividends to shareholders from net investment income (0.07)
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NET ASSET VALUE, END OF PERIOD $ 12.24
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TOTAL RETURN** 1.70%(b)
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RATIOS TO AVERAGE NET ASSETS
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Expenses 0.61%(c)
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Net investment income 1.52%(c)
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Expense waiver/reimbursement(a) 0.09%(c))
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SUPPLEMENTAL DATA
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Net assets, end of period (000 omitted) $ 2,493
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Portfolio turnover rate %13
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</TABLE>
* Reflects operations for the period from August 30, 1993 (date of initial
public investment) to October 31, 1993.
** 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 5).
(b)_ Cumulative total return.
(c) Computed on an annualized basis.
Further information about the Fund's performance is contained in the Fund's
annual report dated December 31, 1993, which can be obtained free of charge.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
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The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated January 30, 1990. The Declaration of Trust permits the Trust to
offer separate series of shares of beneficial interest representing interests in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. As of the date of this prospectus, the Board of
Trustees ("Trustees") has established two classes of shares of the Fund known as
Institutional Service Shares ("Shares") and Institutional Shares. This
prospectus relates only to the Institutional Service Shares of the Fund.
Institutional Service Shares are designed primarily for retail and private
banking customers of financial institutions. A minimum initial investment of
$25,000 over a 90-day period is required.
Shares are currently sold and redeemed at net asset value without a sales charge
imposed by the Fund.
INVESTMENT INFORMATION
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INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide investment results that
correspond to the aggregate price and dividend performance of publicly-traded
common stocks, by duplicating the composition of the Index. The investment
objective cannot be changed without approval of shareholders. The Fund's ability
to duplicate the Index will depend partly on the size and timing of cash flows
into and out of the Fund. The Fund's performance is expected to closely mirror
the performance of the Index. An investment in the Fund presents risks similar
to those of investing in a portfolio comprised of the securities of the
companies in the Index. While there is no assurance that the Fund will achieve
its investment objective, it endeavors to do so by following the investment
policies described in this prospectus.
INVESTMENT POLICIES
The investment policies described below may be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material changes
in these policies become effective.
The Fund pursues its investment objective by attempting to duplicate the
investment results of the Index, while minimizing transaction costs and other
expenses. The Fund will attempt to achieve a correlation between the performance
of its portfolio and that of the Index of at least 0.95 of 1% or better; a
figure of 1.00 would represent perfect correlation. The Fund will normally be
invested in substantially all of the stocks that comprise the Index. Under
normal circumstances, at least 80% of the value of the Fund's total assets will
be invested in stocks represented in the Index. However, the Fund is not
required to sell securities if the 80% investment level changes due to increases
or decreases in the market value of portfolio securities.
The Index consists of 500 selected common stocks, most of which are listed on
the New York Stock Exchange. The Standard & Poor's Corporation ("S&P")
designates the stocks to be included in the Index on a statistical basis. A
particular stock's weighting in the Index is based on its relative total market
value; that is, its market price per share times the number of shares
outstanding. From time to time, S&P may add or delete stocks from the Index.
Inclusion of a particular stock in the Index in no way implies an opinion by S&P
as to its investment attractiveness, nor is S&P a sponsor or in any way
affiliated with the Fund. The Fund utilizes the Index as the standard
performance benchmark because it
represents approximately 70% of the total market value of all common stocks. In
addition, it is familiar to investors, and is recognized as a barometer of
common stock investment returns.
The Fund will be managed passively, in that the traditional management functions
of economic, financial, and market analysis will not be undertaken. Furthermore,
a company's adverse financial circumstance will not trigger its elimination from
the Fund's portfolio, unless the company's stock is removed from the Index by
S&P. The Fund is managed by utilizing a computer program that identifies which
stocks should be purchased or sold in order to duplicate, as much as possible,
the composition of the Index. The Fund will include a stock in its investment
portfolio in the order of the stock's weighting in the Index, starting with the
heaviest-weighted stock. Thus, the proportion of Fund assets invested in such
stock is nearly identical to the percentage of the particular stock represented
in the Index. On occasion, so as to respond to changes in the Index's
composition, as well as corporate mergers, tender offers, and other
circumstances, adjustments will be made in the Fund's portfolio. However, it is
anticipated that these adjustments will occur infrequently, and the costs will
be minimized. As a result, portfolio turnover is expected to be well below that
encountered in other investment company portfolios. Therefore, the accompanying
costs, including accounting costs, brokerage fees, custodial expenses, and
transfer taxes, are expected to be relatively low. While the cash flows into and
out of the Fund will impact the Fund's portfolio turnover rate and the Fund's
ability to replicate the Index's performance, investment adjustments will be
made, as practicably as possible, to account for these circumstances.
The Fund believes that indexing, as described above, constitutes a reasonable
and effective method of replicating percentage changes in the Index. While the
Fund will not duplicate the Index's performance precisely, it is anticipated
that the Fund's performance will closely resemble the performance of the Index.
Factors such as the size of the Fund's portfolio, the size and timing of cash
flows into and out of the Fund, and changes in the securities markets and the
Index itself, will account for the difference.
In order to accommodate cash flows, the Fund may enter into stock index futures
contracts and options. The Fund may purchase futures contracts and options
solely to maintain adequate liquidity to meet its redemption demands. This will
allow the Fund to simultaneously maximize the level of the Fund assets which are
tracking the performance of the Index. The Fund can sell futures contracts and
options in order to close out a previously established position. The Fund will
not enter into any stock index futures contract for the purpose of speculation.
ACCEPTABLE INVESTMENTS. The Fund will invest primarily in common stocks
comprising the Index. In addition, the Fund may hold cash reserves which may be
invested in the following:
U.S. GOVERNMENT SECURITIES. The Fund is permitted to invest in U.S.
government securities which are either issued or guaranteed by the U.S.
government, its agencies or instrumentalities. These securities include,
but are not limited to:
direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds; and
notes, bonds, and discount notes of U.S. government agencies or
instrumentalities, such as Federal Home Loan Banks, the Federal National
Mortgage Association, the Federal Home Loan Mortgage Corporation, the
Federal Farm Credit System, and the Student Loan Marketing Association.
REPURCHASE AGREEMENTS. The U.S. government securities and other securities
in which the Fund invests may be purchased pursuant to repurchase
agreements. Repurchase agreements are arrangements in which banks,
broker/dealers, and other recognized financial institutions sell U.S.
government securities or other securities to the Fund and agree at the time
of sale to repurchase them at a mutually agreed upon time and price. To the
extent that the original seller does not repurchase the securities from the
Fund, the Fund could receive less than the repurchase price on any sale of
such securities.
VARIABLE RATE U.S. GOVERNMENT SECURITIES. Some of the short-term U.S.
government securities the Fund may purchase carry variable interest rates.
These securities have a rate of interest subject to adjustment at least
annually. This adjusted interest rate is ordinarily tied to some objective
standard, such as the 91-day U.S. Treasury bill rate.
CASH ITEMS. The Fund may also invest in cash items. The Fund considers
cash items to be instruments issued by a U.S. branch of a domestic bank
having capital, surplus, and undivided profits in excess of $100,000,000 at
the time of the investment.
The Fund may also invest in commercial paper rated A-1 by S&P, Prime-1 by
Moody's Investors Service, Inc., or F-1 by Fitch Investors Service, Inc.
STOCK INDEX FUTURES AND OPTIONS. The Fund may utilize stock index futures
contracts, options, and options on futures contracts, subject to the
limitation that the value of these futures contracts and options will not
exceed 20% of the Fund's total assets. Also, the Fund will not purchase
options to the extent that more than 5% of the value of the Fund's total
assets would be invested in premiums on open put option positions. These
futures contracts and options will be used to handle cash flows into and
out of the Fund and to potentially reduce transactional costs, since
transactional costs associated with futures and options contracts can be
lower than costs stemming from direct investments in stocks.
There are several risks accompanying the utilization of futures contracts
to effectively anticipate market transactions. First, positions in futures
contracts may be closed only on an exchange or board of trade that
furnishes a secondary market for such contracts. While the Fund plans to
utilize futures contracts only if there exists an active market for such
contracts, there is no guarantee that a liquid market will exist for the
contracts at a specified time. Furthermore, because, by definition, futures
contracts look to projected price levels in the future and not to current
levels of valuation, market circumstances may result in there being a
discrepancy between the price of the stock index future and the movement in
the stock index. The absence of a perfect price correlation between the
futures contract and its underlying stock index could stem from investors
choosing to close futures contracts by offsetting transactions, rather than
satisfying additional margin requirements. This could result in a
distortion of the relationship between the index and futures market. In
addition, because the futures market imposes less burdensome margin
requirements than the securities market, an increased amount of
participation by speculators in the futures market could result in price
fluctuations.
In view of these considerations, the Fund will comply with the following
restrictions when purchasing and selling futures contracts. First, the Fund
will not participate in futures transactions if the sum of its initial
margin deposits on open contracts will exceed 5% of the market value of the
Fund's total assets, after taking into account the unrealized profits and
losses on those contracts it has entered into. Second, the Fund will not
enter into these contracts for speculative purposes. Third, since the Fund
does not constitute a commodity pool, it will not market itself as such,
nor serve as a vehicle for trading in the commodities futures or commodity
options markets. In this regard, the Fund will disclose to all prospective
investors the limitations on its futures and
options transactions, and will make clear that these transactions are
entered into only for bona fide hedging purposes or other permissible
purposes pursuant to regulations promulgated by the Commodity Futures
Trading Commission ("CFTC"). Also, the Fund intends to claim an exclusion
from registration as a commodity pool operator under the regulations
promulgated by the CFTC.
INDEX PARTICIPATION CONTRACTS. In addition to investing in stock index
futures contracts, options and options on futures contracts, the Fund may
also participate in the purchasing and selling of index participation
contracts based on the Index. The Fund will utilize index participation
contracts to aid in the management of cash flows into and out of the Fund
and not for speculative purposes. These contracts provide the equivalent of
a position in the stocks of the Index, where each stock is represented in
the same proportion as it is represented in the Index. Unlike futures
contracts, positions in these instruments may last indefinitely, with no
expiration date and will pay dividends implied by the underlying stocks in
the Index. Generally, the value of an index participation contract will
rise and fall as the value of the Index rises and falls. Index
participation contracts have lower transaction costs than those associated
with the purchase and sale of individual stocks. The Fund will invest in
index participation contracts only if there exists an active market for
such contracts.
The value of these contracts, together with the value of the Fund's
investment in stock index futures contracts, options and options on futures
contracts will not exceed 20% of the Fund's total assets. The Fund's use of
these investments will be to maintain adequate liquidity to meet redemption
requests, while simultaneously maximizing the level of Fund assets which
are tracking the performance of the Index.
LENDING OF PORTFOLIO SECURITIES. The Fund may lend its portfolio securities on
a short-term basis or long-term basis up to one-third of the value of its total
assets to broker/dealers, banks, or other institutional borrowers of securities.
The Fund will only enter into loan arrangements with broker/dealers, banks or
other institutions which the managers have determined are creditworthy under
guidelines established by the Trustees. The Fund will receive collateral in the
form of cash or U.S. government securities equal to at least 100% of the value
of the securities loaned.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. _The Fund may purchase short-term
U.S. government securities on a when-issued or delayed delivery basis. These
transactions are arrangements in which the Fund purchases securities with
payment and delivery scheduled for a future time. The Fund engages in
when-issued and delayed delivery transactions only for the purpose of acquiring
portfolio securities consistent with the Fund's investment objective and
policies, not for investment leverage. In when-issued and delayed delivery
transactions, the Fund relies on the seller to complete the transaction. The
seller's failure to complete the transaction may cause the Fund to miss a price
or yield considered to be advantageous.
INVESTMENT LIMITATIONS
The Fund will not:
borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a money market instrument for at
least a percentage of its cash value with an agreement to buy it back on
a set date) except, under certain circumstances, the Fund may borrow up
to one-third of the value of its total assets and pledge up to 10% of the
value of those assets to secure such borrowings.
The above investment limitation cannot be changed without shareholder approval.
The following investment limitations, however, may be changed by the Trustees
without shareholder approval. Shareholders will be notified before any material
change in these policies becomes effective.
The Fund will not:
invest more than 5% of its total assets in securities of issuers that
have records of less than three years of continuous operations; or
invest more than 15% of its net assets in securities that are illiquid.
FEDERATED INDEX TRUST INFORMATION
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MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board. The Board of Trustees is
responsible for managing the business affairs of the Trust and for exercising
all of the powers of the Trust except those reserved for the shareholders. The
Executive Committee of the Board of Trustees handles the Trustees'
responsibilities between meetings of the Trustees.
FUND'S MANAGER. _Federated Management serves as the Fund's manager (the
"Manager"). The Trust has entered into a management contract (the "Management
Contract") with the Manager, which, in turn, has entered into a sub-management
contract (the "Sub-Management Contract") with ANB Investment Management and
Trust Company ("ANB" or the "Sub-Manager") (ANB and the Manager are collectively
referred to as "Managers"). It is the Manager's responsibility to select the
Sub-Manager, subject to the review and approval of the Trustees and to review
and evaluate the Sub-Manager's continued performance. The Manager is also
responsible for providing administrative services to the Fund.
Subject to the supervision and direction of the Trustees, the Manager provides
to the Fund investment management evaluation services principally by performing
initial due diligence on the Sub-Manager for the Fund and thereafter monitoring
and evaluating the performance of the Fund's Sub-Manager through quantitative
and qualitative analyses. In addition, the Manager conducts periodic in-person,
telephonic and written consultations with the Sub-Manager. In initially
evaluating the Sub-Manager, the Manager considered, among other factors, the
Sub-Manager's level of expertise; relative performance over a minimum period of
five years; level of efficiency; level of adherence to investment discipline or
philosophy; personnel, facilities and financial strength; and quality of service
and client communications. On an ongoing basis, the Manager is responsible for
communicating performance expectations and evaluations to the Sub-Manager;
monitoring tracking error; monitoring and analyzing the appropriate futures
contracts to purchase and the futures holdings of the Fund as a percentage of
Fund assets; monitoring market timing in the Fund; discussing with the
Sub-Manager which method of indexing to use; and ultimately recommending to the
Trustees whether the Sub-Management Contract should be renewed, modified or
terminated. The Manager provides written reports to the Trustees regarding the
results of its evaluation and monitoring functions. In addition, the Manager is
responsible for providing the Fund with administrative services, including, but
not limited to, shareholder servicing and certain legal and accounting services.
The Manager is also responsible for conducting all operations of the Fund,
except those operations contracted to the Sub-Manager, custodian, transfer agent
and dividend disbursing agent. As described below, the Manager receives an
annual fee from the Fund for performing its responsibilities under the
Management Contract.
MANAGEMENT FEES. The Fund's Manager receives an annual management fee
equal to .30 of 1% of the Fund's average daily net assets. Under the
Management Contract, which provides for the voluntary waiver of the
management fee by the Manager, the Manager will voluntarily waive some or
all of the management fee. The Manager can terminate this voluntary waiver
of some or all of its management fee at any time in its sole discretion.
The Manager has also undertaken to reimburse the Fund for operating
expenses in excess of limitations established by certain states.
MANAGER'S BACKGROUND. Federated Management, a Delaware business trust
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940. It is a subsidiary of Federated Investors.
All of the Class A (voting) shares of Federated Investors are owned by a
trust, the trustees of which are John F. Donahue, Chairman and Trustee of
Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J.
Christopher Donahue, who is President and Trustee of Federated Investors.
Federated Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services
to a number of investment companies. Total assets under management or
administration by these and other subsidiaries of Federated Investors are
approximately $70 billion. Federated Investors, which was founded in 1956
as Federated Investors, Inc., develops and manages mutual funds primarily
for the financial industry. Federated Investors' track record of
competitive performance and its disciplined, risk averse investment
philosophy serve approximately 3,500 client institutions nationwide.
Through these same client institutions, individual shareholders also have
access to this same level of investment expertise.
SUB-MANAGER. Under the terms of the Sub-Management Contract between the Manager
and ANB, ANB serves as the Fund's Sub-Manager. The Sub-Manager will develop,
maintain and run the computer program designed to determine which securities
will be purchased and sold so as to replicate the composition of the Index to
the extent feasible, and, subject to the Manager's oversight, has complete
discretion to purchase and sell portfolio securities for the Fund within the
Fund's investment objective, restrictions and policies.
SUB MANAGEMENT FEES. For its services under the Sub-Management Contract,
ANB receives an annual fee from the Manager equal to .05 of 1% of the first
$100 million of net assets under management, .02 of 1% over $100 million
but less than $200 million, and .01 of 1% of net assets over and above $200
million, on an annualized basis. This fee is paid by the Manager out of its
resources and is not an incremental Fund expense. No performance or
incentive fees are paid to the Sub-Manager.
SUB-MANAGER'S BACKGROUND. ANB, incorporated in the State of Illinois on
July 1, 1988 is a registered investment adviser under the Investment
Advisers Act of 1940. ANB is a wholly-owned subsidiary of American National
Bank and Trust Company of Chicago, which, in turn, is an indirect
wholly-owned subsidiary of First Chicago Corporation. It serves as
investment adviser principally to corporate defined benefit and defined
contribution plans which have, as of September 30, 1993, placed
approximately $18 billion in assets with ANB. Since 1973, when American
National Bank and Trust Company of Chicago introduced its first commingled
equity index fund, ANB has developed and managed a family of equity and
bond index funds in which some 390 nationwide non-financial institution
clients invest. In total, ANB manages 62 commingled/common trust funds.
Also, since 1990, ANB has served as Sub-Manager for Mini-Cap Fund and Mid-
Cap Fund which are also portfolios of the Trust.
DISTRIBUTION OF INSTITUTIONAL SERVICE SHARES
Federated Securities Corp. is the principal distributor for the Fund. It is a
Pennsylvania corporation organized on November 14, 1969, and is the principal
distributor for a number of investment companies. Federated Securities Corp. is
a subsidiary of Federated Investors. Federated Securities Corp. pays a licensing
fee to the Standard & Poor's Corporation for the right to use the Index in
connection with its sub-management activities for the Fund. Federated Securities
Corp. is not affiliated with the Standard & Poor's Corporation.
DISTRIBUTION PLAN. Pursuant to the provisions of a distribution plan
adopted in accordance with Investment Company Act Rule 12b-1 (the "Plan"),
the Fund will pay to the distributor an amount computed at an annual rate
of .30 of 1% of the average daily net asset value of the Shares to finance
any activity which is principally intended to result in the sale of Shares
subject to the Plan.
The distributor may from time to time and for such periods as it deems
appropriate, voluntarily reduce its compensation under the Plan to the
extent the expenses attributable to the Shares exceed such lower expense
limitation as the distributor may, by notice to the Fund, voluntarily
declare to be effective.
The distributor may select financial institutions such as banks,
fiduciaries, custodians for public funds, investment advisers, and
broker/dealers ("brokers") to provide sales and/or administrative services
as agents for their clients or customers who beneficially own Shares of the
Fund. Administrative services may include, but are not limited to, the
following functions: providing office space, equipment, telephone
facilities, and various clerical, supervisory, computer and other personnel
as necessary or beneficial to establish and maintain shareholder accounts
and records; processing purchase and redemption transactions and automatic
investments of client account cash balances; answering routine client
inquiries regarding the Shares; assisting clients in changing dividend
options, account designations, and addresses; and providing such other
services as the Fund reasonably requests for Shares.
Financial institutions will receive fees from the distributor based upon
Shares owned by their clients or customers. The schedules of such fees and
the basis upon which such fees will be paid will be determined from time to
time by the distributor.
The Fund's plan is a compensation type plan. As such, the Fund makes no
payments to the distributor except as described above. Therefore, the Fund
does not pay for unreimbursed expenses of the distributor, including
amounts expended by the distributor in excess of amounts received by it
from the Fund, interest, carrying or other financing charges in connection
with excess amounts expended, or the distributor's overhead expenses.
However, the distributor may be able to recover such amounts or may earn a
profit from future payments made by the Fund under the Plan.
The Glass-Steagall Act prohibits a depository institution (such as a
commercial bank or a savings and loan association) from being an
underwriter or distributor of most securities. In the event the
Glass-Steagall Act is deemed to prohibit depository institutions from
acting in the administrative capacities described above or should Congress
relax current restrictions on depository institutions, the Board of
Trustees will consider appropriate changes in the services.
State securities laws governing the ability of depository institutions to
act as underwriters or distributors of securities may differ from
interpretations given to the Glass-Steagall Act and, therefore, banks and
financial institutions may be required to register as dealers pursuant to
state law.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Administrative Services, Inc., a subsidiary
of Federated Investors, provides the manager with the administrative personnel
and services necessary to provide shareholder servicing and certain legal and
accounting services.
CUSTODIAN. State Street Bank and Trust Company ("State Street Bank"), Boston,
Massachusetts, is custodian for the securities and cash of the Fund..
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. _Federated Services Company,
Pittsburgh, Pennsylvania, is transfer agent for the shares of the Fund, and
dividend disbursing agent for the Fund.
LEGAL COUNSEL. Legal counsel is provided by Houston, Houston & Donnelly,
Pittsburgh, Pennsylvania, and Dickstein, Shapiro & Morin, Washington, D.C.
INDEPENDENT AUDITORS. The independent auditors for the Fund are Ernst & Young,
Pittsburgh, Pennsylvania.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the managers look for prompt execution of the order at a favorable
price. In working with dealers, the managers will generally utilize those who
are recognized dealers in specific portfolio instruments, except when a better
price and execution of the order can be obtained elsewhere. In selecting among
firms believed to meet these criteria, the managers may give consideration to
those firms which have sold or are selling Shares of the Fund and other funds
distributed by Federated Securities Corp. The managers make decisions on
portfolio transactions and select brokers and dealers subject to review by the
Trustees.
EXPENSES OF THE FUND AND INSTITUTIONAL SERVICE SHARES
Holders of Shares pay their allocable portion of Fund and Trust expenses.
The Institutional Service Shares are a new class of shares. Accordingly, there
are no expense ratios for such shares. The expense ratios presented are
historical information for the Fund. The Trust expenses for which holders of
Shares pay their allocable portion include, but are not limited to: the cost of
organizing the Trust and continuing its existence; registering the Trust with
federal and state securities authorities; Trustees' fees; auditors' fees; the
cost of meeting of Trustees; legal fees of the Trust; association membership
dues; and such non-recurring and extraordinary items as may arise.
The Fund expenses for which holders of Shares pay their allocable portion
include, but are not limited to: registering the Fund and Shares of the Fund;
investment advisory services; taxes and commissions; custodian fees; insurance
premiums; auditors' fees; and such non-recurring and extraordinary items as may
arise.
At present, the only expenses allocated to the Shares as a class are expenses
under the Fund's 12b-1 Plan which relate to the Shares. However, the Trustees
reserves the right to allocate certain other
expenses to holders of Shares as it deems appropriate ("Class Expenses"). In any
case, Class Expenses would be limited to : transfer agent fees as identified by
the transfer agent as attributable to holders of Shares; printing and postage
expenses related to preparing and distributing materials such as shareholder
reports, prospectuses and proxies to current shareholders; registration fees
paid to the Securities and Exchange Commission and registration fees paid to
state securities commissions; expenses related to administrative personnel and
services as required to support holders of Shares; legal fees relating solely to
Shares; and Trustees' fees incurred as a result of issues relating solely to
Shares.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund's net asset value per Share fluctuates. The net asset value for Shares
is determined by adding the interest of the Shares in the market value of all
securities and other assets of the Fund, subtracting the interest of the Shares
in the liabilities of the Fund and those attributable to Shares, and dividing
the remainder by the total number of Shares outstanding. The net asset value for
Institutional Shares may exceed that of Shares due to the variance in daily net
income realized by each class. Such variance will reflect only accrued net
income to which the shareholders of a particular class are entitled.
INVESTING IN INSTITUTIONAL SERVICE SHARES
- --------------------------------------------------------------------------------
SHARE PURCHASES
Shares are sold on days on which the New York Stock Exchange is open. Shares of
the Fund may be purchased either by wire or mail. To purchase Shares of the
Fund, open an account by calling Federated Securities Corp. Information needed
to establish the account will be taken over the telephone. The Fund reserves the
right to reject any purchase request.
BY WIRE. To purchase Shares of the Fund by Federal Reserve wire, call the Fund
to place an order. Shareholders have until 4:00 p.m. (Boston time) to call the
Fund for settlement on the next business day. However, in order to maximize the
Fund's ability to track the Index, shareholders are urged to transmit purchase
requests prior to 2:00 p.m. (Boston time). The order is considered received
immediately. Payment by federal funds must be received before 4:00 p.m. (Boston
time) on the next business day following the order. Federal funds should be
wired as follows: State Street Bank and Trust Company, Boston, Massachusetts;
Attention: EDGEWIRE; For Credit to: Federated Index Trust, Max-Cap
Fund--Institutional Service Shares; Fund Number (this number can be found on the
account statement or by contacting the Fund); Group Number or Order Number;
Nominee or Institution Name; ABA Number 011000028.
BY MAIL. To purchase Shares of the Fund by mail, send a check made payable to
Max-Cap Fund-- Institutional Service Shares to the Fund's transfer agent,
Federated Services Company, c/o State Street Bank and Trust Company, P.O. Box
8602, Boston, Massachusetts 02266-8602. Orders by mail are considered received
after payment by check is converted by State Street Bank into federal funds.
This is normally the next business day after State Street Bank receives the
check.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in Shares is $25,000. However, an account may be
opened with a smaller amount as long as the $25,000 minimum is reached within 90
days. An institutional investor's minimum investment will be calculated by
combining all accounts that it maintains with the Fund.
WHAT SHARES COST
Shares are sold at their net asset value next determined after an order is
received. There is no sales charge imposed by the Fund. The net asset value is
determined at 4:00 p.m. (Boston time), Monday through Friday, except on: (i)
days on which there are not sufficient changes in the value of the Fund's
portfolio securities that its net asset value might be materially affected; (ii)
days during which no shares are tendered for redemption and no orders to
purchase shares are received; and (iii) the following holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day.
SUBACCOUNTING SERVICES
Institutions are encouraged to open single master accounts. However, certain
institutions may wish to use the transfer agent's subaccounting system to
minimize their internal recordkeeping requirements. The transfer agent charges a
fee based on the level of subaccounting services rendered. Institutions holding
Shares in a fiduciary, agency, custodial, or similar capacity may charge or pass
through subaccounting fees as part of or in addition to normal trust or agency
account fees. They may also charge fees for other services provided which may be
related to the ownership of Shares. This prospectus should, therefore, be read
together with any agreement between the customer and the institution with regard
to the services provided, the fees charged for those services, and any
restrictions and limitations imposed.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the Fund.
Detailed confirmations of each purchase or redemption are sent to each
shareholder. Quarterly confirmations are sent to report dividends paid during
the quarter.
DIVIDENDS
Dividends are declared and paid quarterly to all shareholders invested in the
Fund on the record date. Unless shareholders request cash payments by writing to
the Fund, dividends are automatically reinvested in additional Shares on payment
dates at the ex-dividend date net asset value without a sales charge.
CAPITAL GAINS
Capital gains realized by the Fund, if any, will be distributed at least once
every 12 months.
REDEEMING INSTITUTIONAL SERVICE SHARES
- --------------------------------------------------------------------------------
The Fund redeems Shares at their net asset value next determined after the Fund
receives the redemption request. Redemptions will be made on days on which the
Fund computes its net asset value. Redemption requests must be received in
proper form and can be made by telephone request or written request.
TELEPHONE REDEMPTION
Shareholders may redeem their Shares by telephoning the Fund before 4:00 p.m.
(Boston time). However, in order to maximize the Fund's ability to track the
Index, shareholders are urged to telephone the Fund prior to 2:00 p.m. (Boston
time). The proceeds will normally be wired the following business day, but in no
event more than seven days, to the shareholder's account at a domestic
commercial bank that is a member of the Federal Reserve System. If at any time
the Fund shall determine it necessary to terminate or modify this method of
redemption, shareholders would be promptly notified. An authorization form
permitting State Street Bank or the Fund to accept telephone requests must first
be completed. Authorization forms and information on this service are available
from Federated Securities Corp. Telephone redemption instructions may be
recorded.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "Written Requests," should be considered.
If reasonable procedures are not followed by the Fund, it may be liable for
losses due to unauthorized or fraudulent telephone instructions.
WRITTEN REQUESTS
Shares may also be redeemed by sending a written request to the Fund. Call the
Fund for specific instructions before redeeming by letter. The shareholder will
be asked to provide in the request his name, the Fund name, his account number,
and the share or dollar amount requested. If share certificates have been
issued, they must be properly endorsed and should be sent by registered or
certified mail with the written request.
SIGNATURES. Shareholders requesting a redemption of $50,000 or more, a
redemption of any amount to be sent to an address other than that on record with
the Fund, or a redemption payable other than to the shareholder of record must
have signatures on written redemption requests guaranteed by:
a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund ("BIF"), which is administered by the Federal Deposit
Insurance Corporation ("FDIC");
a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;
a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund ("SAIF"), which is administered
by the FDIC; or
any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.
RECEIVING PAYMENT. Normally, a check for the proceeds is mailed within one
business day, but in no event more than seven days, after receipt of a proper
written redemption request.
REDEMPTION BEFORE PURCHASE INSTRUMENTS CLEAR
When Shares are purchased by check, the proceeds from the redemption of those
Shares are not available, and the Shares may not be exchanged, until the Fund or
its agents are reasonably certain that the purchase check has cleared, which
could take up to ten calendar days.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $25,000. This
requirement does not apply, however, if the balance falls below $25,000 because
of changes in the Fund's net asset value.
Before Shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each Share of the Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights except that, in matters
affecting only a particular fund or class, only shares of that fund or class are
entitled to vote. As a Massachusetts business trust, the Trust is not required
to hold annual shareholder meetings. Shareholder approval will be sought only
for certain changes in the Trust's or the Fund's operation and for the election
of Trustees under certain circumstances. As of November 29, 1993, TMA Retirement
Trust, Park Ridge, Illinois, owned approximately 64,834 shares (30.5%); and Bank
One Utah NA, Salt Lake City, Utah, owned approximately 143,597 shares (67.7%) of
the Fund, and therefore, may, for certain purposes, be deemed to control the
Fund and be able to affect the outcome of certain matters presented for a vote
of shareholders.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders shall be called by the Trustees upon the
written request of shareholders owning at least 10% of the outstanding shares of
all series of the Trust.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for acts or obligations of the Trust on behalf
of the Fund. To protect shareholders of the Fund, the Trust has filed legal
documents with Massachusetts that expressly disclaim the liability of
shareholders of the Fund for such acts or obligations of the Trust. These
documents require notice of this disclaimer to be given in each agreement,
obligation, or instrument that the Trust enters into on behalf of the Fund.
In the unlikely event a shareholder of the Fund is held personally liable for
the Trust's obligations on behalf of the Fund, the Trust is required to use the
property of the Fund to protect or compensate the shareholder. On request, the
Trust will defend any claim made and pay any judgment against a shareholder for
any act or obligation of the Trust on behalf of the Fund. Therefore, financial
loss resulting from liability as a shareholder of the Fund will occur only if
the Trust cannot meet its obligations to indemnify shareholders and pay
judgments against them from the assets of the Fund.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code applicable to regulated investment companies and to
receive the special tax treatment afforded to such companies.
The Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by the
Trust's other portfolios, if any, will not be combined for tax purposes with
those realized by the Fund.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions, including capital gains distributions,
received. This applies whether dividends and distributions are received in cash
or as additional shares. Distributions representing long-term capital gains, if
any, will be taxable to shareholders as long-term capital gains no matter how
long the shareholders have held their shares.
PENNSYLVANIA CORPORATE AND PERSONAL PROPERTY TAXES. In the opinion of Houston,
Houston & Donnelly, counsel to the Trust:
neither the Trust nor the Fund is subject to Pennsylvania corporate or
personal property taxes; and
Fund shares may be subject to personal property taxes imposed by
counties, municipalities, and school districts in Pennsylvania to the
extent that the portfolio securities in the Fund would be subject to such
taxes if owned directly by residents of those jurisdictions.
Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time the Fund advertises its total return and yield for Shares.
Total return represents the change, over a specified period of time, in the
value of an investment in the Shares of the Fund after reinvesting all income
and capital gain distributions. It is calculated by dividing that change by the
initial investment and is expressed as a percentage.
The yield of Shares of the Fund is calculated by dividing the net investment
income per share (as defined by the Securities and Exchange Commission) earned
by Shares over a thirty-day period by the offering price per share of the Shares
on the last day of the period. This number is then annualized using semi-annual
compounding. The yield does not necessarily reflect income actually earned by
the Institutional Service Shares and, therefore, may not correlate to the
dividends or other distributions paid to shareholders.
Shares are sold without any sales load or other similar non-recurring charges.
Total return and yield will be calculated separately for Institutional Service
Shares and Institutional Shares. Because Institutional Service Shares are
subject to a 12b-1 fee, the total return and yield for Institutional Shares for
the same period will exceed that of Institutional Service Shares.
From time to time, the Fund may advertise its performance using certain
reporting services and/or compare its performance to certain indices.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
Institutional Shares of the Fund are sold to accounts for which financial
institutions act in a fiduciary or agency capacity. Institutional Shares are
sold at net asset value and investments in Institutional Shares are subject to a
minimum initial investment of $25,000.
Institutional Shares of the Fund are distributed without a 12b-1 Plan. Financial
institutions and brokers providing sales and administrative services may receive
different compensation depending upon which class of shares of the Fund is sold.
The amount of dividends payable to Institutional Shares will exceed that of
Institutional Service Shares by the difference between Class Expenses and
distribution expenses borne by shares of each respective class.
The stated advisory fee is the same for both classes of shares.
MAX-CAP FUND
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Ernst & Young, Independent Auditors, on page
49.
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
1993 1992 1991 1990*
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.64 $ 11.07 $ 8.60 $ 10.00
- --------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------
Net investment income 0.30 0.32 0.37 0.12
- --------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments 1.29 0.71 2.46 (1.43)
- -------------------------------------------------------------- --------- --------- --------- ---------
Total from investment operations 1.59 1.03 2.83 (1.31)
- --------------------------------------------------------------
LESS DISTRIBUTIONS
- --------------------------------------------------------------
Dividends to shareholders from net investment income (0.30) (0.34) (0.36) (0.09)
- --------------------------------------------------------------
Distributions to shareholders from net realized gain on
investment transactions (0.69) (0.12) -- --
- -------------------------------------------------------------- --------- --------- --------- ---------
Total distributions (0.99) (0.46) (0.36) (0.09)
- -------------------------------------------------------------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 12.24 $ 11.64 $ 11.07 $ 8.60
- -------------------------------------------------------------- --------- --------- --------- ---------
TOTAL RETURN** 14.35% 9.51% 33.31% (14.46)%(b)
- --------------------------------------------------------------
RATIO TO AVERAGE NET ASSETS
- --------------------------------------------------------------
Expenses 0.31% 0.30% 0.24% 0.00%(c)
- --------------------------------------------------------------
Net investment income 2.60% 2.92% 3.74% 5.19%(c)
- --------------------------------------------------------------
Expense waiver/reimbursement(a) 0.09% 0.18% 0.45% 0.94%
- --------------------------------------------------------------
SUPPLEMENTAL DATA]
- --------------------------------------------------------------
Net assets, end of period (000 omitted) $407,246 $309,614 $144,528 $25,129
- --------------------------------------------------------------
Portfolio turnover rate 13% 46% 6% 0%
- --------------------------------------------------------------
</TABLE>
* Reflects operations for the period from July 5, 1990 (date of initial public
offering) to October 31, 1990. For the period from the start of business June
26, 1990 to July 4, 1990, net investment income per share aggregating $0.02
per share ($155) was distributed to the Fund's manager. Such distribution
represented the net income of the Fund prior to the initial public offering
of Fund shares which commenced on July 5, 1990.
** 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 5).
(b) Cumulative total return.
(c) Computed on an annualized basis.
Further information about the Fund's performance is contained in the Fund's
annual report dated December 31, 1993, which can be obtained free of charge.
(See Notes which are an integral part of the Financial Statements)
STANDARD & POOR'S CORPORATION
- --------------------------------------------------------------------------------
"Standard & Poor's," "S&P," "S&P 500," "Standard & Poor's 500," and "500" are
trademarks of Standard & Poor's Corporation and have been licensed for use by
Federated Securities Corp.
The Fund is not sponsored, endorsed, sold or promoted by or affiliated with,
Standard & Poor's Corporation.
MAX-CAP FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1993
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--86.3%
- ------------------------------------------------------------------------------------------------
COMMERCIAL SERVICES--1.4%
--------------------------------------------------------------------------------
5,100 Alco Standard Corp. $ 233,325
--------------------------------------------------------------------------------
52,300 American Express Co. 1,686,675
--------------------------------------------------------------------------------
8,900 Deluxe Corp. 318,175
--------------------------------------------------------------------------------
16,700 Donnelley (R.R.) & Sons Co. 486,388
--------------------------------------------------------------------------------
10,700 Dow Jones & Co., Inc. 381,188
--------------------------------------------------------------------------------
4,000 Fleming Companies, Inc. 123,000
--------------------------------------------------------------------------------
5,600 Grainger (W.W.), Inc. 305,900
--------------------------------------------------------------------------------
3,600 Handleman Co. 44,100
--------------------------------------------------------------------------------
3,500 Harland (John H.) Co. 84,437
--------------------------------------------------------------------------------
8,100 Interpublic Group Cos., Inc. 250,088
--------------------------------------------------------------------------------
5,300 McGraw-Hill, Inc. 393,525
--------------------------------------------------------------------------------
4,300 McKesson Corp. 229,512
--------------------------------------------------------------------------------
10,700 Moore Corp. Ltd. 224,700
--------------------------------------------------------------------------------
2,100 National Intergroup, Inc. 32,287
--------------------------------------------------------------------------------
4,700 Ogden Corp. 112,800
--------------------------------------------------------------------------------
6,250 Safety-Kleen Corp. 85,938
--------------------------------------------------------------------------------
7,700 Super Valu Stores, Inc. 259,875
--------------------------------------------------------------------------------
20,000 Sysco Corp. 572,500
-------------------------------------------------------------------------------- ---------------
Total 5,824,413
-------------------------------------------------------------------------------- ---------------
COMMUNICATION--0.3%
--------------------------------------------------------------------------------
22,200 McCaw Cellular Communications, Cl. A 1,182,150
-------------------------------------------------------------------------------- ---------------
CONSUMER DURABLES--4.1%
--------------------------------------------------------------------------------
7,900 American Greetings Corp., Cl. A 230,088
--------------------------------------------------------------------------------
1,538 Bassett Furniture Industries, Inc. 46,509
--------------------------------------------------------------------------------
9,000 Black & Decker Corp. 180,000
--------------------------------------------------------------------------------
1,600 Briggs & Stratton Corp. $ 139,800
--------------------------------------------------------------------------------
10,300 Brunswick Corp. 160,938
--------------------------------------------------------------------------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
CONSUMER DURABLES--CONTINUED
--------------------------------------------------------------------------------
3,400 Centex Corp. 150,875
--------------------------------------------------------------------------------
37,800 Chrysler Corp. 2,116,800
--------------------------------------------------------------------------------
9,000 Cooper Tire & Rubber Co. 195,750
--------------------------------------------------------------------------------
35,300 Eastman Kodak Co. 2,223,900
--------------------------------------------------------------------------------
6,300 Echlin, Inc. 204,750
--------------------------------------------------------------------------------
2,200 Fedders USA, Inc. 13,750
--------------------------------------------------------------------------------
4,900 Fleetwood Enterprises, Inc. 110,862
--------------------------------------------------------------------------------
53,000 Ford Motor Co. 3,279,375
--------------------------------------------------------------------------------
76,200 General Motors Corp. 3,629,025
--------------------------------------------------------------------------------
13,400 Genuine Parts Co. 507,525
--------------------------------------------------------------------------------
15,700 Goodyear Tire & Rubber Co. 702,575
--------------------------------------------------------------------------------
9,400 Hasbro, Inc. 340,750
--------------------------------------------------------------------------------
4,900 Jostens, Inc. 94,937
--------------------------------------------------------------------------------
3,700 Kaufman & Broad, Inc. 73,075
--------------------------------------------------------------------------------
10,362 Mattel, Inc. 300,498
--------------------------------------------------------------------------------
11,500 Maytag Corp. 179,687
--------------------------------------------------------------------------------
8,500 Newell Co. 346,375
--------------------------------------------------------------------------------
2,100 Outboard Marine Corp. 37,012
--------------------------------------------------------------------------------
5,000 Polaroid Corp. 183,125
--------------------------------------------------------------------------------
17,300 Rubbermaid Inc. 601,175
--------------------------------------------------------------------------------
1,200 Skyline Corp. 21,450
--------------------------------------------------------------------------------
4,600 Snap-On Tools Corp. 182,850
--------------------------------------------------------------------------------
4,800 Stanley Works 207,000
--------------------------------------------------------------------------------
7,600 Whirlpool Corp. 485,450
--------------------------------------------------------------------------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
CONSUMER DURABLES--CONTINUED
--------------------------------------------------------------------------------
3,300 Zenith Electronics Corp. $ 25,987
-------------------------------------------------------------------------------- ---------------
Total 16,971,893
-------------------------------------------------------------------------------- ---------------
CONSUMER NON-DURABLES--9.8%
--------------------------------------------------------------------------------
3,100 Alberto-Culver Co., Cl. B Conv. 65,488
--------------------------------------------------------------------------------
21,700 American Brands, Inc. 748,650
--------------------------------------------------------------------------------
29,100 Anheuser-Busch Companies, Inc. 1,385,888
--------------------------------------------------------------------------------
7,800 Avon Products, Inc. 393,900
--------------------------------------------------------------------------------
15,200 Borden, Inc. 243,200
--------------------------------------------------------------------------------
1,900 Brown Group, Inc. 64,600
--------------------------------------------------------------------------------
3,000 Brown-Forman Corp., Cl. B 236,625
--------------------------------------------------------------------------------
27,100 Campbell Soup Co. 1,128,038
--------------------------------------------------------------------------------
5,900 Clorox Co. 312,700
--------------------------------------------------------------------------------
140,000 Coca-Cola Co. 6,072,500
--------------------------------------------------------------------------------
16,700 Colgate-Palmolive Co. 981,125
--------------------------------------------------------------------------------
27,100 ConAgra, Inc. 731,700
--------------------------------------------------------------------------------
4,100 Coors (Adolph) Co., Cl. B 85,588
--------------------------------------------------------------------------------
16,500 CPC International Inc. 792,000
--------------------------------------------------------------------------------
17,300 General Mills, Inc. 1,107,200
--------------------------------------------------------------------------------
7,500 Gerber Products Co. 213,750
--------------------------------------------------------------------------------
23,700 Gillette Co. 1,442,738
--------------------------------------------------------------------------------
3,400* Hartmarx Corp. 22,950
--------------------------------------------------------------------------------
27,400 Heinz (H.J.) Co. 1,030,925
--------------------------------------------------------------------------------
9,700 Hershey Foods Corp. 514,100
--------------------------------------------------------------------------------
4,100 International Flavors & Fragrances, Inc. 444,850
--------------------------------------------------------------------------------
24,800 Kellogg Co. 1,416,700
--------------------------------------------------------------------------------
8,800 Liz Claiborne, Inc. 167,200
--------------------------------------------------------------------------------
8,200 Nike, Inc., Cl. B 396,675
--------------------------------------------------------------------------------
1,600 Oshkosh B'Gosh, Inc., Cl. A $ 29,200
--------------------------------------------------------------------------------
85,400 PepsiCo, Inc. 3,373,300
--------------------------------------------------------------------------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
CONSUMER NON-DURABLES--CONTINUED
--------------------------------------------------------------------------------
11,500 Pet Inc. 196,938
--------------------------------------------------------------------------------
94,300 Philip Morris Cos., Inc. 5,068,625
--------------------------------------------------------------------------------
73,400 Procter & Gamble Co. 3,981,950
--------------------------------------------------------------------------------
7,800 Quaker Oats Co. 553,800
--------------------------------------------------------------------------------
11,200 Ralston Purina Co. 466,200
--------------------------------------------------------------------------------
9,300 Reebok International Ltd. 283,650
--------------------------------------------------------------------------------
4,400 Russell Corp. 119,350
--------------------------------------------------------------------------------
52,300 Sara Lee Corp. 1,385,950
--------------------------------------------------------------------------------
40,300 Seagram Co., Ltd. 1,158,625
--------------------------------------------------------------------------------
5,500 Stride Rite Corp. 94,188
--------------------------------------------------------------------------------
17,200 Unilever N.V. 1,973,700
--------------------------------------------------------------------------------
22,500 UST Inc. 593,438
--------------------------------------------------------------------------------
6,900 V.F. Corp. 273,412
--------------------------------------------------------------------------------
11,500 Whitman Corp. 182,563
--------------------------------------------------------------------------------
12,500 Wrigley (Wm.), Jr. Co. 540,625
-------------------------------------------------------------------------------- ---------------
Total 40,274,604
-------------------------------------------------------------------------------- ---------------
CONSUMER PRODUCTS--0.3%
--------------------------------------------------------------------------------
19,200 Dun & Bradstreet Corp. 1,286,400
-------------------------------------------------------------------------------- ---------------
CONSUMER SERVICES--3.9%
--------------------------------------------------------------------------------
5,000* Bally Manufacturing Corp. 50,000
--------------------------------------------------------------------------------
11,400 Block (H.&R.), Inc. 454,575
--------------------------------------------------------------------------------
1,800 Capital Cities/ABC, Inc. 1,097,325
--------------------------------------------------------------------------------
1,628 CBS, Inc. 501,831
--------------------------------------------------------------------------------
14,600 Comcast Corp., Cl. A 609,550
--------------------------------------------------------------------------------
57,700 Disney (Walt) Co. (The) 2,466,675
--------------------------------------------------------------------------------
15,800 Gannett Co., Inc. $ 811,725
--------------------------------------------------------------------------------
11,100 Host Marriott Corp. 81,862
--------------------------------------------------------------------------------
5,100 Hilton Hotels Corp. 239,063
--------------------------------------------------------------------------------
4,050* King World Productions, Inc. 157,444
--------------------------------------------------------------------------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
CONSUMER SERVICES--CONTINUED
--------------------------------------------------------------------------------
5,900 Knight-Ridder, Inc. 325,975
--------------------------------------------------------------------------------
2,950 Luby's Cafeterias, Inc. 66,006
--------------------------------------------------------------------------------
11,100 Marriott Corp. 291,375
--------------------------------------------------------------------------------
38,100 McDonald's Corp. 2,195,513
--------------------------------------------------------------------------------
1,600 Meredith Corp. 64,200
--------------------------------------------------------------------------------
3,200* National Education Corp. 18,800
--------------------------------------------------------------------------------
8,500 New York Times Co., Cl. A 200,813
--------------------------------------------------------------------------------
12,700 Paramount Communications, Inc. 1,020,762
--------------------------------------------------------------------------------
10,650 Price Costco, Inc. 189,038
--------------------------------------------------------------------------------
7,300* Promus Companies, Inc. 534,725
--------------------------------------------------------------------------------
5,700* Ryan's Family Steak Houses, Inc. 47,025
--------------------------------------------------------------------------------
8,200 Ryder Systems, Inc. 232,675
--------------------------------------------------------------------------------
9,000 Service Corp. International 235,125
--------------------------------------------------------------------------------
4,300* Shoney's, Inc. 98,900
--------------------------------------------------------------------------------
46,400* Tele-Communications, Inc., Cl. A 1,415,200
--------------------------------------------------------------------------------
40,340 Time Warner, Inc. 1,805,215
--------------------------------------------------------------------------------
13,800 Times Mirror Co., Cl. A 455,400
--------------------------------------------------------------------------------
7,200 Tribune Co. 399,600
--------------------------------------------------------------------------------
10,700 Wendy's International, Inc. 177,887
-------------------------------------------------------------------------------- ---------------
Total 16,244,284
-------------------------------------------------------------------------------- ---------------
ELECTRONIC TECHNOLOGY--5.9%
--------------------------------------------------------------------------------
9,700* Advanced Micro Devices, Inc. 191,575
--------------------------------------------------------------------------------
12,200 Amdahl Corp. 56,425
--------------------------------------------------------------------------------
11,300 AMP, Inc. $ 704,837
--------------------------------------------------------------------------------
1,800* Andrew Corp. 67,950
--------------------------------------------------------------------------------
12,500 Apple Computer, Inc. 384,375
--------------------------------------------------------------------------------
36,600 Boeing Co. 1,372,500
--------------------------------------------------------------------------------
4,600* Ceridian Corp. 84,525
--------------------------------------------------------------------------------
8,900* Compaq Computer Corp. 600,750
--------------------------------------------------------------------------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
ELECTRONIC TECHNOLOGY--CONTINUED
--------------------------------------------------------------------------------
1,800* Computer Sciences Corp. 165,375
--------------------------------------------------------------------------------
2,800* Cray Research, Inc. 76,300
--------------------------------------------------------------------------------
3,800* Data General Corp. 36,100
--------------------------------------------------------------------------------
14,200* Digital Equipment Corp. 505,875
--------------------------------------------------------------------------------
5,500* DSC Communications Corp. 360,937
--------------------------------------------------------------------------------
3,600 E-Systems, Inc. 163,350
--------------------------------------------------------------------------------
6,100 EG & G, Inc. 109,037
--------------------------------------------------------------------------------
3,360 General Dynamics Corp. 321,720
--------------------------------------------------------------------------------
3,600 Grumman Corp. 133,650
--------------------------------------------------------------------------------
4,300 Harris Corp. 198,875
--------------------------------------------------------------------------------
27,300 Hewlett-Packard Co. 2,009,963
--------------------------------------------------------------------------------
45,400 Intel Corp. 2,871,550
--------------------------------------------------------------------------------
5,100* Intergraph Corp. 56,737
--------------------------------------------------------------------------------
61,500 International Business Machines Corp. 2,829,000
--------------------------------------------------------------------------------
6,700 Lockheed Corp. 461,463
--------------------------------------------------------------------------------
9,000 Loral Corp. 285,750
--------------------------------------------------------------------------------
2,600* M/A-Com., Inc. 22,100
--------------------------------------------------------------------------------
10,300 Martin-Marietta Corp. 455,775
--------------------------------------------------------------------------------
4,200 McDonnell-Douglas Corp. 393,750
--------------------------------------------------------------------------------
29,200 Motorola, Inc. 3,058,700
--------------------------------------------------------------------------------
11,800* National Semiconductor Corp. 197,650
--------------------------------------------------------------------------------
26,900 Northern Telecom, Ltd. $ 766,650
--------------------------------------------------------------------------------
5,200 Northrop Corp. 180,700
--------------------------------------------------------------------------------
32,900* Novell, Inc. 707,350
--------------------------------------------------------------------------------
4,800 Perkin-Elmer Corp. 168,000
--------------------------------------------------------------------------------
14,600 Raytheon Co. 888,775
--------------------------------------------------------------------------------
23,700 Rockwell International Corp. 850,237
--------------------------------------------------------------------------------
3,950 Scientific-Atlanta, Inc. 138,744
--------------------------------------------------------------------------------
11,400 Sun Microsystems, Inc. 290,700
--------------------------------------------------------------------------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
ELECTRONIC TECHNOLOGY--CONTINUED
--------------------------------------------------------------------------------
12,200* Tandem Computers, Inc. 134,200
--------------------------------------------------------------------------------
3,300 Tektronix, Inc. 76,312
--------------------------------------------------------------------------------
8,900 Texas Instruments, Inc. 584,062
--------------------------------------------------------------------------------
17,500* Unisys Corp. 201,250
--------------------------------------------------------------------------------
13,300 United Technologies Corp. 824,600
-------------------------------------------------------------------------------- ---------------
Total 23,988,174
-------------------------------------------------------------------------------- ---------------
ENERGY MINERALS--8.1%
--------------------------------------------------------------------------------
10,000 Amerada-Hess Corp. 530,000
--------------------------------------------------------------------------------
53,500 Amoco Corp. 2,989,313
--------------------------------------------------------------------------------
6,500 Ashland Oil, Inc. 224,250
--------------------------------------------------------------------------------
17,100 Atlantic Richfield Co. 1,885,275
--------------------------------------------------------------------------------
35,000 Chevron Corp. 3,395,000
--------------------------------------------------------------------------------
133,700 Exxon Corp. 8,740,638
--------------------------------------------------------------------------------
5,200 Kerr-McGee Corp. 261,950
--------------------------------------------------------------------------------
3,100 Louisiana Land & Exploration Co. 140,275
--------------------------------------------------------------------------------
14,400* Maxus Energy Corp. 95,400
--------------------------------------------------------------------------------
43,000 Mobil Corp. 3,504,500
--------------------------------------------------------------------------------
32,800 Occidental Petroleum Corp. 606,800
--------------------------------------------------------------------------------
10,400 Oryx Energy Co. 248,300
--------------------------------------------------------------------------------
4,900 Pennzoil Co. $ 280,525
--------------------------------------------------------------------------------
28,100 Phillips Petroleum Co. 906,225
--------------------------------------------------------------------------------
57,700 Royal Dutch Petroleum Co. 6,101,775
--------------------------------------------------------------------------------
9,712 Santa Fe Energy Resource, Inc. 93,478
--------------------------------------------------------------------------------
11,500 Sun Co., Inc. 359,375
--------------------------------------------------------------------------------
27,900 Texaco, Inc. 1,900,687
--------------------------------------------------------------------------------
25,900 Unocal Corp. 757,575
--------------------------------------------------------------------------------
30,800 USX Marathon Group 569,800
-------------------------------------------------------------------------------- ---------------
Total 33,591,141
-------------------------------------------------------------------------------- ---------------
FINANCE--9.7%
--------------------------------------------------------------------------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
11,900 AEtna Life & Casualty Co. 782,425
--------------------------------------------------------------------------------
12,600 Ahmanson (H.F.) & Co. 228,375
--------------------------------------------------------------------------------
4,400 Alexander & Alexander Services, Inc. 90,750
--------------------------------------------------------------------------------
23,400 American General Corp. 687,375
--------------------------------------------------------------------------------
34,162 American International Group, Inc. 3,074,580
--------------------------------------------------------------------------------
36,750 Banc One Corp. 1,410,281
--------------------------------------------------------------------------------
11,300* Bank of Boston Corp. 265,550
--------------------------------------------------------------------------------
38,276 BankAmerica Corp. 1,598,023
--------------------------------------------------------------------------------
8,900 Bankers Trust New York Corp. 705,325
--------------------------------------------------------------------------------
10,500 Barnett Banks, Inc. 439,687
--------------------------------------------------------------------------------
2,800 Beneficial Corp. 214,900
--------------------------------------------------------------------------------
10,500 Boatmen's Bancshares Inc. 311,062
--------------------------------------------------------------------------------
10,900 Capital Holdings Corp. 450,987
--------------------------------------------------------------------------------
19,700 Chase Manhattan Corp. 650,100
--------------------------------------------------------------------------------
27,090 Chemical Banking Corp. 1,083,600
--------------------------------------------------------------------------------
9,400 Chubb Corp. 771,975
--------------------------------------------------------------------------------
7,700 CIGNA Corp. 516,862
--------------------------------------------------------------------------------
40,500* Citicorp $ 1,468,125
--------------------------------------------------------------------------------
6,700* CNA Financial Corp. 556,100
--------------------------------------------------------------------------------
5,900 Continental Corp. 192,487
--------------------------------------------------------------------------------
12,600 Corestates Financial Corp. 352,800
--------------------------------------------------------------------------------
18,321 Dean Witter, Discover & Co. 753,451
--------------------------------------------------------------------------------
19,300 Federal Home Loan Mortgage Corp. 989,125
--------------------------------------------------------------------------------
29,400 Federal National Mortgage Association 2,289,525
--------------------------------------------------------------------------------
8,000 First Fidelity Bancorporation 325,000
--------------------------------------------------------------------------------
8,200 First Interstate Bancorp 476,625
--------------------------------------------------------------------------------
18,100 First Union Corp. 735,312
--------------------------------------------------------------------------------
14,700 Fleet Financial Group, Inc. 461,213
--------------------------------------------------------------------------------
9,100 General RE Corp. 1,053,325
--------------------------------------------------------------------------------
6,900 Golden West Financial Corp. 294,113
--------------------------------------------------------------------------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
FINANCE--CONTINUED
--------------------------------------------------------------------------------
14,200 Great Western Financial Corp. 271,575
--------------------------------------------------------------------------------
10,000 Household International, Inc. 366,250
--------------------------------------------------------------------------------
5,450 Jefferson-Pilot Corp. 280,675
--------------------------------------------------------------------------------
10,100 Lincoln National Corp. 459,550
--------------------------------------------------------------------------------
7,900 Marsh & McLennan Cos., Inc. 643,850
--------------------------------------------------------------------------------
10,700 MBNA Corp. 365,138
--------------------------------------------------------------------------------
6,800 Mellon Bank Corp. 366,350
--------------------------------------------------------------------------------
11,400 Merrill Lynch & Co., Inc. 1,104,375
--------------------------------------------------------------------------------
20,700 Morgan (J.P.) & Co., Inc. 1,477,462
--------------------------------------------------------------------------------
27,446 NationsBank Corp. 1,279,670
--------------------------------------------------------------------------------
17,250 NBD Bancorp., Inc. 541,219
--------------------------------------------------------------------------------
31,300 Norwest Corp. 805,975
--------------------------------------------------------------------------------
25,200 PNC Bank Corp. 724,500
--------------------------------------------------------------------------------
25,233 Primerica Corp. 1,113,406
--------------------------------------------------------------------------------
3,000 Pulte Corp. $ 115,125
--------------------------------------------------------------------------------
6,800 SAFECO Corp. 394,400
--------------------------------------------------------------------------------
11,900 Salomon, Inc. 538,475
--------------------------------------------------------------------------------
48,200 SCEcorp 1,012,200
--------------------------------------------------------------------------------
10,100 Shawmut National Corp. 223,462
--------------------------------------------------------------------------------
4,500 St. Paul Companies, Inc. 421,875
--------------------------------------------------------------------------------
13,500 SunTrust Banks, Inc. 592,312
--------------------------------------------------------------------------------
7,950 Torchmark Corp. 368,681
--------------------------------------------------------------------------------
8,400 Transamerica Corp. 478,800
--------------------------------------------------------------------------------
15,600 Travelers Corp. 549,900
--------------------------------------------------------------------------------
10,650 U.S. Bancorp 262,256
--------------------------------------------------------------------------------
9,100 USF&G Corp. 123,987
--------------------------------------------------------------------------------
2,400 USLIFE Corp. 101,100
--------------------------------------------------------------------------------
18,600 Wachovia Corp. 711,450
--------------------------------------------------------------------------------
6,000 Wells Fargo & Co. 665,250
-------------------------------------------------------------------------------- ---------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
<C> <S> <C>
FINANCE--CONTINUED
--------------------------------------------------------------------------------
Total 39,588,326
-------------------------------------------------------------------------------- ---------------
HEALTH SERVICES--0.3%
--------------------------------------------------------------------------------
8,800* Beverly Enterprises, Inc. 95,700
--------------------------------------------------------------------------------
16,138 Columbia Healthcare Co. 463,968
--------------------------------------------------------------------------------
4,600 Community Psychiatric Centers 64,400
--------------------------------------------------------------------------------
6,150 Manor Care, Inc. 138,375
--------------------------------------------------------------------------------
17,900 National Medical Enterprises, Inc. 201,375
--------------------------------------------------------------------------------
2,400 Shared Medical Systems Corp. 60,000
-------------------------------------------------------------------------------- ---------------
Total 1,023,818
-------------------------------------------------------------------------------- ---------------
HEALTH TECHNOLOGY--6.3%
--------------------------------------------------------------------------------
89,500 Abbott Laboratories, Inc. 2,539,563
--------------------------------------------------------------------------------
7,100 Allergan, Inc. 162,413
--------------------------------------------------------------------------------
8,100* Alza Corp $ 208,575
--------------------------------------------------------------------------------
33,300 American Home Products Corp. 2,081,250
--------------------------------------------------------------------------------
14,600* Amgen, Inc. 666,125
--------------------------------------------------------------------------------
5,600 Bard (C.R.), Inc. 141,400
--------------------------------------------------------------------------------
6,400 Bausch & Lomb, Inc. 332,000
--------------------------------------------------------------------------------
29,800 Baxter International, Inc. 707,750
--------------------------------------------------------------------------------
8,100 Becton, Dickinson & Co. 307,800
--------------------------------------------------------------------------------
12,400* Biomet, Inc. 127,100
--------------------------------------------------------------------------------
55,800 Bristol-Myers Squibb Co. 3,278,250
--------------------------------------------------------------------------------
8,200 IMCERA Group, Inc. 292,125
--------------------------------------------------------------------------------
70,600 Johnson & Johnson 2,974,025
--------------------------------------------------------------------------------
31,500 Lilly (Eli) & Co. 1,704,938
--------------------------------------------------------------------------------
6,200 Medtronic, Inc. 459,575
--------------------------------------------------------------------------------
122,200 Merck and Co., Inc. 3,925,675
--------------------------------------------------------------------------------
34,200 Pfizer, Inc. 2,128,950
--------------------------------------------------------------------------------
21,000 Schering-Plough, Inc. 1,428,000
--------------------------------------------------------------------------------
5,000 St. Jude Medical Inc. 140,000
--------------------------------------------------------------------------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
HEALTH TECHNOLOGY--CONTINUED
--------------------------------------------------------------------------------
23,800 Syntex Corp. 431,375
--------------------------------------------------------------------------------
6,000 United States Surgical Corp. 142,500
--------------------------------------------------------------------------------
18,700 Upjohn Co. 610,088
--------------------------------------------------------------------------------
14,600 Warner-Lambert Co. 1,014,700
-------------------------------------------------------------------------------- ---------------
Total 25,804,177
-------------------------------------------------------------------------------- ---------------
INDUSTRIAL SERVICES--0.9%
--------------------------------------------------------------------------------
15,100 Baker Hughes, Inc. 339,750
--------------------------------------------------------------------------------
18,600 Browning-Ferris Industries Inc. 420,825
--------------------------------------------------------------------------------
8,800 Fluor Corp. 358,600
--------------------------------------------------------------------------------
3,800 Foster Wheeler Corp. 128,725
--------------------------------------------------------------------------------
12,300 Halliburton Co. $ 392,063
--------------------------------------------------------------------------------
2,600 Helmerich & Payne, Inc. 78,000
--------------------------------------------------------------------------------
5,600 McDermott International, Inc. 158,900
--------------------------------------------------------------------------------
3,400 Morrison Knudsen Corp. 79,900
--------------------------------------------------------------------------------
6,500 Rollins Environmental Services, Inc. 34,125
--------------------------------------------------------------------------------
9,000 Rowan Companies, Inc. 85,500
--------------------------------------------------------------------------------
26,100 Schlumberger, Ltd. 1,654,087
--------------------------------------------------------------------------------
1,300 Zurn Industries, Inc. 35,100
-------------------------------------------------------------------------------- ---------------
Total 3,765,575
-------------------------------------------------------------------------------- ---------------
NON-ENERGY MINERALS--1.9%
--------------------------------------------------------------------------------
24,100 Alcan Aluminum Ltd. 494,050
--------------------------------------------------------------------------------
9,500 Aluminum Co. of America 646,000
--------------------------------------------------------------------------------
9,500 Amax, Inc. 212,562
--------------------------------------------------------------------------------
11,200* Armco, Inc. 63,000
--------------------------------------------------------------------------------
4,500 ASARCO, Inc. 82,688
--------------------------------------------------------------------------------
9,800* Bethlehem Steel Corp. 164,150
--------------------------------------------------------------------------------
5,100 Cyprus Minerals Corp. 124,950
--------------------------------------------------------------------------------
12,000 Echo Bay Mines Ltd. 148,500
--------------------------------------------------------------------------------
9,700 Georgia-Pacific Corp. 623,225
--------------------------------------------------------------------------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
NON-ENERGY MINERALS--CONTINUED
--------------------------------------------------------------------------------
14,700 Homestake Mining Co. 282,975
--------------------------------------------------------------------------------
11,800 Inco Ltd. 249,275
--------------------------------------------------------------------------------
3,800* Inland Steel Industries Inc. 128,250
--------------------------------------------------------------------------------
11,800 Louisiana-Pacific Corp. 426,275
--------------------------------------------------------------------------------
7,300 Newmont Mining Corp. 382,338
--------------------------------------------------------------------------------
9,400 Nucor Corp. 509,950
--------------------------------------------------------------------------------
4,600* Owens-Corning Fiberglass Corp. 216,200
--------------------------------------------------------------------------------
7,600 Phelps Dodge Corp. 323,950
--------------------------------------------------------------------------------
8,000 Pioneer Hi Bred International, Inc. 284,000
--------------------------------------------------------------------------------
25,600 Placer Dome, Inc. $ 624,000
--------------------------------------------------------------------------------
6,400 Reynolds Metals Co. 270,400
--------------------------------------------------------------------------------
7,420 USX-U.S. Steel Group 278,250
--------------------------------------------------------------------------------
22,100 Weyerhaeuser Co. 875,713
--------------------------------------------------------------------------------
9,750 Worthington Industries, Inc. 180,375
-------------------------------------------------------------------------------- ---------------
Total 7,591,076
-------------------------------------------------------------------------------- ---------------
PROCESS INDUSTRIES--4.6%
--------------------------------------------------------------------------------
12,300 Air Products & Chemicals, Inc. 513,525
--------------------------------------------------------------------------------
9,700 American Cyanamid Company 528,650
--------------------------------------------------------------------------------
36,901 Archer-Daniels-Midland Co. 848,723
--------------------------------------------------------------------------------
6,300 Avery Dennison Corp. 178,763
--------------------------------------------------------------------------------
3,200 Ball Corp. 82,800
--------------------------------------------------------------------------------
5,500 Bemis Co., Inc. 120,313
--------------------------------------------------------------------------------
4,100 Boise Cascade Corp. 84,050
--------------------------------------------------------------------------------
10,000 Champion International Corp. 293,750
--------------------------------------------------------------------------------
21,700 Corning Inc. 561,487
--------------------------------------------------------------------------------
9,500* Crown Cork & Seal Co., Inc. 366,938
--------------------------------------------------------------------------------
29,500 Dow Chemical Co. 1,637,250
--------------------------------------------------------------------------------
72,900 Du Pont (E.I.) de Nemours 3,480,975
--------------------------------------------------------------------------------
3,400 Ecolab, Inc. 161,075
--------------------------------------------------------------------------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
PROCESS INDUSTRIES--CONTINUED
--------------------------------------------------------------------------------
10,375 Engelhard Corp. 285,313
--------------------------------------------------------------------------------
12,700 Ethyl Corp. 220,662
--------------------------------------------------------------------------------
4,500 Federal Paper Board Co., Inc. 91,125
--------------------------------------------------------------------------------
2,200 First Mississippi Corp. 25,300
--------------------------------------------------------------------------------
3,900* FMC Corp. 191,588
--------------------------------------------------------------------------------
2,800 Goodrich (B.F.) Co. 123,900
--------------------------------------------------------------------------------
10,000 Grace (W.R.) Overseas Development Corp. 377,500
--------------------------------------------------------------------------------
7,700 Great Lakes Chemical Corp. $ 588,087
--------------------------------------------------------------------------------
4,600 Hercules, Inc. 457,700
--------------------------------------------------------------------------------
13,300 International Paper Co. 788,025
--------------------------------------------------------------------------------
8,800 James River Corp. of Virginia 176,000
--------------------------------------------------------------------------------
17,300 Kimberly-Clark Corp. 893,113
--------------------------------------------------------------------------------
6,400 Mead Corp. 262,400
--------------------------------------------------------------------------------
3,000 Millipore Corp. 104,250
--------------------------------------------------------------------------------
12,900 Monsanto Co. 891,713
--------------------------------------------------------------------------------
5,200 Morton International Inc. 494,000
--------------------------------------------------------------------------------
7,500 Nalco Chemical Co. 265,313
--------------------------------------------------------------------------------
5,500 NL Industries Inc. 26,125
--------------------------------------------------------------------------------
12,533 Pall Corp. 260,066
--------------------------------------------------------------------------------
3,100 Potlatch Corp. 136,012
--------------------------------------------------------------------------------
11,400 PPG Industries, Inc. 795,150
--------------------------------------------------------------------------------
14,400 Praxair, Inc. 232,200
--------------------------------------------------------------------------------
7,300 Rohm & Haas Co. 366,825
--------------------------------------------------------------------------------
8,000 Scott Paper Co. 284,000
--------------------------------------------------------------------------------
9,600 Sherwin-Williams Co. 350,400
--------------------------------------------------------------------------------
1,900 Springs Industries, Inc., Cl. A. 71,963
--------------------------------------------------------------------------------
7,708 Stone Container Corp. 54,919
--------------------------------------------------------------------------------
5,900 Temple-Inland Inc. 250,750
--------------------------------------------------------------------------------
7,500 Union Camp Corp. 322,500
--------------------------------------------------------------------------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
PROCESS INDUSTRIES--CONTINUED
--------------------------------------------------------------------------------
16,300 Union Carbide Corp. 321,925
--------------------------------------------------------------------------------
7,200 Westvaco Corp. 239,400
-------------------------------------------------------------------------------- ---------------
Total 18,806,523
-------------------------------------------------------------------------------- ---------------
PRODUCER MANUFACTURING--6.9%
--------------------------------------------------------------------------------
15,200 Allied-Signal, Inc. 1,088,700
--------------------------------------------------------------------------------
4,000 Armstrong World Industries, Inc. $ 185,000
--------------------------------------------------------------------------------
10,900 Caterpillar, Inc. 997,350
--------------------------------------------------------------------------------
3,600 Cincinnati Milacron Inc. 86,400
--------------------------------------------------------------------------------
1,900* Clark Equipment Co. 98,800
--------------------------------------------------------------------------------
12,200 Cooper Industries, Inc. 637,450
--------------------------------------------------------------------------------
3,200 Crane Co. 89,600
--------------------------------------------------------------------------------
1,900 Cummins Engine Co., Inc. 181,213
--------------------------------------------------------------------------------
5,000 Dana Corp. 291,875
--------------------------------------------------------------------------------
9,000 Deere & Co. 695,250
--------------------------------------------------------------------------------
5,100 Dial Corp. (The) 195,713
--------------------------------------------------------------------------------
6,100 Dover Corp. 350,750
--------------------------------------------------------------------------------
14,800 Dresser Industries, Inc. 318,200
--------------------------------------------------------------------------------
7,500 Eaton Corp. 397,500
--------------------------------------------------------------------------------
24,200 Emerson Electric Co. 1,388,475
--------------------------------------------------------------------------------
91,900 General Electric Co. 8,914,300
--------------------------------------------------------------------------------
4,800 General Signal Corp. 169,200
--------------------------------------------------------------------------------
3,700 Giddings & Lewis, Inc. 89,725
--------------------------------------------------------------------------------
2,578 Harnischfeger Industries, Inc. 57,038
--------------------------------------------------------------------------------
14,500 Honeywell, Inc. 487,563
--------------------------------------------------------------------------------
12,100 Illinois Tool Works, Inc. 452,238
--------------------------------------------------------------------------------
11,300 Ingersoll-Rand Co. 412,450
--------------------------------------------------------------------------------
12,800 ITT Corp. 1,192,000
--------------------------------------------------------------------------------
4,300 Johnson Controls, Inc. 235,425
--------------------------------------------------------------------------------
4,900* Litton Industries, Inc. 325,238
--------------------------------------------------------------------------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
PRODUCER MANUFACTURING--CONTINUED
--------------------------------------------------------------------------------
16,400 Masco Industries, Inc. 518,650
--------------------------------------------------------------------------------
23,400 Minnesota Mining & Manufacturing Co. 2,427,750
--------------------------------------------------------------------------------
1,000 NACCO Industries, Inc., Cl. A 43,125
--------------------------------------------------------------------------------
5,300 National Service Industries, Inc. $ 127,200
--------------------------------------------------------------------------------
2,770* Navistar International Corp. 75,482
--------------------------------------------------------------------------------
3,600 PACCAR, Inc. 243,000
--------------------------------------------------------------------------------
5,200 Parker-Hannifin Corp. 178,100
--------------------------------------------------------------------------------
17,000 Pitney Bowes, Inc. 667,250
--------------------------------------------------------------------------------
4,400 Pittston Co. 111,650
--------------------------------------------------------------------------------
4,500 Raychem Corp. 173,250
--------------------------------------------------------------------------------
1,500 SPX Corp. 25,875
--------------------------------------------------------------------------------
6,000 Teledyne, Inc. 161,250
--------------------------------------------------------------------------------
18,200 Tenneco, Inc. 928,200
--------------------------------------------------------------------------------
9,400 Textron, Inc. 525,225
--------------------------------------------------------------------------------
2,000 Thomas & Betts Corp. 120,000
--------------------------------------------------------------------------------
3,300 Timken Co. 106,425
--------------------------------------------------------------------------------
3,100 Trinova Corp. 96,100
--------------------------------------------------------------------------------
6,900 TRW, Inc. 464,888
--------------------------------------------------------------------------------
5,000 Tyco Laboratories, Inc. 233,750
--------------------------------------------------------------------------------
3,880* Varity Corp. 149,380
--------------------------------------------------------------------------------
37,700 Westinghouse Electric Corp. 546,650
--------------------------------------------------------------------------------
11,200 Xerox Corp. 887,600
-------------------------------------------------------------------------------- ---------------
Total 28,148,253
-------------------------------------------------------------------------------- ---------------
RETAIL TRADE--6.0%
--------------------------------------------------------------------------------
27,200 Albertsons, Inc. 710,600
--------------------------------------------------------------------------------
7,600 American Stores Co. 307,800
--------------------------------------------------------------------------------
22,000 Blockbuster Entertainment Corp. 624,250
--------------------------------------------------------------------------------
8,400 Brunos, Inc. 90,300
--------------------------------------------------------------------------------
11,000 Charming Shoppes, Inc. 155,375
--------------------------------------------------------------------------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
RETAIL TRADE--CONTINUED
--------------------------------------------------------------------------------
10,300 Circuit City Stores, Inc. 288,400
--------------------------------------------------------------------------------
7,700 Dayton-Hudson Corp. $ 535,150
--------------------------------------------------------------------------------
12,100 Dillard Department Stores, Inc., Cl. A 444,675
--------------------------------------------------------------------------------
15,600 GAP, Inc. (The) 555,750
--------------------------------------------------------------------------------
2,500* Genesco, Inc. 16,250
--------------------------------------------------------------------------------
6,400 Giant Foods, Inc., Cl. A 154,400
--------------------------------------------------------------------------------
4,100 Great Atlantic & Pacific Tea Co., Inc. 108,650
--------------------------------------------------------------------------------
8,200 Harcourt General, Inc. 360,800
--------------------------------------------------------------------------------
48,100 Home Depot, Inc. 1,905,962
--------------------------------------------------------------------------------
43,900 K Mart Corp. 1,075,550
--------------------------------------------------------------------------------
11,400* Kroger Co. 223,725
--------------------------------------------------------------------------------
39,100 Limited, Inc. 835,762
--------------------------------------------------------------------------------
2,200 Longs Drug Stores Corp. 74,800
--------------------------------------------------------------------------------
7,900 Lowe's Companies, Inc. 368,338
--------------------------------------------------------------------------------
26,700 May Department Stores Co. 1,181,475
--------------------------------------------------------------------------------
11,300 Melville Corp. 474,600
--------------------------------------------------------------------------------
4,000 Mercantile Stores Co., Inc. 143,000
--------------------------------------------------------------------------------
8,800 Nordstrom, Inc. 305,800
--------------------------------------------------------------------------------
25,300 Penney (J.C.) Co., Inc. 1,315,600
--------------------------------------------------------------------------------
6,500 Pep Boys-Manny Moe & Jack 160,875
--------------------------------------------------------------------------------
3,400 Premark International, Inc. 260,100
--------------------------------------------------------------------------------
9,500 Rite Aid Corp. 154,375
--------------------------------------------------------------------------------
37,700 Sears, Roebuck & Co. 2,163,038
--------------------------------------------------------------------------------
6,865 Tandy Corp. 280,606
--------------------------------------------------------------------------------
7,900 TJX Co's., Inc. 240,950
--------------------------------------------------------------------------------
31,400* Toys "R" Us, Inc. 1,259,925
--------------------------------------------------------------------------------
13,200 Walgreen Co. 561,000
--------------------------------------------------------------------------------
247,600 Wal-Mart Stores, Inc. 6,530,450
--------------------------------------------------------------------------------
8,200 Winn-Dixie Stores, Inc. $ 475,600
--------------------------------------------------------------------------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
RETAIL TRADE--CONTINUED
--------------------------------------------------------------------------------
14,100 Woolworth (F.W.) Co. 319,012
-------------------------------------------------------------------------------- ---------------
Total 24,662,943
-------------------------------------------------------------------------------- ---------------
TECHNOLOGY--0.3%
--------------------------------------------------------------------------------
51,900 WMX Technologies, Inc. 1,278,038
-------------------------------------------------------------------------------- ---------------
TECHNOLOGY SERVICES--0.7%
--------------------------------------------------------------------------------
2,600 Autodesk, Inc. 111,800
--------------------------------------------------------------------------------
15,300 Automatic Data Processing, Inc. 816,637
--------------------------------------------------------------------------------
17,900 Computer Associates International, Inc. 680,200
--------------------------------------------------------------------------------
4,500* Lotus Development Corp. 218,250
--------------------------------------------------------------------------------
15,300* Oracle Systems Corp. 906,525
-------------------------------------------------------------------------------- ---------------
Total 2,733,412
-------------------------------------------------------------------------------- ---------------
TRANSPORTATION--1.7%
--------------------------------------------------------------------------------
8,100* AMR Corp. 568,012
--------------------------------------------------------------------------------
9,600 Burlington Northern, Inc. 540,000
--------------------------------------------------------------------------------
3,800* Consolidated Freightways, Inc. 82,650
--------------------------------------------------------------------------------
8,600 Consolidated Rail Corp. 534,275
--------------------------------------------------------------------------------
11,200 CSX Corp. 907,200
--------------------------------------------------------------------------------
5,400 Delta Air Lines, Inc. 313,200
--------------------------------------------------------------------------------
5,900* Federal Express Corp. 398,250
--------------------------------------------------------------------------------
15,000 Norfolk Southern Corp. 993,750
--------------------------------------------------------------------------------
4,200 Roadway Service, Inc. 252,000
--------------------------------------------------------------------------------
19,725* Santa Fe Southern Pacific Corp. 372,309
--------------------------------------------------------------------------------
2,600* UAL (Allegis) Corp. 395,200
--------------------------------------------------------------------------------
22,100 Union Pacific Corp. 1,397,825
--------------------------------------------------------------------------------
6,200* USAir Group, Inc. 89,125
--------------------------------------------------------------------------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
TRANSPORTATION--CONTINUED
--------------------------------------------------------------------------------
3,000 Yellow Freight Systems, Inc. $ 69,000
-------------------------------------------------------------------------------- ---------------
Total 6,912,796
-------------------------------------------------------------------------------- ---------------
UTILITIES--13.2%
--------------------------------------------------------------------------------
19,900 American Electric Power Co., Inc. 766,150
--------------------------------------------------------------------------------
145,078 American Telephone & Telegraph Co. 8,360,120
--------------------------------------------------------------------------------
29,200 Ameritech Corp. 2,474,700
--------------------------------------------------------------------------------
13,200 Arkla, Inc. 107,250
--------------------------------------------------------------------------------
15,550 Baltimore Gas & Electric Co. 406,244
--------------------------------------------------------------------------------
46,800 Bell Atlantic Corp. 2,977,650
--------------------------------------------------------------------------------
53,400 BellSouth Corp. 3,350,850
--------------------------------------------------------------------------------
17,300 Carolina Power & Light Co. 547,113
--------------------------------------------------------------------------------
20,300 Central & SouthWest Corp. 662,287
--------------------------------------------------------------------------------
11,200 Coastal Corp. 306,600
--------------------------------------------------------------------------------
5,400* Columbia Gas System, Inc. 141,750
--------------------------------------------------------------------------------
23,000 Commonwealth Edison Co. 692,875
--------------------------------------------------------------------------------
25,200 Consolidated Edison Co. 875,700
--------------------------------------------------------------------------------
10,000 Consolidated Natural Gas Co. 483,750
--------------------------------------------------------------------------------
15,800 Detroit Edison Co. 531,275
--------------------------------------------------------------------------------
17,750 Dominion Resources, Inc. 856,437
--------------------------------------------------------------------------------
22,100 Duke Power Co. 966,875
--------------------------------------------------------------------------------
2,400 Eastern Enterprises 65,100
--------------------------------------------------------------------------------
25,600 Enron Corp. 867,200
--------------------------------------------------------------------------------
7,200 Enserch Corp. 143,100
--------------------------------------------------------------------------------
18,900 Entergy Corp. 737,100
--------------------------------------------------------------------------------
20,200 FPL Group, Inc. 795,375
--------------------------------------------------------------------------------
101,700 GTE Corp. 4,042,575
--------------------------------------------------------------------------------
14,000 Houston Industries, Inc. 677,250
--------------------------------------------------------------------------------
57,100 MCI Communications Corp. $ 1,627,350
--------------------------------------------------------------------------------
15,300 Niagara Mohawk Power Corp. 336,600
--------------------------------------------------------------------------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
UTILITIES--CONTINUED
--------------------------------------------------------------------------------
6,000 NICOR, Inc. 169,500
--------------------------------------------------------------------------------
7,100 Northern States Power Co. (Minn.) 315,062
--------------------------------------------------------------------------------
44,400 NYNEX Corp. 1,875,900
--------------------------------------------------------------------------------
16,400 Ohio Edison Co. 395,650
--------------------------------------------------------------------------------
2,900 ONEOK, Inc. 61,625
--------------------------------------------------------------------------------
9,000 Pacific Enterprises 236,250
--------------------------------------------------------------------------------
46,600 Pacific Gas & Electric Co. 1,689,250
--------------------------------------------------------------------------------
44,700 Pacific Telesis Group 2,452,912
--------------------------------------------------------------------------------
29,400 PacifiCorp 576,975
--------------------------------------------------------------------------------
12,700 Panhandle Eastern Corp. 301,625
--------------------------------------------------------------------------------
3,700 Peoples Energy Corp. 117,475
--------------------------------------------------------------------------------
23,800 Philadelphia Electric Co. 743,750
--------------------------------------------------------------------------------
6,100 PSI Resources, Inc. 162,412
--------------------------------------------------------------------------------
26,000 Public Service Enterprises Group, Inc. 877,500
--------------------------------------------------------------------------------
9,400 Sonat, Inc. 292,575
--------------------------------------------------------------------------------
34,400 Southern Co. 1,543,700
--------------------------------------------------------------------------------
64,400 Southwestern Bell Corp. 2,849,700
--------------------------------------------------------------------------------
36,600 Sprint Corp. 1,317,600
--------------------------------------------------------------------------------
24,000 Texas Utilities Co. 1,080,000
--------------------------------------------------------------------------------
4,300 Transco Energy Co. 69,337
--------------------------------------------------------------------------------
44,800 U.S. West, Inc. 2,245,600
--------------------------------------------------------------------------------
11,000 Union Electric Co. 459,250
--------------------------------------------------------------------------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
UTILITIES--CONTINUED
--------------------------------------------------------------------------------
5,500 Williams Companies, Inc. (The) $ 326,562
-------------------------------------------------------------------------------- ---------------
Total 53,959,486
-------------------------------------------------------------------------------- ---------------
TOTAL COMMON STOCKS (IDENTIFIED COST $324,616,238) 353,637,482
-------------------------------------------------------------------------------- ---------------
FOREIGN STOCKS--0.0%
- ------------------------------------------------------------------------------------------------
BASIC INDUSTRY--0.0%
--------------------------------------------------------------------------------
3,528 Hanson PLC (IDENTIFIED COST $42,425) 71,001
-------------------------------------------------------------------------------- ---------------
SHORT-TERM U.S. GOVERNMENT OBLIGATIONS--0.5%
- ------------------------------------------------------------------------------------------------
$ 2,000,000 United States Treasury Bills, 2.91%, 12/30/93 1,990,462
--------------------------------------------------------------------------------
200,000 United States Treasury Bills, 2.93%, 12/30/93 199,039
-------------------------------------------------------------------------------- ---------------
TOTAL SHORT-TERM U.S. GOVERNMENT OBLIGATIONS
(AT AMORTIZED COST) (NOTE 2A) 2,189,501
-------------------------------------------------------------------------------- ---------------
**REPURCHASE AGREEMENT--12.8%
- ------------------------------------------------------------------------------------------------
52,455,000 J.P. Morgan Securities, Inc., 2.99%, dated 10/29/93, due 11/1/93
(AT AMORTIZED COST) (NOTE 2B) 52,455,000
-------------------------------------------------------------------------------- ---------------
TOTAL INVESTMENTS (IDENTIFIED COST $379,303,164) $ 408,352,984\
-------------------------------------------------------------------------------- ---------------
</TABLE>
* Non-income producing securities.
** The repurchase agreement is fully collateralized by U.S. government
obligations. The investment in the repurchase agreement is through
participation in a joint account with other Federated Investors funds.
\ The cost of investments for federal tax purposes amounts to $379,303,164. The
net unrealized appreciation of investments on a federal tax cost basis
amounts to $29,049,820, which is comprised of $46,000,959 appreciation and
$16,951,139 depreciation at October 31, 1993.
Note: The categories of investments are shown as a percentage of net assets
($409,738,745) at October 31, 1993.
(See Notes which are an integral part of the Financial Statements)
MAX-CAP FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1993
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
- -------------------------------------------------------------------------------
Investment in repurchase agreement, at amortized cost (Note 2B) $ 52,455,000
- -------------------------------------------------------------------------------
Investments in other securities, at value 355,897,984
- ------------------------------------------------------------------------------- ---------------
Total investments, at amortized cost and value (Note 2A)
(identified and tax cost; $379,303,164) $ 408,352,984
- ------------------------------------------------------------------------------------------------
Cash 4,383
- ------------------------------------------------------------------------------------------------
Receivable for Fund shares sold 937,861
- ------------------------------------------------------------------------------------------------
Dividends and interest receivable 643,938
- ------------------------------------------------------------------------------------------------
Receivable for daily variation margin on open futures contracts (Note 2F) 270
- ------------------------------------------------------------------------------------------------
Deferred expenses (Note 2D) 2,502
- ------------------------------------------------------------------------------------------------ ---------------
Total assets 409,941,938
- ------------------------------------------------------------------------------------------------
LIABILITIES:
- ------------------------------------------------------------------------------------------------
Payable for Fund shares redeemed 56,677
- -------------------------------------------------------------------------------
Accrued expenses and other liabilities 146,516
- ------------------------------------------------------------------------------- ---------------
Total liabilities 203,193
- ------------------------------------------------------------------------------------------------ ---------------
NET ASSETS for 33,478,499 shares of beneficial interest outstanding $ 409,738,745
- ------------------------------------------------------------------------------------------------ ---------------
NET ASSETS CONSIST OF:
- ------------------------------------------------------------------------------------------------
Paid-in capital $ 368,781,860
- ------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and futures contracts (Note 2F) 29,580,330
- ------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and futures contracts (Note 2F) 11,081,011
- ------------------------------------------------------------------------------------------------
Undistributed net investment income 295,544
- ------------------------------------------------------------------------------------------------ ---------------
Total $ 409,738,745
- ------------------------------------------------------------------------------------------------ ---------------
NET ASSET VALUE, Offering Price and Redemption Price Per Share:
Institutional Shares (net assets of $407,246,022 / 33,274,826 shares of beneficial interest
outstanding) $12.24
- ------------------------------------------------------------------------------------------------ ---------------
Institutional Service Shares (net assets of $2,492,723 / 203,673 shares of beneficial interest
outstanding) $12.24
- ------------------------------------------------------------------------------------------------ ---------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
MAX-CAP FUND
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1993
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- --------------------------------------------------------------------------------------------------
Dividends $ 8,709,104
- --------------------------------------------------------------------------------------------------
Interest 1,561,355
- -------------------------------------------------------------------------------------------------- --------------
Total investment income (Note 2G) 10,270,459
- --------------------------------------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------------------------------------------------
Management fee (Note 5) $ 1,062,278
- -----------------------------------------------------------------------------------
Trustees' fees 11,038
- -----------------------------------------------------------------------------------
Custodian, transfer and dividend disbursing agent fees and expenses 180,020
- -----------------------------------------------------------------------------------
Fund share registration costs 69,282
- -----------------------------------------------------------------------------------
Auditing fees 21,285
- -----------------------------------------------------------------------------------
Legal fees 8,155
- -----------------------------------------------------------------------------------
Printing and postage 25,466
- -----------------------------------------------------------------------------------
Insurance premiums 11,174
- -----------------------------------------------------------------------------------
Distribution service fees (Note 5) 770
- -----------------------------------------------------------------------------------
Taxes 5,535
- -----------------------------------------------------------------------------------
Miscellaneous 19,628
- ----------------------------------------------------------------------------------- -------------
Total expenses 1,414,631
- -----------------------------------------------------------------------------------
Deduct--Waiver of management fee (Note 5) 321,440
- ----------------------------------------------------------------------------------- -------------
Net expenses 1,093,191
- -------------------------------------------------------------------------------------------------- --------------
Net investment income 9,177,268
- -------------------------------------------------------------------------------------------------- --------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES CONTRACTS:
- --------------------------------------------------------------------------------------------------
Net realized gain on investments (identified cost basis) 7,044,485
- --------------------------------------------------------------------------------------------------
Net realized gain on futures contracts (identified cost basis) 4,042,044
- --------------------------------------------------------------------------------------------------
Net change in unrealized appreciation 26,567,254
- -------------------------------------------------------------------------------------------------- --------------
Net realized and unrealized gain on investments and futures contracts 37,653,783
- -------------------------------------------------------------------------------------------------- --------------
Change in net assets resulting from operations $ 46,831,051
- -------------------------------------------------------------------------------------------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
MAX-CAP FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
1993 1992
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------------------------
Net investment income $ 9,177,268 $ 6,378,125
- -----------------------------------------------------------------------------
Net realized gain on investment transactions and futures contracts
($11,617,039, and $16,581,916 net gains, respectively,
as computed for federal tax purposes) 11,086,529 16,581,916
- -----------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) on investments
and futures contracts 26,567,254 (4,485,958)
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets resulting from operations 46,831,051 18,474,083
- ----------------------------------------------------------------------------- ---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 3)--
- -----------------------------------------------------------------------------
Dividends to shareholders from net investment income
- -----------------------------------------------------------------------------
Institutional Shares (9,255,446) (6,439,459)
- -----------------------------------------------------------------------------
Institutional Service Shares (14,290) --
- -----------------------------------------------------------------------------
Distributions to shareholders from net realized gain on investment
transactions and futures contracts
- -----------------------------------------------------------------------------
Institutional Shares (18,292,038) (1,919,998)
- -----------------------------------------------------------------------------
Institutional Service Shares -- --
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets resulting from distributions to shareholders (27,561,774) (8,359,457)
- ----------------------------------------------------------------------------- ---------------- ----------------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 4)--
- -----------------------------------------------------------------------------
Proceeds from sale of shares 290,371,076 274,966,492
- -----------------------------------------------------------------------------
Net asset value of shares issued to shareholders electing
to receive payment of dividends in Fund shares 8,873,310 2,036,368
- -----------------------------------------------------------------------------
Cost of shares redeemed (218,388,643) (122,031,847)
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets from fund share transactions 80,855,743 154,971,013
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets 100,125,020 165,085,639
- -----------------------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------------------
Beginning of period 309,613,725 144,528,086
- ----------------------------------------------------------------------------- ---------------- ----------------
End of period (including undistributed net investment
income of $295,544 and $388,012, respectively) $ 409,738,745 $ 309,613,725
- ----------------------------------------------------------------------------- ---------------- ----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
MAX-CAP FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1993
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Federated Index Trust (the "Trust") is registered under the Investment Company
Act of 1940, as amended, as a diversified, open-end, management investment
company with three portfolios. The financial statements included herein present
only those of Max-Cap Fund (the "Fund"). 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.
Max-Cap Fund provides 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 the
Investment Company Act of 1940 Rule 12b-1. Under the Plan, the Fund may pay
Federated Securities Corp. (the "distributor") a fee at an annual rate up to .30
of 1% of the average net asset value of Institutional Service Shares to finance
any activity which is principally intended to result in the sale of
Institutional Service Shares. The Institutional Service Shares of the Fund were
declared effective on August 30, 1993.
(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. The
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS--Equity portfolio securities listed on the New York
Stock Exchange or any other national securities exchange are valued at the
last sale price or, if there has been no sale on that day, at the mean
between bid and asked prices. Short-term obligations are ordinarily valued
at the mean between bid and asked prices as furnished by an independent
pricing service. Short-term obligations with maturities of sixty days or
less are valued at amortized cost, which approximates value. All other
securities are appraised at fair value as determined in good faith by the
Board of Trustees.
B. REPURCHASE AGREEMENTS--It is the policy of the Trust to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System or to have segregated within the
custodian bank's vault, all securities held as collateral in support of
repurchase agreement investments. Additionally, procedures have been
established by the Trust to monitor, on a daily basis, the market value of
each repurchase agreement's underlying 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 manager to be creditworthy pursuant to guidelines established
by the Trustees. Risks may arise from the potential inability of
MAX-CAP FUND
- --------------------------------------------------------------------------------
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. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Internal Revenue Code available to regulated investment companies and to
distribute to shareholders each year all of its net income, including any
net realized gains on investments. Accordingly, no provision for federal
tax is necessary.
D. DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering the shares, have been deferred and are being
amortized using the straight-line method over a period of five years from
the Fund's commencement date.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery 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. FUTURES CONTRACTS--Upon entering into a stock index futures contract with a
broker, the Fund is required to deposit in a segregated account an amount
("initial margin") of cash or U.S. government securities equal to a
percentage of the contract value. The Fund agrees to receive from or pay
the broker an amount of cash equal to a specific dollar amount times the
difference between the closing value of the stock index and the price at
which the contract was made. On a daily basis, the value of a stock index
futures contract is determined and any difference between such value and
the original futures contract value is reflected in the "daily variation
margin" account. Daily variation margin adjustments, arising from this
"marking to market" process, are recorded by the Fund as unrealized gains
or losses.
The Fund may decide to close its position on a contract at any time prior
to the contract's expiration. When a contract is closed, the Fund
recognizes a realized gain or loss. Risks of entering into futures
contracts include the possibility that there may be an illiquid market and
that a change in the value of the contract may not correlate with changes
in the value of the underlying securities.
G. INCOME--Dividend income is recorded on the ex-dividend date. 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. Dividends to
shareholders and capital gain distributions, if any, are recorded on the
ex-dividend date.
MAX-CAP FUND
- --------------------------------------------------------------------------------
H. OTHER--Investment transactions are accounted for as of the trade date of
the transaction.
(3) DIVIDENDS AND DISTRIBUTIONS
Dividends are declared and paid quarterly to all shareholders invested in the
Fund on the record date. Dividends are paid from the net investment income of
the Fund. Net investment income consists of all dividends or interest received
by the Fund less its expenses. Capital gains realized by the Fund, if any, are
distributed at least once every twelve months.
(4) 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>
YEAR ENDED OCTOBER 31,
1993 1992
INSTITUTIONAL SHARES SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------- ------------- ---------------- ------------- ----------------
<S> <C> <C> <C> <C>
Shares outstanding, beginning of period 26,604,714 $ 287,926,116 13,056,654 $ 132,955,103
- ---------------------------------------------
Shares sold 24,571,558 287,913,472 24,052,533 274,966,492
- ---------------------------------------------
Shares issued to shareholders in payment of
dividends declared 764,603 8,868,865 180,492 2,036,368
- ---------------------------------------------
Shares redeemed (18,666,049) (218,365,814) (10,684,965) (122,031,847)
- --------------------------------------------- ------------- ---------------- ------------- ----------------
Shares outstanding, end of period 33,274,826 $ 366,342,639 26,604,714 $ 287,926,116
- --------------------------------------------- ------------- ---------------- ------------- ----------------
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED
OCTOBER 31, 1993*
INSTITUTIONAL SERVICE SHARES SHARES AMOUNT
- -------------------------------------------------------------------------------------- --------- -------------
<S> <C> <C> <C> <C>
Shares outstanding, beginning of period -- $ --
- --------------------------------------------------------------------------------------
Shares sold 205,208 2,457,604
- --------------------------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 372 4,445
- --------------------------------------------------------------------------------------
Shares redeemed (1,907) (22,829)
- -------------------------------------------------------------------------------------- --------- -------------
Shares outstanding, end of period 203,673 $ 2,439,220
- -------------------------------------------------------------------------------------- --------- -------------
* For the period from August 30, 1993 (date of initial public investment) to October 31, 1993.
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
(5) MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Federated Management, the Fund's Manager ("Manager"), receives for its services
an annual management fee equal to .30 of 1% of the Fund's average daily net
assets. Under the Management Contract, which provides for the voluntary waiver
of fee by the Manager, the Manager will voluntarily waive some or all of the
management fee. The Manager can terminate this voluntary waiver of some or all
of its management fee at any time in its sole discretion. For the fiscal year
ended October 31, 1993, the Fund's Manager earned a management fee of $1,062,278
of which $321,440 was voluntarily waived.
The Fund has adopted a Distribution Plan (the "Plan") for its Institutional
Service Shares pursuant to Rule 12b-1 under the Investment Company Act of 1940.
The Fund reimburses Federated Securities Corp., the principal distributor, from
the assets of the Institutional Service Shares of the Fund, for fees it paid
which relate to the distribution and administration of the Fund's Institutional
Service Shares. The Plan provides that the Fund may incur distribution expenses
up to 0.30% of the average daily net assets of the Institutional Service Shares,
annually, to pay commissions, maintenance fees and to compensate the
distributor. For the period from August 30, 1993 (the inception date of
Institutional Service Shares) to October 31, 1993 FSC earned $770 in
distribution services fees.
Organization expenses of $24,763 were borne initially by the Manager. The Fund
has agreed to pay the Manager, at an annual rate .005 of 1% of average daily net
assets for organization expenses until expenses borne by the Manager are
reimbursed. During the year ended October 31, 1993, the Fund paid $16,156
pursuant to this agreement. This commitment will expire five years from July 2,
1990, the date the Trust's registration statement became effective.
Certain of the Officers and Trustees of the Fund are Officers and Directors of
the above corporations.
(6) INVESTMENT TRANSACTIONS
Purchases, and sales of investments, (excluding short-term obligations) for the
year ended October 31, 1993, were as follows:
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------------------
PURCHASES-- $ 104,688,271
- ------------------------------------------------------------------------------------------------- ---------------
SALES-- $ 49,818,628
- ------------------------------------------------------------------------------------------------- ---------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
(7) FINANCIAL FUTURES CONTRACTS
At October 31, 1993, open positions in stock index futures contracts were as
follows:
<TABLE>
<CAPTION>
UNREALIZED
EXPIRATION OPEN CONTRACTS POSITION APPRECIATION
<S> <C> <C> <C>
December 1993 232 S&P 500 Index Futures Long $530,510
</TABLE>
At October 31, 1993, the Fund has deposited in a segregated account, $2,200,000
of U.S. Treasury Bills, to cover margin requirements on open futures contracts.
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
To the Trustees and Shareholders of
Federated Index Trust:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Max-Cap Fund (a portfolio of Federated Index
Trust), as of October 31, 1993, and the related statement of operations for the
year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and financial highlights (see pages 2 and 18 of
this prospectus) for the periods presented. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1993, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Max-Cap Fund of Federated Index Trust at October 31, 1993, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for the
periods presented in conformity with generally accepted accounting principles.
ERNST & YOUNG
Pittsburgh, Pennsylvania
December 10, 1993
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Max-Cap Fund Federated Investors Tower
Institutional Service Shares Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Manager
Federated Management Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Sub-Manager
ANB Investment Management One North LaSalle Street
and Trust Co. Chicago, Illinois 60690
- ---------------------------------------------------------------------------------------------------------------------
Custodian
State Street Bank and P.O. Box 8602
Trust Company Boston, Massachusetts 02266-8602
- ---------------------------------------------------------------------------------------------------------------------
Transfer Agent, and Dividend Disbursing Agent
Federated Services Company Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Legal Counsel
Houston, Houston & Donnelly 2510 Centre City Tower
Pittsburgh, Pennsylvania 15222
- ---------------------------------------------------------------------------------------------------------------------
Legal Counsel
Dickstein, Shapiro & Morin 2101 L Street, N.W.
Washington, D.C. 20037
- ---------------------------------------------------------------------------------------------------------------------
Independent Auditors
Ernst & Young One Oxford Centre
Pittsburgh, Pennsylvania 15219
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
MAX-CAP FUND
(A PORTFOLIO OF FEDERATED INDEX TRUST)
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
An Open-End, Diversified
Management Investment Company
Prospectus dated December 31, 1993
0032104A-ISS (12/93)
MAX-CAP FUND
(A PORTFOLIO OF FEDERATED INDEX TRUST)
INSTITUTIONAL SHARES
PROSPECTUS
The Institutional Shares of Max-Cap Fund (the "Fund") offered by this prospectus
represent interests in the Fund, which is an investment portfolio in Federated
Index Trust (the "Trust"), an open-end, management investment company (a mutual
fund). The investment objective of the Fund is to seek to provide investment
results that correspond to the aggregate price and dividend performance of
publicly traded common stocks as represented by the Standard & Poor's 500
Composite Stock Price Index (the "Index"). The Fund is neither affiliated with
nor sponsored by the Standard & Poor's Corporation.
THE INSTITUTIONAL SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR
OBLIGATIONS OF ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD,
OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE SHARES INVOLVES INVESTMENT
RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
This prospectus contains the information you should read and know before you
invest in the Fund. Keep this prospectus for future reference.
The Fund has also filed a Combined Statement of Additional Information for
Institutional Shares and Institutional Service Shares dated December 31, 1993,
with the Securities and Exchange Commission. The information contained in the
Combined Statement of Additional Information is incorporated by reference into
this prospectus. You may request a copy of the Combined Statement of Additional
Information free of charge by calling 1-800-235-4669. To obtain other
information or to make inquiries about the Fund, contact the Fund at the address
listed in the back of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus dated December 31, 1993
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Acceptable Investments 4
U.S. Government Securities 4
Repurchase Agreements 5
Variable Rate U.S. Government
Securities 5
Cash Items 5
Stock Index Futures and Options 5
Index Participation Contracts 6
Lending of Portfolio Securities 6
When-Issued and Delayed Delivery
Transactions 6
Investment Limitations 7
FEDERATED INDEX TRUST INFORMATION 7
- ------------------------------------------------------
Management of the Trust 7
Board of Trustees 7
Fund's Manager 7
Management Fees 8
Manager's Background 8
Sub-Manager 8
Sub-Management Fees 8
Sub-Manager's Background 9
Distribution of Institutional Shares 9
Administration of the Fund 9
Administrative Services 9
Custodian 9
Transfer Agent, and Dividend
Disbursing Agent 9
Legal Counsel 9
Independent Auditors 9
Brokerage Transactions 9
Expenses of the Fund and Institutional
Shares 10
NET ASSET VALUE 10
- ------------------------------------------------------
INVESTING IN INSTITUTIONAL SHARES 10
- ------------------------------------------------------
Share Purchases 10
By Wire 11
By Mail 11
Minimum Investment Required 11
What Shares Cost 11
Subaccounting Services 11
Certificates and Confirmations 12
Dividends 12
Capital Gains 12
REDEEMING INSTITUTIONAL SHARES 12
- ------------------------------------------------------
Telephone Redemption 12
Written Requests 12
Signatures 13
Receiving Payment 13
Redemption Before Purchase
Instruments Clear 13
Accounts with Low Balances 13
SHAREHOLDER INFORMATION 13
- ------------------------------------------------------
Voting Rights 13
Massachusetts Partnership Law 14
TAX INFORMATION 14
- ------------------------------------------------------
Federal Income Tax 14
Pennsylvania Corporate and
Personal Property Taxes 14
PERFORMANCE INFORMATION 15
- ------------------------------------------------------
OTHER CLASSES OF SHARES 15
- ------------------------------------------------------
Financial Highlights--
Institutional Service Shares 16
STANDARD & POOR'S CORPORATION 17
- ------------------------------------------------------
FINANCIAL STATEMENTS 18
- ------------------------------------------------------
REPORT OF ERNST & YOUNG,
INDEPENDENT AUDITORS 47
- ------------------------------------------------------
ADDRESSES Inside Back Cover
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price).................................................................... None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price).................................................................... None
Deferred Sales Load (as a percentage of original
purchase price or redemption proceeds, as applicable).................................................. None
Redemption Fee (as a percentage of amount redeemed, if applicable)....................................... None
Exchange Fee............................................................................................. None
ANNUAL INSTITUTIONAL SHARES OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver)(1)......................................................................... 0.21%
12b-1 Fee................................................................................................ None
Other Expenses........................................................................................... 0.10%
Total Institutional Shares Operating Expenses(2)................................................ 0.31%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The Manager can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.30%.
(2) The Total Institutional Shares Operating Expenses would have been 0.40%
absent the voluntary waiver of a portion of the management fee.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF INSTITUTIONAL SHARES OF THE
FUND WILL BEAR, EITHER DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF
THE VARIOUS COSTS AND EXPENSES, SEE "FEDERATED INDEX TRUST INFORMATION" AND
"INVESTING IN INSTITUTIONAL SHARES." Wire-transferred redemptions of less than
$5,000 may be subject to additional fees.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000
investment assuming (1) 5% annual return and
(2) redemption at the end of each time period. As noted in
the table above, the Fund charges no redemption fees.................... $3 $10 $17 $39
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The information set forth in the foregoing table and example relates only to
Institutional Shares of the Fund. The Fund offers another class of shares called
Institutional Service Shares. Institutional Shares and Institutional Service
Shares are subject to certain of the same expenses; however, Institutional
Service Shares are subject to a 12b-1 fee of .30%. See "Other Classes of
Shares."
MAX-CAP FUND
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Ernst & Young, Independent Auditors, on page
47.
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
1993 1992 1991 1990*
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.64 $ 11.07 $ 8.60 $ 10.00
- --------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------
Net investment income 0.30 0.32 0.37 0.12
- --------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments 1.29 0.71 2.46 (1.43)
- -------------------------------------------------------------- --------- --------- --------- ---------
Total from investment operations 1.59 1.03 2.83 (1.31)
- --------------------------------------------------------------
LESS DISTRIBUTIONS
- --------------------------------------------------------------
Dividends to shareholders from net investment income (0.30) (0.34) (0.36) (0.09)
- --------------------------------------------------------------
Distributions to shareholders from net realized gain on
investment transactions (0.69) (0.12) -- --
- -------------------------------------------------------------- --------- --------- --------- ---------
Total distributions (0.99) (0.46) (0.36) (0.09)
- -------------------------------------------------------------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 12.24 $ 11.64 $ 11.07 $ 8.60
- -------------------------------------------------------------- --------- --------- --------- ---------
TOTAL RETURN** 14.35% 9.51% 33.31% (14.46)%(b)
- --------------------------------------------------------------
RATIO TO AVERAGE NET ASSETS
- --------------------------------------------------------------
Expenses 0.31% 0.30% 0.24% 0.00%(c)
- --------------------------------------------------------------
Net investment income 2.60% 2.92% 3.74% 5.19%(c)
- --------------------------------------------------------------
Expense waiver/reimbursement(a) 0.09% 0.18% 0.45% 0.94%(c)
- --------------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------------
Net assets, end of period (000 omitted) $407,246 $309,614 $144,528 $25,129
- --------------------------------------------------------------
Portfolio turnover rate 13% 46% 6% 0%
- --------------------------------------------------------------
</TABLE>
* Reflects operations for the period from July 5, 1990 (date of initial public
offering) to October 31, 1990. For the period from the start of business June
26, 1990 to July 4, 1990, net investment income per share aggregating $0.02
per share ($155) was distributed to the Fund's manager. Such distribution
represented the net income of the Fund prior to the initial public offering
of Fund shares which commenced on July 5, 1990.
** 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 5).
(b) Cumulative total return.
(c) Computed on an annualized basis.
Further information about the Fund's performance is contained in the Fund's
annual report dated December 31, 1993, which can be obtained free of charge.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated January 30, 1990. The Declaration of Trust permits the Trust to
offer separate series of shares of beneficial interest representing interests in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. As of the date of this prospectus, the Board of
Trustees ("Trustees") has established two classes of shares of the Fund, known
as Institutional Shares ("Shares") and Institutional Service Shares. This
prospectus relates only to Institutional Shares of the Fund. Institutional
Shares are designed primarily for institutions investing on behalf of their
customers. A minimum initial investment of $25,000 over a 90-day period is
required.
Shares are currently sold and redeemed at net asset value without a sales charge
imposed by the Fund.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide investment results that
correspond to the aggregate price and dividend performance of publicly-traded
common stocks, by duplicating the composition of the Index. The investment
objective cannot be changed without approval of shareholders. The Fund's ability
to duplicate the Index will depend partly on the size and timing of cash flows
into and out of the Fund. The Fund's performance is expected to closely mirror
the performance of the Index. An investment in the Fund presents risks similar
to those of investing in a portfolio comprised of the securities of the
companies in the Index. While there is no assurance that the Fund will achieve
its investment objective, it endeavors to do so by following the investment
policies described in this prospectus.
INVESTMENT POLICIES
The investment policies described below may be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material changes
in these policies become effective.
The Fund pursues its investment objective by attempting to duplicate the
investment results of the Index, while minimizing transaction costs and other
expenses. The Fund will attempt to achieve a correlation between the performance
of its portfolio and that of the Index of at least 0.95 of 1% or better; a
figure of 1.00 would represent perfect correlation. The Fund will normally be
invested in substantially all of the stocks that comprise the Index. Under
normal circumstances, at least 80% of the value of the Fund's total assets will
be invested in stocks represented in the Index. However, the Fund is not
required to sell securities if the 80% investment level changes due to increases
or decreases in the market value of portfolio securities.
The Index consists of 500 selected common stocks, most of which are listed on
the New York Stock Exchange. The Standard & Poor's Corporation ("S&P")
designates the stocks to be included in the Index on a statistical basis. A
particular stock's weighting in the Index is based on its relative total market
value; that is, its market price per share times the number of shares
outstanding. From time to time, S&P may add or delete stocks from the Index.
Inclusion of a particular stock in the Index in no way implies an opinion by S&P
as to its investment attractiveness, nor is S&P a sponsor or in any way
affiliated with the Fund. The Fund utilizes the Index as the standard
performance benchmark because it
represents approximately 70% of the total market value of all common stocks. In
addition, it is familiar to investors, and is recognized as a barometer of
common stock investment returns.
The Fund will be managed passively, in that the traditional management functions
of economic, financial, and market analysis will not be undertaken. Furthermore,
a company's adverse financial circumstance will not trigger its elimination from
the Fund's portfolio, unless the company's stock is removed from the Index by
S&P. The Fund is managed by utilizing a computer program that identifies which
stocks should be purchased or sold in order to duplicate, as much as possible,
the composition of the Index. The Fund will include a stock in its investment
portfolio in the order of the stock's weighting in the Index, starting with the
heaviest-weighted stock. Thus, the proportion of Fund assets invested in such
stock is nearly identical to the percentage of the particular stock represented
in the Index. On occasion, so as to respond to changes in the Index's
composition, as well as corporate mergers, tender offers, and other
circumstances, adjustments will be made in the Fund's portfolio. However, it is
anticipated that these adjustments will occur infrequently, and the costs will
be minimized. As a result, portfolio turnover is expected to be well below that
encountered in other investment company portfolios. Therefore, the accompanying
costs, including accounting costs, brokerage fees, custodial expenses, and
transfer taxes, are expected to be relatively low. While the cash flows into and
out of the Fund will impact the Fund's portfolio turnover rate and the Fund's
ability to replicate the Index's performance, investment adjustments will be
made, as practicably as possible, to account for these circumstances.
The Fund believes that indexing, as described above, constitutes a reasonable
and effective method of replicating percentage changes in the Index. While the
Fund will not duplicate the Index's performance precisely, it is anticipated
that the Fund's performance will closely resemble the performance of the Index.
Factors such as the size of the Fund's portfolio, the size and timing of cash
flows into and out of the Fund, and changes in the securities markets and the
Index itself, will account for the difference.
In order to accommodate cash flows, the Fund may enter into stock index futures
contracts and options. The Fund may purchase futures contracts and options
solely to maintain adequate liquidity to meet its redemption demands. This will
allow the Fund to simultaneously maximize the level of the Fund assets which are
tracking the performance of the Index. The Fund can sell futures contracts and
options in order to close out a previously established position. The Fund will
not enter into any stock index futures contract for the purpose of speculation.
ACCEPTABLE INVESTMENTS. The Fund will invest primarily in common stocks
comprising the Index. In addition, the Fund may hold cash reserves which may be
invested in the following:
U.S. GOVERNMENT SECURITIES. The Fund is permitted to invest in U.S.
government securities which are either issued or guaranteed by the U.S.
government, its agencies or instrumentalities. These securities include,
but are not limited to:
direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds; and
notes, bonds, and discount notes of U.S. government agencies or
instrumentalities, such as Federal Home Loan Banks, the Federal National
Mortgage Association, the Federal Home Loan Mortgage Corporation, the
Federal Farm Credit System, and the Student Loan Marketing Association.
REPURCHASE AGREEMENTS. The U.S. government securities and other securities
in which the Fund invests may be purchased pursuant to repurchase
agreements. Repurchase agreements are arrangements in which banks,
broker/dealers, and other recognized financial institutions sell U.S.
government securities or other securities to the Fund and agree at the time
of sale to repurchase them at a mutually agreed upon time and price. To the
extent that the original seller does not repurchase the securities from the
Fund, the Fund could receive less than the repurchase price on any sale of
such securities.
VARIABLE RATE U.S. GOVERNMENT SECURITIES. Some of the short-term U.S.
government securities the Fund may purchase carry variable interest rates.
These securities have a rate of interest subject to adjustment at least
annually. This adjusted interest rate is ordinarily tied to some objective
standard, such as the 91-day U.S. Treasury bill rate.
CASH ITEMS. The Fund may also invest in cash items. The Fund considers
cash items to be instruments issued by a U.S. branch of a domestic bank
having capital, surplus, and undivided profits in excess of $100,000,000 at
the time of the investment.
The Fund may also invest in commercial paper rated A-1 by S&P, Prime-1 by
Moody's Investors Service, Inc., or F-1 by Fitch Investors Service, Inc.
STOCK INDEX FUTURES AND OPTIONS. The Fund may utilize stock index futures
contracts, options, and options on futures contracts, subject to the
limitation that the value of these futures contracts and options will not
exceed 20% of the Fund's total assets. Also, the Fund will not purchase
options to the extent that more than 5% of the value of the Fund's total
assets would be invested in premiums on open put option positions. These
futures contracts and options will be used to handle cash flows into and
out of the Fund and to potentially reduce transactional costs, since
transactional costs associated with futures and options contracts can be
lower than costs stemming from direct investments in stocks.
There are several risks accompanying the utilization of futures contracts
to effectively anticipate market transactions. First, positions in futures
contracts may be closed only on an exchange or board of trade that
furnishes a secondary market for such contracts. While the Fund plans to
utilize futures contracts only if there exists an active market for such
contracts, there is no guarantee that a liquid market will exist for the
contracts at a specified time. Furthermore, because, by definition, futures
contracts look to projected price levels in the future and not to current
levels of valuation, market circumstances may result in there being a
discrepancy between the price of the stock index future and the movement in
the stock index. The absence of a perfect price correlation between the
futures contract and its underlying stock index could stem from investors
choosing to close futures contracts by offsetting transactions, rather than
satisfying additional margin requirements. This could result in a
distortion of the relationship between the index and futures market. In
addition, because the futures market imposes less burdensome margin
requirements than the securities market, an increased amount of
participation by speculators in the futures market could result in price
fluctuations.
In view of these considerations, the Fund will comply with the following
restrictions when purchasing and selling futures contracts. First, the Fund
will not participate in futures transactions if the sum of its initial
margin deposits on open contracts will exceed 5% of the market value of the
Fund's total assets, after taking into account the unrealized profits and
losses on those contracts it has entered into. Second, the Fund will not
enter into these contracts for speculative purposes. Third, since the Fund
does not constitute a commodity pool, it will not market itself as such,
nor serve as a vehicle for trading in the commodities futures or commodity
options markets. In this regard, the Fund will disclose to all prospective
investors the limitations on its futures and
options transactions, and will make clear that these transactions are
entered into only for bona fide hedging purposes or other permissible
purposes pursuant to regulations promulgated by the Commodity Futures
Trading Commission ("CFTC"). Also, the Fund intends to claim an exclusion
from registration as a commodity pool operator under the regulations
promulgated by the CFTC.
INDEX PARTICIPATION CONTRACTS. In addition to investing in stock index
futures contracts, options and options on futures contracts, the Fund may
also participate in the purchasing and selling of index participation
contracts based on the Index. The Fund will utilize index participation
contracts to aid in the management of cash flows into and out of the Fund
and not for speculative purposes. These contracts provide the equivalent of
a position in the stocks of the Index, where each stock is represented in
the same proportion as it is represented in the Index. Unlike futures
contracts, positions in these instruments may last indefinitely, with no
expiration date and will pay dividends implied by the underlying stocks in
the Index. Generally, the value of an index participation contract will
rise and fall as the value of the Index rises and falls. Index
participation contracts have lower transaction costs than those associated
with the purchase and sale of individual stocks. The Fund will invest in
index participation contracts only if there exists an active market for
such contracts.
The value of these contracts, together with the value of the Fund's
investment in stock index futures contracts, options and options on futures
contracts will not exceed 20% of the Fund's total assets. The Fund's use of
these investments will be to maintain adequate liquidity to meet redemption
requests, while simultaneously maximizing the level of Fund assets which
are tracking the performance of the Index.
LENDING OF PORTFOLIO SECURITIES. The Fund may lend its portfolio securities on
a short-term basis or long-term basis, up to one-third of the value of its total
assets to broker/dealers, banks, or other institutional borrowers of securities.
The Fund will only enter into loan arrangements with broker/dealers, banks or
other institutions which the managers have determined are creditworthy under
guidelines established by the Trustees. The Fund will receive collateral in the
form of cash or U.S. government securities equal to at least 100% of the value
of the securities loaned.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. _The Fund may purchase short-term
U.S. government securities on a when-issued or delayed delivery basis. These
transactions are arrangements in which the Fund purchases securities with
payment and delivery scheduled for a future time. The Fund engages in
when-issued and delayed delivery transactions only for the purpose of acquiring
portfolio securities consistent with the Fund's investment objective and
policies, not for investment leverage. In when-issued and delayed delivery
transactions, the Fund relies on the seller to complete the transaction. The
seller's failure to complete the transaction may cause the Fund to miss a price
or yield considered to be advantageous.
INVESTMENT LIMITATIONS
The Fund will not:
borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a money market instrument for at
least a percentage of its cash value with an agreement to buy it back on
a set date) except, under certain circumstances, the Fund may borrow up
to one-third of the value of its total assets and pledge up to 10% of the
value of those assets to secure such borrowings.
The above investment limitation cannot be changed without shareholder approval.
The following investment limitations, however, may be changed by the Trustees
without shareholder approval. Shareholders will be notified before any material
change in these policies becomes effective.
The Fund will not:
invest more than 5% of its total assets in securities of issuers that
have records of less than three years of continuous operations; or
invest more than 15% of its net assets in securities that are illiquid.
FEDERATED INDEX TRUST INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Board of
Trustees is responsible for managing the business affairs of the Trust and for
exercising all of the powers of the Trust except those reserved for the
shareholders. The Executive Committee of the Board of Trustees handles the
Trustees' responsibilities between meetings of the Trustees.
FUND'S MANAGER. _Federated Management serves as the Fund's manager (the
"Manager"). The Trust has entered into a management contract (the "Management
Contract") with the Manager, which, in turn, has entered into a sub-management
contract (the "Sub-Management Contract") with ANB Investment Management and
Trust Company ("ANB" or the "Sub-Manager" (ANB and the Manager are collectively
referred to as "Managers"). It is the Manager's responsibility to select the
Sub-Manager, subject to the review and approval of the Trustees and to review
and evaluate the Sub-Manager's continued performance. The Manager is also
responsible for providing administrative services to the Fund.
Subject to the supervision and direction of the Trustees, the Manager provides
to the Fund investment management evaluation services principally by performing
initial due diligence on the Sub-Manager for the Fund and thereafter monitoring
and evaluating the performance of the Fund's Sub-Manager through quantitative
and qualitative analyses. In addition, the Manager conducts periodic in-person,
telephonic and written consultations with the Sub-Manager. In initially
evaluating the Sub-Manager, the Manager considered, among other factors, the
Sub-Manager's level of expertise; relative performance over a minimum period of
five years; level of efficiency; level of adherence to investment discipline or
philosophy; personnel, facilities and financial strength; and quality of service
and client communications. On an ongoing basis, the Manager is responsible for
communicating performance expectations and evaluations to the Sub-Manager;
monitoring tracking error; monitoring and analyzing the appropriate futures
contracts to purchase and the futures holdings of the Fund as a percentage of
Fund assets; monitoring market timing in the Fund; discussing with the
Sub-Manager which method of indexing to use; and ultimately recommending to the
Trustees whether the Sub-Management Contract should be renewed, modified or
terminated. The Manager provides written reports to the Trustees regarding the
results of its evaluation and monitoring functions. In addition, the Manager is
responsible for providing the Fund with administrative services, including, but
not limited to, shareholder servicing and certain legal and accounting services.
The Manager is also responsible for conducting all operations of the Fund,
except those operations contracted to the Sub-Manager, custodian, transfer agent
and dividend disbursing agent. As described below, the Manager receives an
annual fee from the Fund for performing its responsibilities under the
Management Contract.
MANAGEMENT FEES. _The Fund's Manager receives an annual management fee
equal to .30 of 1% of the Fund's average daily net assets. Under the
Management Contract, which provides for the voluntary waiver of the
management fee by the Manager, the Manager will voluntarily waive some or
all of the management fee. The Manager can terminate this voluntary waiver
of some or all of its management fee at any time in its sole discretion.
The Manager has also undertaken to reimburse the Fund for operating
expenses in excess of limitations established by certain states.
MANAGER'S BACKGROUND. Federated Management, a Delaware business trust
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940. It is a subsidiary of Federated Investors.
All of the Class A (voting) shares of Federated Investors are owned by a
trust, the trustees of which are John F. Donahue, Chairman and Trustee of
Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J.
Christopher Donahue, who is President and Trustee of Federated Investors.
Federated Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services
to a number of investment companies. Total assets under management or
administration by these and other subsidiaries of Federated Investors are
approximately $70 billion. Federated Investors, which was founded in 1956
as Federated Investors, Inc., develops and manages mutual funds primarily
for the financial industry. Federated Investors' track record of
competitive performance and its disciplined, risk averse investment
philosophy serve approximately 3,500 client institutions nationwide.
Through these same client institutions, individual shareholders also have
access to this same level of investment expertise.
SUB-MANAGER. Under the terms of the Sub-Management Contract between the Manager
and ANB, ANB serves as the Fund's Sub-Manager. The Sub-Manager will develop,
maintain and run the computer program designed to determine which securities
will be purchased and sold so as to replicate the composition of the Index to
the extent feasible, and, subject to the Manager's oversight, has complete
discretion to purchase and sell portfolio securities for the Fund within the
Fund's investment objective, restrictions and policies.
SUB-MANAGEMENT FEES. For its services under the Sub-Management Contract,
ANB receives an annual fee from the Manager equal to .05 of 1% of the first
$100 million of net assets under management, .02 of 1% over $100 million
but less than $200 million, and .01 of 1% of net assets over and above $200
million, on an annualized basis. This fee is paid by the Manager out of its
resources and is not an incremental Fund expense. No performance or
incentive fees are paid to the Sub-Manager.
SUB-MANAGER'S BACKGROUND. ANB, incorporated in the State of Illinois on
July 1, 1988, is a registered investment adviser under the Investment
Advisers Act of 1940. ANB is a wholly-owned subsidiary of American National
Bank and Trust Company of Chicago, which, in turn, is an indirect
wholly-owned subsidiary of First Chicago Corporation. It serves as
investment adviser principally to corporate defined benefit and defined
contribution plans which have, as of September 30, 1993, placed
approximately $18 billion in assets with ANB. Since 1973, when American
National Bank and Trust Company of Chicago introduced its first commingled
equity index fund, ANB has developed and managed a family of equity and
bond index funds in which some 390 nationwide non-financial institution
clients invest. In total, ANB manages 62 commingled/common trust funds.
Also, since 1990, ANB has served as Sub-Manager for Mini-Cap Fund and Mid-
Cap Fund which are also portfolios of the Trust.
DISTRIBUTION OF INSTITUTIONAL SHARES
Federated Securities Corp. is the principal distributor for the Fund. It is a
Pennsylvania corporation organized on November 14, 1969, and is the principal
distributor for a number of investment companies. Federated Securities Corp. is
a subsidiary of Federated Investors. Federated Securities Corp. pays a licensing
fee to the Standard & Poor's Corporation for the right to use the Index in
connection with its sub-managment activities for the Fund. Federated Securities
Corp. is not affiliated with the Standard & Poor's Corporation.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Administrative Services, Inc., a subsidiary
of Federated Investors, provides the manager with the administrative personnel
and services necessary to provide shareholder servicing and certain legal and
accounting services.
CUSTODIAN. State Street Bank and Trust Company ("State Street Bank"), Boston,
Massachusetts, is custodian for the securities and cash of the Fund.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. _Federated Services Company,
Pittsburgh, Pennsylvania, is transfer agent for the shares of the Fund, and
dividend disbursing agent for the Fund.
LEGAL COUNSEL. Legal counsel is provided by Houston, Houston & Donnelly,
Pittsburgh, Pennsylvania, and Dickstein, Shapiro & Morin, Washington, D.C.
INDEPENDENT AUDITORS. The independent auditors for the Fund are Ernst & Young,
Pittsburgh, Pennsylvania.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the managers look for prompt execution of the order at a favorable
price. In working with dealers, the managers will generally utilize those who
are recognized dealers in specific portfolio instruments, except when a better
price and execution of the order can be obtained elsewhere. In selecting among
firms believed to meet these criteria, the managers may give consideration to
those firms which have sold or are selling shares of the Fund and other funds
distributed by Federated Securities Corp. The managers make decisions on
portfolio transactions and select brokers and dealers subject to review by the
Trustees.
EXPENSES OF THE FUND AND INSTITUTIONAL SHARES
Holders of Shares pay their allocable portion of Fund and Trust expenses.
The Trust expenses for which holders of Shares pay their allocable portion
include, but are not limited to: the cost of organizing the Trust and continuing
its existence; registering the Trust with federal and state securities
authorities; Trustees' fees; auditors' fees; the cost of meetings of Trustees;
legal fees of the Trust; association membership dues; and such non-recurring and
extraordinary items as may arise.
The Fund expenses for which holders of Shares pay their allocable portion
include, but are not limited to: registering the Fund and Shares of the Fund;
investment advisory services; taxes and commissions; custodian fees; insurance
premiums; auditors' fees; and such non-recurring and extraordinary items as may
arise.
At present, no expenses are allocated to the Shares as a class. However, the
Trustees reserves the right to allocate certain other expenses to holders of
Shares as it deems appropriate ("Class Expenses"). In any case, Class Expenses
would be limited to transfer agent fees as identified by the transfer agent as
attributable to holders of Shares; printing and postage expenses related to
preparing and distributing materials such as shareholder reports, prospectuses
and proxies to current shareholders; registration fees paid to the Securities
and Exchange Commission and registration fees paid to state securities
commissions; expenses related to administrative personnel and services as
required to support holders of Shares; legal fees relating solely to Shares; and
Trustees' fees incurred as a result of issues relating solely to Shares.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund's net asset value per Share fluctuates. It is determined by adding the
interest of the Shares in the market value of all securities and other assets of
the Fund, subtracting the interest of the Shares in the liabilities of the Fund
and those attributable to Shares, and dividing the remainder by the total number
of Shares outstanding. The net asset value for Shares may exceed that of
Institutional Service Shares due to the variance in daily net income realized by
each class. Such variance will reflect only accrued net income to which the
shareholders of a particular class are entitled.
INVESTING IN INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
SHARE PURCHASES
Shares are sold on days on which the New York Stock Exchange is open. Shares of
the Fund may be purchased either by wire or mail. To purchase Shares of the
Fund, open an account by calling Federated Securities Corp. Information needed
to establish the account will be taken over the telephone. The Fund reserves the
right to reject any purchase request.
BY WIRE. To purchase Shares of the Fund by Federal Reserve wire, call the Fund
to place an order. Shareholders have until 4:00 p.m. (Boston time) to call the
Fund for settlement on the next business day. However, in order to maximize the
Fund's ability to track the Index, shareholders are urged to transmit purchase
requests prior to 2:00 p.m. (Boston time). The order is considered received
immediately. Payment by federal funds must be received before 4:00 p.m. (Boston
time) on the next business day following the order. Federal funds should be
wired as follows: State Street Bank and Trust Company, Boston, Massachusetts;
Attention: EDGEWIRE; For Credit to: Federated Index Trust, Max-Cap
Fund--Institutional Shares; Fund Number (this number can be found on the account
statement or by contacting the Fund); Group Number or Order Number; Nominee or
Institution Name; ABA Number 011000028.
BY MAIL. To purchase Shares of the Fund by mail, send a check made payable to
Max-Cap Fund--
Institutional Shares to the Fund's transfer agent, Federated Services Company,
c/o State Street Bank and Trust Company, P.O. Box 8602, Boston, Massachusetts
02266-8602. Orders by mail are considered received after payment by check is
converted by State Street Bank into federal funds. This is normally the next
business day after State Street Bank receives the check.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in the Fund is $25,000. However, an account may
be opened with a smaller amount as long as the $25,000 minimum is reached within
90 days. An investor's minimum investment will be calculated by combining all
accounts that the institution maintains with the Fund.
WHAT SHARES COST
Shares are sold at their net asset value next determined after an order is
received. There is no sales charge imposed by the Fund.
The net asset value is determined at 4:00 p.m. (Boston time), Monday through
Friday, except on: (i) days on which there are not sufficient changes in the
value of the Fund's portfolio securities that its net asset value might be
materially affected; (ii) days during which no Shares are tendered for
redemption and no orders to purchase Shares are received; and (iii) the
following holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
SUBACCOUNTING SERVICES
Institutions are encouraged to open single master accounts. However, certain
institutions may wish to use the transfer agent's subaccounting system to
minimize their internal recordkeeping requirements. The transfer agent charges a
fee based on the level of subaccounting services rendered. Institutions holding
Shares in a fiduciary, agency, custodial, or similar capacity may charge or pass
through subaccounting fees as part of or in addition to normal trust or agency
account fees. They may also charge fees for other services provided which may be
related to the ownership of Shares. This prospectus should, therefore, be read
together with any agreement between the customer and the institution with regard
to the services provided, the fees charged for those services, and any
restrictions and limitations imposed.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company, c/o maintains a
share account for each shareholder. Share certificates are not issued unless
requested by contacting the Fund.
Detailed confirmations of each purchase or redemption are sent to each
shareholder. Quarterly confirmations are sent to report dividends paid during
the quarter.
DIVIDENDS
Dividends are declared and paid quarterly to all shareholders invested in the
Fund on the record date. Unless shareholders request cash payments by writing to
the Fund, dividends are automatically reinvested in additional Shares on payment
dates at the ex-dividend date net asset value without a sales charge.
CAPITAL GAINS
Capital gains realized by the Fund, if any, will be distributed at least once
every 12 months.
REDEEMING INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
The Fund redeems Shares at their net asset value next determined after the Fund
receives the redemption request. Redemptions will be made on days on which the
Fund computes its net asset value. Redemption requests must be received in
proper form and can be made by telephone request or written request.
TELEPHONE REDEMPTION
Shareholders may redeem their Shares by telephoning the Fund before 4:00 p.m.
(Boston time). However, in order to maximize the Fund's ability to track the
Index, shareholders are urged to telephone the Fund prior to 2:00 p.m. (Boston
time). The proceeds will normally be wired the following business day, but in no
event more than seven days, to the shareholder's account at a domestic
commercial bank that is a member of the Federal Reserve System. If at any time
the Fund shall determine it necessary to terminate or modify this method of
redemption, shareholders would be promptly notified. An authorization form
permitting State Street Bank or the Fund to accept telephone requests must first
be completed. Authorization forms and information on this service are available
from Federated Securities Corp. Telephone redemption instructions may be
recorded.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "Written Requests," should be considered.
If reasonable procedures are not followed by the Fund, it may be liable for
losses due to unauthorized or fraudulent telephone instructions.
WRITTEN REQUESTS
Shares may also be redeemed by sending a written request to the Fund. Call the
Fund for specific instructions before redeeming by letter. The shareholder will
be asked to provide in the request his name, the Fund name, his account number,
and the share or dollar amount requested. If share certificates have been
issued, they must be properly endorsed and should be sent by registered or
certified mail with the written request.
SIGNATURES. Shareholders requesting a redemption of $50,000 or more, a
redemption of any amount to be sent to an address other than that on record with
the Fund, or a redemption payable other than to the shareholder of record must
have signatures on written redemption requests guaranteed by:
a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund ("BIF"), which is administered by the Federal Deposit
Insurance Corporation ("FDIC");
a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;
a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund ("SAIF"), which is administered
by the FDIC; or
any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions
that are members of a signature guarantee program. The Fund and its transfer
agent reserve the right to amend these standards at any time without notice.
RECEIVING PAYMENT. Normally, a check for the proceeds is mailed within one
business day, but in no event more than seven days, after receipt of a proper
written redemption request.
REDEMPTION BEFORE PURCHASE INSTRUMENTS CLEAR
When Shares are purchased by check, the proceeds from the redemption of those
Shares are not available, and the Shares may not be exchanged, until the Fund or
its agents are reasonably certain that the purchase check has cleared, which
could take up to ten calendar days.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $25,000. This
requirement does not apply, however, if the balance falls below $25,000 because
of changes in the Fund's net asset value.
Before Shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each Share of the Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights except that, in matters
affecting only a particular fund or class, only shares of that Fund or class are
entitled to vote. As a Massachusetts business trust, the Trust is not required
to hold annual shareholder meetings. Shareholder approval will be sought only
for certain changes in the Trust's or the Fund's operation and for the election
of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders shall be called by the Trustees upon the
written request of shareholders owning at least 10% of the outstanding shares of
all series of the Trust.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for acts or obligations of the Trust on behalf
of the Fund. To protect shareholders of the Fund, the Trust has filed legal
documents with Massachusetts that expressly disclaim the liability of
shareholders of the Fund for such acts or obligations of the Trust. These
documents require notice of this disclaimer to be given in each agreement,
obligation, or instrument that the Trust enters into on behalf of the Fund.
In the unlikely event a shareholder of the Fund is held personally liable for
the Trust's obligations on behalf of the Fund, the Trust is required to use the
property of the Fund to protect or compensate the shareholder. On request, the
Trust will defend any claim made and pay any judgment against a shareholder for
any act or obligation of the Trust on behalf of the Fund. Therefore, financial
loss
resulting from liability as a shareholder of the Fund will occur only if the
Trust cannot meet its obligations to indemnify shareholders and pay judgments
against them from the assets of the Fund.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code applicable to regulated investment companies and to
receive the special tax treatment afforded to such companies.
The Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by the
Trust's other portfolios, if any, will not be combined for tax purposes with
those realized by the Fund.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions, including capital gains distributions,
received. This applies whether dividends and distributions are received in cash
or as additional shares. Distributions representing long-term capital gains, if
any, will be taxable to shareholders as long-term capital gains no matter how
long the shareholders have held their shares.
PENNSYLVANIA CORPORATE AND PERSONAL PROPERTY TAXES. In the opinion of Houston,
Houston & Donnelly, counsel to the Trust:
neither the Trust nor the Fund is subject to Pennsylvania corporate or
personal property taxes; and
Fund shares may be subject to personal property taxes imposed by
counties, municipalities, and school districts in Pennsylvania to the
extent that the portfolio securities in the Fund would be subject to such
taxes if owned directly by residents of those jurisdictions.
Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time the Fund advertises its total return and yield for Shares.
Total return represents the change, over a specified period of time, in the
value of an investment in Shares of the Fund after reinvesting all income and
capital gain distributions. It is calculated by dividing that change by the
initial investment and is expressed as a percentage.
The yield of Shares of the Fund is calculated by dividing the net investment
income per share (as defined by the Securities and Exchange Commission) earned
by the Shares over a thirty-day period by the offering price per share of the
Shares on the last day of the period. This number is then annualized using
semi-annual compounding. The yield does not necessarily reflect income actually
earned by the Shares and, therefore, may not correlate to the dividends or other
distributions paid to shareholders.
Shares are sold without any sales load or other similar non-recurring charges.
Total return and yield will be calculated separately for Institutional Shares
and Institutional Service Shares. Because Institutional Service Shares are
subject to a 12b-1 fee, the total return and yield for Institutional Shares for
the same period will exceed that of Institutional Service Shares.
From time to time, the Fund may advertise its performance using certain
reporting services and/or compare its performance to certain indices.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
Institutional Service Shares are sold at net asset value and are subject to a
minimum initial investment of $25,000. Institutional Service Shares are
distributed pursuant to a 12b-1 Plan adopted by the Trust whereby the
distributor is paid a fee of .30 of 1% of the Institutional Service Shares'
average daily net assets.
Financial institutions and brokers providing sales and/or administrative
services may receive different compensation depending upon which class of shares
of the Fund is sold.
The amount of dividends payable to Institutional Shares will exceed that of
Institutional Service Shares by the difference between Class Expenses and
distribution expenses borne by shares of each respective class.
The stated advisory fee is the same for both classes of shares.
MAX-CAP FUND
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
Reference is made to the Report of Ernst & Young, Independent Auditors, on page
47.
<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31,
1993*
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.12
- -------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------------
Net investment income 0.07
- -------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 0.12
- ------------------------------------------------------------------------------------------------- ---------------
Total from investment operations 0.19
- -------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- -------------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (0.07)
- ------------------------------------------------------------------------------------------------- ---------------
NET ASSET VALUE, END OF PERIOD $ 12.24
- ------------------------------------------------------------------------------------------------- ---------------
TOTAL RETURN** 1.70%(b)
- -------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------------------------------------------------------------
Expenses 0.61%(c)
- -------------------------------------------------------------------------------------------------
Net investment income 1.52%(c)
- -------------------------------------------------------------------------------------------------
Expense waiver/reimbursement(a) 0.09%(c)
- -------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $ 2,493
- -------------------------------------------------------------------------------------------------
Portfolio turnover rate 13%
- -------------------------------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from August 30, 1993 (date of initial
public investment) to October 31, 1993.
** 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 5).
(b)_ Cumulative total return.
(c) Computed on an annualized basis.
Further information about the Fund's performance is contained in the Fund's
annual report dated December 31, 1993, which can be obtained free of charge.
(See Notes which are an integral part of the Financial Statements)
STANDARD & POOR'S CORPORATION
- --------------------------------------------------------------------------------
"Standard & Poor's," "S&P," "S&P 500," "Standard & Poor's 500," and "500" are
trademarks of Standard & Poor's Corporation and have been licensed for use by
Federated Securities Corp.
The Fund is not sponsored, endorsed, sold or promoted by or affiliated with,
Standard & Poor's Corporation.
MAX-CAP FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1993
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--86.3%
- ------------------------------------------------------------------------------------------------
COMMERCIAL SERVICES--1.4%
--------------------------------------------------------------------------------
5,100 Alco Standard Corp. $ 233,325
--------------------------------------------------------------------------------
52,300 American Express Co. 1,686,675
--------------------------------------------------------------------------------
8,900 Deluxe Corp. 318,175
--------------------------------------------------------------------------------
16,700 Donnelley (R.R.) & Sons Co. 486,388
--------------------------------------------------------------------------------
10,700 Dow Jones & Co., Inc. 381,188
--------------------------------------------------------------------------------
4,000 Fleming Companies, Inc. 123,000
--------------------------------------------------------------------------------
5,600 Grainger (W.W.), Inc. 305,900
--------------------------------------------------------------------------------
3,600 Handleman Co. 44,100
--------------------------------------------------------------------------------
3,500 Harland (John H.) Co. 84,437
--------------------------------------------------------------------------------
8,100 Interpublic Group Cos., Inc. 250,088
--------------------------------------------------------------------------------
5,300 McGraw-Hill, Inc. 393,525
--------------------------------------------------------------------------------
4,300 McKesson Corp. 229,512
--------------------------------------------------------------------------------
10,700 Moore Corp. Ltd. 224,700
--------------------------------------------------------------------------------
2,100 National Intergroup, Inc. 32,287
--------------------------------------------------------------------------------
4,700 Ogden Corp. 112,800
--------------------------------------------------------------------------------
6,250 Safety-Kleen Corp. 85,938
--------------------------------------------------------------------------------
7,700 Super Valu Stores, Inc. 259,875
--------------------------------------------------------------------------------
20,000 Sysco Corp. 572,500
-------------------------------------------------------------------------------- ---------------
Total 5,824,413
-------------------------------------------------------------------------------- ---------------
COMMUNICATION--0.3%
--------------------------------------------------------------------------------
22,200 McCaw Cellular Communications, Cl. A 1,182,150
-------------------------------------------------------------------------------- ---------------
CONSUMER DURABLES--4.1%
--------------------------------------------------------------------------------
7,900 American Greetings Corp., Cl. A 230,088
--------------------------------------------------------------------------------
1,538 Bassett Furniture Industries, Inc. 46,509
--------------------------------------------------------------------------------
9,000 Black & Decker Corp. 180,000
--------------------------------------------------------------------------------
1,600 Briggs & Stratton Corp. $ 139,800
--------------------------------------------------------------------------------
10,300 Brunswick Corp. 160,938
--------------------------------------------------------------------------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
CONSUMER DURABLES--CONTINUED
--------------------------------------------------------------------------------
3,400 Centex Corp. 150,875
--------------------------------------------------------------------------------
37,800 Chrysler Corp. 2,116,800
--------------------------------------------------------------------------------
9,000 Cooper Tire & Rubber Co. 195,750
--------------------------------------------------------------------------------
35,300 Eastman Kodak Co. 2,223,900
--------------------------------------------------------------------------------
6,300 Echlin, Inc. 204,750
--------------------------------------------------------------------------------
2,200 Fedders USA, Inc. 13,750
--------------------------------------------------------------------------------
4,900 Fleetwood Enterprises, Inc. 110,862
--------------------------------------------------------------------------------
53,000 Ford Motor Co. 3,279,375
--------------------------------------------------------------------------------
76,200 General Motors Corp. 3,629,025
--------------------------------------------------------------------------------
13,400 Genuine Parts Co. 507,525
--------------------------------------------------------------------------------
15,700 Goodyear Tire & Rubber Co. 702,575
--------------------------------------------------------------------------------
9,400 Hasbro, Inc. 340,750
--------------------------------------------------------------------------------
4,900 Jostens, Inc. 94,937
--------------------------------------------------------------------------------
3,700 Kaufman & Broad, Inc. 73,075
--------------------------------------------------------------------------------
10,362 Mattel, Inc. 300,498
--------------------------------------------------------------------------------
11,500 Maytag Corp. 179,687
--------------------------------------------------------------------------------
8,500 Newell Co. 346,375
--------------------------------------------------------------------------------
2,100 Outboard Marine Corp. 37,012
--------------------------------------------------------------------------------
5,000 Polaroid Corp. 183,125
--------------------------------------------------------------------------------
17,300 Rubbermaid Inc. 601,175
--------------------------------------------------------------------------------
1,200 Skyline Corp. 21,450
--------------------------------------------------------------------------------
4,600 Snap-On Tools Corp. 182,850
--------------------------------------------------------------------------------
4,800 Stanley Works 207,000
--------------------------------------------------------------------------------
7,600 Whirlpool Corp. 485,450
--------------------------------------------------------------------------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
CONSUMER DURABLES--CONTINUED
--------------------------------------------------------------------------------
3,300 Zenith Electronics Corp. $ 25,987
-------------------------------------------------------------------------------- ---------------
Total 16,971,893
-------------------------------------------------------------------------------- ---------------
CONSUMER NON-DURABLES--9.8%
--------------------------------------------------------------------------------
3,100 Alberto-Culver Co., Cl. B Conv. 65,488
--------------------------------------------------------------------------------
21,700 American Brands, Inc. 748,650
--------------------------------------------------------------------------------
29,100 Anheuser-Busch Companies, Inc. 1,385,888
--------------------------------------------------------------------------------
7,800 Avon Products, Inc. 393,900
--------------------------------------------------------------------------------
15,200 Borden, Inc. 243,200
--------------------------------------------------------------------------------
1,900 Brown Group, Inc. 64,600
--------------------------------------------------------------------------------
3,000 Brown-Forman Corp., Cl. B 236,625
--------------------------------------------------------------------------------
27,100 Campbell Soup Co. 1,128,038
--------------------------------------------------------------------------------
5,900 Clorox Co. 312,700
--------------------------------------------------------------------------------
140,000 Coca-Cola Co. 6,072,500
--------------------------------------------------------------------------------
16,700 Colgate-Palmolive Co. 981,125
--------------------------------------------------------------------------------
27,100 ConAgra, Inc. 731,700
--------------------------------------------------------------------------------
4,100 Coors (Adolph) Co., Cl. B 85,588
--------------------------------------------------------------------------------
16,500 CPC International Inc. 792,000
--------------------------------------------------------------------------------
17,300 General Mills, Inc. 1,107,200
--------------------------------------------------------------------------------
7,500 Gerber Products Co. 213,750
--------------------------------------------------------------------------------
23,700 Gillette Co. 1,442,738
--------------------------------------------------------------------------------
3,400* Hartmarx Corp. 22,950
--------------------------------------------------------------------------------
27,400 Heinz (H.J.) Co. 1,030,925
--------------------------------------------------------------------------------
9,700 Hershey Foods Corp. 514,100
--------------------------------------------------------------------------------
4,100 International Flavors & Fragrances, Inc. 444,850
--------------------------------------------------------------------------------
24,800 Kellogg Co. 1,416,700
--------------------------------------------------------------------------------
8,800 Liz Claiborne, Inc. 167,200
--------------------------------------------------------------------------------
8,200 Nike, Inc., Cl. B 396,675
--------------------------------------------------------------------------------
1,600 Oshkosh B'Gosh, Inc., Cl. A $ 29,200
--------------------------------------------------------------------------------
85,400 PepsiCo, Inc. 3,373,300
--------------------------------------------------------------------------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
CONSUMER NON-DURABLES--CONTINUED
--------------------------------------------------------------------------------
11,500 Pet Inc. 196,938
--------------------------------------------------------------------------------
94,300 Philip Morris Cos., Inc. 5,068,625
--------------------------------------------------------------------------------
73,400 Procter & Gamble Co. 3,981,950
--------------------------------------------------------------------------------
7,800 Quaker Oats Co. 553,800
--------------------------------------------------------------------------------
11,200 Ralston Purina Co. 466,200
--------------------------------------------------------------------------------
9,300 Reebok International Ltd. 283,650
--------------------------------------------------------------------------------
4,400 Russell Corp. 119,350
--------------------------------------------------------------------------------
52,300 Sara Lee Corp. 1,385,950
--------------------------------------------------------------------------------
40,300 Seagram Co., Ltd. 1,158,625
--------------------------------------------------------------------------------
5,500 Stride Rite Corp. 94,188
--------------------------------------------------------------------------------
17,200 Unilever N.V. 1,973,700
--------------------------------------------------------------------------------
22,500 UST Inc. 593,438
--------------------------------------------------------------------------------
6,900 V.F. Corp. 273,412
--------------------------------------------------------------------------------
11,500 Whitman Corp. 182,563
--------------------------------------------------------------------------------
12,500 Wrigley (Wm.), Jr. Co. 540,625
-------------------------------------------------------------------------------- ---------------
Total 40,274,604
-------------------------------------------------------------------------------- ---------------
CONSUMER PRODUCTS--0.3%
--------------------------------------------------------------------------------
19,200 Dun & Bradstreet Corp. 1,286,400
-------------------------------------------------------------------------------- ---------------
CONSUMER SERVICES--3.9%
--------------------------------------------------------------------------------
5,000* Bally Manufacturing Corp. 50,000
--------------------------------------------------------------------------------
11,400 Block (H.&R.), Inc. 454,575
--------------------------------------------------------------------------------
1,800 Capital Cities/ABC, Inc. 1,097,325
--------------------------------------------------------------------------------
1,628 CBS, Inc. 501,831
--------------------------------------------------------------------------------
14,600 Comcast Corp., Cl. A 609,550
--------------------------------------------------------------------------------
57,700 Disney (Walt) Co. (The) 2,466,675
--------------------------------------------------------------------------------
15,800 Gannett Co., Inc. $ 811,725
--------------------------------------------------------------------------------
5,100 Hilton Hotels Corp. 239,063
--------------------------------------------------------------------------------
11,100 Host Marriott Corp. 81,862
--------------------------------------------------------------------------------
4,050* King World Productions, Inc. 157,444
--------------------------------------------------------------------------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
CONSUMER SERVICES--CONTINUED
--------------------------------------------------------------------------------
5,900 Knight-Ridder, Inc. 325,975
--------------------------------------------------------------------------------
2,950 Luby's Cafeterias, Inc. 66,006
--------------------------------------------------------------------------------
11,100 Marriott Corp. 291,375
--------------------------------------------------------------------------------
38,100 McDonald's Corp. 2,195,513
--------------------------------------------------------------------------------
1,600 Meredith Corp. 64,200
--------------------------------------------------------------------------------
3,200* National Education Corp. 18,800
--------------------------------------------------------------------------------
8,500 New York Times Co., Cl. A 200,813
--------------------------------------------------------------------------------
12,700 Paramount Communications, Inc. 1,020,762
--------------------------------------------------------------------------------
10,650 Price Costco, Inc. 189,038
--------------------------------------------------------------------------------
7,300* Promus Companies, Inc. 534,725
--------------------------------------------------------------------------------
5,700* Ryan's Family Steak Houses, Inc. 47,025
--------------------------------------------------------------------------------
8,200 Ryder Systems, Inc. 232,675
--------------------------------------------------------------------------------
9,000 Service Corp. International 235,125
--------------------------------------------------------------------------------
4,300* Shoney's, Inc. 98,900
--------------------------------------------------------------------------------
46,400* Tele-Communications, Inc., Cl. A 1,415,200
--------------------------------------------------------------------------------
40,340 Time Warner, Inc. 1,805,215
--------------------------------------------------------------------------------
13,800 Times Mirror Co., Cl. A 455,400
--------------------------------------------------------------------------------
7,200 Tribune Co. 399,600
--------------------------------------------------------------------------------
10,700 Wendy's International, Inc. 177,887
-------------------------------------------------------------------------------- ---------------
Total 16,244,284
-------------------------------------------------------------------------------- ---------------
ELECTRONIC TECHNOLOGY--5.9%
--------------------------------------------------------------------------------
9,700* Advanced Micro Devices, Inc. 191,575
--------------------------------------------------------------------------------
12,200 Amdahl Corp. 56,425
--------------------------------------------------------------------------------
11,300 AMP, Inc. $ 704,837
--------------------------------------------------------------------------------
1,800* Andrew Corp. 67,950
--------------------------------------------------------------------------------
12,500 Apple Computer, Inc. 384,375
--------------------------------------------------------------------------------
36,600 Boeing Co. 1,372,500
--------------------------------------------------------------------------------
4,600* Ceridian Corp. 84,525
--------------------------------------------------------------------------------
8,900* Compaq Computer Corp. 600,750
--------------------------------------------------------------------------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
ELECTRONIC TECHNOLOGY--CONTINUED
--------------------------------------------------------------------------------
1,800* Computer Sciences Corp. 165,375
--------------------------------------------------------------------------------
2,800* Cray Research, Inc. 76,300
--------------------------------------------------------------------------------
3,800* Data General Corp. 36,100
--------------------------------------------------------------------------------
14,200* Digital Equipment Corp. 505,875
--------------------------------------------------------------------------------
5,500* DSC Communications Corp. 360,937
--------------------------------------------------------------------------------
3,600 E-Systems, Inc. 163,350
--------------------------------------------------------------------------------
6,100 EG & G, Inc. 109,037
--------------------------------------------------------------------------------
3,360 General Dynamics Corp. 321,720
--------------------------------------------------------------------------------
3,600 Grumman Corp. 133,650
--------------------------------------------------------------------------------
4,300 Harris Corp. 198,875
--------------------------------------------------------------------------------
27,300 Hewlett-Packard Co. 2,009,963
--------------------------------------------------------------------------------
45,400 Intel Corp. 2,871,550
--------------------------------------------------------------------------------
5,100* Intergraph Corp. 56,737
--------------------------------------------------------------------------------
61,500 International Business Machines Corp. 2,829,000
--------------------------------------------------------------------------------
6,700 Lockheed Corp. 461,463
--------------------------------------------------------------------------------
9,000 Loral Corp. 285,750
--------------------------------------------------------------------------------
2,600* M/A-Com., Inc. 22,100
--------------------------------------------------------------------------------
10,300 Martin-Marietta Corp. 455,775
--------------------------------------------------------------------------------
4,200 McDonnell-Douglas Corp. 393,750
--------------------------------------------------------------------------------
29,200 Motorola, Inc. 3,058,700
--------------------------------------------------------------------------------
11,800* National Semiconductor Corp. 197,650
--------------------------------------------------------------------------------
26,900 Northern Telecom, Ltd. $ 766,650
--------------------------------------------------------------------------------
5,200 Northrop Corp. 180,700
--------------------------------------------------------------------------------
32,900* Novell, Inc. 707,350
--------------------------------------------------------------------------------
4,800 Perkin-Elmer Corp. 168,000
--------------------------------------------------------------------------------
14,600 Raytheon Co. 888,775
--------------------------------------------------------------------------------
23,700 Rockwell International Corp. 850,237
--------------------------------------------------------------------------------
3,950 Scientific-Atlanta, Inc. 138,744
--------------------------------------------------------------------------------
11,400 Sun Microsystems, Inc. 290,700
--------------------------------------------------------------------------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
ELECTRONIC TECHNOLOGY--CONTINUED
--------------------------------------------------------------------------------
12,200* Tandem Computers, Inc. 134,200
--------------------------------------------------------------------------------
3,300 Tektronix, Inc. 76,312
--------------------------------------------------------------------------------
8,900 Texas Instruments, Inc. 584,062
--------------------------------------------------------------------------------
17,500* Unisys Corp. 201,250
--------------------------------------------------------------------------------
13,300 United Technologies Corp. 824,600
-------------------------------------------------------------------------------- ---------------
Total 23,988,174
-------------------------------------------------------------------------------- ---------------
ENERGY MINERALS--8.1%
--------------------------------------------------------------------------------
10,000 Amerada-Hess Corp. 530,000
--------------------------------------------------------------------------------
53,500 Amoco Corp. 2,989,313
--------------------------------------------------------------------------------
6,500 Ashland Oil, Inc. 224,250
--------------------------------------------------------------------------------
17,100 Atlantic Richfield Co. 1,885,275
--------------------------------------------------------------------------------
35,000 Chevron Corp. 3,395,000
--------------------------------------------------------------------------------
133,700 Exxon Corp. 8,740,638
--------------------------------------------------------------------------------
5,200 Kerr-McGee Corp. 261,950
--------------------------------------------------------------------------------
3,100 Louisiana Land & Exploration Co. 140,275
--------------------------------------------------------------------------------
14,400* Maxus Energy Corp. 95,400
--------------------------------------------------------------------------------
43,000 Mobil Corp. 3,504,500
--------------------------------------------------------------------------------
32,800 Occidental Petroleum Corp. 606,800
--------------------------------------------------------------------------------
10,400 Oryx Energy Co. 248,300
--------------------------------------------------------------------------------
4,900 Pennzoil Co. $ 280,525
--------------------------------------------------------------------------------
28,100 Phillips Petroleum Co. 906,225
--------------------------------------------------------------------------------
57,700 Royal Dutch Petroleum Co. 6,101,775
--------------------------------------------------------------------------------
9,712 Santa Fe Energy Resource, Inc. 93,478
--------------------------------------------------------------------------------
11,500 Sun Co., Inc. 359,375
--------------------------------------------------------------------------------
27,900 Texaco, Inc. 1,900,687
--------------------------------------------------------------------------------
25,900 Unocal Corp. 757,575
--------------------------------------------------------------------------------
30,800 USX Marathon Group 569,800
-------------------------------------------------------------------------------- ---------------
Total 33,591,141
-------------------------------------------------------------------------------- ---------------
FINANCE--9.7%
--------------------------------------------------------------------------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
11,900 AEtna Life & Casualty Co. 782,425
--------------------------------------------------------------------------------
12,600 Ahmanson (H.F.) & Co. 228,375
--------------------------------------------------------------------------------
4,400 Alexander & Alexander Services, Inc. 90,750
--------------------------------------------------------------------------------
23,400 American General Corp. 687,375
--------------------------------------------------------------------------------
34,162 American International Group, Inc. 3,074,580
--------------------------------------------------------------------------------
36,750 Banc One Corp. 1,410,281
--------------------------------------------------------------------------------
11,300* Bank of Boston Corp. 265,550
--------------------------------------------------------------------------------
38,276 BankAmerica Corp. 1,598,023
--------------------------------------------------------------------------------
8,900 Bankers Trust New York Corp. 705,325
--------------------------------------------------------------------------------
10,500 Barnett Banks, Inc. 439,687
--------------------------------------------------------------------------------
2,800 Beneficial Corp. 214,900
--------------------------------------------------------------------------------
10,500 Boatmen's Bancshares Inc. 311,062
--------------------------------------------------------------------------------
10,900 Capital Holdings Corp. 450,987
--------------------------------------------------------------------------------
19,700 Chase Manhattan Corp. 650,100
--------------------------------------------------------------------------------
27,090 Chemical Banking Corp. 1,083,600
--------------------------------------------------------------------------------
9,400 Chubb Corp. 771,975
--------------------------------------------------------------------------------
7,700 CIGNA Corp. 516,862
--------------------------------------------------------------------------------
40,500* Citicorp $ 1,468,125
--------------------------------------------------------------------------------
6,700* CNA Financial Corp. 556,100
--------------------------------------------------------------------------------
5,900 Continental Corp. 192,487
--------------------------------------------------------------------------------
12,600 Corestates Financial Corp. 352,800
--------------------------------------------------------------------------------
18,321 Dean Witter, Discover & Co. 753,451
--------------------------------------------------------------------------------
19,300 Federal Home Loan Mortgage Corp. 989,125
--------------------------------------------------------------------------------
29,400 Federal National Mortgage Association 2,289,525
--------------------------------------------------------------------------------
8,000 First Fidelity Bancorporation 325,000
--------------------------------------------------------------------------------
8,200 First Interstate Bancorp 476,625
--------------------------------------------------------------------------------
18,100 First Union Corp. 735,312
--------------------------------------------------------------------------------
14,700 Fleet Financial Group, Inc. 461,213
--------------------------------------------------------------------------------
9,100 General RE Corp. 1,053,325
--------------------------------------------------------------------------------
6,900 Golden West Financial Corp. 294,113
--------------------------------------------------------------------------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
FINANCE--CONTINUED
--------------------------------------------------------------------------------
14,200 Great Western Financial Corp. 271,575
--------------------------------------------------------------------------------
10,000 Household International, Inc. 366,250
--------------------------------------------------------------------------------
5,450 Jefferson-Pilot Corp. 280,675
--------------------------------------------------------------------------------
10,100 Lincoln National Corp. 459,550
--------------------------------------------------------------------------------
7,900 Marsh & McLennan Cos., Inc. 643,850
--------------------------------------------------------------------------------
10,700 MBNA Corp. 365,138
--------------------------------------------------------------------------------
6,800 Mellon Bank Corp. 366,350
--------------------------------------------------------------------------------
11,400 Merrill Lynch & Co., Inc. 1,104,375
--------------------------------------------------------------------------------
20,700 Morgan (J.P.) & Co., Inc. 1,477,462
--------------------------------------------------------------------------------
27,446 NationsBank Corp. 1,279,670
--------------------------------------------------------------------------------
17,250 NBD Bancorp., Inc. 541,219
--------------------------------------------------------------------------------
31,300 Norwest Corp. 805,975
--------------------------------------------------------------------------------
25,200 PNC Bank Corp. 724,500
--------------------------------------------------------------------------------
25,233 Primerica Corp. 1,113,406
--------------------------------------------------------------------------------
3,000 Pulte Corp. $ 115,125
--------------------------------------------------------------------------------
6,800 SAFECO Corp. 394,400
--------------------------------------------------------------------------------
11,900 Salomon, Inc. 538,475
--------------------------------------------------------------------------------
48,200 SCEcorp 1,012,200
--------------------------------------------------------------------------------
10,100 Shawmut National Corp. 223,462
--------------------------------------------------------------------------------
4,500 St. Paul Companies, Inc. 421,875
--------------------------------------------------------------------------------
13,500 SunTrust Banks, Inc. 592,312
--------------------------------------------------------------------------------
7,950 Torchmark Corp. 368,681
--------------------------------------------------------------------------------
8,400 Transamerica Corp. 478,800
--------------------------------------------------------------------------------
15,600 Travelers Corp. 549,900
--------------------------------------------------------------------------------
10,650 U.S. Bancorp 262,256
--------------------------------------------------------------------------------
9,100 USF&G Corp. 123,987
--------------------------------------------------------------------------------
2,400 USLIFE Corp. 101,100
--------------------------------------------------------------------------------
18,600 Wachovia Corp. 711,450
--------------------------------------------------------------------------------
6,000 Wells Fargo & Co. 665,250
-------------------------------------------------------------------------------- ---------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
FINANCE--CONTINUED
--------------------------------------------------------------------------------
Total 39,588,326
-------------------------------------------------------------------------------- ---------------
HEALTH SERVICES--0.3%
--------------------------------------------------------------------------------
8,800* Beverly Enterprises, Inc. 95,700
--------------------------------------------------------------------------------
16,138 Columbia Healthcare Co. 463,968
--------------------------------------------------------------------------------
4,600 Community Psychiatric Centers 64,400
--------------------------------------------------------------------------------
6,150 Manor Care, Inc. 138,375
--------------------------------------------------------------------------------
17,900 National Medical Enterprises, Inc. 201,375
--------------------------------------------------------------------------------
2,400 Shared Medical Systems Corp. 60,000
-------------------------------------------------------------------------------- ---------------
Total 1,023,818
-------------------------------------------------------------------------------- ---------------
HEALTH TECHNOLOGY--6.3%
--------------------------------------------------------------------------------
89,500 Abbott Laboratories, Inc. 2,539,563
--------------------------------------------------------------------------------
7,100 Allergan, Inc. 162,413
--------------------------------------------------------------------------------
8,100* Alza Corp $ 208,575
--------------------------------------------------------------------------------
33,300 American Home Products Corp. 2,081,250
--------------------------------------------------------------------------------
14,600* Amgen, Inc. 666,125
--------------------------------------------------------------------------------
5,600 Bard (C.R.), Inc. 141,400
--------------------------------------------------------------------------------
6,400 Bausch & Lomb, Inc. 332,000
--------------------------------------------------------------------------------
29,800 Baxter International, Inc. 707,750
--------------------------------------------------------------------------------
8,100 Becton, Dickinson & Co. 307,800
--------------------------------------------------------------------------------
12,400* Biomet, Inc. 127,100
--------------------------------------------------------------------------------
55,800 Bristol-Myers Squibb Co. 3,278,250
--------------------------------------------------------------------------------
8,200 IMCERA Group, Inc. 292,125
--------------------------------------------------------------------------------
70,600 Johnson & Johnson 2,974,025
--------------------------------------------------------------------------------
31,500 Lilly (Eli) & Co. 1,704,938
--------------------------------------------------------------------------------
6,200 Medtronic, Inc. 459,575
--------------------------------------------------------------------------------
122,200 Merck and Co., Inc. 3,925,675
--------------------------------------------------------------------------------
34,200 Pfizer, Inc. 2,128,950
--------------------------------------------------------------------------------
21,000 Schering-Plough, Inc. 1,428,000
--------------------------------------------------------------------------------
5,000 St. Jude Medical Inc. 140,000
--------------------------------------------------------------------------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
HEALTH TECHNOLOGY--CONTINUED
--------------------------------------------------------------------------------
23,800 Syntex Corp. 431,375
--------------------------------------------------------------------------------
6,000 United States Surgical Corp. 142,500
--------------------------------------------------------------------------------
18,700 Upjohn Co. 610,088
--------------------------------------------------------------------------------
14,600 Warner-Lambert Co. 1,014,700
-------------------------------------------------------------------------------- ---------------
Total 25,804,177
-------------------------------------------------------------------------------- ---------------
INDUSTRIAL SERVICES--0.9%
--------------------------------------------------------------------------------
15,100 Baker Hughes, Inc. 339,750
--------------------------------------------------------------------------------
18,600 Browning-Ferris Industries Inc. 420,825
--------------------------------------------------------------------------------
8,800 Fluor Corp. 358,600
--------------------------------------------------------------------------------
3,800 Foster Wheeler Corp. 128,725
--------------------------------------------------------------------------------
12,300 Halliburton Co. $ 392,063
--------------------------------------------------------------------------------
2,600 Helmerich & Payne, Inc. 78,000
--------------------------------------------------------------------------------
5,600 McDermott International, Inc. 158,900
--------------------------------------------------------------------------------
3,400 Morrison Knudsen Corp. 79,900
--------------------------------------------------------------------------------
6,500 Rollins Environmental Services, Inc. 34,125
--------------------------------------------------------------------------------
9,000 Rowan Companies, Inc. 85,500
--------------------------------------------------------------------------------
26,100 Schlumberger, Ltd. 1,654,087
--------------------------------------------------------------------------------
1,300 Zurn Industries, Inc. 35,100
-------------------------------------------------------------------------------- ---------------
Total 3,765,575
-------------------------------------------------------------------------------- ---------------
NON-ENERGY MINERALS--1.9%
--------------------------------------------------------------------------------
24,100 Alcan Aluminum Ltd. 494,050
--------------------------------------------------------------------------------
9,500 Aluminum Co. of America 646,000
--------------------------------------------------------------------------------
9,500 Amax, Inc. 212,562
--------------------------------------------------------------------------------
11,200* Armco, Inc. 63,000
--------------------------------------------------------------------------------
4,500 ASARCO, Inc. 82,688
--------------------------------------------------------------------------------
9,800* Bethlehem Steel Corp. 164,150
--------------------------------------------------------------------------------
5,100 Cyprus Minerals Corp. 124,950
--------------------------------------------------------------------------------
12,000 Echo Bay Mines Ltd. 148,500
--------------------------------------------------------------------------------
9,700 Georgia-Pacific Corp. 623,225
--------------------------------------------------------------------------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
NON-ENERGY MINERALS--CONTINUED
--------------------------------------------------------------------------------
14,700 Homestake Mining Co. 282,975
--------------------------------------------------------------------------------
11,800 Inco Ltd. 249,275
--------------------------------------------------------------------------------
3,800* Inland Steel Industries Inc. 128,250
--------------------------------------------------------------------------------
11,800 Louisiana-Pacific Corp. 426,275
--------------------------------------------------------------------------------
7,300 Newmont Mining Corp. 382,338
--------------------------------------------------------------------------------
9,400 Nucor Corp. 509,950
--------------------------------------------------------------------------------
4,600* Owens-Corning Fiberglass Corp. 216,200
--------------------------------------------------------------------------------
7,600 Phelps Dodge Corp. 323,950
--------------------------------------------------------------------------------
8,000 Pioneer Hi Bred International, Inc. $ 284,000
--------------------------------------------------------------------------------
25,600 Placer Dome, Inc. 624,000
--------------------------------------------------------------------------------
6,400 Reynolds Metals Co. 270,400
--------------------------------------------------------------------------------
7,420 USX-U.S. Steel Group 278,250
--------------------------------------------------------------------------------
22,100 Weyerhaeuser Co. 875,713
--------------------------------------------------------------------------------
9,750 Worthington Industries, Inc. 180,375
-------------------------------------------------------------------------------- ---------------
Total 7,591,076
-------------------------------------------------------------------------------- ---------------
PROCESS INDUSTRIES--4.6%
--------------------------------------------------------------------------------
12,300 Air Products & Chemicals, Inc. 513,525
--------------------------------------------------------------------------------
9,700 American Cyanamid Company 528,650
--------------------------------------------------------------------------------
36,901 Archer-Daniels-Midland Co. 848,723
--------------------------------------------------------------------------------
6,300 Avery Dennison Corp. 178,763
--------------------------------------------------------------------------------
3,200 Ball Corp. 82,800
--------------------------------------------------------------------------------
5,500 Bemis Co., Inc. 120,313
--------------------------------------------------------------------------------
4,100 Boise Cascade Corp. 84,050
--------------------------------------------------------------------------------
10,000 Champion International Corp. 293,750
--------------------------------------------------------------------------------
21,700 Corning Inc. 561,487
--------------------------------------------------------------------------------
9,500* Crown Cork & Seal Co., Inc. 366,938
--------------------------------------------------------------------------------
29,500 Dow Chemical Co. 1,637,250
--------------------------------------------------------------------------------
72,900 Du Pont (E.I.) de Nemours 3,480,975
--------------------------------------------------------------------------------
3,400 Ecolab, Inc. 161,075
--------------------------------------------------------------------------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
PROCESS INDUSTRIES--CONTINUED
--------------------------------------------------------------------------------
10,375 Engelhard Corp. 285,313
--------------------------------------------------------------------------------
12,700 Ethyl Corp. 220,662
--------------------------------------------------------------------------------
4,500 Federal Paper Board Co., Inc. 91,125
--------------------------------------------------------------------------------
2,200 First Mississippi Corp. 25,300
--------------------------------------------------------------------------------
3,900* FMC Corp. 191,588
--------------------------------------------------------------------------------
2,800 Goodrich (B.F.) Co. 123,900
--------------------------------------------------------------------------------
10,000 Grace (W.R.) Overseas Development Corp. $ 377,500
--------------------------------------------------------------------------------
7,700 Great Lakes Chemical Corp. 588,087
--------------------------------------------------------------------------------
4,600 Hercules, Inc. 457,700
--------------------------------------------------------------------------------
13,300 International Paper Co. 788,025
--------------------------------------------------------------------------------
8,800 James River Corp. of Virginia 176,000
--------------------------------------------------------------------------------
17,300 Kimberly-Clark Corp. 893,113
--------------------------------------------------------------------------------
6,400 Mead Corp. 262,400
--------------------------------------------------------------------------------
3,000 Millipore Corp. 104,250
--------------------------------------------------------------------------------
12,900 Monsanto Co. 891,713
--------------------------------------------------------------------------------
5,200 Morton International Inc. 494,000
--------------------------------------------------------------------------------
7,500 Nalco Chemical Co. 265,313
--------------------------------------------------------------------------------
5,500 NL Industries Inc. 26,125
--------------------------------------------------------------------------------
12,533 Pall Corp. 260,066
--------------------------------------------------------------------------------
3,100 Potlatch Corp. 136,012
--------------------------------------------------------------------------------
11,400 PPG Industries, Inc. 795,150
--------------------------------------------------------------------------------
14,400 Praxair, Inc. 232,200
--------------------------------------------------------------------------------
7,300 Rohm & Haas Co. 366,825
--------------------------------------------------------------------------------
8,000 Scott Paper Co. 284,000
--------------------------------------------------------------------------------
9,600 Sherwin-Williams Co. 350,400
--------------------------------------------------------------------------------
1,900 Springs Industries, Inc., Cl. A. 71,963
--------------------------------------------------------------------------------
7,708 Stone Container Corp. 54,919
--------------------------------------------------------------------------------
5,900 Temple-Inland Inc. 250,750
--------------------------------------------------------------------------------
7,500 Union Camp Corp. 322,500
--------------------------------------------------------------------------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
PROCESS INDUSTRIES--CONTINUED
--------------------------------------------------------------------------------
16,300 Union Carbide Corp. 321,925
--------------------------------------------------------------------------------
7,200 Westvaco Corp. 239,400
-------------------------------------------------------------------------------- ---------------
Total 18,806,523
-------------------------------------------------------------------------------- ---------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
PRODUCER MANUFACTURING--6.9%
--------------------------------------------------------------------------------
15,200 Allied-Signal, Inc. $ 1,088,700
--------------------------------------------------------------------------------
4,000 Armstrong World Industries, Inc. 185,000
--------------------------------------------------------------------------------
10,900 Caterpillar, Inc. 997,350
--------------------------------------------------------------------------------
3,600 Cincinnati Milacron Inc. 86,400
--------------------------------------------------------------------------------
1,900* Clark Equipment Co. 98,800
--------------------------------------------------------------------------------
12,200 Cooper Industries, Inc. 637,450
--------------------------------------------------------------------------------
3,200 Crane Co. 89,600
--------------------------------------------------------------------------------
1,900 Cummins Engine Co., Inc. 181,213
--------------------------------------------------------------------------------
5,000 Dana Corp. 291,875
--------------------------------------------------------------------------------
9,000 Deere & Co. 695,250
--------------------------------------------------------------------------------
5,100 Dial Corp. (The) 195,713
--------------------------------------------------------------------------------
6,100 Dover Corp. 350,750
--------------------------------------------------------------------------------
14,800 Dresser Industries, Inc. 318,200
--------------------------------------------------------------------------------
7,500 Eaton Corp. 397,500
--------------------------------------------------------------------------------
24,200 Emerson Electric Co. 1,388,475
--------------------------------------------------------------------------------
91,900 General Electric Co. 8,914,300
--------------------------------------------------------------------------------
4,800 General Signal Corp. 169,200
--------------------------------------------------------------------------------
3,700 Giddings & Lewis, Inc. 89,725
--------------------------------------------------------------------------------
2,578 Harnischfeger Industries, Inc. 57,038
--------------------------------------------------------------------------------
14,500 Honeywell, Inc. 487,563
--------------------------------------------------------------------------------
12,100 Illinois Tool Works, Inc. 452,238
--------------------------------------------------------------------------------
11,300 Ingersoll-Rand Co. 412,450
--------------------------------------------------------------------------------
12,800 ITT Corp. 1,192,000
--------------------------------------------------------------------------------
4,300 Johnson Controls, Inc. 235,425
--------------------------------------------------------------------------------
4,900* Litton Industries, Inc. 325,238
--------------------------------------------------------------------------------
16,400 Masco Industries, Inc. 518,650
--------------------------------------------------------------------------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
PRODUCER MANUFACTURING--CONTINUED
--------------------------------------------------------------------------------
23,400 Minnesota Mining & Manufacturing Co. $ 2,427,750
--------------------------------------------------------------------------------
1,000 NACCO Industries, Inc., Cl. A 43,125
--------------------------------------------------------------------------------
5,300 National Service Industries, Inc. 127,200
--------------------------------------------------------------------------------
2,770* Navistar International Corp. 75,482
--------------------------------------------------------------------------------
3,600 PACCAR, Inc. 243,000
--------------------------------------------------------------------------------
5,200 Parker-Hannifin Corp. 178,100
--------------------------------------------------------------------------------
17,000 Pitney Bowes, Inc. 667,250
--------------------------------------------------------------------------------
4,400 Pittston Co. 111,650
--------------------------------------------------------------------------------
4,500 Raychem Corp. 173,250
--------------------------------------------------------------------------------
1,500 SPX Corp. 25,875
--------------------------------------------------------------------------------
6,000 Teledyne, Inc. 161,250
--------------------------------------------------------------------------------
18,200 Tenneco, Inc. 928,200
--------------------------------------------------------------------------------
9,400 Textron, Inc. 525,225
--------------------------------------------------------------------------------
2,000 Thomas & Betts Corp. 120,000
--------------------------------------------------------------------------------
3,300 Timken Co. 106,425
--------------------------------------------------------------------------------
3,100 Trinova Corp. 96,100
--------------------------------------------------------------------------------
6,900 TRW, Inc. 464,888
--------------------------------------------------------------------------------
5,000 Tyco Laboratories, Inc. 233,750
--------------------------------------------------------------------------------
3,880* Varity Corp. 149,380
--------------------------------------------------------------------------------
37,700 Westinghouse Electric Corp. 546,650
--------------------------------------------------------------------------------
11,200 Xerox Corp. 887,600
-------------------------------------------------------------------------------- ---------------
Total 28,148,253
-------------------------------------------------------------------------------- ---------------
RETAIL TRADE--6.0%
--------------------------------------------------------------------------------
27,200 Albertsons, Inc. 710,600
--------------------------------------------------------------------------------
7,600 American Stores Co. 307,800
--------------------------------------------------------------------------------
22,000 Blockbuster Entertainment Corp. 624,250
--------------------------------------------------------------------------------
8,400 Brunos, Inc. 90,300
--------------------------------------------------------------------------------
11,000 Charming Shoppes, Inc. $ 155,375
--------------------------------------------------------------------------------
10,300 Circuit City Stores, Inc. 288,400
--------------------------------------------------------------------------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
RETAIL TRADE--CONTINUED
--------------------------------------------------------------------------------
7,700 Dayton-Hudson Corp. 535,150
--------------------------------------------------------------------------------
12,100 Dillard Department Stores, Inc., Cl. A 444,675
--------------------------------------------------------------------------------
15,600 GAP, Inc. (The) 555,750
--------------------------------------------------------------------------------
2,500* Genesco, Inc. 16,250
--------------------------------------------------------------------------------
6,400 Giant Foods, Inc., Cl. A 154,400
--------------------------------------------------------------------------------
4,100 Great Atlantic & Pacific Tea Co., Inc. 108,650
--------------------------------------------------------------------------------
8,200 Harcourt General, Inc. 360,800
--------------------------------------------------------------------------------
48,100 Home Depot, Inc. 1,905,962
--------------------------------------------------------------------------------
43,900 K Mart Corp. 1,075,550
--------------------------------------------------------------------------------
11,400* Kroger Co. 223,725
--------------------------------------------------------------------------------
39,100 Limited, Inc. 835,762
--------------------------------------------------------------------------------
2,200 Longs Drug Stores Corp. 74,800
--------------------------------------------------------------------------------
7,900 Lowe's Companies, Inc. 368,338
--------------------------------------------------------------------------------
26,700 May Department Stores Co. 1,181,475
--------------------------------------------------------------------------------
11,300 Melville Corp. 474,600
--------------------------------------------------------------------------------
4,000 Mercantile Stores Co., Inc. 143,000
--------------------------------------------------------------------------------
8,800 Nordstrom, Inc. 305,800
--------------------------------------------------------------------------------
25,300 Penney (J.C.) Co., Inc. 1,315,600
--------------------------------------------------------------------------------
6,500 Pep Boys-Manny Moe & Jack 160,875
--------------------------------------------------------------------------------
3,400 Premark International, Inc. 260,100
--------------------------------------------------------------------------------
9,500 Rite Aid Corp. 154,375
--------------------------------------------------------------------------------
37,700 Sears, Roebuck & Co. 2,163,038
--------------------------------------------------------------------------------
6,865 Tandy Corp. 280,606
--------------------------------------------------------------------------------
7,900 TJX Co's., Inc. 240,950
--------------------------------------------------------------------------------
31,400* Toys "R" Us, Inc. 1,259,925
--------------------------------------------------------------------------------
13,200 Walgreen Co. $ 561,000
--------------------------------------------------------------------------------
247,600 Wal-Mart Stores, Inc. 6,530,450
--------------------------------------------------------------------------------
8,200 Winn-Dixie Stores, Inc. 475,600
--------------------------------------------------------------------------------
14,100 Woolworth (F.W.) Co. 319,012
-------------------------------------------------------------------------------- ---------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
RETAIL TRADE--CONTINUED
--------------------------------------------------------------------------------
Total 24,662,943
-------------------------------------------------------------------------------- ---------------
TECHNOLOGY--0.3%
--------------------------------------------------------------------------------
51,900 WMX Technologies, Inc. 1,278,038
-------------------------------------------------------------------------------- ---------------
TECHNOLOGY SERVICES--0.7%
--------------------------------------------------------------------------------
2,600 Autodesk, Inc. 111,800
--------------------------------------------------------------------------------
15,300 Automatic Data Processing, Inc. 816,637
--------------------------------------------------------------------------------
17,900 Computer Associates International, Inc. 680,200
--------------------------------------------------------------------------------
4,500* Lotus Development Corp. 218,250
--------------------------------------------------------------------------------
15,300* Oracle Systems Corp. 906,525
-------------------------------------------------------------------------------- ---------------
Total 2,733,412
-------------------------------------------------------------------------------- ---------------
TRANSPORTATION--1.7%
--------------------------------------------------------------------------------
8,100* AMR Corp. 568,012
--------------------------------------------------------------------------------
9,600 Burlington Northern, Inc. 540,000
--------------------------------------------------------------------------------
3,800* Consolidated Freightways, Inc. 82,650
--------------------------------------------------------------------------------
8,600 Consolidated Rail Corp. 534,275
--------------------------------------------------------------------------------
11,200 CSX Corp. 907,200
--------------------------------------------------------------------------------
5,400 Delta Air Lines, Inc. 313,200
--------------------------------------------------------------------------------
5,900* Federal Express Corp. 398,250
--------------------------------------------------------------------------------
15,000 Norfolk Southern Corp. 993,750
--------------------------------------------------------------------------------
4,200 Roadway Service, Inc. 252,000
--------------------------------------------------------------------------------
19,725* Santa Fe Southern Pacific Corp. 372,309
--------------------------------------------------------------------------------
2,600* UAL (Allegis) Corp. 395,200
--------------------------------------------------------------------------------
22,100 Union Pacific Corp. 1,397,825
--------------------------------------------------------------------------------
6,200* USAir Group, Inc. $ 89,125
--------------------------------------------------------------------------------
3,000 Yellow Freight Systems, Inc. 69,000
-------------------------------------------------------------------------------- ---------------
Total 6,912,796
-------------------------------------------------------------------------------- ---------------
UTILITIES--13.2%
--------------------------------------------------------------------------------
19,900 American Electric Power Co., Inc. 766,150
--------------------------------------------------------------------------------
145,078 American Telephone & Telegraph Co. 8,360,120
--------------------------------------------------------------------------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
UTILITIES--CONTINUED
--------------------------------------------------------------------------------
29,200 Ameritech Corp. 2,474,700
--------------------------------------------------------------------------------
13,200 Arkla, Inc. 107,250
--------------------------------------------------------------------------------
15,550 Baltimore Gas & Electric Co. 406,244
--------------------------------------------------------------------------------
46,800 Bell Atlantic Corp. 2,977,650
--------------------------------------------------------------------------------
53,400 BellSouth Corp. 3,350,850
--------------------------------------------------------------------------------
17,300 Carolina Power & Light Co. 547,113
--------------------------------------------------------------------------------
20,300 Central & SouthWest Corp. 662,287
--------------------------------------------------------------------------------
11,200 Coastal Corp. 306,600
--------------------------------------------------------------------------------
5,400* Columbia Gas System, Inc. 141,750
--------------------------------------------------------------------------------
23,000 Commonwealth Edison Co. 692,875
--------------------------------------------------------------------------------
25,200 Consolidated Edison Co. 875,700
--------------------------------------------------------------------------------
10,000 Consolidated Natural Gas Co. 483,750
--------------------------------------------------------------------------------
15,800 Detroit Edison Co. 531,275
--------------------------------------------------------------------------------
17,750 Dominion Resources, Inc. 856,437
--------------------------------------------------------------------------------
22,100 Duke Power Co. 966,875
--------------------------------------------------------------------------------
2,400 Eastern Enterprises 65,100
--------------------------------------------------------------------------------
25,600 Enron Corp. 867,200
--------------------------------------------------------------------------------
7,200 Enserch Corp. 143,100
--------------------------------------------------------------------------------
18,900 Entergy Corp. 737,100
--------------------------------------------------------------------------------
20,200 FPL Group, Inc. 795,375
--------------------------------------------------------------------------------
101,700 GTE Corp. 4,042,575
--------------------------------------------------------------------------------
14,000 Houston Industries, Inc. $ 677,250
--------------------------------------------------------------------------------
57,100 MCI Communications Corp. 1,627,350
--------------------------------------------------------------------------------
15,300 Niagara Mohawk Power Corp. 336,600
--------------------------------------------------------------------------------
6,000 NICOR, Inc. 169,500
--------------------------------------------------------------------------------
7,100 Northern States Power Co. (Minn.) 315,062
--------------------------------------------------------------------------------
44,400 NYNEX Corp. 1,875,900
--------------------------------------------------------------------------------
16,400 Ohio Edison Co. 395,650
--------------------------------------------------------------------------------
2,900 ONEOK, Inc. 61,625
--------------------------------------------------------------------------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
UTILITIES--CONTINUED
--------------------------------------------------------------------------------
9,000 Pacific Enterprises 236,250
--------------------------------------------------------------------------------
46,600 Pacific Gas & Electric Co. 1,689,250
--------------------------------------------------------------------------------
44,700 Pacific Telesis Group 2,452,912
--------------------------------------------------------------------------------
29,400 PacifiCorp 576,975
--------------------------------------------------------------------------------
12,700 Panhandle Eastern Corp. 301,625
--------------------------------------------------------------------------------
3,700 Peoples Energy Corp. 117,475
--------------------------------------------------------------------------------
23,800 Philadelphia Electric Co. 743,750
--------------------------------------------------------------------------------
6,100 PSI Resources, Inc. 162,412
--------------------------------------------------------------------------------
26,000 Public Service Enterprises Group, Inc. 877,500
--------------------------------------------------------------------------------
9,400 Sonat, Inc. 292,575
--------------------------------------------------------------------------------
34,400 Southern Co. 1,543,700
--------------------------------------------------------------------------------
64,400 Southwestern Bell Corp. 2,849,700
--------------------------------------------------------------------------------
36,600 Sprint Corp. 1,317,600
--------------------------------------------------------------------------------
24,000 Texas Utilities Co. 1,080,000
--------------------------------------------------------------------------------
4,300 Transco Energy Co. 69,337
--------------------------------------------------------------------------------
44,800 U.S. West, Inc. 2,245,600
--------------------------------------------------------------------------------
11,000 Union Electric Co. 459,250
--------------------------------------------------------------------------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
UTILITIES--CONTINUED
--------------------------------------------------------------------------------
5,500 Williams Companies, Inc. (The) $ 326,562
-------------------------------------------------------------------------------- ---------------
Total 53,959,486
-------------------------------------------------------------------------------- ---------------
TOTAL COMMON STOCKS (IDENTIFIED COST $324,616,238) 353,637,482
-------------------------------------------------------------------------------- ---------------
FOREIGN STOCKS--0.0%
- ------------------------------------------------------------------------------------------------
BASIC INDUSTRY--0.0%
--------------------------------------------------------------------------------
3,528 Hanson PLC (IDENTIFIED COST $42,425) 71,001
-------------------------------------------------------------------------------- ---------------
SHORT-TERM U.S. GOVERNMENT OBLIGATIONS--0.5%
- ------------------------------------------------------------------------------------------------
$ 2,000,000 United States Treasury Bills, 2.91%, 12/30/93 1,990,462
--------------------------------------------------------------------------------
200,000 United States Treasury Bills, 2.93%, 12/30/93 199,039
-------------------------------------------------------------------------------- ---------------
TOTAL SHORT-TERM U.S. GOVERNMENT OBLIGATIONS
(AT AMORTIZED COST) (NOTE 2A) 2,189,501
-------------------------------------------------------------------------------- ---------------
**REPURCHASE AGREEMENT--12.8%
- ------------------------------------------------------------------------------------------------
52,455,000 J.P. Morgan Securities, Inc., 2.99%, dated 10/29/93, due 11/1/93
(AT AMORTIZED COST) (NOTE 2B) 52,455,000
-------------------------------------------------------------------------------- ---------------
TOTAL INVESTMENTS (IDENTIFIED COST $379,303,164) $ 408,352,984\
-------------------------------------------------------------------------------- ---------------
</TABLE>
*Non-income producing securities.
**The repurchase agreement is fully collateralized by U.S. government
obligations. The investment in the repurchase agreement is through
participation in a joint account with other Federated Investors funds.
\The cost of investments for federal tax purposes amounts to $379,303,164. The
net unrealized appreciation of investments on a federal tax cost basis amounts
to $29,049,820, which is comprised of $46,000,959 appreciation and $16,951,139
depreciation at October 31, 1993.
Note: The categories of investments are shown as a percentage of net assets
($409,738,745) at October 31, 1993.
(See Notes which are an integral part of the Financial Statements.)
MAX-CAP FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1993
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------
Investment in repurchase agreement, at amortized cost (Note 2B) $ 52,455,000
- -------------------------------------------------------------------------------
Investments in other securities, at value 355,897,984
- ------------------------------------------------------------------------------- ---------------
Total investments, at amortized cost and value (Note 2A)
(identified and tax cost; $379,303,164) $ 408,352,984
- ------------------------------------------------------------------------------------------------
Cash 4,383
- ------------------------------------------------------------------------------------------------
Receivable for Fund shares sold 937,861
- ------------------------------------------------------------------------------------------------
Dividends and interest receivable 643,938
- ------------------------------------------------------------------------------------------------
Receivable for daily variation margin on open futures contracts (Note 2F) 270
- ------------------------------------------------------------------------------------------------
Deferred expenses (Note 2D) 2,502
- ------------------------------------------------------------------------------------------------ ---------------
Total assets 409,941,938
- ------------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------
Payable for Fund shares redeemed 56,677
- -------------------------------------------------------------------------------
Accrued expenses and other liabilities 146,516
- ------------------------------------------------------------------------------- ---------------
Total liabilities 203,193
- ------------------------------------------------------------------------------------------------ ---------------
NET ASSETS for 33,478,499 shares of beneficial interest outstanding $ 409,738,745
- ------------------------------------------------------------------------------------------------ ---------------
NET ASSETS CONSIST OF:
- ------------------------------------------------------------------------------------------------
Paid-in capital $ 368,781,860
- ------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and futures contracts (Note 2F) 29,580,330
- ------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and futures contracts (Note 2F) 11,081,011
- ------------------------------------------------------------------------------------------------
Undistributed net investment income 295,544
- ------------------------------------------------------------------------------------------------ ---------------
Total $ 409,738,745
- ------------------------------------------------------------------------------------------------ ---------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE: Institutional Shares (net assets
of $407,246,022 / 33,274,826 shares of beneficial interest outstanding) $12.24
- ------------------------------------------------------------------------------------------------ ---------------
Institutional Service Shares (net assets of $2,492,723 / 203,673 shares of beneficial interest
outstanding) $12.24
- ------------------------------------------------------------------------------------------------ ---------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
MAX-CAP FUND
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1993
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- --------------------------------------------------------------------------------------------------
Dividends $ 8,709,104
- --------------------------------------------------------------------------------------------------
Interest 1,561,355
- -------------------------------------------------------------------------------------------------- --------------
Total investment income (Note 2G) 10,270,459
- --------------------------------------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------------------------------------------------
Management fee (Note 5) $ 1,062,278
- -----------------------------------------------------------------------------------
Trustees' fees 11,038
- -----------------------------------------------------------------------------------
Custodian, transfer and dividend disbursing agent fees and expenses 180,020
- -----------------------------------------------------------------------------------
Fund share registration costs 69,282
- -----------------------------------------------------------------------------------
Auditing fees 21,285
- -----------------------------------------------------------------------------------
Legal fees 8,155
- -----------------------------------------------------------------------------------
Printing and postage 25,466
- -----------------------------------------------------------------------------------
Insurance premiums 11,174
- -----------------------------------------------------------------------------------
Distribution service fees (Note 5) 770
- -----------------------------------------------------------------------------------
Taxes 5,535
- -----------------------------------------------------------------------------------
Miscellaneous 19,628
- ----------------------------------------------------------------------------------- -------------
Total expenses 1,414,631
- -----------------------------------------------------------------------------------
Deduct--Waiver of management fee (Note 5) 321,440
- ----------------------------------------------------------------------------------- -------------
Net expenses 1,093,191
- -------------------------------------------------------------------------------------------------- --------------
Net investment income 9,177,268
- -------------------------------------------------------------------------------------------------- --------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES CONTRACTS:
- --------------------------------------------------------------------------------------------------
Net realized gain on investments (identified cost basis) 7,044,485
- --------------------------------------------------------------------------------------------------
Net realized gain on futures contracts (identified cost basis) 4,042,044
- --------------------------------------------------------------------------------------------------
Net change in unrealized appreciation 26,567,254
- -------------------------------------------------------------------------------------------------- --------------
Net realized and unrealized gain on investments and futures contracts 37,653,783
- -------------------------------------------------------------------------------------------------- --------------
Change in net assets resulting from operations $ 46,831,051
- -------------------------------------------------------------------------------------------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
MAX-CAP FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
1993 1992
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------------------------
Net investment income $ 9,177,268 $ 6,378,125
- -----------------------------------------------------------------------------
Net realized gain on investment transactions and futures contracts
($11,617,039, and $16,581,916 net gains, respectively,
as computed for federal tax purposes) 11,086,529 16,581,916
- -----------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) on investments
and futures contracts 26,567,254 (4,485,958)
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets resulting from operations 46,831,051 18,474,083
- ----------------------------------------------------------------------------- ---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 3)--
- -----------------------------------------------------------------------------
Dividends to shareholders from net investment income
- -----------------------------------------------------------------------------
Institutional Shares (9,255,446) (6,439,459)
- -----------------------------------------------------------------------------
Institutional Service Shares (14,290) --
- -----------------------------------------------------------------------------
Distributions to shareholders from net realized gain on investment
transactions and futures contracts
- -----------------------------------------------------------------------------
Institutional Shares (18,292,038) (1,919,998)
- -----------------------------------------------------------------------------
Institutional Service Shares -- --
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets resulting from distributions to shareholders (27,561,774) (8,359,457)
- ----------------------------------------------------------------------------- ---------------- ----------------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 4)--
- -----------------------------------------------------------------------------
Proceeds from sale of shares 290,371,076 274,966,492
- -----------------------------------------------------------------------------
Net asset value of shares issued to shareholders electing
to receive payment of dividends in Fund shares 8,873,310 2,036,368
- -----------------------------------------------------------------------------
Cost of shares redeemed (218,388,643) (122,031,847)
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets from fund share transactions 80,855,743 154,971,013
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets 100,125,020 165,085,639
- -----------------------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------------------
Beginning of period 309,613,725 144,528,086
- ----------------------------------------------------------------------------- ---------------- ----------------
End of period (including undistributed net investment
income of $295,544 and $388,012, respectively) $ 409,738,745 $ 309,613,725
- ----------------------------------------------------------------------------- ---------------- ----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
MAX-CAP FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1993
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Federated Index Trust (the "Trust") is registered under the Investment Company
Act of 1940, as amended, as a diversified, open-end, management investment
company with three portfolios. The financial statements included herein present
only those of Max-Cap Fund (the "Fund"). The financial statements of the other
portfolios are presented separateily. The assets of each portfolio are
segregated and a shareholder's interest is limited to the portfolio in which
shares are held.
Max-Cap Fund provides 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 the
Investment Company Act of 1940 Rule 12b-1. Under the Plan, the Fund may pay
Federated Securities Corp. (the "distributor") a fee at an annual rate up to .30
of 1% of the average net asset value of Institutional Service Shares to finance
any activity which is principally intended to result in the sale of
Institutional Service Shares. The Institutional Service Shares of the Fund were
declared effective on August 30, 1993.
(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. The
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS--Equity portfolio securities listed on the New York
Stock Exchange or any other national securities exchange are valued at the
last sale price or, if there has been no sale on that day, at the mean
between bid and asked prices. Short-term obligations are ordinarily valued
at the mean between bid and asked prices as furnished by an independent
pricing service. Short-term obligations with maturities of sixty days or
less are valued at amortized cost, which approximates value. All other
securities are appraised at fair value as determined in good faith by the
Board of Trustees.
B. REPURCHASE AGREEMENTS--It is the policy of the Trust to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System or to have segregated within the
custodian bank's vault, all securities held as collateral in support of
repurchase agreement investments. Additionally, procedures have been
established by the Trust to monitor, on a daily basis, the market value of
each repurchase agreement's underlying 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 manager to be creditworthy pursuant to guidelines established
by the Trustees. Risks may arise from the potential inability of
MAX-CAP FUND
- --------------------------------------------------------------------------------
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. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Internal Revenue Code available to regulated investment companies and to
distribute to shareholders each year all of its net income, including any
net realized gains on investments. Accordingly, no provision for federal
tax is necessary.
D. DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering the shares, have been deferred and are being
amortized using the straight-line method over a period of five years from
the Fund's commencement date.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery 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. FUTURES CONTRACTS--Upon entering into a stock index futures contract with a
broker, the Fund is required to deposit in a segregated account an amount
("initial margin") of cash or U.S. government securities equal to a
percentage of the contract value. The Fund agrees to receive from or pay
the broker an amount of cash equal to a specific dollar amount times the
difference between the closing value of the stock index and the price at
which the contract was made. On a daily basis, the value of a stock index
futures contract is determined and any difference between such value and
the original futures contract value is reflected in the "daily variation
margin" account. Daily variation margin adjustments, arising from this
"marking to market" process, are recorded by the Fund as unrealized gains
or losses.
The Fund may decide to close its position on a contract at any time prior
to the contract's expiration. When a contract is closed, the Fund
recognizes a realized gain or loss. Risks of entering into futures
contracts include the possibility that there may be an illiquid market and
that a change in the value of the contract may not correlate with changes
in the value of the underlying securities.
G. INCOME--Dividend income is recorded on the ex-dividend date. 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. Dividends to
shareholders and capital gain distributions, if any, are recorded on the
ex-dividend date.
MAX-CAP FUND
- --------------------------------------------------------------------------------
H. OTHER--Investment transactions are accounted for as of the trade date of
the transaction.
(3) DIVIDENDS AND DISTRIBUTIONS
Dividends are declared and paid quarterly to all shareholders invested in the
Fund on the record date. Dividends are paid from the net investment income of
the Fund. Net investment income consists of all dividends or interest received
by the Fund less its expenses. Capital gains realized by the Fund, if any, are
distributed at least once every twelve months.
(4) 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>
YEAR ENDED OCTOBER 31,
1993 1992
INSTITUTIONAL SHARES SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares outstanding, beginning of period 26,604,714 $ 287,926,116 13,056,654 $ 132,955,103
- ---------------------------------------------
Shares sold 24,571,558 287,913,472 24,052,533 274,966,492
- ---------------------------------------------
Shares issued to shareholders in payment of
dividends declared 764,603 8,868,865 180,492 2,036,368
- ---------------------------------------------
Shares redeemed (18,666,049) (218,365,814) (10,684,965) (122,031,847)
- --------------------------------------------- ------------- ---------------- ------------- ----------------
Shares outstanding, end of period 33,274,826 $ 366,342,639 26,604,714 $ 287,926,116
- --------------------------------------------- ------------- ---------------- ------------- ----------------
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED
OCTOBER 31, 1993*
INSTITUTIONAL SERVICE SHARES SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares outstanding, beginning of period -- $ --
- --------------------------------------------------------------------------------------
Shares sold 205,208 2,457,604
- --------------------------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 372 4,445
- --------------------------------------------------------------------------------------
Shares redeemed (1,907) (22,829)
- -------------------------------------------------------------------------------------- --------- -------------
Shares outstanding, end of period 203,673 $ 2,439,220
- -------------------------------------------------------------------------------------- --------- -------------
</TABLE>
*For the period from August 30, 1993 (date of initial public investment) to
October 31, 1993.
MAX-CAP FUND
- --------------------------------------------------------------------------------
(5) MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Federated Management, the Fund's Manager ("Manager"); receives for its services
an annual management fee equal to .30 of 1% of the Fund's average daily net
assets. Under the Management Contract, which provides for the voluntary waiver
of fee by the Manager, the Manager will voluntarily waive some or all of the
management fee. The Manager can terminate this voluntary waiver of some or all
of its management fee at any time in its sole discretion. For the fiscal year
ended October 31, 1993, the Fund's Manager earned a management fee of $1,062,278
of which $321,440 was voluntarily waived.
The Fund has adopted a Distribution Plan (the "Plan") for its Institutional
Service Shares pursuant to Rule 12b-1 under the Investment Company Act of 1940.
The Fund reimburses Federated Securities Corp., the principal distributor, from
the assets of the Institutional Service Shares of the Fund, for fees it paid
which relate to the distribution and administration of the Fund's Institutional
Service Shares. The Plan provides that the Fund may incur distribution expenses
up to 0.30% of the average daily net assets of the Institutional Service Shares,
annually, to pay commissions, maintenance fees and to compensate the
distributor. For the period from August 30, 1993 (the inception date of
Institutional Service Shares) to October 31, 1993 FSC the distributor earned
$770 in distribution services fees.
Organization expenses of $24,763 were borne initially by the Manager. The Fund
has agreed to pay the Manager, at an annual rate .005 of 1% of average daily net
assets for organization expenses until expenses borne by the Manager are
reimbursed. During the year ended October 31, 1993, the Fund paid $16,156
pursuant to this agreement. This commitment will expire five years from July 2,
1990, the date the Trust's registration statement became effective.
Certain of the Officers and Trustees of the Fund are Officers and Directors of
the above corporations.
(6) INVESTMENT TRANSACTIONS
Purchases, and sales of investments, (excluding short-term obligations) for the
year ended October 31, 1993, were as follows:
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------------------
PURCHASES-- $ 104,688,271
- ------------------------------------------------------------------------------------------------- ---------------
SALES-- $ 49,818,628
- ------------------------------------------------------------------------------------------------- ---------------
</TABLE>
MAX-CAP FUND
- --------------------------------------------------------------------------------
(7) FINANCIAL FUTURES CONTRACTS
At October 31, 1993, open positions in stock index futures contracts were as
follows:
<TABLE>
<CAPTION>
UNREALIZED
EXPIRATION OPEN CONTRACTS POSITION APPRECIATION
<S> <C> <C> <C>
December 1993 232 S&P 500 Index Futures Long $530,510
</TABLE>
At October 31, 1993, the Fund has deposited in a segregated account, $2,200,000
of U.S. Treasury Bills, to cover margin requirements on open futures contracts.
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
To the Trustees and Shareholders of
Federated Index Trust:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Max-Cap Fund (a portfolio of Federated Index
Trust), as of October 31, 1993, and the related statement of operations for the
year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and financial highlights (see pages 2 and 16 of
this prospectus) for the periods presented. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1993, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Max-Cap Fund of Federated Index Trust at October 31, 1993, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for the
periods presented in conformity with generally accepted accounting principles.
ERNST & YOUNG
Pittsburgh, Pennsylvania
December 10, 1993
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Max-Cap Fund Federated Investors Tower
Institutional Shares Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Manager
Federated Management Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Sub-Manager
ANB Investment Management One North LaSalle Street
and Trust Co. Chicago, Illinois 60690
- ---------------------------------------------------------------------------------------------------------------------
Custodian
State Street Bank and P.O. Box 8602
Trust Company Boston, Massachusetts 02266-8602
- ---------------------------------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Legal Counsel
Houston, Houston & Donnelly 2510 Centre City Tower
Pittsburgh, Pennsylvania 15222
- ---------------------------------------------------------------------------------------------------------------------
Legal Counsel
Dickstein, Shapiro & Morin 2101 L Street, N.W.
Washington, D.C. 20037
- ---------------------------------------------------------------------------------------------------------------------
Independent Auditors
Ernst & Young One Oxford Centre
Pittsburgh, Pennsylvania 15219
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
MAX-CAP FUND
(A PORTFOLIO OF FEDERATED INDEX TRUST)
INSTITUTIONAL SHARES
PROSPECTUS
An Open-End, Diversified
Management Investment Company
Prospectus dated December 31, 1993
0032104A-IS (12/93)
MAX-CAP FUND
(A PORTFOLIO OF FEDERATED INDEX TRUST)
INSTITUTIONAL SHARES
INSTITUTIONAL SERVICE SHARES
COMBINED STATEMENT OF ADDITIONAL INFORMATION
The Institutional Shares and Institutional Service Shares of Max-Cap
Fund (the "Fund") (a portfolio of Federated Index Trust) represent
interests in a diversified portfolio of securities. This Combined
Statement of Additional Information should be read with the respective
prospectus for Institutional Shares and Institutional Service Shares
dated December 31, 1993. This Statement is not a prospectus itself. To
receive a copy of either prospectus, write or call Federated Index
Trust.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Statement dated December 31, 1993
[LOGO] FEDERATED SECURITIES CORP.
---------------------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
GENERAL INFORMATION ABOUT THE FUND 1
- ---------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES 1
- ---------------------------------------------------------------
Types of Investments 1
When-Issued and Delayed
Delivery Transactions 2
Lending of Portfolio Securities 3
Reverse Repurchase Agreements 3
Portfolio Turnover 3
Investment Limitations 3
TRUST MANAGEMENT 5
- ---------------------------------------------------------------
Officers and Trustees 5
The Funds 7
Fund Ownership 8
Trustee Liability 8
MANAGEMENT SERVICES 8
- ---------------------------------------------------------------
Managers to the Fund 8
Management Fees 8
Other Related Services 9
ADMINISTRATIVE SERVICES 9
- ---------------------------------------------------------------
BROKERAGE TRANSACTIONS 9
- ---------------------------------------------------------------
PURCHASING SHARES 9
- ---------------------------------------------------------------
Distribution Plan (Institutional Service Shares) 9
Conversion to Federal Funds 10
DETERMINING NET ASSET VALUE 10
- ---------------------------------------------------------------
Determining Market Value of Securities 10
REDEEMING SHARES 10
- ---------------------------------------------------------------
Redemption in Kind 10
TAX STATUS 11
- ---------------------------------------------------------------
The Fund's Tax Status 11
Shareholders' Tax Status 11
Capital Gains 11
TOTAL RETURN 11
- ---------------------------------------------------------------
YIELD 11
- ---------------------------------------------------------------
PERFORMANCE COMPARISONS 11
- ---------------------------------------------------------------
STANDARD & POOR'S CORPORATION 12
- ---------------------------------------------------------------
GENERAL INFORMATION ABOUT THE FUND
- --------------------------------------------------------------------------------
Max-Cap Fund is a portfolio of Federated Index Trust (the "Trust"), which was
established as a Massachusetts business trust under a Declaration of Trust dated
January 30, 1990. Shares of the Fund are offered in two classes, known as
Institutional Shares and Institutional Service Shares (individually and
collectively referred to as "Shares"). This Combined Statement of Additional
Information relates to the above-mentioned Shares of the Fund.
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------
The Fund's investment objective is to provide investment results that correspond
to the aggregate price and dividend performance of publicly-traded common
stocks, by duplicating the composition of the Standard & Poor's 500 Composite
Stock Price Index. The investment objective cannot be changed without approval
of shareholders. The policies described below may be changed by the Board of
Trustees ("Trustees") without shareholder approval. Shareholders will be
notified before any material change in these policies becomes effective.
TYPES OF INVESTMENTS
In addition to the common stocks described in the prospectus, the Fund may also
invest in money market instruments and U.S. government obligations and
securities in such proportions as, in the judgment of the manager, prevailing
market conditions warrant.
MONEY MARKET INSTRUMENTS
The Fund may invest in the following money market instruments:
instruments of domestic and foreign banks and savings and loans having
capital, surplus, and undivided profits of over $100,000,000, or if the
principal amount of the instrument is insured in full by the Federal
Deposit Insurance Corporation; and
prime commercial paper (rated A-1 by Standard and Poor's Corporation,
Prime-1 by Moody's Investors Service, Inc., or F-1 by Fitch Investors
Service).
REPURCHASE AGREEMENTS
When purchasing U.S. government securities pursuant to repurchase
agreements, in the event that a defaulting seller of the securities filed
for bankruptcy or became insolvent, disposition of such securities by the
Fund might be delayed pending court action. The Fund believes that under
the regular procedures normally in effect for custody of the Fund's
portfolio securities subject to repurchase agreements, a court of
competent jurisdiction would rule in favor of the Fund and allow
retention or disposition of such securities. 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
manager to be creditworthy pursuant to guidelines established by the
Trustees. The Fund or its custodian will take possession of the
securities subject to repurchase agreements and these securities will be
marked to market daily.
U.S. GOVERNMENT OBLIGATIONS
The types of U.S. government obligations in which the Fund may invest
generally include direct obligations of the U.S. Treasury (such as U.S.
Treasury bills, notes, and bonds) and obligations issued or guaranteed by
U.S. government agencies or instrumentalities. These securities are
backed by:
the full faith and credit of the U.S. Treasury;
the issuer's right to borrow from the U.S. Treasury;
the discretionary authority of the U.S. government to purchase certain
obligations of agencies or instrumentalities; or
the credit of the agency or instrumentality issuing the obligations.
Examples of agencies and instrumentalities which may not always receive
financial support from the U.S.
government are:
Federal Land Banks;
Central Bank for Cooperatives;
Federal Intermediate Credit Banks;
Federal Home Loan Banks;
Farmers Home Administration; and
Federal National Mortgage Association.
VARIABLE RATE U.S. GOVERNMENT SECURITIES
In the case of certain U.S. government securities purchased by the Fund
that carry variable interest rates, these rates will reduce the changes
in the market value of such securities from their original purchase
prices.
Accordingly, the potential for capital appreciation or capital
depreciation should not be greater than the
- --------------------------------------------------------------------------------
potential for capital appreciation or capital depreciation of fixed
interest rate U.S. government securities having maturities equal to the
interest rate adjustment dates of the variable rate U.S. government
securities.
STOCK INDEX FUTURES AND OPTIONS
The Fund may utilize stock index futures contracts and options on stocks,
stock indices and stock index futures contracts for the purposes of
managing cash flows into and out of the Fund's portfolio and potentially
reducing transactional costs. The Fund may not use stock index futures
contracts and options for speculative purposes.
As a means of reducing fluctuations in the net asset value of shares of
the Fund, the Fund may attempt to hedge all or a portion of its portfolio
through the purchase of listed put options on stocks, stock indices, and
stock index futures contracts. These options will be used only as a form
of forward pricing to protect portfolio securities against decreases in
value resulting from market factors such as an anticipated increase in
interest rates. A put option gives the Fund, in return for a premium, the
right to sell the underlying security to the writer (seller) at a
specified price during the term of the option. Put options on stock
indices are similar to put options on stocks except for the delivery
requirements. Instead of giving the Fund the right to make delivery of
stock at a specified price, a put option on a stock index gives the Fund,
as holder, the right to receive an amount of cash upon exercise of the
option.
The Fund may also write covered call options. As the writer of a call
option, the Fund has the obligation upon exercise of the option during
the option period to deliver the underlying security upon payment of the
exercise price.
The Fund may only: (1) buy listed put options on stock indices and stock
index futures contracts; (2) buy listed put options on securities held in
its portfolio; and (3) sell listed call options either on securities held
in its portfolio or on securities which it has the right to obtain
without payment of further consideration (or has segregated cash in the
amount of any such additional consideration). The Fund will maintain its
positions in securities, option rights, and segregated cash subject to
puts and calls until the options are exercised, closed, or expired.
The Fund may also enter into stock index futures contracts. A stock index
futures contract is a bilateral agreement which obligates the seller to
deliver (and the purchaser to take delivery of) an amount of cash equal
to a specific dollar amount times the difference between the value of a
specific stock index at the close of trading of the contract and the
price at which the agreement is originally made. There is no physical
delivery of the stocks constituting the index, and no price is paid upon
entering into a futures contract. In general, contracts are closed out
prior to their expiration. The Fund, when purchasing or selling a futures
contract, will initially be required to deposit in a segregated account
in the broker's name with the Fund's custodian an amount of cash or U.S.
government securities approximately equal to 5-10% of the contract value.
This amount is known as "initial margin", and it is subject to change by
the exchange or board of trade on which the contract is traded.
Subsequent payments to and from the broker are made on a daily basis as
the price of the index or the securities underlying the futures contract
fluctuates. These payments are known as "variation margins", and the
fluctuation in value of the long and short positions in the futures
contract is a process referred to as "marking to market." The Fund may
decide to close its position on a contract at any time prior to the
contract's expiration. This is accomplished by the Fund taking an
opposite position at the then prevailing price, thereby terminating its
existing position in the contract. Because both the initial and variation
margin resemble a performance bond or good faith deposit on the contract,
they are returned to the Fund upon the termination of the contract,
assuming that all contractual obligations have been satisfied. Therefore,
the margin utilized in futures contracts is readily distinguishable from
the margin employed in security transactions, since futures contracts
margin does not involve the borrowing of funds to finance the
transaction.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an advantageous
price and yield for the Fund. Settlement dates may be a month or more after
entering into these transactions, and the market values of the securities
purchased may vary from the purchase prices.
No fees or other expenses, other than normal transaction costs, are incurred.
However, liquid assets of the Fund sufficient to make payment for the securities
to be purchased are segregated at the trade date. These securities are marked to
market daily and maintained until the transaction is settled. The Fund may
engage in these transactions to an extent that would cause the segregation of an
amount up to 20% of the total value of its assets.
LENDING OF PORTFOLIO SECURITIES
The Fund may lend its portfolio securities up to one-third of the value of its
total assets to broker/dealers, banks, or other institutional borrowers of
securities. The Fund will only enter into loan arrangements with broker/dealers,
banks, or other institutions which the sub-manager has determined are
creditworthy under guidelines established by the Trustees and will receive
collateral equal to at least 100% of the value of the securities loaned.
The collateral received when the Fund lends portfolio securities must be valued
daily and, should the market value of the loaned securities increase, the
borrower must furnish additional collateral to the Fund. During the time
portfolio securities are on loan, the borrower pays the Fund any dividends or
interest paid on such securities. Loans are subject to termination at the option
of the Fund or the borrower. The Fund may pay reasonable administrative and
custodial fees in connection with a loan and may pay a negotiated portion of the
interest earned on the cash or equivalent collateral to the borrower or placing
broker. The Fund does not have the right to vote securities on loan, but would
terminate the loan and regain the right to vote if that were considered
important with respect to the investment.
REVERSE REPURCHASE AGREEMENTS
The Fund may also enter into reverse repurchase agreements. A reverse repurchase
transaction is similar to borrowing cash. In a reverse repurchase agreement the
Fund transfers possession of a portfolio instrument to another person, such as a
financial institution, broker, or dealer, in return for a percentage of the
instrument's market value in cash, and agrees that on a stipulated date in the
future the Fund will repurchase the portfolio instrument by remitting the
original consideration plus interest at an agreed upon rate. The use of reverse
repurchase agreements may enable the Fund to avoid selling portfolio instruments
at a time when a sale may be deemed to be disadvantageous, but the ability to
enter into reverse repurchase agreements does not ensure that the Fund will be
able to avoid selling portfolio instruments at a disadvantageous time.
When effecting reverse repurchase agreements, liquid assets of the Fund, in a
dollar amount sufficient to make payment for the obligations to be purchased,
are segregated at the trade date. These assets are marked to market daily and
maintained until the transaction is settled.
PORTFOLIO TURNOVER
The Fund will not attempt to set or meet a portfolio turnover rate since any
turnover would be incidental to transactions undertaken in an attempt to achieve
the Fund's investment objective. For the fiscal years ended October 31, 1993,
1992, and 1991, the portfolio turnover rate for the Fund was 13%, 46%, and 6%,
respectively.
INVESTMENT LIMITATIONS
INVESTING IN COMMODITIES
The Fund will not purchase or sell commodities. However, the Fund may
purchase put options on stock index futures, put options on financial
futures, and stock index futures contracts.
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities on
margin, other than in connection with buying stock index futures
contracts, put options on stock index futures and put options on
financial futures, but may obtain such short-term credits as are
necessary for the clearance of transactions.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets except portfolio securities, the
market value of which does not exceed one-third of the total value of the
Fund's assets. This shall not prevent the purchase or holding of
corporate or government bonds, debentures, notes, certificates of
indebtedness or other debt securities of an issuer, repurchase
agreements, or other transactions which are permitted by the Fund's
investment objective and policies or the Declaration of Trust.
UNDERWRITING
The Fund will not underwrite any issue of securities except as it may be
deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of restricted securities which the Fund may
purchase pursuant to its investment objective, policies, and limitations.
INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS AND TRUSTEES OF
THE TRUST
The Fund will not purchase or retain the securities of any issuer in
which the Officers and Trustees of the Trust or the Fund's investment
adviser own a substantial financial interest.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities, except as permitted by its
investment objective and policies, and except that the Fund may enter
into reverse repurchase agreements and otherwise borrow up to one-third
of the value of its total assets, including the amount borrowed, as a
temporary, extraordinary, or emergency measure or to facilitate
management of the portfolio by enabling the Fund to meet redemption
requests
- --------------------------------------------------------------------------------
when the liquidation of portfolio instruments would be inconvenient or
disadvantageous. The Fund will not purchase any securities while any
borrowings in excess of 5% of its total assets are outstanding. During
the period any reverse repurchase agreements are outstanding the Fund
will restrict the purchase of portfolio securities to money market
instruments maturing on or before the expiration date of the reverse
repurchase agreements, but only to the extent necessary to assure the
completion of the reverse repurchase agreements.
DIVERSIFICATION OF INVESTMENTS
The Fund will not invest more than 5% of the value of its total assets in
the securities of any one issuer, except U.S. government securities, or
invest in more than 10% of the voting securities of one issuer.
CONCENTRATION OF INVESTMENTS
The Fund will not invest 25% or more of the value of its total assets in
securities of companies in any one industry. However, investing in U.S.
government obligations shall not be considered investing in any one
industry.
INVESTING IN REAL ESTATE
The Fund will not buy or sell real estate, although it may invest in the
marketable securities of companies whose business involves the purchase
or sale of real estate or in marketable securities which are secured by
real estate or interests in real estate.
INVESTING IN RESTRICTED SECURITIES
The Fund will not invest in securities subject to restrictions on resale
under the federal securities laws, unless the securities are determined
by the Fund's manager to be liquid under criteria established by the
Trustees. The Fund will not invest more than 5% of its total assets in
restricted securities.
The above investment limitations cannot be changed without shareholder approval.
The following investment limitations, however, may be changed by the Trustees
without shareholder approval. Shareholders will be notified before any material
change in these policies becomes effective.
WRITING COVERED CALL OPTIONS
The Fund will not write call options on securities unless the securities
are held in the Fund's portfolio or unless the Fund is entitled to them
in deliverable form without further payment or after segregating cash in
the amount of any further payment.
INVESTING IN PUT OPTIONS
The Fund will not purchase put options on securities, other than put
options on stock indices, unless the securities are held in the Fund's
portfolio and not more than 5% of the value of the Fund's total assets
would be invested in premiums on open put option positions.
INVESTING IN MINERALS
The Fund will not purchase interests in oil, gas, or other mineral
exploration or development programs or leases, although it may invest in
the securities of issuers which invest in or sponsor such programs.
ACQUIRING SECURITIES
The Fund will not purchase securities of other investment companies
except to the extent permitted by the Investment Company Act of 1940, or
except as part of a merger, consolidation, or other acquisition. It will
not invest in securities for the purpose of exercising control or
management.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 15% of its net assets in securities
which are illiquid, including certain restricted securities and
repurchase agreements providing for settlement more than seven days after
notice.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. In those cases, it may mortgage, pledge, or
hypothecate assets having a market value not exceeding the lesser of the
dollar amounts borrowed or 10% of the value of the total assets at the
time of the borrowing.
INVESTING IN WARRANTS
The Fund will not invest in warrants.
Except with respect to borrowing money, if a percentage limitation is adhered to
at the time of investment, a later increase or decrease in percentage resulting
from any change in value or net assets will not result in a violation of such
restriction.
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The Fund did not borrow money or pledge securities in excess of 5% of the value
of its net assets during the past fiscal year and does not expect to do so
during the coming fiscal year.
TRUST MANAGEMENT
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OFFICERS AND TRUSTEES
Officers and Trustees are listed with their addresses, principal occupations,
and present positions, including any
affiliation with Federated Investors, Federated Management, Federated Securities
Corp., and Federated Administrative Services, Inc.
<TABLE>
<CAPTION>
POSITIONS WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS THE TRUST DURING PAST FIVE YEARS
<S> <C> <C>
John F. Donahue\* Chairman and Chairman and Trustee, Federated Investors; Chairman and
Federated Investors Tower Trustee Trustee, Federated Advisers, Federated Management, and
Pittsburgh, PA Federated Research; Director, AEtna Life and Casualty Company;
Chief Executive Officer and Director, Trustee, or Managing
General Partner of the Funds; formerly, Director, The Standard
Fire Insurance Company. Mr. Donahue is the father of J.
Christopher Donahue, Vice-President and Trustee of the Trust.
John T. Conroy, Jr. Trustee President, Investment Properties Corporation; Senior
Wood/IPC Vice-President, John R. Wood and Associates, Inc., Realtors;
Commercial Department President, Northgate Village Development Corporation; General
John R. Wood and Partner or Trustee in private real estate ventures in Southwest
Associates, Inc., Realtors Florida; Director, Trustee, or Managing General Partner of the
3255 Tamiami Trail North Funds; formerly President, Naples Property Management, Inc.
Naples, FL
William J. Copeland Trustee Director and Member of the Executive Committee, Michael Baker,
One PNC Plaza-23rd Floor Inc.; Director, Trustee, or Managing General Partner of the
Pittsburgh, PA Funds; formerly, Vice Chairman and Director, PNC Bank, N.A.,
and PNC Bank Corp. and Director, Ryan Homes, Inc.
J. Christopher Donahue* Vice President President and Trustee, Federated Investors; Trustee,
Federated Investors Tower and Trustee Federated Advisers, Federated Management and Federated
Pittsburgh, PA Research; President and Director, Federated Administrative
Services, Inc.; Trustee, Federated Services Company; President
or Vice President of the Funds; Director, Trustee or Managing
General Partner of some of the Funds. Mr. Donahue is the son of
John F. Donahue, Chairman and Trustee of the Trust.
James E. Dowd Trustee Attorney-at-law; Director, The Emerging Germany Fund, Inc.;
571 Hayward Mill Road Director, Trustee, or Managing General Partner of the Funds;
Concord, MA formerly, Director, Blue Cross of Massachusetts, Inc.
Lawrence D. Ellis, M.D. Trustee Hematologist, Oncologist, and Internist, Presbyterian and
3471 Fifth Avenue Montefiore Hospitals; Clinical Professor of Medicine and
Suite 1111 Trustee, University of Pittsburgh; Director, Trustee, or
Pittsburgh, PA Managing General Partner of the Funds.
</TABLE>
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<TABLE>
<CAPTION>
POSITIONS WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS THE TRUST DURING PAST FIVE YEARS
<S> <C> <C>
Edward L. Flaherty, Jr.\ Trustee Attorney-at-law; Partner, Meyer and Flaherty; Director, Eat'N
5916 Penn Mall Park Restaurants, Inc., and Statewide Settlement Agency, Inc.;
Pittsburgh, PA Director, Trustee, or Managing General Partner of the Funds;
formerly, Counsel, Horizon Financial, F.A., Western Region.
Peter E. Madden Trustee Consultant; State Representative, Commonwealth of
225 Franklin Street Massachusetts; Director, Trustee, or Managing General Partner
Boston, MA of the Funds; formerly, President, State Street Bank and Trust
Company and State Street Boston Corporation and Trustee, Lahey
Clinic Foundation, Inc.
Gregor F. Meyer Trustee Attorney-at-law; Partner, Meyer and Flaherty; Chairman,
5916 Penn Mall Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.;
Pittsburgh, PA Director, Trustee, or Managing General Partner of the Funds;
formerly, Vice Chairman, Horizon Financial, F.A.
Wesley W. Posvar Trustee Professor, Foreign Policy and Managment Consultant; Trustee,
1202 Cathedral of Carnegie Endowment for International Peace, RAND Corporation,
Learning Online Computer Library Center, Inc., and U.S. Space
University of Pittsburgh Foundation; Chairman, Czecho Slovak Management Center;
Pittsburgh, PA Director, Trustee, or Managing General Partner of the Funds;
President Emeritus, University of Pittsburgh; formerly, Chair-
man, National Advisory Council for Environmental Policy and
Technology.
Marjorie P. Smuts Trustee Public relations/marketing consultant; Director, Trustee, or
4905 Bayard Street Managing General Partner of the Funds.
Pittsburgh, PA
Glen R. Johnson President Trustee, Federated Investors; President and/or Trustee of some
Federated Investors Tower of the Funds; staff member, Federated Securities Corp.,
Pittsburgh, PA Federated Administrative Services and Federated Administrative
Services, Inc.
Richard B. Fisher Vice President Executive Vice President and Trustee, Federated Investors;
Federated Investors Tower Chairman and Director, Federated Securities Corp.; President or
Pittsburgh, PA Vice President of the Funds; Director or Trustee of some of the
Funds.
Edward C. Gonzales Vice President Vice President, Treasurer and Trustee, Federated Investors;
Federated Investors Tower and Treasurer Vice President and Treasurer, Federated Advisers, Federated
Pittsburgh, PA Management, and Federated Research; Executive Vice President,
Treasurer, and Director, Federated Securities Corp.; Chairman,
Treasurer, and Director, Federated Administrative Services,
Inc.; Trustee or Director of some of the Funds; Vice President
and Treasurer of the Funds.
</TABLE>
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<TABLE>
<CAPTION>
POSITIONS WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS THE TRUST DURING PAST FIVE YEARS
<S> <C> <C>
John W. McGonigle Vice President Vice President, Secretary, General Counsel, and Trustee,
Federated Investors Tower and Secretary Federated Investors; Vice President, Secretary and Trustee,
Pittsburgh, PA Federated Advisers, Federated Management, and Federated
Research; Executive Vice President, Secretary, and Director,
Federated Administrative Services, Inc.; Director and Executive
Vice President, Federated Securities Corp.; Vice President and
Secretary of the Funds.
John A. Staley, IV Vice President Vice President and Trustee, Federated Investors; Executive Vice
Federated Investors Tower President, Federated Securities Corp.; President and Trustee,
Pittsburgh, PA Federated Advisers, Federated Management, and Federated
Research; Vice President of the Funds; Director, Trustee, or
Managing General Partner of some of the Funds; formerly, Vice
President, The Standard Fire Insurance Company and President of
its Federated Research Division.
</TABLE>
*This Trustee is deemed to be an "interested person" of the Fund or the
Trust as defined in the Investment Company Act of 1940.
\Members of the Trust's Executive Committee. The Executive Committee of the
Board of Trustees handles the responsibilities of the Board of Trustees between
meetings of the Board.
THE FUNDS
"The Funds" and "Funds" mean the following investment companies: A.T. Ohio
Tax-Free Money Fund; American Leaders Fund, Inc.; Annuity Management Series;
Automated Cash Management Trust; Automated Government Money Trust; The Boulevard
Funds; California Municipal Cash Trust; Cash Trust Series II; Cash Trust Series,
Inc.; DG Investor Series; Edward D. Jones & Co. Daily Passport Cash Trust; FT
Series, Inc.; Federated ARMs Fund; Federated Exchange Fund, Ltd.; Federated GNMA
Trust; Federated Government Trust; Federated Growth Trust; Federated High Yield
Trust; Federated Income Securities Trust; Federated Income Trust; Federated
Intermediate Government Trust; Federated Master Trust; Federated Municipal
Trust; Federated Short-Intermediate Government Trust; Federated Short-Term U.S.
Government Trust; Federated Stock Trust; Federated Tax-Free Trust; Federated
U.S. Government Bond Fund; First Priority Funds; Fixed Income Securities, Inc.;
Fortress Adjustable Rate U.S. Government Fund, Inc.; Fortress Municipal Income
Fund, Inc.; Fortress Utility Fund, Inc.; Fund for U.S. Government Securities,
Inc.; Government Income Securities, Inc.; High Yield Cash Trust; Intermediate
Municipal Trust; Investment Series Funds, Inc.; Investment Series Trust; Liberty
Equity Income Fund, Inc.; Liberty High Income Bond Fund, Inc.; Liberty Municipal
Securities Fund, Inc.; Liberty U.S. Government Money Market Trust; Liberty
Utility Fund, Inc.; Liberty Term Trust, Inc.-1999; Liquid Cash Trust; Mark Twain
Funds; Money Market Management, Inc.; Money Market Obligations Trust; Money
Market Trust; Municipal Securities Income Trust; New York Municipal Cash Trust;
111 Corcoran Funds; The Planters Funds; Portage Funds; RIMCO Monument Funds; The
Shawmut Funds; Short-Term Municipal Trust; Signet Select Funds; Star Funds; The
Starburst Funds; The Starburst Funds II; Stock and Bond Fund, Inc.; Sunburst
Funds; Targeted Duration Trust; Tax-Free Instruments Trust; Trademark Funds;
Trust for Financial Institutions; Trust for Government Cash Reserves; Trust for
Short-Term U.S. Government Securities; Trust for U.S. Treasury Obligations.
FUND OWNERSHIP
Officers and Trustees own less than 1% of the Fund's outstanding shares. As of
November 29, 1993, the following shareholders of record owned 5% or more of the
outstanding shares of the Fund: Charles Schwab & Co., Inc., San Francisco,
California, owned approximately 2,191,783 shares (6.5%); University National
Bank and Trust, Palo Alto, California, owned approximately 2,018,133 shares
(6.0%); Var & Co., St. Paul, Minnesota, owned approximately 2,169,531 shares
(6.4%); and Mitro & Co., Milwaukee, Wisconsin, owned approximately 2,654,816
shares (7.9%).
TRUSTEE LIABILITY
The Trust's Declaration of Trust provides that the Trustees will not be liable
for errors of judgment or mistakes of fact or law. However, they are not
protected against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office.
- --------------------------------------------------------------------------------
MANAGEMENT SERVICES
- --------------------------------------------------------------------------------
MANAGERS TO THE FUND
The Fund's manager is Federated Management. It is a subsidiary of Federated
Investors. All the voting securities of Federated Investors are owned by a
trust, the trustees of which are John F. Donahue, his wife, and his son, J.
Christopher Donahue. John F. Donahue is Chairman and Trustee of Federated
Management, Chairman and Trustee of Federated Investors and Chairman and Trustee
of the Trust. John A. Staley, IV, is President and Trustee of Federated
Management, Vice President and Trustee of Federated Investors, Executive Vice
President of Federated Securities Corp., and Vice President of the Trust. J.
Christopher Donahue, Trustee of Federated Management, is President and Trustee
of Federated Investors, President and Director of Federated Administrative
Services, Inc., and Vice President and Trustee of the Trust. John W. McGonigle,
Vice President, Secretary and Trustee of Federated Management, is Trustee, Vice
President, Secretary, and General Counsel of Federated Investors, Executive Vice
President, Secretary, and Director of Federated Administrative Services, Inc.,
Director and Executive Vice President of Federated Securities Corp. and Vice
President and Secretary of the Trust.
The Fund's sub-manager is ANB Investment Management and Trust Company ("ANB").
It is a wholly-owned subsidiary of American National Bank and Trust Company of
Chicago. American National Bank and Trust Company of Chicago is a wholly-owned
subsidiary of American National Corporation, which, in turn, is a wholly-owned
subsidiary of First Chicago Corporation. The sub-manager's directors are John R.
Tilton, Thomas P. Michaels, John Q. McKinnon, Stephen P. Manus, Neil R. Wright,
and P. James Kartalia. The officers of ANB are John R. Tilton, President and
Chief Investment Officer, and Thomas P. Michaels, Secretary, Treasurer, and
Legal Counsel.
Neither the manager nor the sub-manager shall be liable to the Trust, the Fund,
or any shareholder of the Fund for any losses that may be sustained in the
purchase, holding, or sale of any security or for anything done or omitted by
the manager or sub-manager, except acts or omissions involving willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
imposed upon either of them by their respective management contracts.
MANAGEMENT FEES
For its management services, Federated Management receives an annual fee as
described in the prospectus. ANB receives an annual fee for its services as
described in the prospectus, which will be paid by the manager, based on the
Fund's average daily net assets.
For the fiscal years ended October 31, 1993, 1992, and 1991, the manager earned
$1,062,278, $655,771, and $201,219, respectively, of which, $321,440, $400,391,
and $201,219, respectively, was voluntarily waived due to undertakings to limit
the Fund's expenses.
STATE EXPENSE LIMITATIONS
The manager has undertaken to comply with the expense limitation
established by certain states for investment companies whose shares are
registered for sale in those states. If the Fund's normal operating
expenses (including the management fee, but not including brokerage
commissions, interest, taxes, and extraordinary expenses) exceed 2-1/2%
per year of the first $30 million of average net assets, 2% per year of
the next $70 million of average net assets, and 1-1/2% per year of the
remaining average net assets, the manager will reimburse the Fund for its
expenses over the limitation.
If the Fund's monthly projected operating expenses exceed this
limitation, the management fee paid will be reduced by the amount of the
excess, subject to an annual adjustment. If the expense limitation is
exceeded, the amount to be reimbursed by the manager will be limited, in
any single fiscal year, by the amount of the management fee.
This arrangement is not part of the management contract and may be
amended or rescinded in the future.
OTHER RELATED SERVICES
Affiliates of the manager may, from time to time, provide certain electronic
equipment and software to institutional customers in order to facilitate the
purchase of shares of funds offered by Federated Securities Corp.
ADMINISTRATIVE SERVICES
- --------------------------------------------------------------------------------
Federated Administrative Services, Inc., a subsidiary of Federated Investors,
provides administrative personnel and services to the Fund at approximate cost
through agreement with the Fund's manager. John A. Staley, IV, an officer of the
Trust, and Dr. Henry J. Gailliot, an officer of Federated Management, the
manager to the Fund, each hold approximately 15% and 20%, respectively, of the
outstanding common stock and serve as directors of Commercial Data Services,
Inc., a company which provides computer processing services to Federated
Administrative Services,
Inc. For the fiscal years ended October 31, 1993, 1992, and 1991, Federated
Administrative Services, Inc., paid approximately $165,431, $189,741, and
$187,677, respectively, for services provided by Commerical Data
Services, Inc.
BROKERAGE TRANSACTIONS
- --------------------------------------------------------------------------------
The managers may select brokers and dealers who offer brokerage and research
services. These services may be furnished directly to the Fund or to the
managers and may include:
advice as to the advisability of investing in securities;
security analysis and reports;
economic studies;
industry studies;
receipt of quotations for portfolio evaluations; and
similar services.
The managers and their affiliates exercise reasonable business judgment in
selecting brokers who offer brokerage and research services to execute
securities transactions. They determine in good faith that commissions charged
by such persons are reasonable in relationship to the value of the brokerage and
research services provided.
Research services provided by brokers and dealers may be used by the managers or
by affiliates of Federated Investors in advising Federated Funds and other
accounts. To the extent that receipt of these services may supplant services for
which the managers or their affiliates might otherwise have paid, it would tend
to reduce their expenses.
For the fiscal years ended October 31, 1993, 1992, and 1991, the Fund paid
$16,910, $3,238, and $2,504, respectively, in commissions on brokerage
transactions.
PURCHASING SHARES
- --------------------------------------------------------------------------------
Shares are sold at their net asset value without a sales charge on days the New
York Stock Exchange is open for business. The procedure for purchasing Shares is
explained in the respective prospectus under "Investing in Institutional Shares"
or "Investing in Institutional Service Shares."
DISTRIBUTION PLAN (INSTITUTIONAL SERVICE SHARES)
With respect to the Institutional Service Shares class of the Fund, the Fund has
adopted a Plan pursuant to Rule 12b-1 which was promulgated by the Securities
and Exchange Commission pursuant to the Investment Company Act of 1940. The Plan
permits the payment of fees to administrators (including broker/dealers and
depository institutions such as commerical banks and savings and loan
associations) for distribution and administrative services. The Plan is designed
to stimulate administrators to provide distribution and administrative support
services to the Fund and its shareholders. The administrative services are
provided by a representative who has knowledge of the shareholder's particular
circumstances and goals, and include, but are not limited to: communicating
account openings; communicating account closings; entering purchase
transactions; entering redemption transactions; providing or arranging to
provide account support for all transactions; wiring funds and receiving funds
for Share purchases and redemptions, confirming and reconciling all
transactions; reviewing the activity in Fund accounts or arranging for this
service to be performed by the Fund's transfer agent; and maintaining and
distributing current copies of prospectuses and shareholder reports to the
beneficial owners of Shares of the Fund and prospective shareholders.
By adopting the Plan, the Trustees expect that the Fund will be able to achieve
a more predictable flow of cash for investment purposes and to meet redemptions.
This will facilitate more efficient portfolio management and assist the Fund in
seeking to achieve its investment objective. By identifying potential investors
whose needs are served by the Fund's objective, and properly servicing these
accounts, the Fund may be able to curb sharp fluctuations in rates of redemption
and sales.
Other benefits which the Fund hopes to achieve through the Plan include, but are
not limited to, the following:
(1) an efficient and effective administrative system; (2) a more efficient use
of shareholder assets by having them rapidly invested in the Fund, through
automatic transfer of funds from a demand deposit account to an investment
account, with a minimum of delay and administrative detail; and (3) an efficient
and reliable shareholder records system and prompt responses to shareholder
requests and inquiries concerning their accounts.
CONVERSION TO FEDERAL FUNDS
It is the Fund's policy to be as fully invested as possible so that maximum
interest may be earned. State Street Bank acts as the shareholder's agent in
depositing checks and converting them to federal funds.
DETERMINING NET ASSET VALUE
- --------------------------------------------------------------------------------
Net asset value generally changes each day. The days on which net asset value
for each class of Shares is calculated by the Fund are described in the
prospectus.
DETERMINING MARKET VALUE OF SECURITIES
Market or appraised values of the Fund's portfolio securities are determined as
follows:
for equity securities, according to the last sale price on a national securities
exchange, if available;
in the absence of recorded sales for equity securities, according to the mean
between the last closing bid and asked prices;
for bonds and other fixed income securities, at the last sale price on a
national securities exchange if available, otherwise as determined by an
independent pricing service;
for short-term obligations, according to the mean between bid and asked prices
as furnished by an independent pricing service or for short-term obligations
with maturities of less than 60 days, at amortized cost; or
for all other securities, at fair value as determined in good faith by the
Trustees.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may reflect: institutional trading in
similar groups of securities, yield, quality, coupon rate, maturity, type of
issue, trading characteristics, and other market data.
The Fund will value stock index futures contracts, options on stock and stock
indices and put options on stock index futures and financial futures at their
market values established by the exchanges at the close of option trading on
such exchanges unless the Trustees determine in good faith that another method
of valuing option positions is necessary to appraise their fair value.
REDEEMING SHARES
- --------------------------------------------------------------------------------
The Fund redeems Shares at the next computed net asset value after State Street
Bank receives the redemption request. Redemption procedures are explained in the
respective prospectus under "Redeeming Institutional Shares" or "Redeeming
Institutional Service Shares."
REDEMPTION IN KIND
Although the Fund intends to redeem Shares in cash, it reserves the right under
certain circumstances to pay the redemption price in whole or in part by a
distribution of securities from the Fund's portfolio.
Redemption in kind will be made in conformity with applicable Securities and
Exchange Commission rules, taking such securities at the same value employed in
determining net asset value and selecting the securities in a manner the
Trustees determine to be fair and equitable.
The Fund has elected to be governed by Rule 18f-1 of the Investment Company Act
of 1940 under which the Fund is obligated to redeem shares for any one
shareholder in cash only up to the lesser of $250,000 or 1% of the Fund's net
asset value during any 90-day period.
TAX STATUS
- --------------------------------------------------------------------------------
THE FUND'S TAX STATUS
The Fund will pay no federal income tax because the Fund expects to meet the
requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies and to receive the special tax treatment afforded
to such companies. To qualify for this treatment, the Fund must, among other
requirements:
derive at least 90% of its gross income from dividends, interest, and gains from
the sale of securities;
derive less than 30% of its gross income from the sale of securities held less
than three months;
invest in securities within certain statutory limits; and
distribute to its shareholders at least 90% of its net income earned during the
year.
SHAREHOLDERS' TAX STATUS
Shareholders are subject to federal income tax on dividends received as cash or
additional shares. No portion of any income dividend paid by the Fund is
eligible for the dividends received deduction available to corporations. These
dividends, and any short-term capital gains, are taxable as ordinary income.
CAPITAL GAINS
Capital gains experienced by the Fund could result in an increase in dividends.
Capital losses could result in a decrease in dividends. If the Fund realizes net
long-term capital gains, it will distribute them at least once every 12 months.
TOTAL RETURN
- --------------------------------------------------------------------------------
The Fund's average annual total return for Institutional Shares for the one-year
period ended October 31, 1993, and for the period from July 2, 1990 (the
effective date of the Fund's registration statement), to October 31, 1993, was
14.35% and 11.38%, respectively.
The Fund's average annual total return for Institutional Service Shares for the
period from August 30, 1993 (date of initial public investment) to October 31,
1993 was 1.70%.
The average annual total return for each class of the Fund is the average
compounded rate of return for a given period that would equate a $1,000 initial
investment to the ending redeemable value of that investment. The ending
redeemable value is computed by multiplying the number of shares owned at the
end of the period by the offering price per share at the end of the period. The
number of shares owned at the end of the period is based on the number of shares
purchased at the beginning of the period with $1,000, adjusted over the period
by any additional shares, assuming the quarterly reinvestment of all dividends
and distributions.
YIELD
- --------------------------------------------------------------------------------
The Fund's yields for Institutional Shares and for Institutional Service Shares
for the thirty-day period ended October 31, 1993, were 2.38% and 2.08%,
respectively.
The yield for each class of shares of the Fund is determined by dividing the net
investment income per share (as defined by the Securities and Exchange
Commission) earned by the respective class of shares over a thirty-day period by
the offering price per share of the respective class on the last day of the
period. This value is annualized using semi-annual compounding. This means that
the amount of income generated during the thirty-day period is assumed to be
generated each month over a twelve month period and is reinvested every six
months. The yield does not necessarily reflect income actually earned by the
Fund because of certain adjustments required by the Securities and Exchange
Commission and, therefore, may not correlate to the dividends or other
distributions paid to shareholders.
To the extent that financial institutions and broker/dealers charge fees in
connection with services provided in conjunction with an investment in the Fund,
performance will be reduced for those shareholders paying those fees.
PERFORMANCE COMPARISONS
- --------------------------------------------------------------------------------
The Fund's performance depends upon such variables as:
portfolio quality;
average portfolio maturity;
type of instruments in which the portfolio is invested;
changes in interest rates and market value of portfolio securities;
changes in Fund expenses;
the relative amount of Fund cash flow; and
various other factors.
- --------------------------------------------------------------------------------
The performance of each class of Shares fluctuates on a daily basis largely
because net earnings and offering price per share fluctuate daily. Both net
earnings and offering price per share are factors in the computation of yield
and total return.
From time to time, the Fund may advertise its performance of each class of
Shares compared to similar funds or portfolios using certain indices, reporting
services, and financial publications. These may include the following:
LIPPER ANALYTICAL SERVICES, INC., ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes the
reinvestment of all capital gains distributions and income dividends and takes
into account any change in offering price over a specific period of time. From
time to time, the Fund will quote its Lipper ranking in the "index funds"
category in advertising and sales literature.
DOW JONES INDUSTRIAL AVERAGE ("DJIA") represents share prices of selected
blue-chip industrial corporations as well as public utility and transportation
companies. The DJIA indicates daily changes in the average price of stocks in
any of its categories. It also reports total sales for each group of
industries. Because it represents the top corporations of America, the DJIA's
index movements are leading economic indicators for the stock market as a
whole.
STANDARD & POOR'S DAILY STOCK PRICE INDEX OF 500 COMMON STOCKS, a composite
index of common stocks in industry, transportation, and financial and public
utility companies can be used to compare to the total returns of funds whose
portfolios are invested primarily in common stocks. In addition, the Standard &
Poor's index assumes reinvestments of all dividends paid by stocks listed on
its index. Taxes due on any of these distributions are not included, nor are
brokerage or other fees calculated in Standard & Poor's figures.
MORNINGSTAR, INC., an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for two
weeks.
Investors may use such indices or reporting services in addition to the Fund's
prospectus to obtain a more complete view of the class's performance before
investing. Of course, when comparing performance of either class to any index,
conditions such as composition of the index and prevailing market conditions
should be considered in assessing the significance of such comparisons. When
comparing funds using reporting services, or total return and yield, investors
should take into consideration any relevant differences in funds such as
permitted portfolio compositions and methods used to value portfolio securities
and compute offering price.
Advertisements and other sales literature for each class of shares may quote
total returns which are calculated on nonstandardized base periods. These total
returns also represent the historic change in the value of an investment in
either class of shares based on quarterly reinvestment of dividends over a
specified period of time.
STANDARD & POOR'S CORPORATION
- --------------------------------------------------------------------------------
The Fund is not sponsored, endorsed, sold or promoted by, or affiliated with,
Standard & Poor's Corporation ("S&P"). S&P makes no representation or warranty,
express or implied, to the owners of the Fund or any member of the public
regarding the advisability of investing in securities generally or in the Fund
particularly or the ability of the S&P 500 Index to track general stock market
performance. S&P's only relationship to Federated Securities Corp. (the
"Licensee") is the licensing of certain trademarks and trade names of S&P and of
the S&P 500 Index which is determined, composed and calculated by S&P without
regard to the Licensee or the Fund. S&P has no obligation to take the needs of
the Licensee or the owners of the Fund into consideration in determining,
composing or calculating the S&P 500 Index. S&P is not responsible for and has
not participated in the determination of, the timing of, prices at, or
quantities of the Fund to be issued or in the determination or calculation of
the equation by which the Fund is to be converted into cash. S&P has no
obligation or liability in connection with the administration, marketing or
trading of the Fund.
S&P does not guarantee the accuracy and/or the completeness of the S&P 500 Index
or any data included therein. S&P makes no warranty, express or implied, as to
results to be obtained by Licensee, owners of the Fund, or any other person or
entity from the use of the S&P 500 Index or any data included therein in
connection with the rights licensed hereunder or for any other use. S&P makes no
express or implied warranties, and expressly disclaims all warranties of
merchantability or fitness for a particular purpose or use with respect to the
S&P 500 Index or any data included therein. Without limiting any of the
foregoing, in no event shall S&P have any liability for any special, punitive,
indirect, or consequential damages (including lost profits), even if notified of
the possibility of such damages.
0032104B (12/93)
MAX-CAP FUND
- --------------------------------------------------------------------------------
ANNUAL REPORT FOR FISCAL YEAR ENDED OCTOBER 31, 1993
INVESTMENT REVIEW
---------------------------------------------------------------------------
The total return of the Max-Cap Fund (Institutional Shares) over the
past 12 months was 14.35%. The total return of the Institutional Service
Shares, which commenced operations on September 6, 1993, was 1.70%.
Over the twelve months ended October 31, 1993, U.S. stocks have
registered excellent results. Driven by the recovery in corporate profits,
falling interest rates, and large flows of money into mutual funds, the S&P
500 Index recorded a total return of 14.92% for the year ended October 31,
1993. Small capitalization stocks were the standout, however, as the
Russell 2000 Index had a total return of 32.41% for the same period.
Perhaps the most important factor was the decline in interest rates. The
yield on the 30 year U.S. Treasury bond dropped from 6.7% to 5.7% between
May and September. Interest rate sensitive groups such as the Finance and
Utility sectors performed well in response. Expected market weaknesses in
September and October proved to be unfounded, although the market advance
became more labored as a number of groups experienced minor corrections.
Sustainability of market strength over the coming year will be
importantly influenced by strength in corporate profits and interest rates.
We expect the economy to continue on its recovery path well into 1994 with
further significant gains in corporate profits. Assuming the pace of the
recovery remains in the 3% (real GDP--annual rate) area, inflation should
remain subdued, and any backup in interest rates should not be too damaging
to the stock market. Over the next 12 months we expect positive returns
from U.S. equities, although probably less than the outstanding performance
in the year ended October 31, 1993.
PERFORMANCE COMPARISON
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL $10,000 PURCHASE
IN MAX-CAP FUND (INSTITUTIONAL SERVICE SHARES) AND
STANDARD AND POOR'S 500 INDEX/.
Graphic representation "A" omitted. See Appendix.
Past Performance is not indicative of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost. Mutual funds are not obligations of or
guaranteed by any bank and are not federally insured.
This annual report incorporates by reference and accompanies the prospectus
dated December 31, 1993.
*Reflects operations of Max-Cap Fund (Institutional Service Shares) from the
start of business 9/6/93 through 10/31/93.
**The Fund's performance assumes the reinvestment of all dividends and
distributions. The Standard and Poor's 500 Index is adjusted to reflect
reinvestment of dividends on securities in the index.
/The Standard and Poor's 500 Index is not adjusted to reflect sales loads,
expenses, or other fees that the SEC requires to be reflected in the Fund's
performance.
PERFORMANCE COMPARISON
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL $10,000 PURCHASE IN
MAX-CAP FUND (INSTITUTIONAL SHARES) AND STANDARD AND POOR'S 500 INDEX/.
Graphic representation "B" omitted. See Appendix.
Past Performance is not indicative of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost. Mutual funds are not obligations of or
guaranteed by any bank and are not federally insured.
This annual report incorporates by reference and accompanies the prospectus
dated December 31, 1993.
*Reflects operations of Max-Cap Fund (Institutional Shares) from the start of
business 7/11/90 through 10/31/93.
**The Fund's performance assumes the reinvestment of all dividends and
distributions. The Standard and Poor's 500 Index is adjusted to reflect
reinvestment of dividends on securities in the index.
\The Standard and Poor's 500 Index is not adjusted to reflect sales loads,
expenses, or other fees that the SEC requires to be reflected in the Fund's
performance.
[LOGO[ FEDERATED SECURITIES CORP.
------------------------------------------------------------------------
Distributor
3110509-ARS (12/93)
MID-CAP FUND
(A PORTFOLIO OF FEDERATED INDEX TRUST)
PROSPECTUS
Federated Index Trust (the "Trust") is an open-end, management investment
company (a mutual fund). Its Mid-Cap Fund (the "Fund") seeks to provide
investment results generally corresponding to the aggregate price and dividend
performance of publicly traded common stocks that comprise the Standard & Poor's
400 MidCap Index (the "Index"). The Fund is neither sponsored by nor affiliated
with Standard & Poor's Corporation.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THESE SHARES INVOLVES INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
This prospectus contains the information you should read and know before you
invest in the Fund. Keep this prospectus for future reference.
The Fund has also filed a Statement of Additional Information, dated December
31, 1993, with the Securities and Exchange Commission. The information contained
in the Statement of Additional Information is incorporated by reference into
this prospectus. You may request a copy of the Statement of Additional
Information free of charge by calling 1-800-235-4669. To obtain other
information or to make inquiries about the Fund, contact the Fund at the address
listed in the back of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus dated December 31, 1993
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Acceptable Investments 4
U.S. Government Securities 5
Repurchase Agreements 5
Money Market Instruments 5
Stock Index Futures and Options 5
Lending of Portfolio Securities 6
When-Issued and Delayed
Delivery Transactions 6
Investment Risks 6
Investment Limitations 7
FEDERATED INDEX TRUST INFORMATION 7
- ------------------------------------------------------
Management of the Trust 7
Board of Trustees 7
Fund's Manager 7
Management Fees 8
Manager's Background 8
Sub-Manager 8
Sub-Management Fees 9
Sub-Manager's Background 9
Distribution of Fund Shares 9
Administration of the Fund 9
Administrative Services 9
Custodian 9
Transfer Agent and
Dividend Disbursing Agent 9
Legal Counsel 9
Independent Auditors 9
Brokerage Transactions 9
NET ASSET VALUE 10
- ------------------------------------------------------
INVESTING IN THE FUND 10
- ------------------------------------------------------
Share Purchases 10
By Wire 10
By Mail 10
Minimum Investment Required 10
What Shares Cost 10
Exchanging Securities for Fund Shares 11
Sub-Accounting Services 11
Certificates and Confirmations 11
Dividends 11
Capital Gains 11
REDEEMING SHARES 12
- ------------------------------------------------------
Telephone Redemption 12
Written Requests 12
Signatures 12
Receiving Payment 12
Redemption Before Purchase
Instruments Clear 13
Accounts with Low Balances 13
SHAREHOLDER INFORMATION 13
- ------------------------------------------------------
Voting Rights 13
Massachusetts Partnership Law 13
TAX INFORMATION 14
- ------------------------------------------------------
Federal Income Tax 14
Pennsylvania Corporate and
Personal Property Taxes 14
PERFORMANCE INFORMATION 14
- ------------------------------------------------------
STANDARD AND POOR'S CORPORATION 15
- ------------------------------------------------------
FINANCIAL STATEMENTS 16
- ------------------------------------------------------
REPORT OF ERNST & YOUNG,
INDEPENDENT AUDITORS 44
- ------------------------------------------------------
ADDRESSES Inside Back Cover
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)............................................... None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)............................................... None
Deferred Sales Load (as a percentage of original
purchase price or redemption proceeds as applicable).............................. None
Redemption Fee (as a percentage of amount redeemed, if applicable).................. None
Exchange Fee........................................................................ None
ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver)(1).................................................... 0.00%
12b-1 Fee........................................................................... None
Other Expenses (after expense reimbursement)........................................ 0.60%
Total Fund Operating Expenses(2)............................................... 0.60%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver of the
management fee. The manager can terminate this voluntary waiver at any time at
its sole discretion. The maximum management fee is 0.40%.
(2) The Total Fund Operating Expenses in the table above are based on expenses
expected during the fiscal year ending October 31, 1994. The Total Fund
Operating Expenses were 0.00% for the fiscal year ended October 31, 1993 and
were 1.75% absent the voluntary waiver of the management fee and reimbursement
of certain other operating expenses.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES THAT A SHAREHOLDER OF THE FUND WILL BEAR, EITHER DIRECTLY OR
INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE VARIOUS COSTS AND EXPENSES,
SEE "FEDERATED INDEX TRUST INFORMATION." Wire-transferred redemptions of less
than $5,000 may be subject to additional fees.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
- -------------------------------------------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 invest-
ment assuming (1) 5% annual return and (2) redemption
at the end of each time period. As noted in the table
above, the Fund charges no redemption fees............ $6 $19 $33 $ 75
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
MID-CAP FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Ernst & Young, Independent Auditors
on page 44.
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER
31,
---------------------
1993 1992*
------ -------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $9.99 $10.00
- ---------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------------------------------------
Net investment income 0.16 0.080
- ---------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 1.65 (0.086)
- --------------------------------------------------------------------- ------ -------
Total from investment operations 1.81 (0.006)
- ---------------------------------------------------------------------
LESS DISTRIBUTIONS
- ---------------------------------------------------------------------
Dividends to shareholders from net investment income (0.23) (0.004)
- --------------------------------------------------------------------- ------ -------
NET ASSET VALUE, END OF PERIOD $11.57 $9.99
- --------------------------------------------------------------------- ------ -------
------ -------
TOTAL RETURN** 17.33% 0.00%
- ---------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------------------------
Expenses 0.00% 0.00%(a)
- ---------------------------------------------------------------------
Net investment income 2.33% 0.93%(a)
- ---------------------------------------------------------------------
Expense waiver/reimbursement (b) 1.75% 0.40%(a)
- ---------------------------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------------------------
Net assets, end of period (000 omitted) $16,192 $3
- ---------------------------------------------------------------------
Portfolio turnover rate 59% 0%
- ---------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from September 3, 1992 (date of initial
public investment) to October 31, 1992.
** Based on net asset value which does not reflect the sales load or redemption
fee, if applicable.
(a) Computed on an annualized basis.
(b) This expense decrease is reflected in both the expense and net investment
income ratios shown above (Note 5).
Further information about the Fund's performance is contained in the Fund's
annual report dated December 31, 1993, which can be obtained free of charge.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated January 30, 1990. The Declaration of Trust permits the Trust to
offer separate series of shares of beneficial interest representing interests in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. This prospectus relates only to the Fund. The Fund
is designed primarily for institutions investing on behalf of their customers. A
minimum initial investment of $25,000 over a 90-day period is required.
Fund shares are currently sold and redeemed at net asset value without a sales
charge or redemption fee being imposed by the Fund. The Fund's net asset value
per share fluctuates.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide investment results generally
corresponding to the aggregate price and dividend performance of the publicly
traded common stocks that comprise the mid-level stock capitalization sector of
the United States equity market. The investment objective of the Fund cannot be
changed without the approval of shareholders. While there is no assurance that
the Fund will achieve its investment objective, it endeavors to do so by
following the investment policies described in this prospectus.
INVESTMENT POLICIES
The investment policies described below may be changed by the Board of Trustees
("Trustees") without shareholder approval. Shareholders will be notified before
any material changes in these policies become effective.
The Fund pursues its investment objective by investing primarily in the 400
common stocks that comprise the Index. These 400 common stocks are issued by
medium-sized domestic companies whose market capitalizations generally range
from $200 million to $5 billion. The stocks are selected for inclusion in the
Index by Standard & Poor's Corporation ("S&P") on the basis of the issuer's
market size, liquidity and industry group representation. A particular stock's
weighting in the Index is based on its relative total market value, that is, the
stock's market price per share times the number of shares outstanding. From time
to time, S&P may add or delete stocks from the Index. The inclusion of a stock
in the Index in no way implies an opinion by S&P as to its attractiveness as an
investment, nor is S&P a sponsor or in any way affiliated with the Fund.
The Fund will not attempt to actively manage the Fund's portfolio. Rather, the
Fund will utilize a passive approach in pursuit of its investment objective,
meaning that the Fund will not employ the traditional management functions of
economic, financial and market analysis associated with actively managed funds.
Thus, unless an issuer's stock is removed from the Index by S&P, an issuer's
adverse financial circumstance will not cause its stock to be eliminated from
the Fund's portfolio.
In keeping with the passive management approach, the Fund will be managed using
a computer program to determine which securities are to be purchased or sold so
as to replicate the composition of the Index to the extent feasible. Stocks will
be included in the Fund's portfolio on the basis of each stock's weighting in
the Index, starting with the heaviest-weighted stock in the Index. As a result,
the proportion of Fund assets invested in a particular stock will be nearly
identical to the percentage of such stock represented in the Index. From time to
time, adjustments will be made in the Fund's portfolio so as to respond to
changes in the Index's composition, as well as corporate reorganizations and
other circumstances. The Fund will attempt to be fully invested in the common
stocks comprising the Index, and, in any event, at least 80% of the Fund's
assets will be invested in stocks represented in the Index. It is expected that
adjustments to the Fund's portfolio will occur infrequently and that
transactional costs and other expenses will be minimized. Because portfolio
turnover is expected to be well below that encountered in actively managed
investment company portfolios, the Fund anticipates that accompanying costs,
including accounting costs, brokerage fees, custodial expenses and transfer
taxes, will be relatively low. While the cash flows into and out of the Fund
will have an impact upon the Fund's portfolio turnover rate and its ability to
replicate and track the performance of the Index, investment adjustments will be
made, as practicably as possible, to account for these circumstances.
The Fund believes that the indexing approach described above constitutes an
effective and reasonable method of substantially duplicating percentage changes
in the Index. While the Fund will not duplicate the Index's performance
precisely, it is anticipated that there will be a close correlation between the
Fund's performance and that of the Index in both rising and falling markets. The
Fund will attempt to achieve a correlation between the performance of its
portfolio and that of the Index of at least 95%, without taking into account
expenses of the Fund. A perfect correlation would be indicated by a figure of
100%, which would be achieved when the Fund's net asset value, including the
value of its dividends and capital gains distributions, increases or decreases
in exact proportion to changes in the Index. The Fund's ability to correlate its
performance with that of the Index may be affected by, among other things,
changes in the securities markets, the manner in which S&P calculates the Index
and the size and timing of cash flows into and out of the Fund. It is
anticipated that the Fund will achieve its intended correlation to the
performance of the Index when the Fund's net assets reach at least $10 million.
Until such time as the Fund's net assets equal $5 million, the Fund's portfolio
will be invested in cash and repurchase agreements. When the Fund's net assets
exceed $5 million, the Fund may begin to invest in the stocks comprising the
Index. Once the Fund's net assets equal at least $10 million, it is anticipated
that the Fund will be fully invested in stocks comprising the Index and will
achieve the 95% correlation to the performance of the Index.
In order to accommodate cash flows into and out of the Fund's portfolio, the
Fund may enter into stock index futures contracts, options and options on stock
index futures contracts. This will allow the Fund to simultaneously maximize the
level of the Fund assets used to track the movements of the Index. The Fund can
sell futures contracts and options in order to close out a previously
established position. The Fund will not enter into stock index futures
contracts, options and options on stock index futures contracts for speculative
purposes.
ACCEPTABLE INVESTMENTS. Under normal market circumstances, the Fund will invest
at least 80% of its assets in common stocks that are represented in the Index.
In addition, the Fund may hold cash reserves which may, for other than defensive
purposes, be invested in, but not limited to, the following:
U.S. GOVERNMENT SECURITIES. The Fund is permitted to invest in U.S.
government securities which are either issued or guaranteed by the U.S.
government, its agencies or instrumentalities. These securities include,
but are not limited to:
- direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds; and
- notes, bonds, and discount notes of U.S. government agencies or
instrumentalities, such as Federal Home Loan Banks, the Federal National
Mortgage Association, the Federal Home Loan Mortgage Corporation, the
Federal Farm Credit System, and the Student Loan Marketing Association.
REPURCHASE AGREEMENTS. The U.S. government securities and other securities
in which the Fund invests may be purchased pursuant to repurchase
agreements. Repurchase agreements are arrangements pursuant to which banks,
broker/dealers and other recognized financial institutions sell U.S.
government securities or other securities to the Fund and agree at the time
of sale to repurchase them at a mutually agreed upon time and price. To the
extent that the original seller does not repurchase the securities from the
Fund, the Fund could receive less than the repurchase price on any sale of
such securities.
MONEY MARKET INSTRUMENTS. The Fund may also invest in:
- commercial paper; and
- instruments of domestic banks and savings and loans (such as certificates
of deposit and bankers' acceptances).
STOCK INDEX FUTURES AND OPTIONS. The Fund may utilize stock index futures
contracts, options and options on stock index futures contracts, subject to
the limitation that the value of these futures contracts and options will
not exceed 20% of the Fund's total assets. Also, the Fund will not purchase
options to the extent that more than 5% of the value of the Fund's total
assets would be invested in premiums on open put option positions. These
futures contracts and options will be used to handle cash flows into and
out of the Fund and to potentially reduce transactional costs, since
transactional costs associated with futures and options contracts can be
lower than costs stemming from direct investments in stocks.
There are several risks accompanying the utilization of futures contracts
to effectively anticipate market transactions. First, positions in futures
contracts may be closed only on an exchange or board of trade that
furnishes a secondary market for such contracts. While the Fund plans to
utilize futures contracts only if there exists an active market for such
contracts, there is no guarantee that a liquid market will exist for the
contracts at a specified time. Furthermore, because, by definition, futures
contracts look to projected price levels in the future and not to current
levels of valuation, market circumstances may result in there being a
discrepancy between the price of the stock index future and the movement in
the stock index. The absence of a perfect price correlation between the
futures contract and its underlying stock index could stem from investors
choosing to close futures contracts by offsetting transactions, rather than
satisfying additional margin requirements. This could result in a
distortion of the relationship between the index and futures market. In
addition, because the futures market imposes less burdensome margin
requirements than the securities
market, an increased amount of participation by speculators in the futures
market could result in price fluctuations.
In view of these considerations, the Fund will comply with the following
restrictions when purchasing and selling futures contracts. First, the Fund
will not participate in futures transactions if the sum of its initial
margin deposits on open contracts will exceed 5% of the market value of the
Fund's total assets, after taking into account the unrealized profits and
losses on those contracts into which it has entered. Second, the Fund will
not enter into these contracts for speculative purposes. Third, since the
Fund does not constitute a commodity pool, it will not market itself as
such, nor serve as a vehicle for trading in the commodities futures or
commodity options markets. In this regard, the Fund will disclose to all
prospective investors the limitations on its futures and options
transactions, and will make clear that these transactions are entered into
only for bona fide hedging purposes or such other purposes permitted under
regulations promulgated by the Commodity Futures Trading Commission
("CFTC"). Also, the Fund intends to claim an exclusion from registration as
a commodity pool operator under the regulations promulgated by the CFTC.
LENDING OF PORTFOLIO SECURITIES. The Fund may lend its portfolio securities on
a short-term basis or long-term basis up to one-third of the value of its total
assets to broker/dealers, banks, or other institutional borrowers of securities.
The Fund will only enter into loan arrangements with broker/ dealers, banks or
other institutions which the managers have determined are creditworthy under
guidelines established by the Trustees. The Fund will receive collateral in the
form of cash or U.S. government securities equal to at least 100% of the value
of the securities loaned.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase short-term
U.S. government securities on a when-issued or delayed delivery basis. These
transactions are arrangements in which the Fund purchases securities with
payment and delivery scheduled for a future time. The Fund engages in
when-issued and delayed delivery transactions only for the purpose of acquiring
portfolio securities consistent with the Fund's investment objective and
policies, not for investment leverage. In when-issued and delayed delivery
transactions, the Fund relies on the seller to complete the transaction. The
seller's failure to complete the transaction may cause the Fund to miss a price
or yield considered to be advantageous.
INVESTMENT RISKS
As with other mutual funds that invest primarily in equity securities, the Fund
is subject to market risks. That is, the possibility exists that common stocks
will decline over short or even extended periods of time, and the United States
equity market tends to be cyclical, experiencing both periods when stock prices
generally increase and periods when stock prices generally decrease. However,
because the Fund invests primarily in medium capitalization stocks, there are
some additional risk factors associated with investments in the Fund. In
particular, stocks in the medium capitalization sector of the United States
equity market tend to be slightly more volatile in price than larger
capitalization stocks, such as those included in the Standard & Poor's 500
Index. This is because, among other things, medium-sized companies have less
certain growth prospects than larger companies; have a lower degree of liquidity
in the equity market; and tend to have a greater sensitivity to changing
economic conditions. Further, in addition to exhibiting slightly higher
volatility, the stocks of medium-sized companies may, to some degree, fluctuate
independently of the stocks of large companies. That is, the stocks of
medium-sized
companies may decline in price as the price of large company stocks rises or
vice versa. Therefore, investors should expect that the Fund will be more
volatile than, and may fluctuate independently of, broad stock market indices
such as the Standard & Poor's 500 Index.
INVESTMENT LIMITATIONS
The Fund will not:
- borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a money market instrument for at
least a percentage of its cash value with an agreement to buy it back on
a set date) except, under certain circumstances, the Fund may borrow up
to one-third of the value of its total assets and pledge up to 10% of the
value of those assets to secure such borrowings.
The above investment limitation cannot be changed without shareholder approval.
The following investment limitations, however, may be changed by the Trustees
without shareholder approval. Shareholders will be notified before any material
change in these policies becomes effective.
The Fund will not:
- invest more than 5% of its total assets in securities of issuers that
have records of less than three years of continuous operations; or
- invest more than 15% of its net assets in securities that are illiquid.
FEDERATED INDEX TRUST INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Board of
Trustees is responsible for managing the business affairs of the Trust and for
exercising all of the powers of the Trust except those reserved for the
shareholders. The Executive Committee of the Board of Trustees handles the
Trustees' responsibilities between meetings of the Trustees.
FUND'S MANAGER. Federated Management serves as the Fund's manager (the
"Manager"). The Trust has entered into a management contract (the "Management
Contract") with the Manager, which, in turn, has entered into a sub-management
contract (the "Sub-Management Contract") with ANB Investment Management and
Trust Company ("ANB" or the "Sub-Manager") (ANB and the Manager are collectively
referred to as "Managers"). It is the Manager's responsibility to select the
Sub-Manager, subject to the review and approval of the Trustees and to review
and evaluate the Sub-Manager's continued performance. The Manager is also
responsible for providing administrative services to the Fund.
Subject to the supervision and direction of the Trustees, the Manager provides
to the Fund investment management evaluation services principally by performing
initial due diligence on the Sub-Manager for the Fund and thereafter monitoring
and evaluating the performance of the Fund's Sub-Manager through quantitative
and qualitative analyses. In addition, the Manager conducts periodic in-person,
telephonic and written consultations with the Sub-Manager. In initially
evaluating the Sub-Manager,
the Manager considered, among other factors, the Sub-Manager's level of
expertise; relative performance over a minimum period of five years; level of
efficiency; level of adherence to investment discipline or philosophy;
personnel, facilities and financial strength; and quality of service and client
communications. On an ongoing basis, the Manager is responsible for
communicating performance expectations and evaluations to the Sub-Manager;
monitoring tracking error; monitoring and analyzing the appropriate futures
contracts to purchase and the futures holdings of the Fund as a percentage of
Fund assets; monitoring market timing in the Fund; discussing with the
Sub-Manager which method of indexing to use; and ultimately recommending to the
Trustees whether the Sub-Management Contract should be renewed, modified or
terminated. The Manager provides written reports to the Trustees regarding the
results of its evaluation and monitoring functions. In addition, the Manager is
responsible for providing the Fund with administrative services, including, but
not limited to, shareholder servicing and certain legal and accounting services.
The Manager is also responsible for conducting all operations of the Fund,
except those operations contracted to the Sub-Manager, custodian, transfer agent
and dividend disbursing agent. As described below, the Manager receives an
annual fee from the Fund for performing its responsibilities under the
Management Contract.
MANAGEMENT FEES. The Fund's Manager receives an annual management fee
equal to 0.40 of 1% of the Fund's average daily net assets. Under the
Management Contract, which provides for the voluntary waiver of the
management fee by the Manager, the Manager will voluntarily waive some or
all of the management fee. The Manager can terminate this voluntary waiver
of some or all of its management fee at any time in its sole discretion.
The Manager has also undertaken to reimburse the Fund for operating
expenses in excess of limitations established by certain states.
MANAGER'S BACKGROUND. Federated Management, a Delaware business trust
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940. It is a subsidiary of Federated Investors.
All of the Class A (voting) shares of Federated Investors are owned by a
trust, the trustees of which are John F. Donahue, Chairman and Trustee of
Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J.
Christopher Donahue, who is President and Trustee of Federated Investors.
Federated Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services
to a number of investment companies. Total assets under management or
administration by these and other subsidiaries of Federated Investors are
approximately $70 billion. Federated Investors, which was founded in 1956
as Federated Investors, Inc., develops and manages mutual funds primarily
for the financial industry. Federated Investors' track record of
competitive performance and its disciplined, risk averse investment
philosophy serve approximately 3,500 client institutions nationwide.
Through these same client institutions, individual shareholders also have
access to this same level of investment expertise.
SUB-MANAGER. Under the terms of the Sub-Management Contract between the Manager
and ANB, ANB serves as the Fund's Sub-Manager. The Sub-Manager will develop,
maintain and run the computer program designed to determine which securities
will be purchased and sold so as to replicate the composition of the Index to
the extent feasible, and, subject to the Manager's oversight, has complete
discretion to purchase and sell portfolio securities for the Fund within the
Fund's investment objective, restrictions and policies.
SUB-MANAGEMENT FEES. For its services under the Sub-Management Contract,
ANB receives an annual fee from the Manager of .035 of 1% of the Fund's
average daily net assets. This fee is paid by the Manager out of its
resources and is not an incremental Fund expense. No performance or
incentive fees are paid to the Sub-Manager.
SUB-MANAGER'S BACKGROUND. ANB, incorporated in the State of Illinois on
July 1, 1988, is a registered investment adviser under the Investment
Advisers Act of 1940. ANB is a wholly-owned subsidiary of American National
Bank and Trust Company of Chicago which, in turn, is an indirect
wholly-owned subsidiary of First Chicago Corporation. It serves as
investment adviser principally to corporate defined benefit and defined
contribution plans which have, as of September 30, 1993, placed
approximately $18 billion in assets with ANB. Since 1973, when American
National Bank and Trust Company of Chicago introduced its first commingled
equity index fund, ANB has developed and managed a family of equity and
bond index funds in which some 390 nationwide non-financial institution
clients invest. In total, ANB manages 62 commingled/common trust funds.
Also, since 1990, ANB has served as Sub-Manager for the Max-Cap Fund
(formerly the S&P 500 Fund), which is another portfolio of the Trust. ANB
also serves as Sub-Manager for Mini-Cap Fund, another portfolio of the
Trust.
DISTRIBUTION OF FUND SHARES
Federated Securities Corp. is the principal distributor for shares of the Fund.
It is a Pennsylvania corporation organized on November 14, 1969, and is the
principal distributor for a number of investment companies. Federated Securities
Corp. is a subsidiary of Federated Investors. Federated Securities Corp. pays a
licensing fee to the Standard & Poor's Corporation for the right to use the
Index in connection with its sub-management activities for the Fund. Federated
Securities Corp. is not affiliated with the Standard & Poor's Corporation.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Administrative Services, Inc., which is a
subsidiary of Federated Investors, provides the Manager with the administrative
personnel and services necessary to provide shareholder servicing and certain
legal and accounting services to the Fund.
CUSTODIAN. State Street Bank and Trust Company ("State Street Bank"), Boston,
Massachusetts, is custodian for the securities and cash of the Fund.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated Services Company,
Pittsburgh, Pennsylvania, is transfer agent for the shares of the Fund, and
dividend disbursing agent for the Fund.
LEGAL COUNSEL. Legal counsel is provided by Houston, Houston & Donnelly,
Pittsburgh, PA, and Dickstein, Shapiro & Morin, Washington, D.C.
INDEPENDENT AUDITORS. The independent auditors for the Fund are Ernst & Young,
Pittsburgh, Pennsylvania.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the Managers look for prompt execution of the order at a favorable
price. In working with dealers, the
Managers will generally utilize those who are recognized dealers in specific
portfolio instruments, except when a better price and execution of the order can
be obtained elsewhere. In selecting among firms believed to meet these criteria,
the Managers may give consideration to those firms which have sold or are
selling shares of the Fund and other funds distributed by Federated Securities
Corp. The Managers make decisions on portfolio transactions and select brokers
and dealers, subject to review by the Trustees.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund's net asset value per share fluctuates. It is determined by dividing
the sum of the market value of all securities and other assets, less
liabilities, by the number of shares outstanding.
INVESTING IN THE FUND
- --------------------------------------------------------------------------------
SHARE PURCHASES
Fund shares are sold on days on which the New York Stock Exchange is open.
Shares of the Fund may be purchased either by wire or mail. To purchase shares
of the Fund, open an account by calling Federated Securities Corp. Information
needed to establish the account will be taken over the telephone. The Fund
reserves the right to reject any purchase request.
BY WIRE. To purchase shares of the Fund by Federal Reserve wire, call the Fund
to place an order. Shareholders have until 4:00 p.m. (Boston time) to call the
Fund for settlement on the next business day. The order is considered received
immediately. Payment by federal funds must be received before 4:00 p.m. (Boston
time) on the next business day following the order. Federal funds should be
wired as follows: State Street Bank and Trust Company, Boston, Massachusetts;
Attention: EDGEWIRE; For Credit to: Federated Index Trust, Mid-Cap Fund; Group
Number or Order Number; Nominee or Institution Name; ABA Number 011000028.
BY MAIL. To purchase shares of the Fund by mail, send a check made payable to
Federated Index Trust, Mid-Cap Fund, to the Fund's transfer agent, State Street
Bank and Trust Company, P.O. Box 8602, Boston, Massachusetts 02266-8602. Orders
by mail are considered received after payment by check is converted by State
Street Bank into federal funds. This is generally the next business day after
State Street Bank receives the check.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in the Fund is $25,000. However, an account may
be opened with a smaller amount as long as the $25,000 minimum is reached within
90 days. An investor's minimum investment will be calculated by combining all
accounts that the investor maintains with the Fund.
WHAT SHARES COST
Fund shares are sold at their net asset value next determined after an order is
received. There is no sales charge imposed by the Fund.
The net asset value is determined at 4:00 p.m. (Boston time), Monday through
Friday, except on: (i) days on which there are not sufficient changes in the
value of the Fund's portfolio securities that its net asset value might be
materially affected; (ii) days during which no shares are tendered for
redemption and no orders to purchase shares are received; and (iii) the
following holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
EXCHANGING SECURITIES FOR FUND SHARES
Investors may exchange certain securities or a combination of certain securities
and cash for shares of the Fund. The securities and any cash must have a market
value of at least $25,000. The Trust reserves the right to determine the
acceptability of securities to be exchanged. On the day securities are accepted
by the Trust, they are valued in the same manner as the Trust values its assets.
Investors wishing to exchange securities should first contact Federated
Securities Corp.
Shares purchased by exchange of securities cannot be redeemed by telephone for
five business days to allow time for the transfer to settle.
SUB-ACCOUNTING SERVICES
Institutions are encouraged to open single master accounts. However, certain
institutions may wish to use the transfer agent's sub-accounting system to
minimize their internal recordkeeping requirements. The transfer agent charges a
fee based on the level of subaccounting services rendered. Institutions holding
Fund shares in a fiduciary, agency, custodial, or similar capacity may charge or
pass through sub-accounting fees as part of or in addition to normal trust or
agency account fees. They may also charge fees for other services provided which
may be related to the ownership of Fund shares. Therefore, this prospectus
should be read together with any agreement between the customer and the
institution with regard to the services provided, the fees charged for those
services and any restrictions and limitations imposed.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the Fund.
Detailed confirmations of each purchase or redemption are sent to each
shareholder. Quarterly confirmations are sent to report dividends paid during
the quarter.
DIVIDENDS
Dividends are declared and paid quarterly. Unless shareholders request cash
payments by writing to the Fund, dividends are automatically reinvested in
additional shares of the Fund on payment dates at the ex-dividend date net asset
value without a sales charge.
CAPITAL GAINS
Capital gains realized by the Fund, if any, will be distributed at least once
every 12 months.
REDEEMING SHARES
- --------------------------------------------------------------------------------
The Fund redeems shares at their net asset value next determined after the Fund
receives the redemption request. Redemptions will be made on days on which the
Fund computes its net asset value. Redemption requests must be received in
proper form and can be made by telephone request or written request.
TELEPHONE REDEMPTION
Shareholders may redeem their shares by telephoning the Fund before 4:00 p.m.
(Boston time). The proceeds will normally be wired the following business day,
but in no event more than seven days, to the shareholder's account at a domestic
commercial bank that is a member of the Federal Reserve System. If at any time,
the Fund shall determine it necessary to terminate or modify this method of
redemption, shareholders will be promptly notified.
An authorization form permitting State Street Bank or the Fund to accept
telephone requests must first be completed. Authorization forms and information
on this service are available from Federated Securities Corp.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption should be considered, such as by "Written Requests."
If reasonable procedures are not followed by the Fund, it may be liable for
losses due to unauthorized or fraudulent telephone instructions.
WRITTEN REQUESTS
Fund shares may also be redeemed by sending a written request to the Fund. Call
the Fund for specific instructions before redeeming by written request. The
shareholder will be asked to provide in the request his name, the Fund name, his
account number, and the share or dollar amount requested. If share certificates
have been issued, they must be properly endorsed and should be sent by
registered or certified mail with the written request.
SIGNATURES. Shareholders requesting a redemption of $50,000 or more, a
redemption of any amount to be sent to an address other than that on record with
the Fund, or a redemption payable other than to the shareholder of record must
have signatures on written redemption requests guaranteed by:
- a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund ("BIF"), which is administered by the Federal Deposit
Insurance Corporation ("FDIC");
- a member firm of the New York, American, Boston, Midwest, or Pacific
Stock Exchange;
- a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund ("SAIF"), which is administered
by the FDIC; or
- any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.
RECEIVING PAYMENT. Normally, a check for the proceeds is mailed within one
business day, but in no event more than seven days, after receipt of a proper
written redemption request.
REDEMPTION BEFORE PURCHASE INSTRUMENTS CLEAR
When shares are purchased by check, the proceeds from the redemption of those
shares are not available, and the shares may not be exchanged, until the Fund or
its agents are reasonably certain that the purchase check has cleared, which
could take up to ten calendar days.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $25,000. This
requirement does not apply, however, if the balance falls below $25,000 because
of changes in the Fund's net asset value.
Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of each portfolio
in the Trust have equal voting rights except that only shares of the Fund are
entitled to vote on matters affecting only the Fund. As a Massachusetts business
trust, the Trust is not required to hold annual shareholder meetings.
Shareholder approval will be sought only for certain changes in the Trust's or
the Fund's operations and for the election of Trustees under certain
circumstances.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders shall be called by the Trustees upon the
written request of shareholders owning at least 10% of the outstanding shares of
all series of the Trust.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for acts or obligations of the Trust on behalf
of the Fund. To protect shareholders of the Fund, the Trust has filed legal
documents with Massachusetts that expressly disclaim the liability of
shareholders of the Fund for such acts or obligations of the Trust. These
documents require notice of this disclaimer to be given in each agreement,
obligation, or instrument that the Trust enters into or its Trustees enter into
or sign on behalf of the Fund.
In the unlikely event a shareholder of the Fund is held personally liable for
the Trust's obligations on behalf of the Fund, the Trust is required to use the
property of the Fund to protect or compensate the shareholder. On request, the
Trust will defend any claim made and pay any judgment against a shareholder for
any act or obligation of the Trust on behalf of the Fund. Therefore, financial
loss resulting from liability as a shareholder of the Fund will occur only if
the Trust itself cannot meet its obligations to indemnify shareholders and pay
judgments against them from the assets of the Fund.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to receive the special tax treatment afforded to such companies.
The Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by the
Trust's other portfolios, if any, will not be combined for tax purposes with
those realized by the Fund.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions, including capital gains distributions,
received. This applies whether dividends and distributions are received in cash
or as additional shares. Distributions representing long-term capital gains, if
any, will be taxable to shareholders as long-term capital gains no matter how
long the shareholders have held their shares.
PENNSYLVANIA CORPORATE AND PERSONAL PROPERTY TAXES. In the opinion of Houston,
Houston & Donnelly, counsel to the Trust:
- neither the Trust nor the Fund is subject to Pennsylvania corporate or
personal property taxes; and
- Fund shares may be subject to personal property taxes imposed by
counties, municipalities, and school districts in Pennsylvania to the
extent that the portfolio securities in the Fund would be subject to such
taxes if owned directly by residents of those jurisdictions.
Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time the Fund advertises its total return and yield.
Total return represents the change, over a specified period of time, in the
value of an investment in the Fund after reinvesting all income and capital gain
distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
The yield of the Fund is calculated by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by the Fund
over a thirty-day period by the offering price per share of the Fund on the last
day of the period. This number is then annualized using semi-
annual compounding. The yield does not necessarily reflect income actually
earned by the Fund and, therefore, may not correlate to the dividends or other
distributions paid to shareholders.
The Fund is sold without any sales load or other similar non-recurring charges.
From time to time, the Fund may advertise its performance using certain
reporting services and/or compare its performance to certain indices.
STANDARD & POOR'S CORPORATION
- --------------------------------------------------------------------------------
"Standard & Poor's(TM)", "S&P", "S&P MidCap 400 Index", "Standard & Poor's
MidCap 400 Index", and "400" are trademarks of Standard & Poor's Corporation
("S&P") and have been licensed for use by Federated Securities Corp. (the
"Licensee").
The Fund is not sponsored, endorsed, sold or promoted by, or affiliated with,
S&P makes no representation or warranty, express or implied, to the owners of
the Fund or any member of the public regarding the advisability of investing in
securities generally or in the Fund particularly or the ability of the S&P
MidCap 400 Index to track general stock market performance. S&P's only
relationship to the Licensee is the licensing of certain trademarks and trade
names of S&P and of the S&P MidCap 400 Index which is determined, composed and
calculated by S&P without regard to the Licensee or the Fund. S&P has no
obligation to take the needs of the Licensee or the owners of the Fund into
consideration in determining, composing or calculating the S&P MidCap 400 Index.
S&P is not responsible for and has not participated in the determination of, the
timing of, prices at, or quantities of the Fund to be issued or in the
determination or calculation of the equation by which the Fund is to be
converted into cash. S&P has no obligation or liability in connection with the
administration, marketing or trading of the Fund.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P MIDCAP
400 INDEX OR ANY DATA INCLUDED THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR
IMPLIED, AS TO RESULTS TO BE OBTAINED BY LICENSEE, OWNERS OF THE FUND, OR ANY
OTHER PERSON OR ENTITY FROM THE USE OF THE S&P MIDCAP 400 INDEX OR ANY DATA
INCLUDED THEREIN IN CONNECTION WITH THE RIGHTS LICENSED HEREUNDER OR FOR ANY
OTHER USE. S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS
ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE
WITH RESPECT TO THE S&P MIDCAP 400 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT
LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY
SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS),
EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
MID-CAP FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1993
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--86.0%
- ------------------------------------------------------------------------------------
BASIC INDUSTRY--7.9%
-----------------------------------------------------------------
ALUMINUM--0.0%
-----------------------------------------------------------------
200 * Maxxam, Inc. $ 6,500
----------------------------------------------------------------- -----------
CHEMICALS--3.5%
-----------------------------------------------------------------
300 * Advanced Technology Labs, Inc. 5,175
-----------------------------------------------------------------
800 Betz Laboratories, Inc. 34,800
-----------------------------------------------------------------
500 Cabot Corp. 28,688
-----------------------------------------------------------------
1,100 Calgon Carbon Corp. 11,137
-----------------------------------------------------------------
1,400 Crompton & Knowles Corp. 27,300
-----------------------------------------------------------------
700 Dexter Corp. 16,538
-----------------------------------------------------------------
800 Ferro Corp. 25,400
-----------------------------------------------------------------
400 Fuller (H.B.) Co. 12,900
-----------------------------------------------------------------
1,100 * Georgia Gulf Corp. 20,763
-----------------------------------------------------------------
700 Hanna (M.A.) Co. 22,400
-----------------------------------------------------------------
700 IMC Fertilizer Group, Inc. 25,462
-----------------------------------------------------------------
1,200 Lawter International, Inc. 16,350
-----------------------------------------------------------------
1,000 Loctite Corp. 37,625
-----------------------------------------------------------------
1,900 Lubrizol Corp. 66,025
-----------------------------------------------------------------
200 NCH Corp. 11,600
-----------------------------------------------------------------
500 Olin Corp. 23,187
-----------------------------------------------------------------
1,300 R.P.M., Inc. Ohio 23,238
-----------------------------------------------------------------
800 Schulman (A.), Inc. 24,000
-----------------------------------------------------------------
1,400 Sigma Aldrich 69,300
-----------------------------------------------------------------
1,500 Sterling Chemicals, Inc. 5,437
-----------------------------------------------------------------
900 Wellman, Inc. 15,412
-----------------------------------------------------------------
</TABLE>
MID-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------
BASIC INDUSTRY--CONTINUED
-----------------------------------------------------------------
CHEMICALS--CONTINUED
-----------------------------------------------------------------
1,400 Witco Corp. $ 41,825
----------------------------------------------------------------- -----------
Total 564,562
----------------------------------------------------------------- -----------
CONTAINERS & GLASS--0.1%
-----------------------------------------------------------------
1,135 Mark IV Industries, Inc. 25,254
----------------------------------------------------------------- -----------
GOLD--1.6%
-----------------------------------------------------------------
7,900 American Barrick Resources Corp. 214,287
-----------------------------------------------------------------
2,200 Battle Mountain Gold Co. 20,900
-----------------------------------------------------------------
4,100 LAC Minerals, Ltd. 30,238
----------------------------------------------------------------- -----------
Total 265,425
----------------------------------------------------------------- -----------
MINING AND MINERALS--0.2%
-----------------------------------------------------------------
400 Brush Wellman, Inc. 5,500
-----------------------------------------------------------------
600 Calmat Co. 10,800
-----------------------------------------------------------------
300 Cleveland Cliffs, Inc. 10,800
----------------------------------------------------------------- -----------
Total 27,100
----------------------------------------------------------------- -----------
PAPER--1.7%
-----------------------------------------------------------------
1,000 Bowater, Inc. 19,625
-----------------------------------------------------------------
700 Chesapeake Corp. 15,400
-----------------------------------------------------------------
1,200 Consolidated Papers, Inc. 51,000
-----------------------------------------------------------------
800 Glatfelter (P.H.) Co. 13,200
-----------------------------------------------------------------
1,400 Longview Fibre Co. Washington 24,850
-----------------------------------------------------------------
500 Pentair, Inc. 15,750
-----------------------------------------------------------------
2,400 Sonoco Products Co. 48,600
-----------------------------------------------------------------
533 Wausau Paper Mills Co. 21,253
-----------------------------------------------------------------
1,500 Willamette Industries, Inc. 62,625
----------------------------------------------------------------- -----------
Total 272,303
----------------------------------------------------------------- -----------
</TABLE>
MID-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------
BASIC INDUSTRY--CONTINUED
-----------------------------------------------------------------
PLASTICS--0.2%
-----------------------------------------------------------------
600 First Brands Corp. $ 19,200
-----------------------------------------------------------------
500 * Sealed Air Corp. 14,938
----------------------------------------------------------------- -----------
Total 34,138
----------------------------------------------------------------- -----------
STEEL--0.5%
-----------------------------------------------------------------
1,800 Allegheny Ludlum Corp. 37,125
-----------------------------------------------------------------
200 Carpenter Technology Corp. 10,950
-----------------------------------------------------------------
** * LTV Corp. 7
-----------------------------------------------------------------
400 Lukens, Inc. 14,900
-----------------------------------------------------------------
500 Oregon Steel Mills, Inc. 11,812
-----------------------------------------------------------------
400 Precision Castparts Corp. 10,700
----------------------------------------------------------------- -----------
Total 85,494
----------------------------------------------------------------- -----------
CAPITAL GOODS--3.4%
-----------------------------------------------------------------
BUILDING CONSTRUCTION--0.4%
-----------------------------------------------------------------
1,000 CBI Industries, Inc. 26,000
-----------------------------------------------------------------
700 Harsco Corp. 29,400
-----------------------------------------------------------------
400 Lawson Products, Inc. 10,800
----------------------------------------------------------------- -----------
Total 66,200
----------------------------------------------------------------- -----------
ELECTRICAL EQUIPMENT--0.5%
-----------------------------------------------------------------
2,500 * American Power Conversion Co. 55,625
-----------------------------------------------------------------
1,200 Ametek, Inc. 16,500
-----------------------------------------------------------------
700 * Magnetek, Inc. 10,587
----------------------------------------------------------------- -----------
Total 82,712
----------------------------------------------------------------- -----------
INDUSTRIAL MACHINERY--1.7%
-----------------------------------------------------------------
2,200 * Applied Materials, Inc. 69,300
-----------------------------------------------------------------
400 Duriron, Inc. 9,000
-----------------------------------------------------------------
600 Goulds Pumps, Inc. 15,900
-----------------------------------------------------------------
</TABLE>
MID-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------
CAPITAL GOODS--CONTINUED
-----------------------------------------------------------------
INDUSTRIAL MACHINERY--CONTINUED
-----------------------------------------------------------------
500 Kaydon Corp. $ 10,562
-----------------------------------------------------------------
300 Kennametal, Inc. 12,037
-----------------------------------------------------------------
1,000 Keystone International, Inc. 26,875
-----------------------------------------------------------------
500 Measurex Corp. 9,437
-----------------------------------------------------------------
500 Nordson Corp. 26,750
-----------------------------------------------------------------
900 Stewart & Stevenson Services, Inc. 40,725
-----------------------------------------------------------------
1,200 * Thermo Electron Corp. 48,900
----------------------------------------------------------------- -----------
Total 269,486
----------------------------------------------------------------- -----------
MISCELLANEOUS--0.3%
-----------------------------------------------------------------
400 Watts Industries, Inc., Cl. A 18,400
-----------------------------------------------------------------
1,000 York International Corp. 34,750
----------------------------------------------------------------- -----------
Total 53,150
----------------------------------------------------------------- -----------
POLLUTION CONTROL--0.5%
-----------------------------------------------------------------
700 * Air & Water Technology Corp., Cl. A 9,712
-----------------------------------------------------------------
800 * American Waste Services, Inc., Cl. A 1,600
-----------------------------------------------------------------
400 Donaldson, Inc. 16,850
-----------------------------------------------------------------
900 * International Technology Corp. 3,375
-----------------------------------------------------------------
7,700 Laidlaw, Inc., Cl. B 46,200
-----------------------------------------------------------------
700 Mid-American Waste System, Inc. 5,687
----------------------------------------------------------------- -----------
Total 83,424
----------------------------------------------------------------- -----------
CONSUMER BASICS--10.8%
-----------------------------------------------------------------
DRUGS & HEALTH CARE--7.3%
-----------------------------------------------------------------
800 * Acuson Corp. 10,900
-----------------------------------------------------------------
800 * Applied Bioscience International, Inc. 4,700
-----------------------------------------------------------------
1,000 Bergen Brunswig Corp., Cl. A 15,625
-----------------------------------------------------------------
900 * Biogen, Inc. 35,100
-----------------------------------------------------------------
</TABLE>
MID-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------
CONSUMER BASICS--CONTINUED
-----------------------------------------------------------------
DRUGS & HEALTH CARE--CONTINUED
-----------------------------------------------------------------
600 Cardinal Distribution, Inc. $ 25,800
-----------------------------------------------------------------
1,300 Carter Wallace, Inc. 35,913
-----------------------------------------------------------------
1,200 * Centocur, Inc. 15,600
-----------------------------------------------------------------
900 * Chiron Corp. 72,450
-----------------------------------------------------------------
1,000 * Continental Medical Systems, Inc. 9,625
-----------------------------------------------------------------
400 * Cordis Corp. 15,900
-----------------------------------------------------------------
400 * Datascope Corp. 6,600
-----------------------------------------------------------------
400 Diagnostic Products Corp. 7,400
-----------------------------------------------------------------
700 * Diagnostek, Inc. 12,600
-----------------------------------------------------------------
900 * FHP International Corp. 17,550
-----------------------------------------------------------------
1,200 * Forest Laboratories, Inc. 50,700
-----------------------------------------------------------------
700 * Genzyme Corp. 21,875
-----------------------------------------------------------------
800 * Healthsouth Rehabilitation 14,200
-----------------------------------------------------------------
1,000 * Healthcare COMPARE Corp. 22,000
-----------------------------------------------------------------
1,900 Ivax Corp. 55,338
-----------------------------------------------------------------
4,300 MEDCO Containment Services, Inc. 161,250
-----------------------------------------------------------------
1,000 * Medical Care America, Inc. 24,875
-----------------------------------------------------------------
2,200 Mylan Labs, Inc. 65,175
-----------------------------------------------------------------
500 * Nellcor, Inc. 11,375
-----------------------------------------------------------------
1,400 * Novacare, Inc. 18,200
-----------------------------------------------------------------
800 * Pacificare Health Systems, Inc., Cl. A 25,400
-----------------------------------------------------------------
300 Puritan Bennet Corp. 4,950
-----------------------------------------------------------------
400 * SCI Med Life Systems, Inc. 19,400
-----------------------------------------------------------------
1,300 Stryker Corp. 35,425
-----------------------------------------------------------------
1,000 Surgical Care Affiliates, Inc. 19,875
-----------------------------------------------------------------
700 * Synergen, Inc. 10,062
-----------------------------------------------------------------
</TABLE>
MID-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------
CONSUMER BASICS--CONTINUED
-----------------------------------------------------------------
DRUGS & HEALTH CARE--CONTINUED
-----------------------------------------------------------------
1,100 T2 Med, Inc. $ 8,525
-----------------------------------------------------------------
1,100 Tambrands, Inc. 46,613
-----------------------------------------------------------------
1,900 United Healthcare Corp. 132,762
-----------------------------------------------------------------
3,000 U S Healthcare, Inc. 139,125
-----------------------------------------------------------------
600 * Xoma Corp. 4,050
----------------------------------------------------------------- -----------
Total 1,176,938
----------------------------------------------------------------- -----------
FOOD & BEVERAGES--2.7%
-----------------------------------------------------------------
3,600 Coca Cola Enterprises, Inc. 50,850
-----------------------------------------------------------------
1,100 Dean Foods Co. 28,188
-----------------------------------------------------------------
1,700 Dole Food, Inc. 47,175
-----------------------------------------------------------------
400 Dreyers Grand Ice Cream, Inc. 12,000
-----------------------------------------------------------------
1,100 Flowers Industries, Inc. 20,900
-----------------------------------------------------------------
1,300 IBP, Inc. 33,150
-----------------------------------------------------------------
700 * International Dairy Queen, Inc., Cl. A 10,850
-----------------------------------------------------------------
500 International Multifoods Corp. 11,688
-----------------------------------------------------------------
900 Lance, Inc. 19,012
-----------------------------------------------------------------
2,300 McCormick & Co., Inc. 54,337
-----------------------------------------------------------------
700 Savannah Foods & Industries, Inc. 10,675
-----------------------------------------------------------------
800 Smucker (J.M.) Co., Cl. A 20,100
-----------------------------------------------------------------
4,100 Tyson Foods, Inc., Cl. A 94,813
-----------------------------------------------------------------
700 Universal Foods Corp. 24,062
----------------------------------------------------------------- -----------
Total 437,800
----------------------------------------------------------------- -----------
HOUSEHOLD PRODUCTS--0.2%
-----------------------------------------------------------------
600 Church & Dwight, Inc. 15,525
-----------------------------------------------------------------
600 Stanhome, Inc. 16,650
----------------------------------------------------------------- -----------
Total 32,175
----------------------------------------------------------------- -----------
</TABLE>
MID-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------
CONSUMER BASICS--CONTINUED
-----------------------------------------------------------------
RETAIL GROCERY--0.4%
-----------------------------------------------------------------
1,100 Hannaford Brothers Co. $ 25,713
-----------------------------------------------------------------
500 Michaels Foods 4,563
-----------------------------------------------------------------
600 Ruddick Corp. 12,975
-----------------------------------------------------------------
1,200 * Vons Cos., Inc. 22,050
----------------------------------------------------------------- -----------
Total 65,301
----------------------------------------------------------------- -----------
TOBACCO--0.2%
-----------------------------------------------------------------
400 Dibrell Brothers, Inc. 12,000
-----------------------------------------------------------------
1,000 Universal Corp. 25,250
----------------------------------------------------------------- -----------
Total 37,250
----------------------------------------------------------------- -----------
CONSUMER DURABLE GOODS--1.9%
-----------------------------------------------------------------
AUTO PARTS--0.5%
-----------------------------------------------------------------
600 Arvin Industries, Inc. 16,875
-----------------------------------------------------------------
800 Danaher Corp. 28,000
-----------------------------------------------------------------
800 Federal Mogul Corp. 21,100
-----------------------------------------------------------------
800 Modine Manufacturing Co. 20,600
----------------------------------------------------------------- -----------
Total 86,575
----------------------------------------------------------------- -----------
AUTOMOBILES AND MOTORCYCLES--0.5%
-----------------------------------------------------------------
1,000 Federal Signal Corp. 26,750
-----------------------------------------------------------------
1,100 Harley Davidson, Inc. 46,337
----------------------------------------------------------------- -----------
Total 73,087
----------------------------------------------------------------- -----------
HOUSEHOLD APPLIANCES AND FURNISHINGS--0.4%
-----------------------------------------------------------------
1,100 Legget & Platt, Inc. 48,263
-----------------------------------------------------------------
200 National Presto Industries, Inc. 11,000
----------------------------------------------------------------- -----------
Total 59,263
----------------------------------------------------------------- -----------
MOBILE HOMES--0.2%
-----------------------------------------------------------------
1,200 * Clayton Homes, Inc. 31,800
----------------------------------------------------------------- -----------
</TABLE>
MID-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------
CONSUMER DURABLE GOODS--CONTINUED
-----------------------------------------------------------------
TIRES AND RUBBER--0.3%
-----------------------------------------------------------------
400 Carlisle Cos, Inc. $ 13,350
-----------------------------------------------------------------
600 Lancaster Colony Corp. 27,750
----------------------------------------------------------------- -----------
Total 41,100
----------------------------------------------------------------- -----------
CONSUMER NON-DURABLES--5.3%
-----------------------------------------------------------------
APPAREL & TEXTILES--2.1%
-----------------------------------------------------------------
800 Albany International Corp., Cl. A 14,400
-----------------------------------------------------------------
300 Angelica Corp. 7,462
-----------------------------------------------------------------
1,450 CML Group, Inc. 42,956
-----------------------------------------------------------------
1,300 Cintas, Corp. 38,025
-----------------------------------------------------------------
2,100 * Fruit of the Loom, Inc. 74,025
-----------------------------------------------------------------
700 Phillips Van Heusen Corp. 22,925
-----------------------------------------------------------------
2,000 Shaw Industries, Inc. 90,500
-----------------------------------------------------------------
1,900 Unifi, Inc. 47,737
----------------------------------------------------------------- -----------
Total 338,030
----------------------------------------------------------------- -----------
COSMETICS & TOILETRIES--0.1%
-----------------------------------------------------------------
700 Neutrogena Corp. 13,475
----------------------------------------------------------------- -----------
PHOTOGRAPHY--0.0%
-----------------------------------------------------------------
400 CPI Corp. 7,000
----------------------------------------------------------------- -----------
RETAIL TRADE--2.9%
-----------------------------------------------------------------
600 Claire's Stores, Inc. 10,650
-----------------------------------------------------------------
1,144 Dollar General Corp. 29,452
-----------------------------------------------------------------
800 Duty Free International, Inc. 12,800
-----------------------------------------------------------------
600 Edison Brothers Stores, Inc. 19,500
-----------------------------------------------------------------
1,600 Family Dollar Stores, Inc. 26,000
-----------------------------------------------------------------
1,300 Fingerhut Companies, Inc. 37,700
-----------------------------------------------------------------
600 Hancock Fabrics, Inc. 5,925
-----------------------------------------------------------------
1,350 Heilig Meyers Co. 43,538
-----------------------------------------------------------------
</TABLE>
MID-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------
CONSUMER NON-DURABLES--CONTINUED
-----------------------------------------------------------------
RETAIL TRADE--CONTINUED
-----------------------------------------------------------------
2,579 * Home Shopping Network, Inc. $ 33,205
-----------------------------------------------------------------
500 Lands End, Inc. 21,250
-----------------------------------------------------------------
800 * MacFrugals Bargains Close Outs 12,800
-----------------------------------------------------------------
1,500 Merry Go Round Enterprises 13,687
-----------------------------------------------------------------
2,550 * Office Depot, Inc. 84,469
-----------------------------------------------------------------
3,000 * Price Costco, Inc. 53,250
-----------------------------------------------------------------
2,800 * Service Merchandise Co., Inc. 28,000
-----------------------------------------------------------------
400 Tiffany & Co. 13,050
-----------------------------------------------------------------
1,300 United States Shoe Corp. 14,137
-----------------------------------------------------------------
900 * Waban, Inc. 11,362
----------------------------------------------------------------- -----------
Total 470,775
----------------------------------------------------------------- -----------
TOYS, AMUSEMENTS, AND SPORTING GOODS--0.2%
-----------------------------------------------------------------
900 Fisher Price, Inc. 32,963
----------------------------------------------------------------- -----------
CONSUMER SERVICES--4.0%
-----------------------------------------------------------------
AIR TRAVEL--1.0%
-----------------------------------------------------------------
400 Alaska Air Group, Inc. 6,400
-----------------------------------------------------------------
1,000 Atlantic Southeast Airlines, Inc. 34,000
-----------------------------------------------------------------
3,900 Southwest Airlines Co. 120,900
----------------------------------------------------------------- -----------
Total 161,300
----------------------------------------------------------------- -----------
HOTELS AND RESTAURANTS--1.7%
-----------------------------------------------------------------
1,200 Bob Evans Farms, Inc. 22,800
-----------------------------------------------------------------
1,250 * Brinker International, Inc. 52,188
-----------------------------------------------------------------
800 * Buffets, Inc. 18,800
-----------------------------------------------------------------
700 * Caesars World, Inc. 31,150
-----------------------------------------------------------------
1,650 Cracker Barrel Old Country Store 43,725
-----------------------------------------------------------------
800 * Mirage Resorts, Inc. 45,100
-----------------------------------------------------------------
700 Morrison Restaurants, Inc. 25,112
-----------------------------------------------------------------
</TABLE>
MID-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------
CONSUMER SERVICES--CONTINUED
-----------------------------------------------------------------
HOTELS AND RESTAURANTS--CONTINUED
-----------------------------------------------------------------
700 * National Pizza Co., Cl. A $ 4,900
-----------------------------------------------------------------
400 Sbarro, Inc. 17,200
-----------------------------------------------------------------
800 Sizzler International, Inc. 8,100
----------------------------------------------------------------- -----------
Total 269,075
----------------------------------------------------------------- -----------
LEISURE TIME--1.3%
-----------------------------------------------------------------
2,400 * Circus Circus Enterprises, Inc. 86,100
-----------------------------------------------------------------
3,400 International Game Technology 120,275
----------------------------------------------------------------- -----------
Total 206,375
----------------------------------------------------------------- -----------
ENERGY--4.7%
-----------------------------------------------------------------
DOMESTIC OIL--1.2%
-----------------------------------------------------------------
3,900 Freeport McMoran, Inc. 65,813
-----------------------------------------------------------------
1,300 Murphy Oil Corp. 58,500
-----------------------------------------------------------------
1,400 Noble Affiliates, Inc. 39,025
-----------------------------------------------------------------
800 Quaker State Corp. 11,100
-----------------------------------------------------------------
800 Tosco Corp. 22,400
----------------------------------------------------------------- -----------
Total 196,838
----------------------------------------------------------------- -----------
GAS EXPLORATION--2.0%
-----------------------------------------------------------------
1,600 Anadarko Petroleum Corp. 75,200
-----------------------------------------------------------------
1,700 Apache Corp. 45,263
-----------------------------------------------------------------
400 * BJ Services Co. 9,050
-----------------------------------------------------------------
3,600 Burlington Resources, Inc. 166,950
-----------------------------------------------------------------
1,000 * Seagull Energy Corp. 28,000
----------------------------------------------------------------- -----------
Total 324,463
----------------------------------------------------------------- -----------
INTERNATIONAL OIL--0.1%
-----------------------------------------------------------------
2,700 Ranger Oil, Ltd. 14,850
----------------------------------------------------------------- -----------
</TABLE>
MID-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------
ENERGY--CONTINUED
-----------------------------------------------------------------
PETROLEUM SERVICES--1.4%
-----------------------------------------------------------------
2,600 Baroid Corp. $ 21,450
-----------------------------------------------------------------
800 Diamond Shamrock, Inc. 21,400
-----------------------------------------------------------------
4,500 * Global Marine, Inc. 22,500
-----------------------------------------------------------------
2,200 Lyondell Petrochemical Co. 43,725
-----------------------------------------------------------------
800 Mapco, Inc. 47,600
-----------------------------------------------------------------
1,800 * Nabors Industries, Inc. 15,750
-----------------------------------------------------------------
1,500 * Parker Drilling Co. 10,312
-----------------------------------------------------------------
1,000 * Smith International, Inc. 11,125
-----------------------------------------------------------------
1,200 Valero Energy Corp. 30,150
-----------------------------------------------------------------
900 * Varco International, Inc. 7,087
----------------------------------------------------------------- -----------
Total 231,099
----------------------------------------------------------------- -----------
FINANCE--13.9%
-----------------------------------------------------------------
BANKING--8.1%
-----------------------------------------------------------------
800 Bancorp Hawaii, Inc. 35,400
-----------------------------------------------------------------
2,500 Bank of New York, Inc. 133,125
-----------------------------------------------------------------
1,050 Central Fidelity Banks, Inc. 29,400
-----------------------------------------------------------------
1,300 City National Corp. 9,913
-----------------------------------------------------------------
3,300 Comerica, Inc. 87,038
-----------------------------------------------------------------
1,500 Continental Bank Corp. 38,250
-----------------------------------------------------------------
1,000 Crestar Financial Corp. 39,875
-----------------------------------------------------------------
800 Dauphin Deposit Corp. 19,600
-----------------------------------------------------------------
1,700 Fifth Third Bancorp 89,250
-----------------------------------------------------------------
1,030 First Alabama Bancshares, Inc. 34,505
-----------------------------------------------------------------
1,600 First American Bank Corp. 61,600
-----------------------------------------------------------------
3,200 First Bank Systems, Inc. 101,600
-----------------------------------------------------------------
1,100 First Security Corp. 30,250
-----------------------------------------------------------------
800 First Tennessee National Corp. 30,400
-----------------------------------------------------------------
</TABLE>
MID-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------
FINANCE--CONTINUED
-----------------------------------------------------------------
BANKING--CONTINUED
-----------------------------------------------------------------
900 First Virginia Banks, Inc. $ 31,725
-----------------------------------------------------------------
2,800 KeyCorp 96,600
-----------------------------------------------------------------
700 Liberty National Bancorp, Inc. 19,600
-----------------------------------------------------------------
1,800 Marshall & Ilsley Corp. 40,950
-----------------------------------------------------------------
1,000 Mercantile Bancorporation 49,250
-----------------------------------------------------------------
900 Mercantile Bankshares Corp. 17,888
-----------------------------------------------------------------
1,300 Meridian Bancorp, Inc. 39,650
-----------------------------------------------------------------
1,500 Northern Trust Corp. 61,125
-----------------------------------------------------------------
2,100 Southtrust Corp. 39,637
-----------------------------------------------------------------
2,100 State Street Boston Corp. 80,850
-----------------------------------------------------------------
1,400 UJB Financial Corp. 36,050
-----------------------------------------------------------------
900 West One Bancorp 24,862
-----------------------------------------------------------------
1,000 Wilmington Trust Corp. 29,750
----------------------------------------------------------------- -----------
Total 1,308,143
----------------------------------------------------------------- -----------
FINANCIAL SERVICES--0.4%
-----------------------------------------------------------------
3,215 Bear Stearns, Inc. 70,730
----------------------------------------------------------------- -----------
INSURANCE--2.9%
-----------------------------------------------------------------
2,850 AFLAC, Inc. 89,775
-----------------------------------------------------------------
1,900 AON Corp. 98,800
-----------------------------------------------------------------
2,100 Equifax, Inc. 53,550
-----------------------------------------------------------------
600 Hartford Steam Boiler Inspectors & Insurance Co. 28,875
-----------------------------------------------------------------
900 Kemper Corp. 34,200
-----------------------------------------------------------------
2,000 Progressive Corp. 91,500
-----------------------------------------------------------------
1,300 Provident Life & Accident Insurance Co., Cl. B 39,975
-----------------------------------------------------------------
600 Transatlantic Holdings, Inc. 31,725
-----------------------------------------------------------------
</TABLE>
MID-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------
FINANCE--CONTINUED
-----------------------------------------------------------------
INSURANCE--CONTINUED
-----------------------------------------------------------------
** UNUM Corp. $ 10
----------------------------------------------------------------- -----------
Total 468,410
----------------------------------------------------------------- -----------
INVESTMENT COMPANIES--2.5%
-----------------------------------------------------------------
1,300 A.G. Edwards, Inc. 40,138
-----------------------------------------------------------------
1,650 Charles Schwab Corp. 56,925
-----------------------------------------------------------------
1,000 Dreyfus Corp. 40,125
-----------------------------------------------------------------
2,300 Franklin Resources, Inc. 110,113
-----------------------------------------------------------------
2,100 Morgan Stanley Group, Inc. 165,113
----------------------------------------------------------------- -----------
Total 412,414
----------------------------------------------------------------- -----------
GENERAL BUSINESS--8.1%
-----------------------------------------------------------------
BROADCASTING--0.5%
-----------------------------------------------------------------
500 Belo (A.H.) Corp. 22,500
-----------------------------------------------------------------
1,000 * Multimedia, Inc. 39,125
-----------------------------------------------------------------
700 TCA Cable TV, Inc. 20,475
----------------------------------------------------------------- -----------
Total 82,100
----------------------------------------------------------------- -----------
BUSINESS SERVICES--4.6%
-----------------------------------------------------------------
600 Banta Corp. 20,550
-----------------------------------------------------------------
3,050 * CUC International, Inc. 117,425
-----------------------------------------------------------------
1,100 Comdisco, Inc. 22,275
-----------------------------------------------------------------
500 * Enterra Corp. 11,750
-----------------------------------------------------------------
1,600 First Financial Management Corp. 87,600
-----------------------------------------------------------------
1,100 * FISERV, Inc. 23,650
-----------------------------------------------------------------
900 Flightsafety International, Inc. 30,600
-----------------------------------------------------------------
6,800 General Motors Corp., Cl. E 209,100
-----------------------------------------------------------------
700 * Information Resource, Inc. 26,075
-----------------------------------------------------------------
700 * Jacobs Engineering Group, Inc. 16,537
-----------------------------------------------------------------
1,075 Kelly Services, Inc., Cl. A 27,413
-----------------------------------------------------------------
</TABLE>
MID-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------
GENERAL BUSINESS--CONTINUED
-----------------------------------------------------------------
BUSINESS SERVICES--CONTINUED
-----------------------------------------------------------------
1,000 * Legent Corp. $ 24,250
-----------------------------------------------------------------
800 Omnicom Group 36,400
-----------------------------------------------------------------
500 PHH Corp. 22,813
-----------------------------------------------------------------
800 Paychex, Inc. 28,000
-----------------------------------------------------------------
1,000 Rollins, Inc. 24,000
-----------------------------------------------------------------
1,500 Sothebys Holdings, Inc. 19,125
----------------------------------------------------------------- -----------
Total 747,563
----------------------------------------------------------------- -----------
DIVERSIFIED--0.2%
-----------------------------------------------------------------
709 Chris-Craft Industries, Inc. 30,133
----------------------------------------------------------------- -----------
NEWSPAPERS--0.6%
-----------------------------------------------------------------
700 Media General, Inc., Cl. A 21,000
-----------------------------------------------------------------
458 New York Times Co., Cl. A 10,830
-----------------------------------------------------------------
300 Washington Post Co., Cl. B 74,850
----------------------------------------------------------------- -----------
Total 106,680
----------------------------------------------------------------- -----------
OFFICE FURNISHINGS AND SUPPLIES--0.6%
-----------------------------------------------------------------
500 Cross (A.T.) Co., Cl. A 7,000
-----------------------------------------------------------------
500 Ennis Business Forms, Inc. 6,375
-----------------------------------------------------------------
700 Herman Miller, Inc. 21,350
-----------------------------------------------------------------
900 Hon Industries, Inc. 24,975
-----------------------------------------------------------------
600 Reynolds & Reynolds Co., Cl. A 23,400
-----------------------------------------------------------------
600 Wallace Computer Service, Inc. 16,875
----------------------------------------------------------------- -----------
Total 99,975
----------------------------------------------------------------- -----------
PUBLISHING--0.4%
-----------------------------------------------------------------
400 Gibson Greetings, Inc. 8,100
-----------------------------------------------------------------
400 Houghton Mifflin Co. 18,950
-----------------------------------------------------------------
800 Standard Register 15,800
-----------------------------------------------------------------
1,300 Topps, Inc. 10,400
-----------------------------------------------------------------
</TABLE>
MID-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------
GENERAL BUSINESS--CONTINUED
-----------------------------------------------------------------
PUBLISHING--CONTINUED
-----------------------------------------------------------------
600 * Western Publishing Group, Inc. $ 8,925
----------------------------------------------------------------- -----------
Total 62,175
----------------------------------------------------------------- -----------
TELECOMMUNICATIONS SERVICES--1.2%
-----------------------------------------------------------------
1,100 Communications Satellite Corp. 38,637
-----------------------------------------------------------------
2,300 * Nextel Communications, Inc., Cl. A 125,062
-----------------------------------------------------------------
700 * Vanguard Cellular Systems, Inc., Cl. A 22,575
----------------------------------------------------------------- -----------
Total 186,274
----------------------------------------------------------------- -----------
SHELTER--0.1%
-----------------------------------------------------------------
CONSTRUCTION MATERIALS--0.1%
-----------------------------------------------------------------
300 Granite Construction, Inc. 5,775
-----------------------------------------------------------------
500 Southdown, Inc. 12,188
----------------------------------------------------------------- -----------
Total 17,963
----------------------------------------------------------------- -----------
TECHNOLOGY--9.6%
-----------------------------------------------------------------
AEROSPACE--0.5%
-----------------------------------------------------------------
900 GenCorp, Inc. 14,175
-----------------------------------------------------------------
600 OEA, Inc. 17,400
-----------------------------------------------------------------
500 * Rohr, Inc. 3,937
-----------------------------------------------------------------
1,000 Sundstrand Corp. 38,125
-----------------------------------------------------------------
600 Thiokol Corp. 15,825
----------------------------------------------------------------- -----------
Total 89,462
----------------------------------------------------------------- -----------
COMPUTERS & BUSINESS EQUIPMENT--3.7%
-----------------------------------------------------------------
900 * AST Research, Inc. 18,562
-----------------------------------------------------------------
800 * Arrow Electronics, Inc. 29,700
-----------------------------------------------------------------
3,400 * CISCO Systems, Inc. 174,250
-----------------------------------------------------------------
800 * Cabletron Systems, Inc. 73,800
-----------------------------------------------------------------
</TABLE>
MID-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
-----------------------------------------------------------------
COMPUTERS & BUSINESS EQUIPMENT--CONTINUED
-----------------------------------------------------------------
1,400 * Conner Peripherals, Inc. 16,975
-----------------------------------------------------------------
700 * Convex Computer Corp. 3,850
-----------------------------------------------------------------
</TABLE>
MID-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
-----------------------------------------------------------------
COMPUTERS & BUSINESS EQUIPMENT--CONTINUED
-----------------------------------------------------------------
1,000 * Dell Computer Corp. $ 20,250
-----------------------------------------------------------------
550 Diebold, Inc. 32,793
-----------------------------------------------------------------
600 * Exabyte Corp. 9,525
-----------------------------------------------------------------
1,000 Intelligent Electronics, Inc. 21,875
-----------------------------------------------------------------
800 * Network Systems Corp. 6,900
-----------------------------------------------------------------
1,200 * Quantum Corp. 15,300
-----------------------------------------------------------------
1,900 * Seagate Technology 42,275
-----------------------------------------------------------------
800 * Sequent Computer Systems, Inc. 13,600
-----------------------------------------------------------------
1,200 * Storage Technology Corp. 31,050
-----------------------------------------------------------------
600 * Stratus Computer, Inc. 17,550
-----------------------------------------------------------------
700 * Symbol Technologies, Inc. 11,813
-----------------------------------------------------------------
1,700 * Synoptics Communications, Inc. 47,175
-----------------------------------------------------------------
700 * Verifone, Inc. 12,075
----------------------------------------------------------------- -----------
Total 599,318
----------------------------------------------------------------- -----------
ELECTRONICS--4.0%
-----------------------------------------------------------------
800 * ADC Telecommunications, Inc. 29,200
-----------------------------------------------------------------
600 * Altera Corp. 16,575
-----------------------------------------------------------------
1,400 * Analog Devices, Inc. 31,150
-----------------------------------------------------------------
300 * Anthem Electronics, Inc. 9,637
-----------------------------------------------------------------
1,100 Avnet, Inc. 43,175
-----------------------------------------------------------------
800 Beckman Instruments, Inc. 22,000
-----------------------------------------------------------------
700 * Cirrus Logic, Inc. 24,500
-----------------------------------------------------------------
1,000 * Cypress Semiconductor Corp. 11,875
-----------------------------------------------------------------
1,300 * LSI Logic Corp. 18,850
-----------------------------------------------------------------
1,000 Linear Technology Corp. 32,750
-----------------------------------------------------------------
1,100 Micron Technology, Inc. 52,250
-----------------------------------------------------------------
1,800 Molex, Inc. 64,350
-----------------------------------------------------------------
</TABLE>
MID-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
-----------------------------------------------------------------
ELECTRONICS--CONTINUED
-----------------------------------------------------------------
500 * Octel Communications Crop. $ 12,500
-----------------------------------------------------------------
1,300 Penn Central Corp. (The) 44,037
-----------------------------------------------------------------
1,100 Sensormatic Electronics Corp. 51,150
-----------------------------------------------------------------
300 Sequa Corp., Cl. A 10,087
-----------------------------------------------------------------
1,800 * Silicon Graphics, Inc. 78,300
-----------------------------------------------------------------
500 Telefex, Inc. 14,438
-----------------------------------------------------------------
1,000 * Teradyne, Inc. 24,125
-----------------------------------------------------------------
500 Varian Associates, Inc. 24,875
-----------------------------------------------------------------
600 * Xilinx, Inc. 23,850
----------------------------------------------------------------- -----------
Total 639,674
----------------------------------------------------------------- -----------
SOFTWARE--1.4%
-----------------------------------------------------------------
1,200 Adobe Systems, Inc. 26,100
-----------------------------------------------------------------
400 * Aldus Corp. 8,900
-----------------------------------------------------------------
700 * BMC Software, Inc. 33,688
-----------------------------------------------------------------
700 * Borland International, Inc. 12,075
-----------------------------------------------------------------
1,200 * Cadence Design Systems, Inc. 13,950
-----------------------------------------------------------------
400 * Knowledgeware, Inc. 6,500
-----------------------------------------------------------------
1,300 Mentor Graphics Corp. 15,275
-----------------------------------------------------------------
1,500 * Parametric Technology Corp. 59,625
-----------------------------------------------------------------
600 * Policy Management Systems Corp. 16,800
-----------------------------------------------------------------
800 * Structural Dynamics Research Corp. 13,100
-----------------------------------------------------------------
700 * Symantec Corp. 14,175
----------------------------------------------------------------- -----------
Total 220,188
----------------------------------------------------------------- -----------
TRANSPORTATION--1.8%
-----------------------------------------------------------------
RAILROADS & EQUIPMENT--1.0%
-----------------------------------------------------------------
500 GATX Corp. 19,062
-----------------------------------------------------------------
1,200 Illinois Central Corp. 40,050
-----------------------------------------------------------------
</TABLE>
MID-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------
TRANSPORTATION--CONTINUED
-----------------------------------------------------------------
RAILROADS & EQUIPMENT--CONTINUED
-----------------------------------------------------------------
1,200 Kansas City Southern Industries, Inc. $ 54,150
-----------------------------------------------------------------
1,150 Trinity Industries, Inc. 45,425
----------------------------------------------------------------- -----------
Total 158,687
----------------------------------------------------------------- -----------
TRUCKING & FREIGHT FORWARDING--0.8%
-----------------------------------------------------------------
500 Airborne Freight Corp. 15,062
-----------------------------------------------------------------
1,300 Alexander & Baldwin, Inc. 30,875
-----------------------------------------------------------------
400 American President Companies, Ltd. 22,200
-----------------------------------------------------------------
400 Arnold Industries, Inc. 16,000
-----------------------------------------------------------------
900 Overseas Shipholding Group, Inc. 18,450
-----------------------------------------------------------------
1,500 Tidewater, Inc. 34,125
----------------------------------------------------------------- -----------
Total 136,712
----------------------------------------------------------------- -----------
UTILITIES--14.5%
-----------------------------------------------------------------
ELECTRIC UTILITIES--11.0%
-----------------------------------------------------------------
1,300 AES Corp. 42,575
-----------------------------------------------------------------
1,600 Allegheny Power Systems, Inc. 88,200
-----------------------------------------------------------------
1,500 Atlantic Energy, Inc. 33,563
-----------------------------------------------------------------
400 Black Hills Corp. 9,750
-----------------------------------------------------------------
2,400 CMS Energy Corp. 63,300
-----------------------------------------------------------------
600 Central Louisiana Electric Co. 15,825
-----------------------------------------------------------------
900 Central Maine Power Co. 16,088
-----------------------------------------------------------------
2,400 Cincinnati Gas & Electric Co. 68,700
-----------------------------------------------------------------
1,600 Delmarva Power & Light Co. 38,400
-----------------------------------------------------------------
2,500 Florida Progress Corp. 89,062
-----------------------------------------------------------------
800 Hawaiian Electric Industries, Inc. 30,300
-----------------------------------------------------------------
1,000 Idaho Power Co. 32,000
-----------------------------------------------------------------
2,100 Illinois Power Co. 48,300
-----------------------------------------------------------------
</TABLE>
MID-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------
UTILITIES--CONTINUED
-----------------------------------------------------------------
ELECTRIC UTILITIES--CONTINUED
-----------------------------------------------------------------
800 Iowa-III Gas & Electric Co. $ 20,300
-----------------------------------------------------------------
1,100 Ipalco Enterprises 40,563
-----------------------------------------------------------------
1,700 Kansas City Power & Light Co. 40,800
-----------------------------------------------------------------
900 LG & E Energy Corp. 37,575
-----------------------------------------------------------------
600 * Magma Power Co. 21,600
-----------------------------------------------------------------
800 Minnesota Power & Light Co. 26,200
-----------------------------------------------------------------
1,400 Montana Power Co. 37,625
-----------------------------------------------------------------
1,800 Nipsco Industries, Inc. 61,200
-----------------------------------------------------------------
1,100 Nevada Power Co. 27,638
-----------------------------------------------------------------
1,800 New England Electric Systems 75,150
-----------------------------------------------------------------
2,000 New York State Electric & Gas Corp. 65,750
-----------------------------------------------------------------
3,700 Northeast Utilities 97,125
-----------------------------------------------------------------
1,100 Oklahoma Gas & Electric Co. 39,188
-----------------------------------------------------------------
2,400 Pinnacle West Capital Corp. 55,200
-----------------------------------------------------------------
1,300 Portland General Corp. 28,112
-----------------------------------------------------------------
3,200 Potomac Electric Power Co. 89,600
-----------------------------------------------------------------
1,700 Public Service Co., Colorado 51,213
-----------------------------------------------------------------
1,200 * Public Service Co., New Mexico 13,350
-----------------------------------------------------------------
1,700 Puget Sound Power & Light Co. 42,712
-----------------------------------------------------------------
1,300 Scana Corp. 66,950
-----------------------------------------------------------------
1,100 Southwestern Public Service Co. 35,063
-----------------------------------------------------------------
3,200 Teco Energy, Inc. 79,200
-----------------------------------------------------------------
1,100 Utilicorp Unlimited, Inc. 36,300
-----------------------------------------------------------------
800 WPL Holdings, Inc. 28,000
-----------------------------------------------------------------
2,900 Wisconsin Energy Corp. 84,462
----------------------------------------------------------------- -----------
Total 1,776,939
----------------------------------------------------------------- -----------
</TABLE>
MID-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------
UTILITIES--CONTINUED
-----------------------------------------------------------------
GAS & PIPELINE UTILITIES--1.5%
-----------------------------------------------------------------
700 Atlanta Gas & Light Co. $ 25,725
-----------------------------------------------------------------
1,200 Brooklyn Union Gas Co. (The) 32,400
-----------------------------------------------------------------
1,000 El Paso Natural Gas Co. 36,875
-----------------------------------------------------------------
650 Indiana Energy, Inc. 14,868
-----------------------------------------------------------------
800 MCN Corp. 28,600
-----------------------------------------------------------------
1,000 National Fuel Gas Co. 35,500
-----------------------------------------------------------------
1,100 Questar Corp. 41,525
-----------------------------------------------------------------
600 Washington Gas & Light Co. 25,725
----------------------------------------------------------------- -----------
Total 241,218
----------------------------------------------------------------- -----------
TELEPHONE--2.0%
-----------------------------------------------------------------
1,400 Century Telephone Enterprises, Inc. 38,500
-----------------------------------------------------------------
1,659 * LDDS Communications, Inc., Cl.A 83,364
-----------------------------------------------------------------
500 Lincoln Telecommunications Co. 20,125
-----------------------------------------------------------------
900 Rochester Telephone Corp. 43,088
-----------------------------------------------------------------
1,800 Southern New England Telecom 65,475
-----------------------------------------------------------------
1,300 Telephone & Data Systems, Inc. 71,012
----------------------------------------------------------------- -----------
Total 321,564
----------------------------------------------------------------- -----------
TOTAL COMMON STOCKS (IDENTIFIED COST $13,908,197) 13,919,602
----------------------------------------------------------------- -----------
</TABLE>
MID-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- -----------
<C> <C> <S> <C>
SHORT-TERM U.S. GOVERNMENT OBLIGATIONS--0.4%
- ------------------------------------------------------------------------------------
$ 50,000 United States Treasury Bill, 12/30/93 $ 49,762
-----------------------------------------------------------------
20,000 United States Treasury Bill, 12/30/93 19,904
----------------------------------------------------------------- -----------
TOTAL SHORT-TERM U.S. GOVERNMENT OBLIGATIONS
(AT AMORTIZED COST) (NOTE 2A) 69,666
----------------------------------------------------------------- -----------
</TABLE>
<TABLE>
<C> <C> <S> <C>
***REPURCHASE AGREEMENT--21.4%
- ------------------------------------------------------------------------------------
3,460,000 Morgan (J.P.) Securities, Inc., 2.99%, dated 10/29/93, due
11/01/93
(AT AMORTIZED COST) (NOTE 2B) 3,460,000
----------------------------------------------------------------- -----------
TOTAL INVESTMENTS (IDENTIFIED COST $17,437,863) $17,449,268+
----------------------------------------------------------------- -----------
</TABLE>
* Non-income producing securities.
** Indicates fractional shares.
*** The repurchase agreement is fully collateralized by U.S. government
obligations, based on market prices on the date of the portfolio. The
investment in the repurchase agreement is through participation in a joint
account with other Federated Investors funds.
+ The cost for federal tax purposes amounts to $17,437,863. The net unrealized
appreciation of investments on a federal tax cost basis amounts to $11,405,
which is comprised of $617,065 appreciation and $605,660 depreciation at
October 31, 1993.
Note: The categories of investments are shown as a percentage of net assets
($16,191,543) at October 31, 1993.
(See Notes which are an integral part of the Financial Statements)
MID-CAP FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1993
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------
Investment in repurchase agreement, at amortized cost (Note 2B) $3,460,000
- --------------------------------------------------------------------
Investments in securities, at value 13,989,268
- -------------------------------------------------------------------- ----------
Total investments, at amortized cost and value (Note 2A)
(identified and tax cost $17,437,863) $17,449,268
- ---------------------------------------------------------------------------------
Cash 83,559
- ---------------------------------------------------------------------------------
Receivable for Fund shares sold 154,778
- ---------------------------------------------------------------------------------
Dividends and interest receivable 17,990
- ---------------------------------------------------------------------------------
Receivable for daily variation margin on open futures contracts (Note 2F) 11,185
- ---------------------------------------------------------------------------------
Deferred expenses (Note 2D) 22,731
- --------------------------------------------------------------------------------- -----------
Total assets 17,739,511
- ---------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------
Payable for investments purchased 1,497,421
- --------------------------------------------------------------------
Payable for Fund shares repurchased 10,428
- --------------------------------------------------------------------
Accrued expenses and other liabilities 40,119
- -------------------------------------------------------------------- ----------
Total liabilities 1,547,968
- --------------------------------------------------------------------------------- -----------
NET ASSETS FOR 1,399,261 shares of beneficial interest outstanding $16,191,543
- --------------------------------------------------------------------------------- -----------
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------
Paid-in capital $15,276,795
- ---------------------------------------------------------------------------------
Net unrealized appreciation of investments and futures contracts (Note 2F) 49,200
- ---------------------------------------------------------------------------------
Accumulated net realized gain on investments and futures contracts (Note 2F) 852,566
- ---------------------------------------------------------------------------------
Undistributed net investment income 12,982
- --------------------------------------------------------------------------------- -----------
Total $16,191,543
- --------------------------------------------------------------------------------- -----------
NET ASSET VALUE, Offering Price and Redemption Price Per Share
($16,191,543 / 1,399,261 shares of beneficial interest outstanding) $11.57
- --------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
MID-CAP FUND
STATEMENT OF OPERATIONS
OCTOBER 31, 1993
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------
Dividends $ 131,376
- ----------------------------------------------------------------------------------------
Interest 66,503
- ---------------------------------------------------------------------------------------- ----------
Total investment income (Note 2G) 197,879
- ----------------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------
Management fee (Note 5) $ 34,031
- ----------------------------------------------------------------------------
Trustees' fees 1,444
- ----------------------------------------------------------------------------
Custodian, transfer and dividend disbursing agent fees and
expenses 82,381
- ----------------------------------------------------------------------------
Fund share registration costs 34
- ----------------------------------------------------------------------------
Auditing fees 4,676
- ----------------------------------------------------------------------------
Legal fees 8,636
- ----------------------------------------------------------------------------
Printing and postage 8,152
- ----------------------------------------------------------------------------
Insurance premiums 5,213
- ----------------------------------------------------------------------------
Miscellaneous 4,232
- ---------------------------------------------------------------------------- --------
Total expenses 148,799
- ----------------------------------------------------------------------------
Deduct--
- ----------------------------------------------------------------------------
Waiver of management fee (Note 5) $ 34,031
- -----------------------------------------------------------------
Reimbursement of other operating expenses (Note 5) 114,768 148,799
- ----------------------------------------------------------------- -------- --------
Net expenses 0
- ---------------------------------------------------------------------------------------- ----------
Net investment income 197,879
- ---------------------------------------------------------------------------------------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES CONTRACTS:
- ----------------------------------------------------------------------------------------
Net realized gain on investments (identified cost basis) 713,031
- ----------------------------------------------------------------------------------------
Net realized gain on futures contracts (identified cost basis) 139,535
- ----------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments and futures contracts 49,200
- ---------------------------------------------------------------------------------------- ----------
Net realized and unrealized gain on investments and futures contracts 901,766
- ---------------------------------------------------------------------------------------- ----------
Change in net assets resulting from operations $1,099,645
- ---------------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
MID-CAP FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
--------------------------
1993 1992*
----------- --------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------------------------------------
OPERATIONS--
- ------------------------------------------------------------------
Net investment income $ 197,879 $ 54
- ------------------------------------------------------------------
Net realized gain on investment transactions and futures contracts
($890,361 and $0 net gain, respectively, as computed for federal
tax purposes) 852,566 --
- ------------------------------------------------------------------
Change in unrealized appreciation on investments and futures
contracts 49,200 --
- ------------------------------------------------------------------ ----------- --------
Change in net assets resulting from operations 1,099,645 54
- ------------------------------------------------------------------ ----------- --------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 3)--
- ------------------------------------------------------------------
Dividends to shareholders from net investment income (184,919) (32)
- ------------------------------------------------------------------ ----------- --------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 4)--
- ------------------------------------------------------------------
Proceeds from sale of shares 21,071,924 89,950
- ------------------------------------------------------------------
Net asset value of shares issued to shareholders electing to
receive payment of dividends in Fund shares 86,668 30
- ------------------------------------------------------------------
Cost of shares redeemed (5,884,621) (87,156)
- ------------------------------------------------------------------ ----------- --------
Change in net assets resulting from Fund share transactions 15,273,971 2,824
- ------------------------------------------------------------------ ----------- --------
Change in net assets 16,188,697 2,846
- ------------------------------------------------------------------
NET ASSETS:
- ------------------------------------------------------------------
Beginning of period 2,846 --
- ------------------------------------------------------------------ ----------- --------
End of period (including undistributed net investment income of
$12,982 and $22, respectively) $16,191,543 $ 2,846
- ------------------------------------------------------------------ ----------- --------
</TABLE>
* For the period from September 3, 1992 (date of initial public investment) to
October 31, 1992.
(See Notes which are an integral part of the Financial Statements)
MID-CAP FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1993
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Federated Index Trust (the "Trust") is registered under the Investment Company
Act of 1940, as amended, as a diversified, no load, open-end management
investment company with three portfolios. The financial statements included
herein present only those of Mid-Cap Fund (the "Fund"). 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.
(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. The
policies are in conformity with generally accepted accounting principles.
<TABLE>
<S> <C>
A. INVESTMENT VALUATIONS--Equity portfolio securities listed on the New York Stock Exchange
or any other national securities exchange are valued at the last sale price or, if there
has been no sale on that day, at the mean between bid and asked prices. Short-term
obligations are ordinarily valued at the mean between bid and asked prices furnished by
an independent pricing service. Short-term obligations with maturities of sixty days or
less are valued at amortized cost, which approximates value. All other securities are
appraised at fair value as determined in good faith by the Board of Trustees.
B. REPURCHASE AGREEMENTS--It is the policy of the Trust to require the custodian bank to
take possession, to have legally segregated in the Federal Reserve Book Entry System or
to have segregated within the custodian bank's vault, all securities held as collateral
in support of repurchase agreement investments. Additionally, procedures have been
established by the Trust to monitor, on a daily basis, the market value of each
repurchase agreement's underlying 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 manager to
be creditworthy pursuant to guidelines established by the Trustees. Risks may arise from
the potential inability of counterparties to honor the terms of a repurchase agreement.
Accordingly, the Fund could receive less than the repurchase price on the sale of
collateral securities.
C. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the Internal
Revenue Code available to regulated investment companies and to distribute to
shareholders each year all of its net income, including any net realized gains on
investments. Accordingly, no provision for federal tax is necessary.
</TABLE>
MID-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
D. DEFERRED EXPENSES--The costs incurred by the Fund with respect to registration of its
shares in its first fiscal year, excluding the initial expense of registering the shares,
have been deferred and are being amortized using the straight-line method over a period
of five years from the Fund's commencement date.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in when-issued or
delayed delivery 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 objectives 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. FUTURES CONTRACTS--Upon entering into a stock index futures contract with a broker, the
Fund is required to deposit in a segregated account an amount ("initial margin") of cash
or U.S. government securities equal to a percentage of the contract value. The Fund
agrees to receive from or pay the broker an amount of cash equal to a specific dollar
amount times the difference between the closing value of the stock index and the price at
which the contract was made. On a daily basis, the value of a stock index futures
contract is determined and any difference between such value and the original futures
contract value is reflected in the "daily variation margin" account. Daily variation
margin adjustments, arising from this "marking to market" process, are recorded by the
Fund as unrealized gains or losses.
The Fund may decide to close its position on a contract at any time prior to the
contract's expiration. When a contract is closed, the Fund recognizes a realized gain or
loss. Risks of entering into futures contracts include the possibility that there may be
an illiquid market and that a change in the value of the contract may not correlate with
changes in the value of the underlying securities.
G. INCOME--Dividend income is recorded on the ex-dividend date. 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. Dividends to
shareholders and capital gain distributions, if any, are recorded on the ex-dividend
date.
H. OTHER--Investment transactions are accounted for as of the trade date of the transaction.
</TABLE>
(3) DIVIDENDS AND DISTRIBUTIONS
Dividends are declared and paid quarterly to all shareholders invested in the
Fund on the record date. Dividends are paid from the net investment income of
the Fund. Net investment income consists of all dividends or interest received
by the Fund less its expenses. Capital gains realized by the Fund, if any, are
distributed at least once every twelve months.
MID-CAP FUND
- --------------------------------------------------------------------------------
(4) 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>
YEAR ENDED OCTOBER
31,
--------------------
1993 1992*
- ------------------------------------------------------------------------ --------- ------
<S> <C> <C>
Shares outstanding, beginning of period 285 --
- ------------------------------------------------------------------------
Shares sold 1,921,140 8,995
- ------------------------------------------------------------------------
Shares issued to shareholders electing to receive payment of dividends
in
Fund shares 7,911 3
- ------------------------------------------------------------------------
Shares redeemed (530,075) (8,713)
- ------------------------------------------------------------------------ --------- ------
Shares outstanding, end of period 1,399,261 285
- ------------------------------------------------------------------------ --------- ------
</TABLE>
* For the period from September 3, 1992 (date of initial public investment) to
October 31, 1992.
(5) MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Federated Management, the Fund's Manager ("Manager"), receives for its services
an annual management fee equal to .40 of 1% of the Fund's average daily net
assets. Under the management contract, which provides for the voluntarily waiver
of the fee by the Manager, the Manager will voluntarily waive some or all of the
management fee. The Manager can terminate this voluntary waiver of some or all
of its management fee at any time in its sole discretion. The Manager has also
undertaken to reimburse the Fund for operating expenses in excess of limitations
established by certain states. For the fiscal year ended October 31, 1993, the
Fund's Manager earned a management fee of $34,031 all of which was voluntarily
waived. In addition, the Manager reimbursed $112,125 of the Fund's normal
operating expenses because of undertakings to limit the Fund's expenses.
Organization expenses of $23,784 were borne initially by the Manager. The Fund
has agreed to pay the Manager, at an annual rate .005 of 1% of average daily net
assets for organization expenses until expenses borne by the Manager are
reimbursed. For the year ended October 31, 1993 the Fund paid $2,643 pursuant to
this agreement. This commitment will expire five years from July 2, 1990, the
date the Trust's registration statement became effective.
Certain of the Officers and Trustees of the Fund are Officers and Directors of
the above corporations.
MID-CAP FUND
- --------------------------------------------------------------------------------
(6) INVESTMENT TRANSACTIONS
Purchases, and sales of investments (excluding short-term obligations) for the
fiscal year ended October 31, 1993, were as follows:
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------
PURCHASES-- $17,112,674
- ------------------------------------------------------------------------------- -----------
SALES-- $ 3,206,652
- ------------------------------------------------------------------------------- -----------
</TABLE>
(7) FINANCIAL FUTURES CONTRACTS
At October 31, 1993, open positions in stock index futures contracts were as
follows:
<TABLE>
<CAPTION>
UNREALIZED
EXPIRATION OPEN CONTRACTS POSITION APPRECIATION
- --------------------- ------------------------- --------- --------------
<S> <C> <C> <C>
December 1993 17 S&P 400 Index Futures Long $37,795
</TABLE>
At October 31, 1993, the Fund has deposited $70,000 of U.S. Treasury Bills in a
segregated account to cover margin requirements on open futures contracts.
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
To the Trustees and Shareholders of
FEDERATED INDEX TRUST:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Mid-Cap Fund (a portfolio of Federated Index
Trust), as of October 31, 1993, and the related statement of operations for the
year then ended and the statement of changes in net assets and financial
highlights (see page 2 of this prospectus) for the year then ended and for the
period from September 3, 1992 (date of initial public investment) to October 31,
1992. These financial statements and financial highlights are the responsibility
of the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1993, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Mid-Cap Fund of Federated Index Trust at October 31, 1993, the results of its
operations for the year then ended and the changes in its net assets and the
financial highlights for the year then ended and for the period from September
3, 1992 to October 31, 1992 in conformity with generally accepted accounting
principles.
ERNST & YOUNG
Pittsburgh, Pennsylvania
December 10, 1993
2062304B (12/93)
[THIS PAGE INTENTIONALLY LEFT BLANK]
[THIS PAGE INTENTIONALLY LEFT BLANK]
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Mid-Cap Fund Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ------------------------------------------------------------------------------------------------
Manager
Federated Management Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ------------------------------------------------------------------------------------------------
Sub-Manager
ANB Investment Management One North LaSalle Street
and Trust Co. Chicago, Illinois 60690
- ------------------------------------------------------------------------------------------------
Custodian
State Street Bank and P.O. Box 8602
Trust Company Boston, Massachusetts 02266-8602
- ------------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company Federated Investors Tower
Pittsburgh, Pennsylvania 1522-3779
- ------------------------------------------------------------------------------------------------
Legal Counsel
Houston, Houston & Donnelly 2510 Centre City Tower
Pittsburgh, Pennsylvania 15222
- ------------------------------------------------------------------------------------------------
Legal Counsel
Dickstein, Shapiro & Morin 2101 L Street, N.W.
Washington, D.C. 20037
- ------------------------------------------------------------------------------------------------
Independent Auditors
Ernst & Young One Oxford Centre
Pittsburgh, PA 15219
- ------------------------------------------------------------------------------------------------
</TABLE>
MID-CAP FUND
(A PORTFOLIO OF FEDERATED INDEX TRUST)
PROSPECTUS
A No-Load, Open-End, Diversified
Management Investment Company
Prospectus dated December 31, 1993
FEDERATED SECURITIES CORP.
(LOGO)
- ---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
2062304A (12/93)
MID-CAP FUND
(A PORTFOLIO OF FEDERATED INDEX TRUST)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the prospectus of
the Fund dated December 31, 1993. This Statement is not a prospectus itself. To
receive a copy of the prospectus, write or call the Mid-Cap Fund.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Statement dated December 31, 1993
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
GENERAL INFORMATION ABOUT THE FUND 1
- ----------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES 1
- ----------------------------------------------------------------
Types of Investments 1
When-Issued and Delayed
Delivery Transactions 2
Lending of Portfolio Securities 3
Reverse Repurchase Agreements 3
Portfolio Turnover 3
Investment Limitations 3
TRUST MANAGEMENT 5
- ----------------------------------------------------------------
Officers and Trustees 5
Funds 7
Fund Ownership 7
Trustee Liability 8
MANAGEMENT SERVICES 8
- ----------------------------------------------------------------
Manager to the Fund 8
Management Fees 8
Other Related Services 8
ADMINISTRATIVE SERVICES 9
- ----------------------------------------------------------------
BROKERAGE TRANSACTIONS 9
- ----------------------------------------------------------------
PURCHASING SHARES 9
- ----------------------------------------------------------------
Conversion to Federal Funds 9
Exchanging Securities for Fund Shares 9
DETERMINING NET ASSET VALUE 10
- ----------------------------------------------------------------
Determining Market Value of Securities 10
REDEEMING SHARES 10
- ----------------------------------------------------------------
Redemption in Kind 10
TAX STATUS 10
- ----------------------------------------------------------------
The Fund's Tax Status 10
Shareholders' Tax Status 10
Capital Gains 10
TOTAL RETURN 11
- ----------------------------------------------------------------
YIELD 11
- ----------------------------------------------------------------
PERFORMANCE COMPARISONS 11
- ----------------------------------------------------------------
STANDARD & POOR'S CORPORATION 12
- ----------------------------------------------------------------
GENERAL INFORMATION ABOUT THE FUND
- --------------------------------------------------------------------------------
The Mid-Cap Fund (the "Fund") is a portfolio of Federated Index Trust (the
"Trust"), which was established as a Massachusetts business trust under a
Declaration of Trust dated January 30, 1990.
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------
The investment objective of the Fund is to provide investment results generally
corresponding to the aggregate price and dividend performance of the publicly
traded common stocks that comprise the mid-level stock capitalization sector of
the United States equity market. The investment objective cannot be changed
without the approval of shareholders. The policies described below may be
changed by the Board of Trustees ("Trustees") without shareholder approval.
Shareholders will be notified before any material change in these policies
becomes effective.
TYPES OF INVESTMENTS
In addition to the common stocks described in the prospectus, the Fund may also
invest in money market instruments and U.S. government obligations and
securities in such proportions as, in the judgment of the sub-manager,
prevailing market conditions warrant.
MONEY MARKET INSTRUMENTS
The Fund may invest in the following money market instruments:
- instruments of domestic banks and savings and loans having capital,
surplus, and undivided profits of over $100,000,000, or if the
principal amount of the instrument is insured in full by the Federal
Deposit Insurance Corporation; and
- prime commercial paper (rated A-1 by Standard and Poor's Corporation,
Prime-1 by Moody's Investors Service, Inc., or F-1 by Fitch Investors
Service).
REPURCHASE AGREEMENTS
The Fund requires its custodian to take possession of the securities
subject to repurchase agreements, and these securities are marked to
market daily. To the extent that the original seller does not repurchase
the securities from the Fund, the Fund could receive less than the
repurchase price on any sale of such securities. In the event that such a
defaulting seller files for bankruptcy or becomes insolvent, disposition
of such securities by the Fund might be delayed pending court action. The
Fund believes that under the regular procedures normally in effect for
custody of the Fund's portfolio securities subject to repurchase
agreements, a court of competent jurisdiction would rule in favor of the
Fund and allow retention or disposition of such securities. 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 sub-manager to be creditworthy pursuant to guidelines established
by the Trustees.
U.S. GOVERNMENT OBLIGATIONS
The types of U.S. government obligations in which the Fund may invest
generally include direct obligations of the U.S. Treasury (such as U.S.
Treasury bills, notes, and bonds) and obligations issued or guaranteed by
U.S. government agencies or instrumentalities. These securities are
backed by:
- the full faith and credit of the U.S. Treasury;
- the issuer's right to borrow from the U.S. Treasury;
- the discretionary authority of the U.S. government to purchase certain
obligations of agencies or instrumentalities; or
- the credit of the agency or instrumentality issuing the obligations.
Examples of agencies and instrumentalities which may not always receive
financial support from the U.S. government are:
- Federal Land Banks;
- Central Bank for Cooperatives;
- Federal Intermediate Credit Banks;
- Federal Home Loan Banks;
- Farmers Home Administration; and
- Federal National Mortgage Association.
STOCK INDEX FUTURES AND OPTIONS
The Fund may utilize stock index futures contracts and options on stocks,
stock indices and stock index futures contracts for the purposes of
managing cash flows into and out of the Fund's portfolio and potentially
- --------------------------------------------------------------------------------
reducing transactional costs. The Fund may not use stock index futures
contracts and options for speculative purposes.
As a means of reducing fluctuations in the net asset value of shares of
the Fund, the Fund may attempt to hedge all or a portion of its portfolio
through the purchase of listed put options on stocks, stock indices and
stock index futures contracts. These options will be used only as a form
of forward pricing to protect portfolio securities against decreases in
value resulting from market factors such as an anticipated increase in
interest rates. A put option gives the Fund, in return for a premium, the
right to sell the underlying security to the writer (seller) at a
specified price during the term of the option. Put options on stock
indices are similar to put options on stocks except for the delivery
requirements. Instead of giving the Fund the right to make delivery of
stock at a specified price, a put option on a stock index gives the Fund,
as holder, the right to receive an amount of cash upon exercise of the
option.
The Fund may also write covered call options. As the writer of a call
option, the Fund has the obligation upon exercise of the option during
the option period to deliver the underlying security upon payment of the
exercise price.
The Fund may only: (1) buy listed put options on stock indices and stock
index futures contracts; (2) buy listed put options on securities held in
its portfolio; and (3) sell listed call options either on securities held
in its portfolio or on securities which it has the right to obtain
without payment of further consideration (or has segregated cash in the
amount of any such additional consideration). The Fund will maintain its
positions in securities, option rights, and segregated cash subject to
puts and calls until the options are exercised, closed, or expired.
The Fund may also enter into stock index futures contracts. A stock index
futures contract is a bilateral agreement which obligates the seller to
deliver (and the purchaser to take delivery of) an amount of cash equal
to a specific dollar amount times the difference between the value of a
specific stock index at the close of trading of the contract and the
price at which the agreement is originally made. There is no physical
delivery of the stocks constituting the index, and no price is paid upon
entering into a futures contract.
In general, contracts are closed out prior to their expiration. The Fund,
when purchasing or selling a futures contract, will initially be required
to deposit in a segregated account in the broker's name with the Fund's
custodian an amount of cash or U.S. government securities approximately
equal to 5%-10% of the contract value. This amount is known as "initial
margin," and it is subject to change by the exchange or board of trade on
which the contract is traded. Subsequent payments to and from the broker
are made on a daily basis as the price of the index or the securities
underlying the futures contract fluctuates. These payments are known as
"variation margins," and the fluctuation in value of the long and short
positions in the futures contract is a process referred to as "marking to
market." The Fund may decide to close its position on a contract at any
time prior to the contract's expiration. This is accomplished by the Fund
taking an opposite position at the then prevailing price, thereby
terminating its existing position in the contract. Because the initial
margin resembles a performance bond or good faith deposit on the
contract, it is returned to the Fund upon the termination of the
contract, assuming that all contractual obligations have been satisfied.
Therefore, the margin utilized in futures contracts is readily
distinguishable from the margin employed in security transactions, since
the margin employed in futures contracts does not involve the borrowing
of funds to finance the transaction.
RESTRICTIONS ON THE USE OF FUTURES CONTRACTS AND OPTIONS
The Fund will not enter into stock index futures contracts to the extent
that, immediately thereafter, the sum of its initial margin deposits on
open contracts exceeds 5% of the market value of the Fund's total assets.
Further, the Fund will enter into stock index futures contracts only for
bona fide hedging purposes or such other purposes permitted under Part 4
of the regulations promulgated by the Commodity Futures Trading
Commission ("CFTC"). Also, the Fund may not enter into stock index
futures contracts and options to the extent that the value of such
contracts and options would exceed 20% of the Fund's total net assets and
may not purchase put options to the extent that more than 5% of the value
of the Fund's total assets would be invested in premiums on open put
option positions.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an advantageous
price and yield for the Fund. Settlement dates may be a month or more after
entering into these transactions, and the market values of the securities
purchased may vary from the purchase prices.
No fees or other expenses, other than normal transaction costs, are incurred.
However, liquid assets of the Fund sufficient to make payment for the securities
to be purchased are segregated at the trade date. These securities are
- --------------------------------------------------------------------------------
marked to market daily and are maintained until the transaction is settled. As a
matter of policy, the Fund does not intend to engage in when-issued and delayed
delivery transactions to an extent that would cause the segregation of more than
20% of the total value of its assets.
LENDING OF PORTFOLIO SECURITIES
The Fund may lend its portfolio securities up to one-third of the value of its
total assets to broker/dealers, banks, or other institutional borrowers of
securities. The Fund will only enter into loan arrangements with broker/dealers,
banks, or other institutions which the sub-manager has determined are
creditworthy under guidelines established by the Trustees and will receive
collateral equal to at least 100% of the value of the securities loaned.
The collateral received when the Fund lends portfolio securities must be valued
daily and, should the market value of the loaned securities increase, the
borrower must furnish additional collateral to the Fund. During the time
portfolio securities are on loan, the borrower pays the Fund any dividends or
interest paid on such securities. Loans are subject to termination at the option
of the Fund or the borrower. The Fund may pay reasonable administrative and
custodial fees in connection with a loan and may pay a negotiated portion of the
interest earned on the cash or equivalent collateral to the borrower or placing
broker. The Fund does not have the right to vote securities on loan, but would
terminate the loan and regain the right to vote if that were considered
important with respect to the investment.
REVERSE REPURCHASE AGREEMENTS
The Fund may also enter into reverse repurchase agreements. A reverse repurchase
transaction is similar to borrowing cash. In a reverse repurchase agreement the
Fund transfers possession of a portfolio instrument to another person, such as a
financial institution, broker, or dealer, in return for a percentage of the
instrument's market value in cash, and agrees that on a stipulated date in the
future the Fund will repurchase the portfolio instrument by remitting the
original consideration plus interest at an agreed upon rate. The use of reverse
repurchase agreements may enable the Fund to avoid selling portfolio instruments
at a time when a sale may be deemed to be disadvantageous, but the ability to
enter into reverse repurchase agreements does not ensure that the Fund will be
able to avoid selling portfolio instruments at a disadvantageous time.
When effecting reverse repurchase agreements, liquid assets of the Fund, in a
dollar amount sufficient to make payment for the obligations to be purchased,
are segregated at the trade date. These securities are marked to market daily
and are maintained until the transaction is settled.
PORTFOLIO TURNOVER
The Fund will not attempt to set or meet a portfolio turnover rate since any
turnover would be incidental to transactions undertaken in an attempt to achieve
the Fund's investment objective. For the fiscal year ended October 31, 1993 and
the period ended October 31, 1992, the portfolio rate for the fund was 59%, and
0%, respectively.
INVESTMENT LIMITATIONS
INVESTING IN COMMODITIES
The Fund will not purchase or sell commodities. However, the Fund may
purchase stock index futures contracts and put options on stock indices
and stock index futures contracts to the extent that not more than 5% of
the Fund's total assets are required as initial margin deposit for
futures contracts and not more than 20% of the Fund's total net assets
are invested in futures contracts and options at any time.
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities on
margin, other than in connection with buying stock index futures
contracts and put options on stock index futures contracts, but may
obtain such short-term credits as are necessary for the clearance of
transactions.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets, except portfolio securities up
to one-third of the value of its total assets. This shall not prevent the
Fund from purchasing or holding U.S. government obligations, money market
instruments, bonds, debentures, notes, certificates of indebtedness or
other debt securities, entering into repurchase agreements, or engaging
in other transactions where permitted by the Fund's investment objective
and policies and Declaration of Trust of the Trust.
- --------------------------------------------------------------------------------
UNDERWRITING
The Fund will not underwrite any issue of securities, except as it may be
deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of restricted securities which the Fund may
purchase pursuant to its investment objective, policies, and limitations.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities, except that the Fund may
borrow money and engage in reverse repurchase agreements in amounts up to
one-third of the value of its total assets, including the amounts
borrowed. The Fund will not borrow money or engage in reverse repurchase
agreements for investment leverage, but rather as a temporary,
extraordinary, or emergency measure or to facilitate management of the
portfolio by enabling the Fund to meet redemption requests when the
liquidation of portfolio securities is deemed to be inconvenient or
disadvantageous. The Fund will not purchase any securities while
borrowings in excess of 5% of its total assets are outstanding. During
the period any reverse repurchase agreements are outstanding, but only to
the extent necessary to assure completion of the reverse repurchase
agreements, the Fund will restrict the purchase of portfolio instruments
to money market instruments maturing on or before the expiration date of
the reverse repurchase agreements.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. In those cases, it may pledge assets having
a market value not exceeding the lesser of the dollar amounts borrowed or
10% of the value of total assets at the time of the borrowing.
DIVERSIFICATION OF INVESTMENTS
The Fund will not invest more than 5% of the value of its total assets in
the securities of any one issuer, except U.S. government securities, or
invest in more than 10% of the voting securities of any one issuer.
CONCENTRATION OF INVESTMENTS
The Fund will not invest 25% or more of the value of its total assets in
securities of companies in any one industry. However, investing in U.S.
government obligations shall not be considered investing in any one
industry.
INVESTING IN REAL ESTATE
The Fund will not buy or sell real estate, including partnership
interests in real estate, although it may invest in securities of
companies whose business involves the purchase or sale of real estate or
in securities which are secured by real estate or interests in real
estate.
INVESTING IN RESTRICTED SECURITIES
To comply with requirements of a particular state, the Fund will limit
its investment in restricted securities to 5% of the value of its total
assets in securities subject to restrictions on resale under the Security
Exchange Act of 1933.
The above investment limitations cannot be changed without shareholder approval.
The following investment limitations, however, may be changed by the Trustees
without shareholder approval. Shareholders will be notified before any material
change in these policies becomes effective.
INVESTING IN NEW ISSUERS
The Fund will not invest more than 5% of the value of its total assets in
securities of issuers which have records of less than three years of
operating history, including the operation of any predecessor.
INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS AND TRUSTEES OF
THE TRUST
The Fund will not purchase or retain the securities of any issuer if the
Officers and Trustees of the Trust or the Fund's manager or sub-manager
owning individually more than 1/2 of 1% of the issuer's securities
together own more than 5% of the issuer's securities.
WRITING COVERED CALL OPTIONS
The Fund will not write call options on securities unless the securities
are held in the Fund's portfolio or unless the Fund is entitled to them
in deliverable form without further payment or after segregating cash in
the amount of any further payment.
- --------------------------------------------------------------------------------
INVESTING IN PUT OPTIONS
The Fund will not purchase put options on securities, other than put
options on stock, stock indices and stock index futures contracts, unless
the securities are held in the Fund's portfolio and not more than 5% of
the value of the Fund's total assets would be invested in premiums on
open put option positions and not more than 20% of the Fund's total net
assets are invested in put options and future contracts at any time.
INVESTING IN MINERALS
The Fund will not purchase interests in oil, gas, or other mineral
exploration or development programs or leases, although it may purchase
the securities of issuers which invest in or sponsor such programs.
ACQUIRING SECURITIES
The Fund will not purchase securities of other investment companies
except to the extent permitted by the Investment Company Act of 1940, or
except as part of a merger, consolidation, or other acquisition. It will
not invest in securities for the purpose of exercising control or
management.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 15% of its net assets in securities
which are illiquid, including certain restricted securities and
repurchase agreements providing for settlement more than seven days after
notice.
INVESTING IN WARRANTS
The Fund will not invest in warrants.
Except with respect to borrowing money, if a percentage limitation is adhered to
at the time of investment, a later increase or decrease in percentage resulting
from any change in value or net assets will not result in a violation of such
restriction.
The Fund did not borrow money or pledge securities in excess of 5% of the value
of its net assets during the past fiscal year and does not expect to do so
during the coming fiscal year.
TRUST MANAGEMENT
- --------------------------------------------------------------------------------
OFFICERS AND TRUSTEES
Officers and Trustees are listed with their addresses, principal occupations,
and present positions, including any affiliation with Federated Investors,
Federated Management, Federated Securities Corp., and Federated Administrative
Services, Inc.
<TABLE>
<CAPTION>
POSITIONS WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS THE TRUST DURING PAST FIVE YEARS
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
John F. Donahue+* Chairman Chairman and Trustee, Federated Investors; Chairman and
Federated Investors and Trustee Trustee, Federated Advisers, Federated Management, and
Tower Federated Research; Director, AEtna Life and Casualty
Pittsburgh, PA Company; Chief Executive Officer and Director, Trustee,
or Managing General Partner of the Funds; formerly,
Director, The Standard Fire Insurance Company. Mr.
Donahue is the father of J. Christopher Donahue, Vice
President and Trustee of the Trust.
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
John T. Conroy, Jr. Trustee President, Investment Properties Corporation; Senior
Wood/IPC Commercial Vice-President, John R. Wood and Associates, Inc.,
Department Realtors; President, Northgate Village Development
John R. Wood and Corporation; General Partner or Trustee in private real
Associates, Inc., Realtors estate ventures in Southwest Florida; Director, Trustee,
3255 Tamiami Trail North or Managing General Partner of the Funds; formerly,
Naples, FL President, Naples Property Management, Inc.
- -----------------------------------------------------------------------------------------------------------------
William J. Copeland Trustee Director and Member of the Executive Committee, Michael
One PNC Plaza Baker, Inc.; Director, Trustee, or Managing General
23rd Floor Partner of the Funds; formerly, Vice Chairman, and
Pittsburgh, PA Director, PNC Bank, N.A., and PNC Bank Corp. and
Director, Ryan Homes, Inc.
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POSITIONS WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS THE TRUST DURING PAST FIVE YEARS
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
J. Christopher Donahue* Vice President President and Trustee, Federated Investors; Trustee,
Federated Investors and Trustee Federated Advisers, Federated Management, and Federated
Tower Research; President and Director, Federated
Pittsburgh, PA Administrative Services, Inc.; Trustee, Federated
Services Company; President or Vice President of the
Funds; Director, Trustee or Managing General Partner of
some of the Funds. Mr. Donahue is the son of John F.
Donahue, Chairman and Trustee of the Trust.
- -----------------------------------------------------------------------------------------------------------------
James E. Dowd Trustee Attorney-at-law; Director, The Emerging Germany Fund,
571 Hayward Mill Road Inc.; Director, Trustee, or Managing General Partner of
Concord, MA the Funds; formerly, Director, Blue Cross of
Massachusetts, Inc.
- -----------------------------------------------------------------------------------------------------------------
Lawrence D. Ellis, M.D. Trustee Hematologist, Oncologist, and Internist, Presbyterian and
3471 Fifth Avenue Montefiore Hospitals; Clinical Professor of Medicine and
Suite 1111 Trustee, University of Pittsburgh; Director, Trustee, or
Pittsburgh, PA Managing General Partner of the Funds.
- -----------------------------------------------------------------------------------------------------------------
Edward L. Flaherty, Jr.+ Trustee Attorney-at-law; Partner, Meyer and Flaherty; Director,
5916 Penn Mall Eat 'N Park Restaurants, Inc., and Statewide Settlement
Pittsburgh, PA Agency, Inc.; Director, Trustee, or Managing General
Partner of the Funds; formerly, Counsel, Horizon
Financial, F.A., Western Region.
- -----------------------------------------------------------------------------------------------------------------
Peter E. Madden Trustee Consultant; State Representative, Commonwealth of
225 Franklin Street Massachusetts; Director, Trustee, or Managing General
Boston, MA Partner of the Funds; formerly, President, State Street
Bank and Trust Company and State Street Boston
Corporation and Trustee, Lahey Clinic Foundation, Inc.
- -----------------------------------------------------------------------------------------------------------------
Gregor F. Meyer Trustee Attorney-at-law; Partner, Meyer and Flaherty; Chairman,
5916 Penn Mall Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.;
Pittsburgh, PA Director, Trustee, or Managing General Partner of the
Funds; formerly, Vice Chairman, Horizon Financial, F.A.
- -----------------------------------------------------------------------------------------------------------------
Wesley W. Posvar Trustee Professor, Foreign Policy and Management Consultant;
1202 Cathedral of Trustee, Carnegie Endowment for International Peace, RAND
Learning Corporation, Online Computer Library Center, Inc. and
University of Pittsburgh U.S. Space Foundation; Chairman, Czecho Slovak Management
Pittsburgh, PA Center; Director, Trustee, or Managing General Partner of
the Funds; President Emeritus, University of Pittsburgh;
formerly, Chairman, National Advisory Council for
Environmental Policy and Technology.
- -----------------------------------------------------------------------------------------------------------------
Marjorie P. Smuts Trustee Public relations/marketing consultant; Director, Trustee,
4905 Bayard Street or Managing General Partner of the Funds.
Pittsburgh, PA
- -----------------------------------------------------------------------------------------------------------------
Glen R. Johnson President Trustee, Federated Investors; President and/or Trustee of
Federated Investors some of the Funds; staff member, Federated Securities
Tower Corp., Federated Administrative Services and Federated
Pittsburgh, PA Administrative Services, Inc.
- -----------------------------------------------------------------------------------------------------------------
Richard B. Fisher Vice President Executive Vice President and Trustee, Federated
Federated Investors Investors; Chairman and Director, Federated Securities
Tower Corp.; President or Vice President of the Funds; Director
Pittsburgh, PA or Trustee of some of the Funds.
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POSITIONS WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS THE TRUST DURING PAST FIVE YEARS
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
Edward C. Gonzales Vice President Vice President, Treasurer and Trustee, Federated
Federated Investors and Treasurer Investors; Vice President and Treasurer, Federated
Tower Advisers, Federated Management, and Federated Research;
Pittsburgh, PA Executive Vice President, Treasurer, and Director,
Federated Securities Corp.; Chairman, Treasurer, and
Director, Federated Administrative Services, Inc.;
Trustee or Director of some of the Funds; Vice President
and Treasurer of the Funds.
- -----------------------------------------------------------------------------------------------------------------
John W. McGonigle Vice President Vice President, Secretary, General Counsel, and Trustee,
Federated Investors and Secretary Federated Investors; Vice President, Secretary and
Tower Trustee, Federated Advisers, Federated Management, and
Pittsburgh, PA Federated Research; Executive Vice President, Secretary,
and Director, Federated Administrative Services, Inc.;
Director and Executive Vice President, Federated
Securities Corp.; Vice President and Secretary of the
Funds.
- -----------------------------------------------------------------------------------------------------------------
John A. Staley, IV Vice President Vice President and Trustee, Federated Investors;
Federated Investors Executive Vice President, Federated Securities Corp.;
Tower President and Trustee, Federated Advisers, Federated
Pittsburgh, PA Management, and Federated Research; Vice President of the
Funds; Director, Trustee, or Managing General Partner of
some of the Funds; formerly, Vice President, The Standard
Fire Insurance Company and President of its Federated
Research Division.
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
* This Trustee is deemed to be an "interested person" of the Fund or the Trust
as defined in the Investment Company Act of 1940.
+ Members of the Trust's Executive Committee. The Executive Committee of the
Board of Trustees handles the responsibilities of the Board of Trustees
between meetings of the Board.
THE FUNDS
"The Funds" and "Funds" mean the following investment companies: A.T. Ohio
Tax-Free Money Fund; American Leaders Fund, Inc.; Annuity Management Series;
Automated Cash Management Trust; Automated Government Money Trust; The Boulevard
Funds; California Municipal Cash Trust; Cash Trust Series II; Cash Trust Series,
Inc.; DG Investor Series; Edward D. Jones & Co. Daily Passport Cash Trust; FT
Series, Inc.; Federated ARMs Fund; Federated Exchange Fund, Ltd.; Federated GNMA
Trust; Federated Government Trust; Federated Growth Trust; Federated High Yield
Trust; Federated Income Securities Trust; Federated Income Trust; Federated
Intermediate Government Trust; Federated Master Trust; Federated Municipal
Trust; Federated Short-Intermediate Government Trust; Federated Short-Term U.S.
Government Trust; Federated Stock Trust; Federated Tax-Free Trust; Federated
U.S. Government Bond Fund; First Priority Funds; Fixed Income Securities, Inc.;
Fortress Adjustable Rate U.S. Government Fund, Inc.; Fortress Municipal Income
Fund, Inc.; Fortress Utility Fund, Inc.; Fund for U.S. Government Securities,
Inc.; Government Income Securities, Inc.; High Yield Cash Trust; Intermediate
Municipal Trust; Investment Series Funds, Inc.; Investment Series Trust; Liberty
Equity Income Fund, Inc.; Liberty High Income Bond Fund, Inc.; Liberty Municipal
Securities Fund, Inc.; Liberty U.S. Government Money Market Trust; Liberty
Utility Fund, Inc.; Liberty Term Trust, Inc.-1999; Liquid Cash Trust; Mark Twain
Funds; Money Market Management, Inc.; Money Market Obligations Trust; Money
Market Trust; Municipal Securities Income Trust; New York Municipal Cash Trust;
111 Corcoran Funds; The Planters Funds; Portage Funds; RIMCO Monument Funds; The
Shawmut Funds; Short-Term Municipal Trust; Signet Select Funds; Star Funds; The
Starburst Funds; The Starburst Funds II; Stock and Bond Fund, Inc.; Sunburst
Funds; Targeted Duration Trust; Tax-Free Instruments Trust; Trademark Funds;
Trust for Financial Institutions; Trust For Government Cash Reserves; Trust for
Short-Term U.S. Government Securities; Trust for U.S. Treasury Obligations.
FUND OWNERSHIP
Officers and Trustees own less than 1% of the Fund's outstanding shares.
As of November 29, 1993, the following shareholders of record owned 5% or more
of the outstanding shares of the Fund: CASBO, St. Clair, Michigan, owned
approximately 115,444 shares (6.9%); The Washington Trust Co., Westerly, Rhode
Island, owned approximately 91,224 shares (5.4%); and Firnaticia, Iowa, owned
approximately 154,707 shares (9.3%).
- --------------------------------------------------------------------------------
TRUSTEE LIABILITY
The Trust's Declaration of Trust provides that the Trustees will not be liable
for errors of judgment or mistakes of fact or law. However, they are not
protected against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office.
MANAGEMENT SERVICES
- --------------------------------------------------------------------------------
MANAGERS TO THE FUND
The Fund's manager is Federated Management. It is a subsidiary of Federated
Investors. All the voting securities of Federated Investors are owned by a
trust, the trustees of which are John F. Donahue, his wife, and his son, J.
Christopher Donahue. John F. Donahue is Chairman and Trustee of Federated
Management, Chairman and Trustee of Federated Investors and Chairman and Trustee
of the Trust. John A. Staley, IV is President and Trustee of Federated
Management, Vice President and Trustee of Federated Investors, Executive Vice
President of Federated Securities Corp., and Vice President of the Trust. J.
Christopher Donahue, Trustee of Federated Management, is President and Trustee
of Federated Investors, President and Director of Federated Administrative
Services, Inc., and Vice President and Trustee of the Trust. John W. McGonigle,
Vice President, Secretary and Trustee of Federated Management, is Trustee, Vice
President, Secretary, and General Counsel of Federated Investors, Executive Vice
President, Secretary, and Director of Federated Administrative Services, Inc.,
Director and Executive Vice President of Federated Securities Corp. and Vice
President and Secretary of the Trust.
The Fund's sub-manager is ANB Investment Management and Trust Company ("ANB").
It is a wholly-owned subsidiary of American National Bank and Trust Company of
Chicago. American National Bank and Trust Company of Chicago is a wholly-owned
subsidiary of American National Corporation, which, in turn, is a wholly-owned
subsidiary of First Chicago Corporation. The sub-manager's directors are John R.
Tilton, Thomas P. Michaels, Olivia C. Martinez, Stephen P. Manus, Neil R.
Wright, Peter J. Kartalia, and Ronald J. Grayheck. The officers of ANB are John
R. Tilton, President and Chief Investment Officer, and Thomas P. Michaels,
Secretary, Treasurer, and Legal Counsel.
Neither the manager nor the sub-manager shall be liable to the Trust, the Fund,
or any shareholder of the Fund for any losses that may be sustained in the
purchase, holding, or sale of any security or for anything done or omitted by
the manager or sub-manager, except acts or omissions involving willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
imposed upon either of them by their respective management contracts.
MANAGEMENT FEES
For its management services, Federated Management receives an annual fee as
described in the prospectus. ANB receives an annual fee for its services, which
will be paid by the manager, as described in the prospectus.
For the fiscal year ended October 31, 1993, and the period ended October 31,
1992, the manager earned $34,031 and $23 all of which was voluntarily waived
because of undertakings to limit the Fund's expenses.
STATE EXPENSE LIMITATIONS
The manager has undertaken to comply with the expense limitation
established by certain states for investment companies whose shares are
registered for sale in those states. If the Fund's normal operating
expenses (including the management fee, but not including brokerage
commissions, interest, taxes, and extraordinary expenses) exceed 2 1/2%
per year of the first $30 million of average net assets, 2% per year of
the next $70 million of average net assets, and 1 1/2% per year of the
remaining average net assets, the manager will reimburse the Fund for its
expenses over the limitation.
If the Fund's monthly projected operating expenses exceed this expense
limitation, the management fee paid will be reduced by the amount of the
excess, subject to an annual adjustment. If the expense limitation is
exceeded, the amount to be reimbursed by the manager will be limited, in
any single fiscal year, by the amount of the management fee.
This arrangement is not part of the management contract and may be
amended or rescinded in the future.
OTHER RELATED SERVICES
Affiliates of the manager may, from time to time, provide certain electronic
equipment and software to institutional customers in order to facilitate the
purchase of shares of funds offered by Federated Securities Corp.
In addition, during the fiscal year ended October 31, 1993, the manager
voluntarily reimbursed, with respect to this Fund, $112,125 of other operating
expenses, because of the same undertakings to limit the Fund's expenses.
ADMINISTRATIVE SERVICES
- --------------------------------------------------------------------------------
Federated Administrative Services, Inc., a subsidiary of Federated Investors,
provides administrative personnel and services to the Fund at approximate cost
through an agreement with the Fund's Manager. John A. Staley, IV, an officer of
the Trust, and Dr. Henry J. Gailliot, an officer of Federated Management, the
adviser to the Fund, each hold approximately 15% and 20%, respectively, of the
outstanding common stock and serve as directors of Commercial Data Services,
Inc., a company which provides computer processing services to Federated
Administrative Services, Inc. For the fiscal years ended October 31, 1993 and
1992, Federated Administrative Services, Inc. paid approximately $165,431 and
$189,741, respectively, for services provided by Commercial Data Services, Inc.
BROKERAGE TRANSACTIONS
- --------------------------------------------------------------------------------
The managers may select brokers and dealers who offer brokerage and research
services. These services may be furnished directly to the Fund or to the
managers and may include:
- - advice as to the advisability of investing in securities;
- - security analysis and reports;
- - economic studies;
- - industry studies;
- - receipt of quotations for portfolio evaluations; and
- - similar services.
The managers and their affiliates exercise reasonable business judgment in
selecting brokers who offer brokerage and research services to execute
securities transactions. They determine in good faith that commissions charged
by such persons are reasonable in relationship to the value of the brokerage and
research services provided.
Research services provided by brokers and dealers may be used by the managers or
by affiliates of Federated Investors in advising Federated Funds and other
accounts. To the extent that receipt of these services may supplant services for
which the managers or their affiliates might otherwise have paid, it would tend
to reduce their expenses.
For the fiscal year ended October 31, 1993, the Fund paid $2,222 in brokerage
commissions on broker transactions.
PURCHASING SHARES
- --------------------------------------------------------------------------------
Shares are sold at their net asset value without a sales charge on days the New
York Stock Exchange is open for business. The procedure for purchasing shares of
the Fund is explained in the prospectus under "Investing in the Fund."
CONVERSION TO FEDERAL FUNDS
It is the Fund's policy to be as fully invested as possible so that maximum
interest may be earned. To this end, all payments from shareholders must be in
federal funds or be converted into federal funds. State Street Bank acts as the
shareholder's agent in depositing checks and converting them to federal funds.
EXCHANGING SECURITIES FOR FUND SHARES
Investors may exchange securities they already own for Fund shares, or they may
exchange a combination of securities and cash for Fund shares. Any securities to
be exchanged must meet the investment objective and policies of the Fund, must
have a readily ascertainable market value, must be liquid, and must not be
subject to restrictions on resale. An investor should forward the securities in
negotiable form with an authorized letter of transmittal to Federated Securities
Corp. The Fund will notify the investor of its acceptance and valuation of the
securities within five business days of their receipt by State Street Bank.
The Fund values such securities in the same manner as the Fund values its
assets. The basis of the exchange will depend upon the net asset value of Fund
shares on the day the securities are valued. One share of the Fund will be
issued for each equivalent amount of securities accepted.
Any interest earned on the securities prior to the exchange will be considered
in valuing the securities. All interest, dividends, subscription, conversion, or
other rights attached to the securities become the property of the Fund, along
with the securities.
TAX CONSEQUENCES
Exercise of this exchange privilege is treated as a sale for federal
income tax purposes. Depending upon the cost basis of the securities
exchanged for Fund shares, a gain or loss may be realized by the
investor.
DETERMINING NET ASSET VALUE
- --------------------------------------------------------------------------------
Net asset value generally changes each day. The days on which net asset value is
calculated by the Fund are described in the prospectus.
DETERMINING MARKET VALUE OF SECURITIES
Market values of the Fund's portfolio securities are determined as follows:
- - for equity securities, according to the last sale price on a national
securities exchange, if available;
- - in the absence of recorded sales for equity securities, according to the mean
between the last closing bid and asked prices;
- - for bonds and other fixed income securities, at the last sale price on a
national securities exchange if available, otherwise as determined by an
independent pricing service;
- - for short-term obligations, according to the mean between bid and asked prices
as furnished by an independent pricing service or for short-term obligations
with maturities of less than 60 days, at amortized cost; or
- - for all other securities, at fair value as determined in good faith by the
Trustees.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may reflect: institutional trading in
similar groups of securities, yield, quality, coupon rate, maturity, type of
issue, trading characteristics, and other market data.
The Fund will value stock index futures contracts and options on stocks, stock
indices and stock index futures contracts at their market values established by
the exchanges at the close of option trading on such exchanges unless the
Trustees determine in good faith that another method of valuing option positions
is necessary to appraise their fair value.
REDEEMING SHARES
- --------------------------------------------------------------------------------
The Fund redeems shares at the next computed net asset value after State Street
Bank receives the redemption request. Redemption procedures are explained in the
prospectus under "Redeeming Shares."
REDEMPTION IN KIND
Although the Fund intends to redeem shares in cash, it reserves the right under
certain circumstances to pay the redemption price in whole or in part with
securities from the Fund's portfolio.
Such securities will be valued with the same valuation techniques employed in
determining net asset value, and the securities will be selected in a manner the
Trustees determine to be fair and equitable.
The Fund has elected to be governed by Rule 18f-1 of the Investment Company Act
of 1940 under which the Fund will redeem shares for any one shareholder in cash
up to the lesser of $250,000 or 1% of the Fund's net asset value during any
90-day period.
TAX STATUS
- --------------------------------------------------------------------------------
THE FUND'S TAX STATUS
The Fund will pay no federal income tax because the Fund expects to meet the
requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies and to receive the special tax treatment afforded
to such companies. To qualify for this treatment, the Fund must, among other
requirements:
- - derive at least 90% of its gross income from dividends, interest, and gains
from the sale of securities;
- - derive less than 30% of its gross income from the sale of securities held less
than three months;
- - invest in securities within certain statutory limits; and
- - distribute to its shareholders at least 90% of its net income earned during
the year.
SHAREHOLDERS' TAX STATUS
Shareholders are subject to federal income tax on dividends received as cash or
additional shares. No portion of any income dividend paid by the Fund is
eligible for the dividends received deduction available to corporations. These
dividends, and any short-term capital gains, are taxable as ordinary income.
CAPITAL GAINS
Shareholders will pay federal tax at capital gains rates on long-term
capital gains distributed to them regardless of how long they have held
the Fund shares.
TOTAL RETURN
- --------------------------------------------------------------------------------
The Fund's cumulative total return for the period from November 5, 1992 (start
of performance) to October 31, 1993 was 17.33%.
The Fund's average annual total return is the average compounded rate of return
for a given period that would equate a $1,000 initial investment to the ending
redeemable value of that investment. The ending redeemable value is computed by
multiplying the number of shares owned at the end of the period by the offering
price per share at the end of the period. The number of shares owned at the end
of the period is based on the number of shares purchased at the beginning of the
period with $1,000, adjusted over the period by any additional shares, assuming
the quarterly reinvestment of all dividends and distributions.
YIELD
- --------------------------------------------------------------------------------
The Fund's yield for the thirty-day period ended October 31, 1993 was 2.32%.
The yield for the Fund is determined by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by the Fund
over a thirty-day period by the offering price per share of the Fund on the last
day of the period. This value is annualized using semi-annual compounding. This
means that the amount of income generated during the thirty-day period is
assumed to be generated each month over a twelve month period and is reinvested
every six months. The yield does not necessarily reflect income actually earned
by the Fund because of certain adjustments required by the Securities and
Exchange Commission and, therefore, may not correlate to the dividends or other
distributions paid to shareholders.
To the extent that financial institutions and broker/dealers charge fees in
connection with services provided in conjunction with an investment in the Fund,
performance will be reduced for those shareholders paying those fees.
PERFORMANCE COMPARISONS
- --------------------------------------------------------------------------------
The Fund's performance depends upon such variables as:
- - portfolio quality;
- - average portfolio maturity;
- - type of instruments in which the portfolio is invested;
- - changes in interest rates and market value of portfolio securities;
- - changes in Fund expenses;
- - the relative amount of Fund cash flow; and
- - various other factors.
The Fund's performance fluctuates on a daily basis largely because net earnings
and offering price per share fluctuate daily. Both net earnings and offering
price per share are factors in the computation of yield and total return.
From time to time, the Fund may advertise its performance compared to similar
funds or portfolios using certain indices, reporting services, and financial
publications. These may include the following:
- - LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes the
reinvestment of all capital gains distributions and income dividends and takes
into account any change in offering price over a specific period of time. From
time to time, the Fund will quote its Lipper ranking in the "index funds"
category in advertising and sales literature.
- - RUSSELL 2000 SMALL STOCK INDEX--is a broadly diversified index consisting of
approximately 2,000 small capitalization common stocks that can be used to
compare to the total returns of funds whose portfolios are invested primarily
in small capitalization common stocks.
- - STANDARD & POOR'S DAILY STOCK PRICE INDEXES OF 500 AND 400 COMMON STOCKS--are
composite indexes of common stocks in industry, transportation, and financial
and public utility companies that can be used to compare to the total returns
of funds whose portfolios are invested primarily in common stocks. In
addition, the Standard & Poor's indexes assume reinvestments of all dividends
paid by stocks listed on its indexes. Taxes due on any of these distributions
are not included, nor are brokerage or other fees calculated in Standard &
Poor's figures.
- - WILSHIRE 5000 EQUITY INDEXES--consists of nearly 5,000 common equity
securities, covering all stocks in the U.S. for which daily pricing is
available, and can be used to compare to the total returns of funds whose
portfolios are invested primarily in common stocks.
- --------------------------------------------------------------------------------
- - MORNINGSTAR, INC., an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for two
weeks.
Investors may use such indices or reporting services in addition to the Fund's
prospectus to obtain a more complete view of the Fund's performance before
investing. Of course, when comparing Fund performance to any index, conditions
such as composition of the index and prevailing market conditions should be
considered in assessing the significance of such comparisons. When comparing
funds using reporting services, or total return and yield, investors should take
into consideration any relevant differences in funds such as permitted portfolio
compositions and methods used to value portfolio securities and compute offering
price.
Advertisements and other sales literature for the Fund may quote total returns
which are calculated on non-standardized base periods. These total returns also
represent the historic change in the value of an investment in the Fund based on
quarterly reinvestment of dividends over a specified period of time.
STANDARD & POOR'S CORPORATION
- --------------------------------------------------------------------------------
"Standard and Poor'sTM," "S&PTM," "S&P MidCap 400 Index," and "Standard & Poor's
MidCap 400 Index" are trademarks of Standard & Poor's Corporation ("S&P") and
have been licensed for use by Federated Securities Corp. The Fund is not
sponsored, endorsed, sold or promoted by S&P and S&P makes no representation
regarding the advisability of investing in the Fund.
2062304B (12/93)
MID-CAP FUND
- --------------------------------------------------------------------------------
INVESTMENT REVIEW
The total return of the Mid-Cap Fund for the period from November 5,
1992 (start of business) to October 31, 1993 was 17.33%
Over the 12 months ended October 31, 1993, U.S. stocks have registered
excellent results. Driven by the recovery in corporate profits, falling
interest rates, and large flows of money into mutual funds, the S&P 500
Index recorded a total return of 14.92% for the year ended October 31,
1993. Small capitalization stocks were the standout, however, as the
Russell 2000 Index had a total return of 32.41% for the same period.
Perhaps the most important factor was the decline in interest rates. The
yield on the 30-year U.S. Treasury bond dropped from 6.7% to 5.7% between
May and September. Interest rate sensitive groups such as the Finance and
Utility sectors performed well in response. Expected market weakness in
September and October proved to be unfounded, although the market advance
became more labored as a number of groups experienced minor corrections.
Sustainability of market strength over the coming year will be
importantly influenced by strength in corporate profits and interest rates.
We expect the economy to continue on its recovery path well into 1994 with
further significant gains in corporate profits. Assuming the pace of the
recovery remains in the 3% (real GDP--annual rate) area, inflation should
remain subdued, and any backup in interest rates should not be too damaging
to the stock market. Over the next 12 months we expect positive returns
from U.S. equities, although probably less than the outstanding performance
in the year ended October 31, 1993.
PERFORMANCE COMPARISON
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL $10,000 PURCHASE
IN MID-CAP FUND AND STANDARD AND POOR'S MIDCAP 400 INDEX+.
Graphic representation "C" omitted. See Appendix.
Past Performance is not indicative of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost. Mutual funds are not obligations of or
guaranteed by any bank and are not federally insured.
This annual report incorporates by reference and accompanies the prospectus
dated December 31, 1993.
* Reflects operations of Mid-Cap Fund from the start of business 11/5/92
through 10/31/93 on a cumulative basis.
** The Fund's performance assumes the reinvestment of all dividends and
distributions. The Standard and Poor's MidCap 400 Index is adjusted to
reflect reinvestment of dividends on securities in the index.
+ The Standard and Poor's MidCap 400 Index is not adjusted to reflect sales
loads, expenses, or other fees that the SEC requires to be reflected in the
Fund's performance.
++ Returns reflect maximum applicable fees.
FEDERATED SECURITIES CORP.
(LOGO)
- --------------------------------------------------------------------------------
Distributor
3110507-ARS (12/93)
MINI-CAP FUND
(A PORTFOLIO OF FEDERATED INDEX TRUST)
PROSPECTUS
Federated Index Trust (the "Trust") is an open-end, management investment
company (a mutual fund). Its Mini-Cap Fund (the "Fund") seeks to provide
investment results corresponding to the aggregate price and dividend performance
of publicly traded common stocks comprising the small-stock capitalization
sector of the United States equity market.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THESE SHARES INVOLVES INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
This prospectus contains the information you should read and know before you
invest in the Fund. Keep this prospectus for future reference.
The Fund has also filed a Statement of Additional Information, dated December
31, 1993, with the Securities and Exchange Commission. The information contained
in the Statement of Additional Information is incorporated by reference into
this prospectus. You may request a copy of the Statement of Additional
Information free of charge by calling 1-800-235-4669. To obtain other
information or to make inquiries about the Fund, contact the Fund at the address
listed in the back of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus dated December 31, 1993
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Acceptable Investments 4
U.S. Government Securities 4
Repurchase Agreements 5
Money Market Instruments 5
Stock Index Futures and Options 5
Lending of Portfolio Securities 6
When-Issued and Delayed
Delivery Transactions 6
Investment Risks 6
Investment Limitations 6
FEDERATED INDEX TRUST INFORMATION 7
- ------------------------------------------------------
Management of the Trust 7
Board of Trustees 7
Fund's Manager 7
Management Fees 8
Manager's Background 8
Sub-Manager 8
Sub-Management Fees 8
Sub-Manager's Background 9
Distribution of Fund Shares 9
Administration of the Fund 9
Administrative Services 9
Custodian 9
Transfer Agent and Dividend
Disbursing Agent 9
Legal Counsel 9
Independent Auditors 9
Brokerage Transactions 9
NET ASSET VALUE 10
- ------------------------------------------------------
INVESTING IN THE FUND 10
- ------------------------------------------------------
Share Purchases 10
By Wire 10
By Mail 10
Minimum Investment Required 10
What Shares Cost 10
Exchanging Securities for Fund Shares 11
Sub-Accounting Services 11
Certificates and Confirmations 11
Dividends 11
Capital Gains 11
REDEEMING SHARES 11
- ------------------------------------------------------
Telephone Redemption 12
Written Requests 12
Signatures 12
Receiving Payment 12
Redemption Before Purchase
Instruments Clear 13
Accounts with Low Balances 13
SHAREHOLDER INFORMATION 13
- ------------------------------------------------------
Voting Rights 13
Massachusetts Partnership Law 13
TAX INFORMATION 14
- ------------------------------------------------------
Federal Income Tax 14
Pennsylvania Corporate and
Personal Property Taxes 14
PERFORMANCE INFORMATION 14
- ------------------------------------------------------
FINANCIAL STATEMENTS 15
- ------------------------------------------------------
REPORT OF ERNST & YOUNG,
INDEPENDENT AUDITORS 99
- ------------------------------------------------------
ADDRESSES Inside Back Cover
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)......... None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)............................................... None
Deferred Sales Load (as a percentage of original
purchase price or redemption proceeds, as applicable)............................. None
Redemption Fee (as a percentage of amount redeemed, if applicable).................. None
Exchange Fee........................................................................ None
ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver)(1).................................................... 0.03%
12b-1 Fee........................................................................... None
Other Expenses...................................................................... 0.72%
Total Fund Operating Expenses(2)............................................... 0.75%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The Manager can terminate this voluntary waiver
at any time at its sole discretion. The maximum management fee is 0.50%
(2) The Total Fund Operating Expenses in the table above are based on expenses
expected during the fiscal year ending October 31, 1994. The Total Fund
Operating Expenses were 0.37% for the fiscal year ended October 31, 1993 and
were 1.23% absent the voluntary waiver of the management fee and reimbursement
of certain other operating expenses.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF THE FUND WILL BEAR, EITHER
DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE VARIOUS COSTS AND
EXPENSES, SEE "FEDERATED INDEX TRUST INFORMATION." Wire-transferred redemptions
of less than $5,000 may be subject to additional fees.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000
investment assuming (1) 5% annual return and (2)
redemption at the end of each time period. As noted in the
table above, the Fund charges no redemption fees.......... $ 8 $ 24 $ 42 $ 93
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
MINI-CAP FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Ernst & Young, Independent Auditors on page
99.
<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31,
------------------
1993 1992*
------- ------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.39 $10.00
- ---------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------------------------------------
Net investment income 0.17 0.02
- ---------------------------------------------------------------------
Net realized and unrealized gain on investments 2.27 0.38
- --------------------------------------------------------------------- ------- ------
Total from investment operations 2.44 0.40
- ---------------------------------------------------------------------
LESS DISTRIBUTIONS
- ---------------------------------------------------------------------
Dividends to shareholders from net investment income (0.17) (0.01)
- --------------------------------------------------------------------- ------- ------
NET ASSET VALUE, END OF PERIOD $12.66 $10.39
- --------------------------------------------------------------------- ------- ------
TOTAL RETURN** 23.73% 4.00%
- ---------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------------------------
Expenses 0.37% 0.00%(b)
- ---------------------------------------------------------------------
Net investment income 1.48% 2.04%(b)
- ---------------------------------------------------------------------
Expense waiver/reimbursement(a) 0.86% 0.87%
- ---------------------------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------------------------
Net assets, end of period (000 omitted) $76,139 $7,751
- ---------------------------------------------------------------------
Portfolio turnover rate 48% 1%
- ---------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from August 10, 1992 (commencement of
operations) to
October 31, 1992.
** Based on net asset value which does not reflect the sales load or redemption
fee, if applicable.
<TABLE>
<S> <C>
(a) This expense decrease is reflected in both the expense and net investment income ratios
shown above (Note 5).
(b) Computed on an annualized basis.
</TABLE>
Further information about the Fund's performance is contained in the Fund's
annual report dated December 31 1993, which can be obtained free of charge.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated January 30, 1990. The Declaration of Trust permits the Trust to
offer separate series of shares of beneficial interest representing interests in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. This prospectus relates only to the Fund. The Fund
is designed primarily for institutions investing on behalf of their customers. A
minimum initial investment of $25,000 over a 90-day period is required.
Fund shares are currently sold and redeemed at net asset value without a sales
charge or redemption fee being imposed by the Fund. The Fund's net asset value
per share fluctuates.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide investment results that,
generally correspond to the aggregate price and dividend performance of the
approximately 2,000 publicly traded common stocks that are ranked in terms of
capitalization below the top 1,000 stocks that comprise the large and mid-range
capitalization sector of the United States equity market. The investment
objective of the Fund cannot be changed without the approval of shareholders.
These stocks comprise the Russell 2000(R)Index (the "Index"), an index of small
capitalization stocks. While there is no assurance that the Fund will achieve
its investment objective, it endeavors to do so by following the investment
policies described in this prospectus.
The Fund is neither affiliated with nor promoted, sponsored or endorsed by the
Frank Russell Company. Frank Russell's only relationship to the Fund is the
licensing of the use of the Index. Frank Russell Company is the owner of the
trademarks and copyrights relating to the Index. The Russell 2000(R)Index is a
trademark/service mark of the Frank Russell Company. Russell(TM)is a trademark
of the Frank Russell Company. Frank Russell Company is not responsible for and
has not reviewed the Fund or any associated literature or publications and Frank
Russell Company makes no representation or warranty, express or implied, as to
their accuracy, or completeness, or otherwise.
INVESTMENT POLICIES
The investment policies described below may be changed by the Board of Trustees
("Trustees") without shareholder approval. Shareholders will be notified before
any material changes in these policies become effective.
The Fund pursues its investment objective by investing primarily in a pool of
securities that will duplicate the investment characteristics of the Index.
Under normal market circumstances, the Fund will invest at least 80% of its
assets in the common stock included in the Index.
In pursuit of its investment objective, the Fund uses a "passive" versus an
"active" investment approach. In the case of a fund using an active investment
approach, the fund would be managed by buying and selling securities based upon
economic, financial and market analysis as well as active
investment judgment. In contrast, the Fund uses a passive approach that attempts
to approximate the investment performance of the Index. Stocks are selected for
inclusion in the Fund's portfolio in the order of their contribution to the
Fund's market capitalization, industry and fundamental characteristics. Thus,
small stocks with the highest market capitalizations will comprise the highest
percentage of the Fund's investment portfolio, and those with the lowest market
capitalizations will comprise the lowest percentage of the Fund's investment
portfolio.
The Fund will not attempt to duplicate or approximate the composition of the
Index, although at least 80% of the assets comprising the Fund's portfolio will
be invested in stocks included in the Index. It is expected that by investing in
a pool of the issues that comprise the Index, the Fund's portfolio will closely
resemble the characteristics of the small stock capitalization sector of the
United States equity market. It is also anticipated that the Fund's performance
will achieve at least a 95% correlation to the performance of the Index, even
though the Fund will not, and does not seek to, duplicate the Index's
performance precisely. It is anticipated that the Fund will achieve its intended
correlation to the performance of the Index when the Fund's net assets reach at
least $10 million. When the Fund's net assets exceed $5 million, the Fund may
begin to invest in the stocks comprising the Index. Once the Fund's net assets
equal at least $10 million, it is anticipated that the Fund will be fully
invested in stocks comprising the Index and will achieve the 95% correlation to
the performance of the Index.
The Index is updated monthly, which results in a significant annual turnover
rate. The Fund would incur high transaction costs if it rebalanced its portfolio
each time the Index was updated. Consequently, adjustments will be made to the
Fund's portfolio less frequently. As a result, portfolio turnover is expected to
be well below that encountered in actively managed investment company
portfolios. Therefore, the accompanying costs, including accounting costs,
brokerage fees, custodial expenses, and transfer taxes are expected to be
relatively low. Factors such as the size of the Fund's portfolio, the size and
timing of cash flows into and out of the Fund, and changes in the securities
markets as well as in the composition of the Index will determine how frequently
the Fund's portfolio will be rebalanced to resemble the characteristics of the
Index.
In order to accommodate cash flows into and out of the Fund's portfolio, the
Fund may enter into stock index futures contracts, options and options on
futures contracts. This will allow the Fund to simultaneously maximize the level
of the Fund assets used to track the performance of the small stock
capitalization sector of the United States equity market. The Fund can sell
futures contracts and options in order to close out a previously established
position. The Fund will not enter into stock index futures contracts, options
and options on futures contracts for speculative purposes.
ACCEPTABLE INVESTMENTS. Under normal market circumstances, the Fund will invest
80% of its assets in stocks that comprise the Index. In addition, the Fund may
hold cash reserves which may, for other than defensive purposes, be invested in,
but not limited to, the following:
U.S. GOVERNMENT SECURITIES. The Fund is permitted to invest in U.S.
government securities which are either issued or guaranteed by the U.S.
government, its agencies or instrumentalities. These securities include,
but are not limited to:
- direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds; and
- notes, bonds, and discount notes of U.S. government agencies or
instrumentalities, such as Federal Home Loan Banks, the Federal
National Mortgage Association, the Federal Home
Loan Mortgage Corporation, the Federal Farm Credit System, and the
Student Loan Marketing Association.
REPURCHASE AGREEMENTS. The U.S. government securities and other securities
in which the Fund invests may be purchased pursuant to repurchase
agreements. Repurchase agreements are arrangements pursuant to which banks,
broker/dealers and other recognized financial institutions sell U.S.
government securities or other securities to the Fund and agree at the time
of sale to repurchase them at a mutually agreed upon time and price. To the
extent that the original seller does not repurchase the securities from the
Fund, the Fund could receive less than the repurchase price on any sale of
such securities.
MONEY MARKET INSTRUMENTS. The Fund may also invest in:
- commercial paper; and
- instruments of domestic banks and savings and loans (such as
certificates of deposit and bankers' acceptances).
STOCK INDEX FUTURES AND OPTIONS. The Fund may utilize stock index futures
contracts, options, and options on futures contracts, subject to the
limitation that the value of these futures contracts and options will not
exceed 20% of the Fund's total assets. Also, the Fund will not purchase
options to the extent that more than 5% of the value of the Fund's total
assets would be invested in premiums on open put option positions. These
futures contracts and options will be used to handle cash flows into and
out of the Fund and to potentially reduce transactional costs, since
transactional costs associated with futures and options contracts can be
lower than costs stemming from direct investments in stocks.
There are several risks accompanying the utilization of futures contracts
to effectively anticipate market transactions. First, positions in futures
contracts may be closed only on an exchange or board of trade that
furnishes a secondary market for such contracts. While the Fund plans to
utilize futures contracts only if there exists an active market for such
contracts, there is no guarantee that a liquid market will exist for the
contracts at a specified time. Furthermore, because, by definition, futures
contracts look to projected price levels in the future and not to current
levels of valuation, market circumstances may result in there being a
discrepancy between the price of the stock index future and the movement in
the stock index. The absence of a perfect price correlation between the
futures contract and its underlying stock index could stem from investors
choosing to close futures contracts by offsetting transactions, rather than
satisfying additional margin requirements. This could result in a
distortion of the relationship between the index and futures market. In
addition, because the futures market imposes less burdensome margin
requirements than the securities market, an increased amount of
participation by speculators in the futures market could result in price
fluctuations.
In view of these considerations, the Fund will comply with the following
restrictions when purchasing and selling futures contracts. First, the Fund
will not participate in futures transactions if the sum of its initial
margin deposits on open contracts will exceed 5% of the market value of the
Fund's total assets, after taking into account the unrealized profits and
losses on those contracts into which it has entered. Second, the Fund will
not enter into these contracts for speculative purposes. Third, since the
Fund does not constitute a commodity pool, it will not market itself as
such, nor serve as a vehicle for trading in the commodities futures or
commodity options markets. In this regard, the Fund will disclose to all
prospective investors the limitations on its futures and options
transactions, and will make clear that these transactions are entered into
only for bona fide hedging purposes or such other purposes permitted under
regulations promulgated by the Commodity Futures Trading Commission
("CFTC"). Also, the Fund intends to claim an exclusion from registration as
a commodity pool operator under the regulations promulgated by the CFTC.
LENDING OF PORTFOLIO SECURITIES. The Fund may lend its portfolio securities on a
short-term or long-term basis up to one-third of the value of its total assets
to broker/dealers, banks, or other institutional borrowers of securities. The
Fund will only enter into loan arrangements with broker/dealers, banks or other
institutions which the managers have determined are creditworthy under
guidelines established by the Trustees. The Fund will receive collateral in the
form of cash or U.S. government securities equal to at least 100% of the value
of the securities loaned.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase short-term
U.S. government securities on a when-issued or delayed delivery basis. These
transactions are arrangements in which the Fund purchases securities with
payment and delivery scheduled for a future time. The Fund engages in
when-issued and delayed delivery transactions only for the purpose of acquiring
portfolio securities consistent with the Fund's investment objective and
policies, not for investment leverage. In when-issued and delayed delivery
transactions, the Fund relies on the seller to complete the transaction. The
seller's failure to complete the transaction may cause tne Fund to miss a price
yield considered to be advantageous.
INVESTMENT RISKS
As with other mutual funds that invest primarily in equity securities, the Fund
is subject to market risks. That is, the possibility exists that common stocks
will decline over short or even extended periods of time, and the United States
equity market tends to be cyclical, experiencing both periods when stock prices
generally increase and periods when stock prices generally decrease. However,
because the Fund invests primarily in small capitalization stocks, there are
some additional risk factors associated with investments in the Fund. In
particular, stocks in the small capitalization sector of the United States
equity market have historically been more volatile in price than larger
capitalization stocks, such as those included in the Standard & Poor's 500
Index. This is because, among other things, small companies have less certain
growth prospects than larger companies; have a lower degree of liquidity in the
equity market; and tend to have a greater sensitivity to changing economic
conditions. Further, in addition to exhibiting greater volatility, the stocks of
small companies may, to some degree, fluctuate independently of the stocks of
large companies. That is, the stocks of small companies may decline in price as
the price of large company stocks rises or vice versa. Therefore, investors
should expect that the Fund will be more volatile than, and may fluctuate
independently of, broad stock market indices such as the Standard & Poor's 500
Index.
INVESTMENT LIMITATIONS
The Fund will not:
- borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a money market instrument for at
least a percentage of its cash value with an
agreement to buy it back on a set date) except, under certain
circumstances, the Fund may borrow up to one-third of the value of its
total assets and pledge up to 10% of the value of those assets to secure
such borrowings.
The above investment limitation cannot be changed without shareholder approval.
The following investment limitations, however, may be changed by the Trustees
without shareholder approval. Shareholders will be notified before any material
change in these policies becomes effective.
The Fund will not:
- invest more than 5% of its total assets in securities of issuers that
have records of less than three years of continuous operations; or
- invest more than 15% of its net assets in securities that are illiquid.
FEDERATED INDEX TRUST INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Board of
Trustees is responsible for managing the business affairs of the Trust and for
exercising all of the powers of the Trust except those reserved for the
shareholders. The Executive Committee of the Board of Trustees handles the
Trustees' responsibilities between meetings of the Trustees.
FUND'S MANAGER. Federated Management serves as the Fund's manager (the
"Manager"). The Trust has entered into a management contract (the "Management
Contract") with the Manager, which, in turn, has entered into a sub-management
contract (the "Sub-Management Contract") with ANB Investment Management and
Trust Company ("ANB" or the "Sub-Manager") (ANB and the Manager are collectively
referred to herein as "Managers"). It is the Manager's responsibility to select
the Sub-Manager, subject to the review and approval of the Trustees, and to
review and evaluate the Sub-Manager's continued performance. The Manager is also
responsible for providing administrative services to the Fund.
Subject to the supervision and direction of the Trustees, the Manager provides
to the Fund investment management evaluation services principally by performing
initial due diligence on the Sub-Manager for the Fund and thereafter monitoring
and evaluating the performance of the Sub-Manager through quantitative and
qualitative analyses. In addition, the Manager conducts periodic in-person,
telephonic and written consultations with the Sub-Manager. In initially
evaluating the Sub-Manager, the Manager considered, among other factors, the
Sub-Manager's level of expertise; relative performance over a minimum period of
five years; level of efficiency; level of adherence to investment discipline or
philosophy; personnel, facilities and financial strength; and quality of service
and client communications. On an ongoing basis, the Manager is responsible for
communicating performance expectations and evaluations to the Sub-Manager;
monitoring tracking errors; monitoring and analyzing the use of futures
contracts; monitoring the futures holdings of the Fund as a percentage of Fund
assets; monitoring market timing in the Fund; discussing with the Sub-Manager
the portfolio sampling techniques employed by the Sub-Manager; defining with the
Sub-Manager the universe of stocks that comprise the small capitalization sector
of the United States equity market; and ultimately recom-
mending to the Trustees whether the Sub-Management Contract should be renewed,
modified or terminated. The Manager provides written reports to the Trustees
regarding the results of its evaluation and monitoring functions. In addition,
the Manager is responsible for providing the Fund with administrative services,
including, but not limited to, shareholder servicing and certain legal and
accounting services. The Manager is also responsible for conducting all
operations of the Fund, except those operations contracted to the Sub-Manager,
custodian, transfer agent and dividend disbursing agent. As described below, the
Manager receives an annual fee from the Fund for performing its responsibilities
under the Management Contract.
MANAGEMENT FEES. The Fund's Manager receives an annual management fee equal
to 0.50 of 1% of the Fund's average daily net assets. Under the Management
Contract, which provides for the voluntary waiver of the management fee by
the Manager, the Manager will voluntarily waive some or all of the
management fee. The Manager can terminate this voluntary waiver of some or
all of its management fee at any time in its sole discretion. The Manager
has also undertaken to reimburse the Fund for operating expenses in excess
of limitations established by certain states.
MANAGER'S BACKGROUND. Federated Management, a Delaware business trust
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940. It is a subsidiary of Federated Investors.
All of the Class A (voting) shares of Federated Investors are owned by a
trust, the trustees of which are John F. Donahue, Chairman and Trustee of
Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J.
Christopher Donahue, who is President and Trustee of Federated Investors.
Federated Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services
to a number of investment companies. Total assets under management or
administration by these and other subsidiaries of Federated Investors are
approximately $70 billion. Federated Investors, which was founded in 1956
as Federated Investors, Inc., develops and manages mutual funds primarily
for the financial industry. Federated Investors' track record of
competitive performance and its disciplined, risk averse investment
philosophy serve approximately 3,500 client institutions nationwide.
Through these same client institutions, individual shareholders also have
access to this same level of investment expertise.
SUB-MANAGER. Under the terms of the Sub-Management Contract between the Manager
and ANB, ANB serves as the Fund's Sub-Manager. The Sub-Manager will develop,
maintain and run the computer program designed to determine which securities
will be purchased and sold so as to replicate the composition of the Index to
the extent feasible, and, subject to the Manager's oversight has complete
discretion to purchase and sell portfolio securities for the Fund within the
Fund's investment objective, restrictions and policies.
SUB-MANAGEMENT FEES. For its services under the Sub-Management Contract,
ANB receives an annual fee from the Manager of .065 of 1% of the Fund's
average daily net assets. This fee is paid by the Manager out of its
resources and is not an incremental Fund expense. No performance or
incentive fees are paid to the Sub-Manager.
SUB-MANAGER'S BACKGROUND. ANB, incorporated in the State of Illinois on
July 1, 1988, is a registered investment adviser under the Investment
Advisers Act of 1940. ANB is a wholly-owned subsidiary of American National
Bank and Trust Company of Chicago, which, in turn, is an indirect
wholly-owned subsidiary of First Chicago Corporation. It serves as
investment adviser principally to corporate defined benefit and defined
contribution plans which have, as of September 30, 1993, placed
approximately $18 billion in assets with ANB. Since 1973, when American
National Bank and Trust Company of Chicago introduced its first commingled
equity index fund, ANB has developed and managed a family of equity and
bond index funds in which some 390 nationwide non-financial institution
clients invest. In total, ANB manages 62 commingled/common trust funds.
Also, since 1990, ANB has served as Sub-Manager for the Max-Cap Fund
(formerly the S&P 500 Fund), which is another portfolio of the Trust. ANB
also serves as Sub-Manager for the Mid-Cap Fund, another portfolio of the
Trust.
DISTRIBUTION OF FUND SHARES
Federated Securities Corp. is the principal distributor for shares of the Fund.
It is a Pennsylvania corporation organized on November 14, 1969, and is the
principal distributor for a number of investment companies. Federated Securities
Corp. is a subsidiary of Federated Investors.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Administrative Services, Inc., which is a
subsidiary of Federated Investors, provides the Manager with the administrative
personnel and services necessary to provide shareholder servicing and certain
legal and accounting services to the Fund.
CUSTODIAN. State Street Bank and Trust Company, Boston, Massachusetts is
custodian for the securities and cash of the Fund.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated Services Company,
Pittsburgh, Pennsylvania, is transfer agent for the shares of the Fund, and
dividend disbursing agent for the Fund.
LEGAL COUNSEL. Legal counsel is provided by Houston, Houston & Donnelly,
Pittsburgh, PA, and Dickstein, Shapiro & Morin, Washington, D.C.
INDEPENDENT AUDITORS. The independent auditors for the Fund are Ernst & Young,
Pittsburgh, Pennsylvania.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the Managers look for prompt execution of the order at a favorable
price. In working with dealers, the Managers will generally utilize those who
are recognized dealers in specific portfolio instruments, except when a better
price and execution of the order can be obtained elsewhere. In selecting among
firms believed to meet these criteria, the Managers may give consideration to
those firms which have sold or are selling shares of the Fund and other funds
distributed by Federated Securities Corp. The Managers make decisions on
portfolio transactions and select brokers and dealers, subject to review by the
Trustees.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund's net asset value per share fluctuates. It is determined by dividing
the sum of the market value of all securities and other assets, less
liabilities, by the number of shares outstanding.
INVESTING IN THE FUND
- --------------------------------------------------------------------------------
SHARE PURCHASES
Fund shares are sold on days on which the New York Stock Exchange is open.
Shares of the Fund may be purchased either by wire or mail. To purchase shares
of the Fund, open an account by calling Federated Securities Corp. Information
needed to establish the account will be taken over the telephone. The Fund
reserves the right to reject any purchase request.
BY WIRE. To purchase shares of the Fund by Federal Reserve wire, call the Fund
to place an order. Shareholders have until 4:00 p.m. (Boston time) to call the
Fund for settlement on the next business day. The order is considered received
immediately. Payment by federal funds must be received before 4:00 p.m. (Boston
time) on the next business day following the order. Federal funds should be
wired as follows: State Street Bank and Trust Company, Boston, Massachusetts;
Attention: EDGEWIRE; For Credit to: Federated Index Trust, Mini-Cap Fund; Group
Number or Order Number; Nominee or Institution Name; ABA Number 011000028.
BY MAIL. To purchase shares of the Fund by mail, send a check made payable to
Federated Index Trust, Mini-Cap Fund, to the Fund's transfer agent, State Street
Bank and Trust Company, P.O. Box 8602, Boston, Massachusetts 02266-8602. Orders
by mail are considered received after payment by check is converted by State
Street Bank into federal funds. This is generally the next business day after
State Street Bank receives the check.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in the Fund is $25,000. However, an account may
be opened with a smaller amount as long as the $25,000 minimum is reached within
90 days. An investor's minimum investment will be calculated by combining all
accounts that the institution maintains with the Fund.
WHAT SHARES COST
Fund shares are sold at their net asset value next determined after an order is
received. There is no sales charge imposed by the Fund.
The net asset value is determined at 4:00 p.m. (Boston time), Monday through
Friday, except on: (i) days on which there are not sufficient changes in the
value of the Fund's portfolio securities that its net asset value might be
materially affected; (ii) days during which no shares are tendered for
redemption and no orders to purchase shares are received; and (iii) the
following holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
EXCHANGING SECURITIES FOR FUND SHARES
Investors may exchange certain securities or a combination of securities and
cash for shares of the Fund. The securities and any cash must have a market
value of at least $25,000. The Trust reserves the right to determine the
acceptability of securities to be exchanged. On the day the securities are
accepted by the Trust, they are valued in the same manner as the Trust values
its assets. Investors wishing to exchange securities should first contact
Federated Securities Corp.
Shares purchased by exchange of securities cannot be redeemed by telephone for
five business days to allow time for the transfer to settle.
SUB-ACCOUNTING SERVICES
Institutions are encouraged to open single master accounts. However, certain
institutions may wish to use the transfer agent's sub-accounting system to
minimize their internal recordkeeping requirements. The transfer agent charges a
fee based on the level of sub-accounting services rendered. Institutions holding
Fund shares in a fiduciary, agency, custodial, or similar capacity may charge or
pass through sub-accounting fees as part of or in addition to normal trust or
agency account fees. They may also charge fees for other services provided which
may be related to the ownership of Fund shares. This prospectus should,
therefore, be read together with any agreement between the customer and the
institution with regard to the services provided, the fees charged for those
services, and any restrictions and limitations imposed.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the Fund.
Detailed confirmations of each purchase or redemption are sent to each
shareholder. Quarterly confirmations are sent to report dividends paid during
the quarter.
DIVIDENDS
Dividends are declared and paid quarterly. Unless shareholders request cash
payments by writing to the Fund, dividends are automatically reinvested in
additional shares of the Fund on payment dates at the ex-dividend date net asset
value without a sales charge.
CAPITAL GAINS
Capital gains realized by the Fund, if any, will be distributed at least once
every 12 months.
REDEEMING SHARES
- --------------------------------------------------------------------------------
The Fund redeems shares at their net asset value next determined after the Fund
receives the redemption request. Redemptions will be made on days on which the
Fund computes its net asset value. Redemption requests must be received in
proper form and can be made by telephone request or written request.
TELEPHONE REDEMPTION
Shareholders may redeem their shares by telephoning the Fund before 4:00 p.m.
(Boston time). The proceeds will normally be wired the following business day,
but in no event more than seven days, to the shareholder's account at a domestic
commercial bank that is a member of the Federal Reserve System. If at any time,
the Fund shall determine it necessary to terminate or modify this method of
redemption, shareholders will be promptly notified.
An authorization form permitting State Street Bank or the Fund to accept
telephone requests must first be completed. Authorization forms and information
on this service are available from Federated Securities Corp.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption should be considered, such as by "Written Requests."
If reasonable procedures are not followed by the Fund, it may be liable for
losses due to unauthorized or fraudulent telephone instructions.
WRITTEN REQUESTS
Fund shares may also be redeemed by sending a written request to the Fund. Call
the Fund for specific instructions before redeeming by written request. The
shareholder will be asked to provide in the request his name, the Fund name, his
account number, and the share or dollar amount requested. If share certificates
have been issued, they must be properly endorsed and should be sent by
registered or certified mail with the written request.
SIGNATURES. Shareholders requesting a redemption of $50,000 or more, a
redemption of any amount to be sent to an address other than that on record with
the Fund, or a redemption payable other than to the shareholder of record must
have signatures on written redemption requests guaranteed by:
- a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund ("BIF"), which is administered by the Federal Deposit
Insurance Corporation ("FDIC");
- a member firm of the New York, American, Boston, Midwest, or Pacific
Stock Exchange;
- a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund ("SAIF"), which is administered
by the FDIC; or
- any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.
RECEIVING PAYMENT. Normally, a check for the proceeds is mailed within one
business day, but in no event more than seven days, after receipt of a proper
written redemption request.
REDEMPTION BEFORE PURCHASE INSTRUMENTS CLEAR
When shares are purchased by check, the proceeds from the redemption of those
shares are not available, and the shares may not be exchanged, until the Fund or
its agents are reasonably certain that the purchase check has cleared, which
could take up to ten calendar days.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $25,000. This
requirement does not apply, however, if the balance falls below $25,000 because
of changes in the Fund's net asset value.
Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of each portfolio
in the Trust have equal voting rights except that only shares of the Fund are
entitled to vote on matters affecting only the Fund. As a Massachusetts business
trust, the Trust is not required to hold annual shareholder meetings.
Shareholder approval will be sought only for certain changes in the Trust's or
the Fund's operations and for the election of Trustees under certain
circumstances.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders shall be called by the Trustees upon the
written request of shareholders owning at least 10% of the outstanding shares of
all series of the Trust.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for acts or obligations of the Trust on behalf
of the Fund. To protect shareholders of the Fund, the Trust has filed legal
documents with Massachusetts that expressly disclaim the liability of
shareholders of the Fund for such acts or obligations of the Trust. These
documents require notice of this disclaimer to be given in each agreement,
obligation, or instrument that the Trust enters into or its Trustees enter into
or sign on behalf of the Fund.
In the unlikely event a shareholder of the Fund is held personally liable for
the Trust's obligations on behalf of the Fund, the Trust is required to use the
property of the Fund to protect or compensate the shareholder. On request, the
Trust will defend any claim made and pay any judgment against a shareholder for
any act or obligation of the Trust on behalf of the Fund. Therefore, financial
loss resulting from liability as a shareholder of the Fund will occur only if
the Trust itself cannot meet its obligations to indemnify shareholders and pay
judgments against them from the assets of the Fund.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to receive the special tax treatment afforded to such companies.
The Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by the
Trust's other portfolios, if any, will not be combined for tax purposes with
those realized by the Fund.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions, including capital gains distributions,
received. This applies whether dividends and distributions are received in cash
or as additional shares. Distributions representing long-term capital gains, if
any, will be taxable to shareholders as long-term capital gains no matter how
long the shareholders have held their shares.
PENNSYLVANIA CORPORATE AND PERSONAL PROPERTY TAXES. In the opinion of Houston,
Houston & Donnelly, counsel to the Trust:
- neither the Trust nor the Fund is subject to Pennsylvania corporate or
personal property taxes; and
- Fund shares may be subject to personal property taxes imposed by
counties, municipalities, and school districts in Pennsylvania to the
extent that the portfolio securities in the Fund would be subject to such
taxes if owned directly by residents of those jurisdictions.
Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time the Fund advertises its total return and yield.
Total return represents the change, over a specified period of time, in the
value of an investment in the Fund after reinvesting all income and capital gain
distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
The yield of the Fund is calculated by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by the Fund
over a thirty-day period by the offering price per share of the Fund on the last
day of the period. This number is then annualized using semi-annual compounding.
The yield does not necessarily reflect income actually earned by the Fund and,
therefore, may not correlate to the dividends or other distributions paid to
shareholders.
The Fund is sold without any sales load or other similar non-recurring charges.
From time to time, the Fund may advertise its performance using certain
reporting services and/or compare its performance to certain indices.
MINI-CAP FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1993
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--83.9%
- ----------------------------------------------------------------------------------
AEROSPACE--0.0%
----------------------------------------------------------------------
2,400 * Abex Inc. $ 9,000
---------------------------------------------------------------------- -----------
AUTOMOTIVE--0.1%
----------------------------------------------------------------------
100 * ADESA Corp. 1,650
----------------------------------------------------------------------
1,200 * Alpha Beta Technology 36,900
----------------------------------------------------------------------
600 * Astec Industries, Inc. 8,250
---------------------------------------------------------------------- -----------
Total 46,800
---------------------------------------------------------------------- -----------
BASIC INDUSTRIES--4.4%
----------------------------------------------------------------------
860 Aceto Corp. 11,610
----------------------------------------------------------------------
500 * Acme Metals, Inc. 7,750
----------------------------------------------------------------------
2,467 ADAC Laboratories 32,071
----------------------------------------------------------------------
500 AEP Industries 10,000
----------------------------------------------------------------------
1,300 * Allied Products 15,763
----------------------------------------------------------------------
2,200 American Colloid Co. 52,250
----------------------------------------------------------------------
300 American Filtrona Corp. 7,800
----------------------------------------------------------------------
1,100 * American Pacific Corp. 15,125
----------------------------------------------------------------------
1,200 Amcast Industrial Corp. 21,750
----------------------------------------------------------------------
4,100 * AMSCO International, Inc. 51,250
----------------------------------------------------------------------
2,100 * Applied Microbiology 13,125
----------------------------------------------------------------------
1,000 Athlone Industries, Inc. 17,250
----------------------------------------------------------------------
1,800 * Bayou Steel, Class A 6,413
----------------------------------------------------------------------
400 * Bio Rad Laboratories, Inc., Class A 5,000
----------------------------------------------------------------------
3,650 Birmingham Steel Corp. 84,863
----------------------------------------------------------------------
300 Blessings Corp. 6,600
----------------------------------------------------------------------
2,700 Brush Wellman, Inc. 37,125
----------------------------------------------------------------------
3,100 CalMat Co. 55,800
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
BASIC INDUSTRIES--CONTINUED
----------------------------------------------------------------------
700 Cambrex Corp. $ 14,000
----------------------------------------------------------------------
3,600 * Canyon Resources Corp. 12,600
----------------------------------------------------------------------
3,500 Caranstar Industries, Inc. 55,125
----------------------------------------------------------------------
1,300 * Carlisle Plastics, Inc. 9,100
----------------------------------------------------------------------
1,400 Carpenter Technology Corp. 76,650
----------------------------------------------------------------------
500 Castle A M & Co. 7,000
----------------------------------------------------------------------
600 Chaparral St. Louis Co. 5,325
----------------------------------------------------------------------
2,000 Cleveland Cliffs, Inc. 72,000
----------------------------------------------------------------------
3,000 Coeur d'Alene Mines Corp. 60,375
----------------------------------------------------------------------
1,700 Commercial Intertech Corp. 35,275
----------------------------------------------------------------------
1,500 Commercial Metals Corp. 56,063
----------------------------------------------------------------------
400 * Continental Can Co., Inc. 8,100
----------------------------------------------------------------------
2,300 * Crown Resources Corp. 11,500
----------------------------------------------------------------------
2,200 * Dravo Corp. 24,750
----------------------------------------------------------------------
800 * Ecogen, Inc. 5,600
----------------------------------------------------------------------
2,000 Embrace Systems Corp. 26,000
----------------------------------------------------------------------
700 Fansteel, Inc. 5,250
----------------------------------------------------------------------
1,100 * FirstMiss Gold, Inc. 7,150
----------------------------------------------------------------------
3,400 First Mississippi Corp. 39,100
----------------------------------------------------------------------
1,400 FMC Gold Co. 7,525
----------------------------------------------------------------------
2,500 Fuller (H.B.) Co. 80,625
----------------------------------------------------------------------
8,200 * Gaylord Container Corp., Class A 24,088
----------------------------------------------------------------------
2,000 Greif Bros. Corp., Class A 80,250
----------------------------------------------------------------------
2,600 Grow Group, Inc. 36,400
----------------------------------------------------------------------
1,000 Guardsman Products, Inc. 14,500
----------------------------------------------------------------------
1,800 * Gundle Environmental Systems, Inc. 17,775
----------------------------------------------------------------------
2,400 Handy & Harmon 31,200
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
BASIC INDUSTRIES--CONTINUED
----------------------------------------------------------------------
5,997 Hanson PLC $ 120,690
----------------------------------------------------------------------
6,100 Hecla Mining Co. 64,813
----------------------------------------------------------------------
1,400 * Imclone Systems,Inc. 10,325
----------------------------------------------------------------------
1,500 * Imco Recycling, Inc. 21,000
----------------------------------------------------------------------
550 Insteel Industries, Inc. 6,188
----------------------------------------------------------------------
3,100 Intermet Corp. 24,025
----------------------------------------------------------------------
300 International Aluminum Corp. 6,675
----------------------------------------------------------------------
800 Kaiser Resources Inc. 13,200
----------------------------------------------------------------------
1,300 Kaiser St. Louis Co. 10,075
----------------------------------------------------------------------
600 * Keystone Consolidated Industries, Inc. 5,925
----------------------------------------------------------------------
400 Laclede St. Louis Co. 5,800
----------------------------------------------------------------------
800 Learonal 11,800
----------------------------------------------------------------------
450 Lesco, Inc. 6,413
----------------------------------------------------------------------
2,600 Lilly Industrial, Inc. 55,250
----------------------------------------------------------------------
3,300 Lone Star Technologies, Inc. 29,700
----------------------------------------------------------------------
1,200 * Lydall, Inc. 25,050
----------------------------------------------------------------------
500 Macdermid, Inc. 13,500
----------------------------------------------------------------------
1,100 * Maxxam, Inc. 35,750
----------------------------------------------------------------------
1,000 Mosinee Paper Corp. 25,500
----------------------------------------------------------------------
1,600 * Mueller Industries, Inc. 52,800
----------------------------------------------------------------------
2,400 * Mycogen Corp. 27,000
----------------------------------------------------------------------
600 NCH Corp. 34,800
----------------------------------------------------------------------
600 National San Supply Co. 7,725
----------------------------------------------------------------------
400 New Jersey Steel Corp. 6,700
----------------------------------------------------------------------
2,800 N L Industries, Inc. 13,300
----------------------------------------------------------------------
1,900 * Nord Resources 8,788
----------------------------------------------------------------------
1,500 N S Group, Inc. 14,063
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
BASIC INDUSTRIES--CONTINUED
----------------------------------------------------------------------
700 Oil Drilling Corp. $ 14,263
----------------------------------------------------------------------
1,400 Oregon Metallurgical Corp. 6,475
----------------------------------------------------------------------
2,900 Oregon Steel Mills 68,513
----------------------------------------------------------------------
400 Penn Virginia Corp. 15,400
----------------------------------------------------------------------
3,300 Pentair, Inc. 103,950
----------------------------------------------------------------------
800 Petrolite Corp. 31,400
----------------------------------------------------------------------
1,900 * Pharmaceutical Resources, Inc. 32,063
----------------------------------------------------------------------
200 Pitt Desmoines, Inc. 5,300
----------------------------------------------------------------------
2,000 Pope & Talbot, Inc. 49,750
----------------------------------------------------------------------
800 Pratt & Lambert, Inc. 15,700
----------------------------------------------------------------------
2,000 Precision Castparts Corp. 53,500
----------------------------------------------------------------------
1,300 Quaker Chemical 22,425
----------------------------------------------------------------------
2,300 Quanex Corp. 46,000
----------------------------------------------------------------------
7,400 * Quantum Chemical Corp. 94,350
----------------------------------------------------------------------
1,000 Quixote Corp. 16,000
----------------------------------------------------------------------
600 Roanoke Electrical St. Louis Corp. 7,950
----------------------------------------------------------------------
3,600 * Scotts Co., Class A 65,700
----------------------------------------------------------------------
3,500 * Sealed Airlines Corp. 104,563
----------------------------------------------------------------------
900 Sealright Co., Inc. 13,725
----------------------------------------------------------------------
2,200 * Shorewood Packaging Corp. 23,100
----------------------------------------------------------------------
600 * Special Devices, Inc. 4,050
----------------------------------------------------------------------
1,000 Steel Technologies, Inc. 19,750
----------------------------------------------------------------------
600 * Steel West Va Inc. 6,300
----------------------------------------------------------------------
5,500 Sterling Chemicals, Inc. 19,938
----------------------------------------------------------------------
27,700 * Sunshine Mining Co. 79,638
----------------------------------------------------------------------
900 * Sybron Chemical Industries Inc. 20,025
----------------------------------------------------------------------
800 * Synetic, Inc. 8,000
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
BASIC INDUSTRIES--CONTINUED
----------------------------------------------------------------------
4,800 Terra Industries, Inc. $ 25,200
----------------------------------------------------------------------
1,500 Texas Industries, Inc. 36,563
----------------------------------------------------------------------
1,500 Tredegar Industries, Inc. 22,125
----------------------------------------------------------------------
1,100 Trenwick Group, Inc. 46,200
----------------------------------------------------------------------
900 Tuscarora, Inc. 13,500
----------------------------------------------------------------------
3,000 * Tyler Corp. 14,250
----------------------------------------------------------------------
1,900 Univar Corp. 20,663
----------------------------------------------------------------------
6,700 UNR Industries, Inc. 50,250
----------------------------------------------------------------------
2,200 Valhi Inc. 10,725
----------------------------------------------------------------------
450 Varlen Corp. 9,900
----------------------------------------------------------------------
3,000 Vigoro Corp. 78,000
----------------------------------------------------------------------
1,200 WD 40 Co. 53,400
----------------------------------------------------------------------
4,800 Weirton Steel Corp. 36,600
----------------------------------------------------------------------
1,900 * Wheeling Pittsburgh Corp. 33,725
---------------------------------------------------------------------- -----------
Total 3,330,655
---------------------------------------------------------------------- -----------
BROADCAST RADIO & TV--0.0%
----------------------------------------------------------------------
1,800 * Ackerley Communication 11,025
---------------------------------------------------------------------- -----------
BROADCASTING & CABLE--0.2%
----------------------------------------------------------------------
3,750 * Infinity Broadcasting 181,875
---------------------------------------------------------------------- -----------
CABLE TV--0.0%
----------------------------------------------------------------------
1,200 * International Cabletel, Inc. 34,650
---------------------------------------------------------------------- -----------
CAPITAL GOODS--5.7%
----------------------------------------------------------------------
2,700 AAR Corp. 37,463
----------------------------------------------------------------------
1,500 AGCO Corp. 40,875
----------------------------------------------------------------------
700 Acme Cleveland Corp. 7,263
----------------------------------------------------------------------
3,500 * Airlines & Water Technologies Corp., Class A 48,563
----------------------------------------------------------------------
5,400 * Allwaste, Inc. 23,625
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
CAPITAL GOODS--CONTINUED
----------------------------------------------------------------------
1,500 * Alkermes, Inc. $ 13,875
----------------------------------------------------------------------
500 * American Ecology, Inc. 5,750
----------------------------------------------------------------------
2,200 * American Waste Savings, Inc., Class A 4,400
----------------------------------------------------------------------
800 Ampco Pittsburgh Corp. 5,600
----------------------------------------------------------------------
1,800 Apogee Enterprises, Inc. 24,750
----------------------------------------------------------------------
1,900 Applied Power, Inc. 32,063
----------------------------------------------------------------------
2,400 Aptargroup, Inc. 50,700
----------------------------------------------------------------------
800 Arrow Int'l, Inc. 18,200
----------------------------------------------------------------------
500 Astro Medical, Inc. 6,125
----------------------------------------------------------------------
700 Atkinson Guy F. Co. 6,825
----------------------------------------------------------------------
2,600 * Atmel Corp. 71,500
----------------------------------------------------------------------
700 * Audiovox Corp., Class A 12,338
----------------------------------------------------------------------
1,900 Baldor Electric Co. 54,150
----------------------------------------------------------------------
700 Barnes Group, Inc. 22,750
----------------------------------------------------------------------
1,200 Bearings, Inc. 34,200
----------------------------------------------------------------------
300 * Bel Fuse, Inc. 2,738
----------------------------------------------------------------------
800 BHA Group, Inc., Class A 8,400
----------------------------------------------------------------------
315 Binks Manufacturing Co. 7,052
----------------------------------------------------------------------
500 Blount, Inc., Class A 10,188
----------------------------------------------------------------------
600 * BMC West Corp. 15,150
----------------------------------------------------------------------
900 Brady W H Co., Class A 33,300
----------------------------------------------------------------------
1,200 Brenco, Inc. 13,650
----------------------------------------------------------------------
4,400 BWIP Holding Inc., Class A 102,850
----------------------------------------------------------------------
600 Cascade Corp. 11,888
----------------------------------------------------------------------
1,600 * C D I Corp. 15,800
----------------------------------------------------------------------
1,600 * Cellpro, Inc. 46,800
----------------------------------------------------------------------
6,800 Chambers Development, Inc., Class A 27,200
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
CAPITAL GOODS--CONTINUED
----------------------------------------------------------------------
1,700 Chart Industries Inc. $ 9,350
----------------------------------------------------------------------
300 Cherry Corp. 5,588
----------------------------------------------------------------------
2,100 * Clark Equipment Co. 109,200
----------------------------------------------------------------------
900 * Clean Harbors, Inc. 6,075
----------------------------------------------------------------------
2,800 * CMI Corp., Class A 17,850
----------------------------------------------------------------------
700 Cohu Inc. 14,350
----------------------------------------------------------------------
2,000 * Cognex Corp. 31,000
----------------------------------------------------------------------
1,600 * Coherent, Inc. 23,200
----------------------------------------------------------------------
1,700 Core Industries, Inc. 22,950
----------------------------------------------------------------------
1,800 Daniel Industries, Inc. 26,100
----------------------------------------------------------------------
1,600 Delta Queen Steamboat 26,000
----------------------------------------------------------------------
1,900 Donaldson, Inc. 80,038
----------------------------------------------------------------------
840 * D R Horton Inc. 12,810
----------------------------------------------------------------------
1,000 * Dovatron International Inc. 25,250
----------------------------------------------------------------------
2,100 Duriron, Inc. 47,250
----------------------------------------------------------------------
1,000 * Electromedics, Inc. 4,625
----------------------------------------------------------------------
600 * Emcon 3,900
----------------------------------------------------------------------
3,500 * Environsource, Inc. 11,375
----------------------------------------------------------------------
2,900 * Envirotest System Corp., Class A 55,100
----------------------------------------------------------------------
2,900 Fisher Scientific International, Inc. 97,513
----------------------------------------------------------------------
2,100 * Flow International Corp. 15,488
----------------------------------------------------------------------
700 Fluke John Manufacturing, Inc. 17,325
----------------------------------------------------------------------
800 * Forshne Group, Inc. 13,200
----------------------------------------------------------------------
800 Franklin Electronics, Inc. 28,000
----------------------------------------------------------------------
1,300 Furon Co. 18,200
----------------------------------------------------------------------
1,700 Galveston Houston Co. 7,438
----------------------------------------------------------------------
900 Gleason Corp. 12,825
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
CAPITAL GOODS--CONTINUED
----------------------------------------------------------------------
900 Gorman Rupp Co. $ 24,075
----------------------------------------------------------------------
3,800 Goulds Pumps Inc. 100,700
----------------------------------------------------------------------
800 Graco, Inc. 25,600
----------------------------------------------------------------------
1,200 * Groundwater Technology, Inc. 13,800
----------------------------------------------------------------------
500 Hach Co. 10,438
----------------------------------------------------------------------
1,400 * Harman International Industries, Inc. 29,925
----------------------------------------------------------------------
1,200 Hexcel Corp. 8,700
----------------------------------------------------------------------
1,000 * Harmon Industries Inc. 18,500
----------------------------------------------------------------------
5,100 Harnischfeger Industries, Inc. 112,838
----------------------------------------------------------------------
900 Horsehead Resource Dev., Inc. 4,050
----------------------------------------------------------------------
400 Hughes Supply, Inc. 7,050
----------------------------------------------------------------------
3,500 * ICF International, Inc. 16,625
----------------------------------------------------------------------
2,100 * Idex Corp. 69,038
----------------------------------------------------------------------
2,900 Imo Industries, Inc. 22,113
----------------------------------------------------------------------
1,166 Insituform Mid American, Inc. 16,033
----------------------------------------------------------------------
1,000 * Integrated Waste Services, Inc. 7,375
----------------------------------------------------------------------
7,600 * Intergraph Corp. 84,550
----------------------------------------------------------------------
3,600 * Interlake Corp. 10,350
----------------------------------------------------------------------
1,200 Intermedia Communications 18,300
----------------------------------------------------------------------
4,400 * International Technology Corp. 16,500
----------------------------------------------------------------------
3,500 * Joy Technologies, Inc. 38,500
----------------------------------------------------------------------
3,100 Juno Lighting, Inc. 62,000
----------------------------------------------------------------------
7,000 * JWP, Inc. 7,438
----------------------------------------------------------------------
2,900 Kaydon Corp. 61,263
----------------------------------------------------------------------
1,700 Kennametal, Inc. 68,213
----------------------------------------------------------------------
1,000 * Kent Electronics Corp. 26,125
----------------------------------------------------------------------
1,000 Kuhlman Corp. 16,750
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
CAPITAL GOODS--CONTINUED
----------------------------------------------------------------------
2,200 * Lamson & Sessions Co. $ 11,000
----------------------------------------------------------------------
1,400 Lawson Products, Inc. 37,800
----------------------------------------------------------------------
700 * Lindsay Manufacturing Co. 23,625
----------------------------------------------------------------------
3,000 * Magnetek, Inc. 45,375
----------------------------------------------------------------------
1,600 Manitowoc, Inc. 52,000
----------------------------------------------------------------------
700 * Martech USA, Inc. 5,600
----------------------------------------------------------------------
1,800 * Material Sciences Corp. 43,650
----------------------------------------------------------------------
1,000 * Maverick Tube Corp. 13,500
----------------------------------------------------------------------
2,500 Measurex Corp. 47,188
----------------------------------------------------------------------
700 * Mestek, Inc. 5,950
----------------------------------------------------------------------
300 * Micros Systems Corp. 5,513
----------------------------------------------------------------------
3,400 Mid American Waste Systems, Inc. 27,625
----------------------------------------------------------------------
1,700 Moorco International, Inc. 26,138
----------------------------------------------------------------------
600 MTS Systems Corp. 18,450
----------------------------------------------------------------------
1,400 NACCO Industries, Inc., Class A 60,375
----------------------------------------------------------------------
600 * NCI Building Systems, Inc. 10,200
----------------------------------------------------------------------
800 Newcor, Inc. 10,600
----------------------------------------------------------------------
2,300 Nortek, Inc. 16,100
----------------------------------------------------------------------
2,500 * Novellus Systems, Inc. 68,750
----------------------------------------------------------------------
900 * Noxso Corp. 7,200
----------------------------------------------------------------------
2,700 * Oaks Industries, Inc. 48,600
----------------------------------------------------------------------
700 * OHM Corp. 8,400
----------------------------------------------------------------------
3,100 * Omega Environment Inc. 44,175
----------------------------------------------------------------------
700 * Osmonics, Inc. 13,825
----------------------------------------------------------------------
500 Park Electrochemical Corp. 8,500
----------------------------------------------------------------------
1,100 * Park-Ohio Industries, Inc. 14,575
----------------------------------------------------------------------
3,200 * PEC Israel Economic Corp. 102,000
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
CAPITAL GOODS--CONTINUED
----------------------------------------------------------------------
200 Penn Engineering & Manufacturing Corp. $ 9,200
----------------------------------------------------------------------
1,700 Pioneer Standard Electronics, Inc. 33,788
----------------------------------------------------------------------
800 * Powell Industries, Inc. 5,800
----------------------------------------------------------------------
600 * Presstek Inc. 15,000
----------------------------------------------------------------------
800 * Raymond Corp. 13,200
----------------------------------------------------------------------
1,700 Regal Beloit Corp. 37,400
----------------------------------------------------------------------
700 Richardson Electronics Ltd. 4,725
----------------------------------------------------------------------
400 Robbins & Myers, Inc. 7,350
----------------------------------------------------------------------
9,900 Rollins Environmental Services, Inc. 51,975
----------------------------------------------------------------------
1,800 Roper Industries Inc. 63,000
----------------------------------------------------------------------
1,300 Saint Mary Ld & Expl Co. 18,850
----------------------------------------------------------------------
2,300 * Sanifill, Inc. 40,825
----------------------------------------------------------------------
1,200 Scotsman Industries, Inc. 14,850
----------------------------------------------------------------------
500 * Sevenson Environmental Services 7,250
----------------------------------------------------------------------
1,100 * Sierra Semi Conductor Corp. 8,800
----------------------------------------------------------------------
2,600 * Silicon Valley Group, Inc. 28,925
----------------------------------------------------------------------
700 SPS Technologies, Inc. 19,688
----------------------------------------------------------------------
2,300 SPX Corp. 39,675
----------------------------------------------------------------------
2,000 Standex International Corp. 43,250
----------------------------------------------------------------------
1,300 Sturm Ruger & Co., Inc. 41,113
----------------------------------------------------------------------
600 Synalloy Corp 8,550
----------------------------------------------------------------------
800 Tennant Co. 33,600
----------------------------------------------------------------------
800 Terex Corp. 6,100
----------------------------------------------------------------------
1,600 * Tetra Technologies, Inc. 12,400
----------------------------------------------------------------------
1,000 * Thermo Fibertek Inc. 14,250
----------------------------------------------------------------------
800 * Thermo Process Systems, Inc. 6,700
----------------------------------------------------------------------
1,800 Thomas Industries, Inc. 22,275
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
CAPITAL GOODS--CONTINUED
----------------------------------------------------------------------
1,000 Tokheim Corp. $ 12,750
----------------------------------------------------------------------
2,600 Trimas Corp. 53,625
----------------------------------------------------------------------
1,100 * U.S. Filter Corp. 26,125
----------------------------------------------------------------------
1,200 * Unique Mobility Inc. 10,200
----------------------------------------------------------------------
1,400 United Industrial Corp. 8,575
----------------------------------------------------------------------
700 * United Waste System Inc. 9,450
----------------------------------------------------------------------
500 * USA Waste Services Inc. 5,438
----------------------------------------------------------------------
1,100 Valmont Industries, Inc. 16,500
----------------------------------------------------------------------
900 * Vans, Inc. 5,400
----------------------------------------------------------------------
4,300 * VMX, Inc. 16,125
----------------------------------------------------------------------
900 * Wahlco Environmental Systems, Inc. 4,725
----------------------------------------------------------------------
1,800 Watts Industries Inc., Class A 82,800
----------------------------------------------------------------------
1,300 * Western Waste Industries 16,900
----------------------------------------------------------------------
900 Wheatley TXT Corp. 10,800
----------------------------------------------------------------------
3,100 Willcox & Gibbs, Inc. 22,475
----------------------------------------------------------------------
1,100 Woodhead Industries 17,050
----------------------------------------------------------------------
2,900 * Worldtex, Inc. 19,575
----------------------------------------------------------------------
1,200 Wyman Gordon Co. 6,000
----------------------------------------------------------------------
1,200 X-Rite, Inc. 25,800
----------------------------------------------------------------------
2,800 Zero Corp. 42,000
----------------------------------------------------------------------
2,100 Zurn Industries, Inc. 56,700
---------------------------------------------------------------------- -----------
Total 4,309,146
---------------------------------------------------------------------- -----------
CONSUMER BASICS--12.3%
----------------------------------------------------------------------
1,900 A L Laboratories, Inc., Class A 30,163
----------------------------------------------------------------------
1,000 * Abbey Healthcare Group, Inc. 24,250
----------------------------------------------------------------------
1,100 * Abiomed, Inc. 9,900
----------------------------------------------------------------------
900 * Advanced Magnetics, Inc. 11,138
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
CONSUMER BASICS--CONTINUED
----------------------------------------------------------------------
600 * Advanced Medical, Inc. $ 900
----------------------------------------------------------------------
4,900 * Advanced Tissue Sciences, Inc. 43,488
----------------------------------------------------------------------
300 * Advantage Health Corp. 3,675
----------------------------------------------------------------------
1,100 * Agouron Pharmaceuticals, Inc. 12,100
----------------------------------------------------------------------
2,400 * Airgas, Inc. 99,000
----------------------------------------------------------------------
600 Alico, Inc. 11,400
----------------------------------------------------------------------
2,700 * Alliance Pharmaceutical Corp. 25,650
----------------------------------------------------------------------
1,200 * Allied Clinical Laboratories, Inc. 21,000
----------------------------------------------------------------------
1,000 * Alpha 1 Biomedicals, Inc. 22,250
----------------------------------------------------------------------
1,500 * Alpine Group, Inc. 13,688
----------------------------------------------------------------------
1,000 * Alteon, Inc. 9,250
----------------------------------------------------------------------
2,500 * American Biogenetic Sciences, Class A 13,438
----------------------------------------------------------------------
3,200 * American Healthcare Management Inc. 20,400
----------------------------------------------------------------------
1,600 * American Healthcorp, Inc. 37,200
----------------------------------------------------------------------
900 American Maize Products Co., Class A 14,963
----------------------------------------------------------------------
2,800 * Amylin Pharmaceuticals, Inc. 36,400
----------------------------------------------------------------------
400 * Andros, Inc. 5,900
----------------------------------------------------------------------
400 * Aphton Corp. 7,900
----------------------------------------------------------------------
5,000 * Applied Bioscience International, Inc. 29,375
----------------------------------------------------------------------
1,574 * Applied Immune Sciences, Inc. 20,856
----------------------------------------------------------------------
200 * Arden Group, Inc. 10,500
----------------------------------------------------------------------
700 Armor All Products Corp. 11,988
----------------------------------------------------------------------
2,700 * Athena Neurosciences, Inc. 32,738
----------------------------------------------------------------------
4,000 * Aura Systems, Inc. 29,250
----------------------------------------------------------------------
1,200 * Auto Immune, Inc. 9,000
----------------------------------------------------------------------
4,700 Ballard Medical Products 79,313
----------------------------------------------------------------------
700 * Barefoot, Inc. 21,788
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
CONSUMER BASICS--CONTINUED
----------------------------------------------------------------------
600 * Barr Laboratories, Inc. $ 13,800
----------------------------------------------------------------------
1,100 * Ben & Jerry's Homemade, Inc. 20,625
----------------------------------------------------------------------
100 * Benson Eyecare Corp. 800
----------------------------------------------------------------------
1,300 Bindley Western Industries, Inc. 15,600
----------------------------------------------------------------------
3,200 * Bio Technology General Corp. 17,000
----------------------------------------------------------------------
900 Biocraft Laboratories, Inc. 30,262
----------------------------------------------------------------------
800 BioWhittaker, Inc. 4,800
----------------------------------------------------------------------
400 Bridgford Food Corp. 4,400
----------------------------------------------------------------------
700 * Buttrey Food & Drug Stores Co. 4,900
----------------------------------------------------------------------
785 * Cabot Medical Corp. 4,612
----------------------------------------------------------------------
4,000 * Calgene, Inc. 68,500
----------------------------------------------------------------------
3,300 * Cambridge Biotech Corp. 11,138
----------------------------------------------------------------------
1,600 * Cambridge Neuroscience, Inc. 14,800
----------------------------------------------------------------------
2,500 * Cardinal Distribution Inc. 107,500
----------------------------------------------------------------------
800 * Carrington Laboratories, Inc. 10,300
----------------------------------------------------------------------
1,300 Casey's General Stores, Inc. 27,625
----------------------------------------------------------------------
3,600 * Cel-Sci Corp. 5,400
----------------------------------------------------------------------
1,100 * Celgene Corp. 9,625
----------------------------------------------------------------------
1,400 * Celtrix Pharmaceuticals 13,650
----------------------------------------------------------------------
7,500 * Centocor, Inc. 97,500
----------------------------------------------------------------------
1,600 * Cephalon, Inc. 25,600
----------------------------------------------------------------------
4,500 * Charter Medical Corp. 113,063
----------------------------------------------------------------------
800 Chattem, Inc. 6,800
----------------------------------------------------------------------
1,600 Chemed Corp. 50,200
----------------------------------------------------------------------
1,300 * Chemtrak Inc. 5,363
----------------------------------------------------------------------
1,751 * Chock Full O'Nuts Corp. 16,853
----------------------------------------------------------------------
3,300 * Circa Pharmaceuticals, Inc. 41,250
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
CONSUMER BASICS--CONTINUED
----------------------------------------------------------------------
600 * Circon Corp. $ 8,400
----------------------------------------------------------------------
800 * Coastal Healthcare Group, Inc. 23,600
----------------------------------------------------------------------
800 Coca Cola Bottling Co. 29,600
----------------------------------------------------------------------
1,700 * Collagen Corp. 45,475
----------------------------------------------------------------------
2,700 * Columbia Laboratories, Inc. 15,863
----------------------------------------------------------------------
1,000 * Community Health Systems, Inc. 26,250
----------------------------------------------------------------------
7,800 Community Psychiatric Centers 109,200
----------------------------------------------------------------------
1,200 * Copley Pharmaceutical 57,600
----------------------------------------------------------------------
2,600 * Cordis Corp. 103,350
----------------------------------------------------------------------
475 Corning Inc. 12,291
----------------------------------------------------------------------
1,700 * Coventry Corp. 66,300
----------------------------------------------------------------------
1,600 Craig Corp. 23,600
----------------------------------------------------------------------
900 Crown Crafts, Inc. 15,638
----------------------------------------------------------------------
3,000 * Cryomedical Sciences, Inc. 13,125
----------------------------------------------------------------------
400 Culbro Corp. 6,200
----------------------------------------------------------------------
800 Curtice-Burns Foods, Inc., Class A 10,900
----------------------------------------------------------------------
1,900 * Cygnus Therapeutic Systems 17,338
----------------------------------------------------------------------
1,400 * Cytel Corp. 7,000
----------------------------------------------------------------------
3,600 * Cytogen Corp. 27,900
----------------------------------------------------------------------
1,300 * Cyto Therapeutics Inc. 16,413
----------------------------------------------------------------------
5,200 * Cytrex Corp. 33,800
----------------------------------------------------------------------
2,200 * Datascope Corp. 36,300
----------------------------------------------------------------------
800 Dekalb Genetics Corp., Class B 21,600
----------------------------------------------------------------------
800 Delchamps, Inc. 19,000
----------------------------------------------------------------------
3,900 * Diagnostek, Inc. 70,200
----------------------------------------------------------------------
1,800 Diagnostic Products Corp. 33,300
----------------------------------------------------------------------
1,800 * Diasonics, Inc. 5,400
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
CONSUMER BASICS--CONTINUED
----------------------------------------------------------------------
2,200 Dibrell Bros., Inc. $ 66,000
----------------------------------------------------------------------
2,900 * DNA Plant Technology 18,125
----------------------------------------------------------------------
1,000 * Doskocil Cos., Inc. 11,000
----------------------------------------------------------------------
2,200 Dreyers Grand Ice Cream, Inc. 66,000
----------------------------------------------------------------------
1,300 Drug Emporium, Inc. 7,150
----------------------------------------------------------------------
1,900 * Eagle Food Centers, Inc. 11,163
----------------------------------------------------------------------
2,900 * Ekco Group, Inc. 23,200
----------------------------------------------------------------------
900 * Empire of Carolina, Inc. 5,513
----------------------------------------------------------------------
1,100 * Employee Benefit Plans, Inc. 10,863
----------------------------------------------------------------------
2,100 * Enzo Biochem Corp. 35,175
----------------------------------------------------------------------
3,100 * Enzon Inc. 15,113
----------------------------------------------------------------------
1,300 * Epitope, Inc. 29,738
----------------------------------------------------------------------
600 Eskimo Pie Corp. 10,650
----------------------------------------------------------------------
200 Farmer Bros. Co. 30,600
----------------------------------------------------------------------
1,800 * Focal Surgery Inc. 1,350
----------------------------------------------------------------------
400 Frankford Corp. 12,200
----------------------------------------------------------------------
1,600 * Franklin Quest Co. 51,200
----------------------------------------------------------------------
100 * Fresenius USA Inc. 825
----------------------------------------------------------------------
700 * Fresh Choice Inc. 18,550
----------------------------------------------------------------------
1,800 * Gencare Health Systems, Inc. 50,850
----------------------------------------------------------------------
2,000 * Genesis Health Ventures, Inc. 35,500
----------------------------------------------------------------------
1,700 * Genetic Therapy, Inc. 31,450
----------------------------------------------------------------------
3,300 * Gensia, Inc. 93,638
----------------------------------------------------------------------
3,100 * Gilead Sciences Inc. 44,175
----------------------------------------------------------------------
1,900 * Glycomed, Inc. 15,200
----------------------------------------------------------------------
800 Golden Enterprises, Inc. 6,400
----------------------------------------------------------------------
660 Golden Poultry, Inc. 5,610
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
CONSUMER BASICS--CONTINUED
----------------------------------------------------------------------
1,000 * Graham Field Health Products, Inc. $ 5,125
----------------------------------------------------------------------
1,600 * Grancare, Inc. 25,200
----------------------------------------------------------------------
4,400 * Greenwich Pharmaceuticals, Inc. 11,000
----------------------------------------------------------------------
1,100 * Grist Mill Co. 6,325
----------------------------------------------------------------------
1,500 * Hallmark Healthcare Co. 20,250
----------------------------------------------------------------------
800 * Hanger Orthopedic Group 5,000
----------------------------------------------------------------------
1,500 * Hauser Chemical Research, Inc. 13,500
----------------------------------------------------------------------
500 * Health Infusion, Inc. 3,438
----------------------------------------------------------------------
3,400 * Health Management Assoc., Class A 126,650
----------------------------------------------------------------------
1,800 * Health Professionals, Inc. 2,700
----------------------------------------------------------------------
6,300 * Healthcare Compare Corp. 138,600
----------------------------------------------------------------------
600 Healthcare Services Group, Inc. 5,775
----------------------------------------------------------------------
2,300 * Healthdyne, Inc. 16,388
----------------------------------------------------------------------
5,200 * Healthsouth Rehabilitation 92,300
----------------------------------------------------------------------
2,350 * Healthsource, Inc. 109,863
----------------------------------------------------------------------
766 * Heartland Express, Inc. 25,661
----------------------------------------------------------------------
800 * Heart Technology Inc. 18,600
----------------------------------------------------------------------
3,500 Herbalife International, Inc. 54,688
----------------------------------------------------------------------
14,900 * Hillhaven Corp. 58,669
----------------------------------------------------------------------
900 * Home Nutritional Services, Inc. 4,725
----------------------------------------------------------------------
500 Home Office Reference Laboratories, Inc. 9,500
----------------------------------------------------------------------
1,600 * Homedco Group, Inc. 48,000
----------------------------------------------------------------------
900 Hooper Holmes, Inc. 11,813
----------------------------------------------------------------------
1,100 * Horizon Healthcare Corp. 17,738
----------------------------------------------------------------------
1,000 Hudson Foods, Inc. 12,750
----------------------------------------------------------------------
1,400 * I-STAT Corp. 25,200
----------------------------------------------------------------------
1,800 ICN Biomedicals, Inc. 9,450
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
CONSUMER BASICS--CONTINUED
----------------------------------------------------------------------
3,400 * ICN Pharmaceuticals, Inc. $ 37,825
----------------------------------------------------------------------
3,000 * ICOS Corp. 19,125
----------------------------------------------------------------------
900 * ICU Medical Inc. 12,375
----------------------------------------------------------------------
2,800 * IDEXX Laboratories, Inc. 70,700
----------------------------------------------------------------------
1,600 * IG Laboratories Inc. 15,000
----------------------------------------------------------------------
1,200 * IGI Inc. 11,850
----------------------------------------------------------------------
1,900 * Immulogic Pharmaceutical Corp. 20,900
----------------------------------------------------------------------
2,200 * Immune Response Corp. 27,775
----------------------------------------------------------------------
2,500 * Immunex Corp. 43,125
----------------------------------------------------------------------
1,900 * Immunogen, Inc. 16,625
----------------------------------------------------------------------
2,700 * Immunomedics, Inc. 17,888
----------------------------------------------------------------------
900 Imperial Holly Corp. 9,000
----------------------------------------------------------------------
1,200 * In Home Health 4,275
----------------------------------------------------------------------
1,300 * Infrasonic, Inc. 7,313
----------------------------------------------------------------------
1,000 Ingles Markets, Inc. 8,750
----------------------------------------------------------------------
6,400 * Instrument System Corp. 57,600
----------------------------------------------------------------------
2,200 * Integrated Health Services, Inc. 64,900
----------------------------------------------------------------------
500 * Intergroup Healthcare 17,250
----------------------------------------------------------------------
2,800 * International Dairy Queen Inc., Class A 43,400
----------------------------------------------------------------------
2,400 * Interneuron Pharmaceuticals 21,300
----------------------------------------------------------------------
3,500 Interstate Bakeries Corp. 49,875
----------------------------------------------------------------------
2,000 Invacare Corp. 50,500
----------------------------------------------------------------------
700 * Invitro International 9,188
----------------------------------------------------------------------
1,000 * Ionics, Inc. 50,250
----------------------------------------------------------------------
1,900 * Isis Pharmaceuticals 15,200
----------------------------------------------------------------------
1,000 * Isomedix, Inc. 19,125
----------------------------------------------------------------------
1,100 * J & J Snack Foods Corp. 21,313
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
CONSUMER BASICS--CONTINUED
----------------------------------------------------------------------
1,350 * Jason, Inc. $ 15,863
----------------------------------------------------------------------
1,000 * Jean Phillippe Fragrances, Inc. 15,000
----------------------------------------------------------------------
1,000 * Jones Medical Industries, Inc. 16,750
----------------------------------------------------------------------
2,500 Life Technologies, Inc. 44,375
----------------------------------------------------------------------
1,800 * Ligand Pharmaceuticals, Class A 22,050
----------------------------------------------------------------------
2,300 * Lincare Holdings Inc. 100,625
----------------------------------------------------------------------
2,800 * Liposome Technology, Inc. 38,500
----------------------------------------------------------------------
4,000 * Liposome, Inc. 28,500
----------------------------------------------------------------------
1,400 * Living Centers American Inc. 31,325
----------------------------------------------------------------------
100 * Longhorn Steaks Inc. 738
----------------------------------------------------------------------
600 * Lunar Corp. 7,050
----------------------------------------------------------------------
132 * Lynx Therapeutic, Inc. 26
----------------------------------------------------------------------
1,800 * Magainin Pharmaceuticals 23,400
----------------------------------------------------------------------
1,000 * Marsam Pharmaceuticals, Inc. 24,250
----------------------------------------------------------------------
800 * Matrix Pharmaceuticals 9,000
----------------------------------------------------------------------
1,800 * Maxicare Health Plans, Inc. 20,700
----------------------------------------------------------------------
800 * Maxxim Medical, Inc. 14,500
----------------------------------------------------------------------
1,100 * Medchem Products, Inc. 7,288
----------------------------------------------------------------------
1,900 * Medco Research, Inc. 22,563
----------------------------------------------------------------------
1,528 Medeva PLC 10,504
----------------------------------------------------------------------
900 Medex, Inc. 13,050
----------------------------------------------------------------------
6,600 * Medical Care America, Inc. 164,175
----------------------------------------------------------------------
900 Medicine Shoppe International, Inc. 20,925
----------------------------------------------------------------------
1,100 * Medimmune, Inc. 23,375
----------------------------------------------------------------------
700 * Mediplex Group, Inc. 17,850
----------------------------------------------------------------------
900 Mediq, Inc. 4,219
----------------------------------------------------------------------
600 * Medrad, Inc. 7,950
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
CONSUMER BASICS--CONTINUED
----------------------------------------------------------------------
113 * Mental Health Management, Inc. $ 464
----------------------------------------------------------------------
1,400 Mentor Corp. 20,650
----------------------------------------------------------------------
700 Meridian Diognostic 6,475
----------------------------------------------------------------------
600 * Meris Laboratories, Inc. 2,925
----------------------------------------------------------------------
1,900 * MGI Pharmaceutical, Inc. 27,550
----------------------------------------------------------------------
2,000 Michaels Foods 18,250
----------------------------------------------------------------------
2,400 * Mid Atlantic Medical Services, Inc. 72,600
----------------------------------------------------------------------
800 Midwest Grain Products, Inc. 19,400
----------------------------------------------------------------------
700 Mine Safety Appliances Co. 31,500
----------------------------------------------------------------------
500 * Minntech Corp. 4,813
----------------------------------------------------------------------
400 * Mitek Surgical Products, Inc. 8,750
----------------------------------------------------------------------
2,000 * Molecular Biosystems, Inc. 49,500
----------------------------------------------------------------------
1,500 * Molecular Dynamics, Inc. 18,275
----------------------------------------------------------------------
800 Monk--Austin, Inc. 12,300
----------------------------------------------------------------------
800 * Mr. Coffee, Inc. 7,200
----------------------------------------------------------------------
1,800 * National Vision Association 19,575
----------------------------------------------------------------------
1,100 * Namic USA Corp. 9,075
----------------------------------------------------------------------
1,900 Nash Finch Co. 38,000
----------------------------------------------------------------------
1,800 National Health Investors, Inc. 52,650
----------------------------------------------------------------------
2,800 * National Intergroup, Inc. 43,050
----------------------------------------------------------------------
800 * Nature's Bounty, Inc. 13,300
----------------------------------------------------------------------
1,233 Natures Sunshine Products, Inc. 13,563
----------------------------------------------------------------------
2,800 * Nellcor, Inc. 63,700
----------------------------------------------------------------------
2,000 * Neorx Corp. 4,938
----------------------------------------------------------------------
2,600 Neutrogena Corp. 50,050
----------------------------------------------------------------------
1,200 * Noven Pharmaceuticals, Inc. 15,450
----------------------------------------------------------------------
1,800 * OEC Medical Systems, Inc. 13,275
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
CONSUMER BASICS--CONTINUED
----------------------------------------------------------------------
1,000 Omega Healthcare Investors $ 25,000
----------------------------------------------------------------------
1,500 Omnicare, Inc. 41,250
----------------------------------------------------------------------
2,300 * Oncogene Science, Inc. 10,063
----------------------------------------------------------------------
2,400 * Oncor, Inc. 21,000
----------------------------------------------------------------------
900 * Optical Radiation Corp. 13,725
----------------------------------------------------------------------
1,500 * Organogenesis, Inc. 12,000
----------------------------------------------------------------------
3,300 * Ornda Healthcorp 48,675
----------------------------------------------------------------------
3,650 Owens & Minor, Inc. 78,475
----------------------------------------------------------------------
2,200 * Oxford Health Plans, Inc. 86,900
----------------------------------------------------------------------
600 * Pacific Physician Services, Inc. 12,900
----------------------------------------------------------------------
1,200 * Patterson Dental Co. 38,700
----------------------------------------------------------------------
1,500 * Penn Traffic Co. 57,000
----------------------------------------------------------------------
1,100 Penwest Ltd. 22,825
----------------------------------------------------------------------
1,100 * Pharmaceutical Marketing Services 15,675
----------------------------------------------------------------------
2,075 * Pharmos Corp. 17,897
----------------------------------------------------------------------
700 * Phycor, Inc. 20,125
----------------------------------------------------------------------
500 * Physicians Clinical Lab 6,250
----------------------------------------------------------------------
900 * Physicians Health Services 15,863
----------------------------------------------------------------------
900 Pilgrims Pride Corp. 7,200
----------------------------------------------------------------------
1,400 PMC Cap, Inc. 18,550
----------------------------------------------------------------------
2,100 * Preferred Healthcare Ltd. 64,575
----------------------------------------------------------------------
3,100 * Primark Corp. 39,913
----------------------------------------------------------------------
4,300 * Primedex Health Systems, Inc. 15,050
----------------------------------------------------------------------
1,400 * Procyte Corp. 22,050
----------------------------------------------------------------------
1,500 * Protein Design Laboratories, Inc. 31,500
----------------------------------------------------------------------
1,000 * Pure Pacific 22,500
----------------------------------------------------------------------
1,900 Puritan Bennett Corp. 31,350
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
CONSUMER BASICS--CONTINUED
----------------------------------------------------------------------
2,000 Purolator Prods Co. $ 38,000
----------------------------------------------------------------------
2,200 * Quantum Health Research, Inc. 59,950
----------------------------------------------------------------------
2,500 * Quidel Corp. 12,500
----------------------------------------------------------------------
3,100 * Radiation Care Inc. 6,588
----------------------------------------------------------------------
1,000 * Ramsay HMO, Inc. 30,250
----------------------------------------------------------------------
800 * Regency Health Services Inc. 9,000
----------------------------------------------------------------------
2,100 * Regeneron Pharmaceuticals, Inc. 38,325
----------------------------------------------------------------------
700 * Rehabclinics Inc. 14,000
----------------------------------------------------------------------
900 * Relife, Ince. 11,025
----------------------------------------------------------------------
1,900 * Ren Corp. USA 20,425
----------------------------------------------------------------------
1,400 * Repligen Corp. 11,550
----------------------------------------------------------------------
1,600 * Research Industries Corp. 13,600
----------------------------------------------------------------------
1,100 * Respironics, Inc. 21,450
----------------------------------------------------------------------
4,300 * Response Technologies, Inc. 10,481
----------------------------------------------------------------------
1,700 * Ribi Immunochem Research, Inc. 12,113
----------------------------------------------------------------------
3,600 Richfood Holdings, Inc. 56,700
----------------------------------------------------------------------
800 * Riser Foods, Inc. 6,800
----------------------------------------------------------------------
500 RLI Corp. 12,500
----------------------------------------------------------------------
1,500 * Roberts Pharmaceutical Corp. 58,125
----------------------------------------------------------------------
400 * Rotech Medical Corp 5,200
----------------------------------------------------------------------
4,200 * Royce Labs 11,550
----------------------------------------------------------------------
2,000 Ruddick Corp. 43,250
----------------------------------------------------------------------
1,800 Rykoff S E & Co. 33,075
----------------------------------------------------------------------
1,000 * Salick Healthcare, Inc. 15,750
----------------------------------------------------------------------
800 Sanderson Farms, Inc. 12,400
----------------------------------------------------------------------
4,500 Savannah Foods & Industries, Inc. 68,625
----------------------------------------------------------------------
300 * Scherer Healthcare, Inc. 6,488
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
CONSUMER BASICS--CONTINUED
----------------------------------------------------------------------
800 * Sciclone Pharmaceuticals $ 19,100
----------------------------------------------------------------------
5,500 * Scios Nova, Inc. 60,500
----------------------------------------------------------------------
100 Seaboard Corp. 18,800
----------------------------------------------------------------------
900 * Seragen Inc. 8,775
----------------------------------------------------------------------
1,600 * Shaman Pharmaceuticals, Inc. 20,400
----------------------------------------------------------------------
1,300 * Sierra Healthservices, Inc. 21,288
----------------------------------------------------------------------
1,900 * Smithfield Foods, Inc. 29,925
----------------------------------------------------------------------
1,900 * Solv Ex Corp. 10,806
----------------------------------------------------------------------
2,200 * Somatix Therapy Corp. 17,050
----------------------------------------------------------------------
1,300 * Somatogen, Inc. 15,275
----------------------------------------------------------------------
1,800 * Spacelabs, Inc. 42,750
----------------------------------------------------------------------
900 Standard Commercial Inc. 14,850
----------------------------------------------------------------------
3,200 Stanhome Inc. 88,800
----------------------------------------------------------------------
1,200 Starrett L S Co., Class A 29,550
----------------------------------------------------------------------
600 Stepan Chemical Co. 17,775
----------------------------------------------------------------------
700 * Sullivan Dental Products, Inc. 13,125
----------------------------------------------------------------------
400 * Summit Care Corp. 6,200
----------------------------------------------------------------------
1,900 Summit Health Ltd. 13,063
----------------------------------------------------------------------
2,900 * Summit Technology, Inc. 74,675
----------------------------------------------------------------------
2,500 Sunrise Medical Inc. 61,875
----------------------------------------------------------------------
800 * Sunrise Technologies, Inc. 4,500
----------------------------------------------------------------------
2,000 Super Food Services, Inc. 23,000
----------------------------------------------------------------------
800 * Super Rite Foods Holdings Corp. 8,400
----------------------------------------------------------------------
3,800 * Sybron Corp. 106,400
----------------------------------------------------------------------
1,500 * Syncor International Corp. 26,250
----------------------------------------------------------------------
4,200 * Synergen Inc. 60,375
----------------------------------------------------------------------
700 * Systemix Inc. 14,000
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
CONSUMER BASICS--CONTINUED
----------------------------------------------------------------------
7,300 * T2 Medical Inc. $ 56,575
----------------------------------------------------------------------
1,800 * Taco Cabana Inc. 37,350
----------------------------------------------------------------------
1,000 * Takecare, Inc. 45,125
----------------------------------------------------------------------
800 Tasty Baking Corp. 11,000
----------------------------------------------------------------------
1,200 * Techne Corp. 15,900
----------------------------------------------------------------------
2,400 * Technological Medical Products, Inc. 40,200
----------------------------------------------------------------------
1,300 Tejon Ranch Co. 20,475
----------------------------------------------------------------------
2,800 * Telios Pharmaceuticals 18,550
----------------------------------------------------------------------
800 * Theratech Inc. Utah 12,600
----------------------------------------------------------------------
1,400 * Thermedics, Inc. 36,050
----------------------------------------------------------------------
800 * Thermo Cardiosystems, Inc. 28,500
----------------------------------------------------------------------
1,950 * Thermotrex Corp. 29,006
----------------------------------------------------------------------
2,900 * Tokos Medical Corp. Del 18,850
----------------------------------------------------------------------
300 Thorn Apple Valley, Inc. 5,250
----------------------------------------------------------------------
2,100 * Total Pharmaceutical Care, Inc. 47,775
----------------------------------------------------------------------
700 * Triconex Corp. 10,150
----------------------------------------------------------------------
1,600 * Trimedyne Corp. 13,000
----------------------------------------------------------------------
5,500 * U.S. Bioscience, Inc. 55,000
----------------------------------------------------------------------
3,300 * Unilab Corp. 19,800
----------------------------------------------------------------------
2,100 Univax Biologies, Inc. 18,900
----------------------------------------------------------------------
2,300 * Universal Health Services, Inc., Class B 47,438
----------------------------------------------------------------------
1,350 Utah Medical Products, Inc. 12,488
----------------------------------------------------------------------
500 * Vallen Corp. 6,875
----------------------------------------------------------------------
2,500 * Vencor Inc. 59,375
----------------------------------------------------------------------
3,500 * Ventritex, Inc. 126,000
----------------------------------------------------------------------
1,300 * Vertex Pharmaceuticals, Inc. 19,500
----------------------------------------------------------------------
1,800 * Vestar, Inc. 14,850
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
CONSUMER BASICS--CONTINUED
----------------------------------------------------------------------
900 * Viratek, Inc. $ 12,375
----------------------------------------------------------------------
1,300 * Visx, Inc. 21,775
----------------------------------------------------------------------
900 * Vital Signs, Inc. 17,100
----------------------------------------------------------------------
2,300 * Vivra, Inc. 75,325
----------------------------------------------------------------------
800 * Whole Foods Markets, Inc. 33,200
----------------------------------------------------------------------
1,600 WLR Foods, Inc. 30,400
----------------------------------------------------------------------
2,700 * Xoma Corp. 18,225
----------------------------------------------------------------------
800 * Zenith Laboratories, Inc. 64,000
----------------------------------------------------------------------
2,800 * Zila, Inc. 9,625
---------------------------------------------------------------------- -----------
Total 9,359,717
---------------------------------------------------------------------- -----------
CONSUMER DURABLES--2.9%
----------------------------------------------------------------------
3,300 Aaron Rents, Inc., Class A 37,538
----------------------------------------------------------------------
3,900 Albany International Corp. 70,200
----------------------------------------------------------------------
3,700 Allen Group, Inc 83,250
----------------------------------------------------------------------
3,300 Arctco, Inc. 76,725
----------------------------------------------------------------------
3,000 * Automotive Industries Holdings, Inc. 83,250
----------------------------------------------------------------------
2,500 * Bassett Furniture Industries, Inc. 75,625
----------------------------------------------------------------------
2,750 * Best Buy Co., Inc. 165,688
----------------------------------------------------------------------
2,400 Carlisle Cos, Inc. 80,100
----------------------------------------------------------------------
900 * Chromcraft Revington Inc. 16,650
----------------------------------------------------------------------
2,500 Clarcor, Inc. 44,375
----------------------------------------------------------------------
900 Coachmen Industries, Inc. 13,050
----------------------------------------------------------------------
200 Dart Group Corp., Class A 16,200
----------------------------------------------------------------------
800 * Discount Auto Parts, Inc. 20,400
----------------------------------------------------------------------
300 Douglas & Lomason Co. 5,250
----------------------------------------------------------------------
600 * Durakon Industries, Inc. 8,100
----------------------------------------------------------------------
600 Dynamics Corp. America 10,200
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
CONSUMER DURABLES--CONTINUED
----------------------------------------------------------------------
900 Excel Industries, Inc. $ 16,650
----------------------------------------------------------------------
600 * Falcon Products, Inc. 6,300
----------------------------------------------------------------------
3,200 Fedders USA Inc. 20,000
----------------------------------------------------------------------
1,600 * Finish Line Inc., Class A 12,800
----------------------------------------------------------------------
1,000 Flexsteel Industries, Inc. 16,000
----------------------------------------------------------------------
2,500 * Genelabs Technologies, Inc. 12,500
----------------------------------------------------------------------
400 General Housewares Corp. 5,350
----------------------------------------------------------------------
660 Genovese Drug Stores, Inc., Class A 7,013
----------------------------------------------------------------------
2,900 * Gentex Corp. 85,550
----------------------------------------------------------------------
1,600 Hayes Wheels International Inc. 38,400
----------------------------------------------------------------------
1,400 * Hi Lo Automotive, Inc. 15,575
----------------------------------------------------------------------
1,000 * Insurance Automotive Auctions, Inc. 40,500
----------------------------------------------------------------------
2,600 Interface Flooring, Inc., Class A 36,075
----------------------------------------------------------------------
1,300 Kinetic Concepts, Inc. 5,038
----------------------------------------------------------------------
800 Knape & Vogt Manufacturing Co. 17,200
----------------------------------------------------------------------
2,100 LA Z Boy Chair Co. 67,200
----------------------------------------------------------------------
3,000 Ladd Furniture, Inc. 29,250
----------------------------------------------------------------------
100 * Larizza Industries Inc. 900
----------------------------------------------------------------------
2,000 * Lechters, Inc. 23,000
----------------------------------------------------------------------
440 * Lifetime Hoan Corp. 7,590
----------------------------------------------------------------------
2,200 * Lo-Jack Corp. 11,688
----------------------------------------------------------------------
900 LSB Industries Inc. 9,675
----------------------------------------------------------------------
400 Lumex, Inc. 4,250
----------------------------------------------------------------------
500 * Monro Muffler Brake, Inc. 7,375
----------------------------------------------------------------------
1,400 Myers Industries, Inc. 32,550
----------------------------------------------------------------------
900 National Presto Industries, Inc. 49,500
----------------------------------------------------------------------
1,300 O'Sullivan Corp. 12,025
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
CONSUMER DURABLES--CONTINUED
----------------------------------------------------------------------
3,700 Oakwood Homes Corp. $ 99,900
----------------------------------------------------------------------
1,300 OshKosh Truck Corp., Class B 12,188
----------------------------------------------------------------------
1,000 * Projectivision Inc. 11,500
----------------------------------------------------------------------
300 Pulaski Furniture Corp. 5,550
----------------------------------------------------------------------
600 * Pure Tech International, Inc. 9,000
----------------------------------------------------------------------
3,100 * Royal Appliance Mfg Co. 20,538
----------------------------------------------------------------------
800 Shelby Williams Industries, Inc. 10,100
----------------------------------------------------------------------
2,100 Simpsons Industries, Inc. 36,750
----------------------------------------------------------------------
1,800 Skyline Corp. 32,175
----------------------------------------------------------------------
1,600 (A.O.) Smith Corp. 44,800
----------------------------------------------------------------------
450 * Southern Electronics Corp. 4,950
----------------------------------------------------------------------
1,500 Spartan Motors, Inc. 25,313
----------------------------------------------------------------------
1,500 Standard Motor Products, Inc., Class A 35,625
----------------------------------------------------------------------
3,025 Standard Products Co. 103,606
----------------------------------------------------------------------
4,950 * TBC Corp. 58,163
----------------------------------------------------------------------
600 Thor Industries, Inc. 12,150
----------------------------------------------------------------------
800 * Tops Appliance City Inc. 18,200
----------------------------------------------------------------------
1,800 Toro Co. 45,675
----------------------------------------------------------------------
2,000 Wabash National Corp. 54,000
----------------------------------------------------------------------
1,200 Walbro Corp. 32,100
----------------------------------------------------------------------
2,700 West, Inc. 64,125
----------------------------------------------------------------------
1,700 * Winnebago Industries, Inc. 12,113
----------------------------------------------------------------------
900 Wynns International, Inc. 17,550
----------------------------------------------------------------------
5,200 * Zenith Electronics Corp. 40,950
---------------------------------------------------------------------- -----------
Total 2,203,576
---------------------------------------------------------------------- -----------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
CONSUMER NON-DURABLES--6.4%
----------------------------------------------------------------------
1,900 * 50 Off Stores, Inc. $ 13,775
----------------------------------------------------------------------
600 * Alexanders, Inc. 35,175
----------------------------------------------------------------------
6,300 * Ames Department Stores, Inc. 10,631
----------------------------------------------------------------------
300 Amoskeag Co. 11,813
----------------------------------------------------------------------
1,000 Amre, Inc. 4,125
----------------------------------------------------------------------
1,500 Angelica Corp. 37,313
----------------------------------------------------------------------
3,800 * Ann Taylor Stores, Inc. 105,450
----------------------------------------------------------------------
1,700 Arbor Drugs, Inc. 33,363
----------------------------------------------------------------------
1,300 * Authentic Fitness Corp. 35,425
----------------------------------------------------------------------
1,400 * Bell Sports Corp. 59,500
----------------------------------------------------------------------
2,200 Baker J., Inc. 38,225
----------------------------------------------------------------------
1,600 Big B, Inc. 20,800
----------------------------------------------------------------------
1,300 Blair Corp. 57,525
----------------------------------------------------------------------
600 * Books-A-Million, Inc. 14,100
----------------------------------------------------------------------
800 * Bon Ton Stores, Inc. 6,900
----------------------------------------------------------------------
1,800 Bradlees, Inc. 24,975
----------------------------------------------------------------------
3,200 Brown Group, Inc. 108,800
----------------------------------------------------------------------
100 * Buckle Inc. 1,813
----------------------------------------------------------------------
1,800 * Cache, Inc. 10,800
----------------------------------------------------------------------
3,000 * Caldor Corp. 96,750
----------------------------------------------------------------------
3,500 * Canandaigua Wine, Inc., Class B 81,813
----------------------------------------------------------------------
8,100 * Carter Hawley Hale 113,400
----------------------------------------------------------------------
4,800 Cash America International Inc. 44,400
----------------------------------------------------------------------
1,200 * Catherines Stores Corp. 21,000
----------------------------------------------------------------------
3,700 Cato Corp. 85,100
----------------------------------------------------------------------
1,900 * Charter Golf, Inc. 22,088
----------------------------------------------------------------------
700 * Chaus Bernard, Inc. 1,750
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
CONSUMER NON-DURABLES--CONTINUED
----------------------------------------------------------------------
3,600 Claire S Stores, Inc. $ 63,900
----------------------------------------------------------------------
1,300 * Clothestime, Inc. 10,400
----------------------------------------------------------------------
700 * Concord Camera Corp. 4,113
----------------------------------------------------------------------
4,400 * Cone Mills 70,400
----------------------------------------------------------------------
2,500 CPI Corp. 43,750
----------------------------------------------------------------------
875 Culp, Inc. 12,250
----------------------------------------------------------------------
600 * Custom Chrome Inc. 14,550
----------------------------------------------------------------------
1,200 * Damark International, Inc., Class A 24,300
----------------------------------------------------------------------
700 Deb Shops, Inc. 4,900
----------------------------------------------------------------------
2,800 Delta Woodside 30,450
----------------------------------------------------------------------
1,950 * Designs, Inc. 29,250
----------------------------------------------------------------------
1,600 Dixie Yarns, Inc. 14,800
----------------------------------------------------------------------
2,400 * Dress Barn, The 31,200
----------------------------------------------------------------------
2,200 Dyersburg Corp. 16,500
----------------------------------------------------------------------
2,800 * Eagle Hardware & Garde 82,950
----------------------------------------------------------------------
600 Elco Industries, Inc. 10,650
----------------------------------------------------------------------
2,100 * ElectroCom Automation 27,038
----------------------------------------------------------------------
1,600 * ERO Inc. 10,400
----------------------------------------------------------------------
1,000 * Ezcorp, Inc., Class A 14,500
----------------------------------------------------------------------
800 Fab Industries 28,300
----------------------------------------------------------------------
800 * Fabric Centers of American, Inc. 12,500
----------------------------------------------------------------------
1,800 Fays, Inc. 11,475
----------------------------------------------------------------------
1,500 Fieldcrest Cannon, Inc. 40,313
----------------------------------------------------------------------
2,300 * Filenes Basement Corp. 25,300
----------------------------------------------------------------------
266 Fredericks of Hollywood, Inc., Class A 1,867
----------------------------------------------------------------------
532 Fredericks of Hollywood, Inc., Class B 3,325
----------------------------------------------------------------------
1,200 Freds Inc., Class A 17,400
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
CONSUMER NON-DURABLES--CONTINUED
----------------------------------------------------------------------
2,300 G & K Services, Class A $ 54,050
----------------------------------------------------------------------
1,700 * Galey & Lord, Inc. 19,125
----------------------------------------------------------------------
600 Garan, Inc. 19,200
----------------------------------------------------------------------
3,000 General Host Corp. 21,750
----------------------------------------------------------------------
3,900 * Genesco, Inc. 25,350
----------------------------------------------------------------------
400 Goody Products, Inc. 9,800
----------------------------------------------------------------------
900 * Goodys Family Clothing, Inc. 12,825
----------------------------------------------------------------------
600 * Gottschalks, Inc. 5,025
----------------------------------------------------------------------
3,700 * Grossmans, Inc. 11,331
----------------------------------------------------------------------
1,600 Guilford Mills, Inc. 32,000
----------------------------------------------------------------------
3,600 Hancock Fabrics,Inc. 35,550
----------------------------------------------------------------------
900 Hancock Holding Co. 31,725
----------------------------------------------------------------------
5,600 Handleman Co. 68,600
----------------------------------------------------------------------
7,900 * Hanover Direct Inc. 56,288
----------------------------------------------------------------------
4,100 Hartmarx Corp. 27,675
----------------------------------------------------------------------
1,350 Haverty Furniture Cos, Inc. 22,781
----------------------------------------------------------------------
5,200 Hechinger Co., Class A 50,050
----------------------------------------------------------------------
700 * Helen of Troy Corp. 11,725
----------------------------------------------------------------------
1,000 Helene Curtis Industries, Inc. 26,500
----------------------------------------------------------------------
2,400 * Hook-Super Px Inc. 16,800
----------------------------------------------------------------------
3,200 House Fabrics, Inc. 26,000
----------------------------------------------------------------------
2,100 Huffy Corp. 41,213
----------------------------------------------------------------------
1,500 * Intertan, Inc. 7,688
----------------------------------------------------------------------
400 Jacobson Stores, Inc. 4,750
----------------------------------------------------------------------
3,300 * Jan Bell Marketing, Inc. 39,188
----------------------------------------------------------------------
700 * Jennifer Convs Inc. 8,663
----------------------------------------------------------------------
600 Johnston Industries, Inc. 11,100
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
CONSUMER NON-DURABLES--CONTINUED
----------------------------------------------------------------------
300 * K-Swiss, Inc., Class A $ 6,675
----------------------------------------------------------------------
2,500 Kellwood Co. 97,500
----------------------------------------------------------------------
3,200 * LA Gear, Inc. 36,800
----------------------------------------------------------------------
1,400 Lands End Inc. 59,500
----------------------------------------------------------------------
2,200 * Leslie Fay Cos, Inc. 6,875
----------------------------------------------------------------------
800 Lillian Vernon Co. 14,500
----------------------------------------------------------------------
400 * Little Switzerland, Inc. 3,100
----------------------------------------------------------------------
700 * Luria L & Son Inc. 8,663
----------------------------------------------------------------------
5,400 * MacFrugal's Bargains CloseOuts, Inc. 86,400
----------------------------------------------------------------------
450 * Mens Wearhouse, Inc. 13,613
----------------------------------------------------------------------
2,200 * Michaels Stores, Inc. 80,850
----------------------------------------------------------------------
3,400 * Mohawk Industries, Inc. 96,050
----------------------------------------------------------------------
2,200 Morningstar Group, Inc. 15,950
----------------------------------------------------------------------
5,100 * Musicland Stores,Inc. 114,750
----------------------------------------------------------------------
1,100 * Natural Wonders, Inc. 12,100
----------------------------------------------------------------------
500 * Nature Food Centres, Inc. 6,313
----------------------------------------------------------------------
3,000 Neiman-Marcus Group 48,375
----------------------------------------------------------------------
2,100 * Nutmeg Industries, Inc. 31,500
----------------------------------------------------------------------
500 * Nutramax Products, Inc. 7,500
----------------------------------------------------------------------
800 * Old America Stores, Inc. 10,600
----------------------------------------------------------------------
400 * One Price Clothing Stores, Inc. 6,800
----------------------------------------------------------------------
1,600 Oneida Ltd. 20,600
----------------------------------------------------------------------
600 Optical Coating Laboratories, Inc. 4,200
----------------------------------------------------------------------
1,900 OshKosh B Gosh, Inc., Class A 34,675
----------------------------------------------------------------------
1,100 Oxford Industries, Inc. 25,988
----------------------------------------------------------------------
1,700 * Perry Drug Stores, Inc. 11,050
----------------------------------------------------------------------
6,300 Pier One Imports, Inc. 66,150
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
CONSUMER NON-DURABLES--CONTINUED
----------------------------------------------------------------------
900 * Peoplesoft, Inc. $ 34,425
----------------------------------------------------------------------
1,000 * Proffitts, Inc. 33,750
----------------------------------------------------------------------
1,100 * Quicksilver, Inc. 12,650
----------------------------------------------------------------------
5,800 * Revco D S Inc. 89,175
----------------------------------------------------------------------
4,700 * Roadmaster Industries, Inc. 24,088
----------------------------------------------------------------------
1,700 Roses Stores, Inc., Class B 1,913
----------------------------------------------------------------------
4,600 * Ross Stores, Inc. 71,875
----------------------------------------------------------------------
1,700 Russ Berrie & Co. 23,163
----------------------------------------------------------------------
600 * S&K Famous Brands Inc. 12,300
----------------------------------------------------------------------
1,300 * Salem Sportswear Corp. 16,575
----------------------------------------------------------------------
2,600 * Scholastic Corp. 135,200
----------------------------------------------------------------------
700 * Score Board Inc. 21,700
----------------------------------------------------------------------
2,700 Shopko Stores Inc. 28,013
----------------------------------------------------------------------
1,200 * Signal Apparel, Inc. 9,300
----------------------------------------------------------------------
1,200 * SLM International, Inc. 52,800
----------------------------------------------------------------------
1,100 * Sports & Recreation Inc. 34,650
----------------------------------------------------------------------
500 Saint Ives Labs Corp. 5,375
----------------------------------------------------------------------
750 * Stein Mart Inc. 16,875
----------------------------------------------------------------------
1,236 Strawbridge & Clothier 25,956
----------------------------------------------------------------------
800 Superior Surgical Manufacturing, Inc. 10,600
----------------------------------------------------------------------
1,500 * Swing-N-Slide Corp. 19,875
----------------------------------------------------------------------
700 Syms Corp. 7,700
----------------------------------------------------------------------
3,500 * Systemed, Inc. 14,438
----------------------------------------------------------------------
900 * Tandy Brands Accessories, Inc. 16,538
----------------------------------------------------------------------
600 * Tandycrafts, Inc. 9,075
----------------------------------------------------------------------
1,800 * The Good Guys, Inc. 23,400
----------------------------------------------------------------------
800 Thomaston Mills, Inc. 15,800
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
CONSUMER NON-DURABLES--CONTINUED
----------------------------------------------------------------------
2,400 Tiffany and Co. $ 78,300
----------------------------------------------------------------------
1,300 * Timberland Co., Class A 102,213
----------------------------------------------------------------------
500 * Todays Man Inc. 7,625
----------------------------------------------------------------------
300 * Trak Auto Corp. 3,825
----------------------------------------------------------------------
500 * Tuesday Morning Corp. 4,625
----------------------------------------------------------------------
4,900 Tultex Corp. 39,200
----------------------------------------------------------------------
6,300 Tyco Toys Inc. 70,875
----------------------------------------------------------------------
700 Unifirst Corp. 23,275
----------------------------------------------------------------------
1,800 * United Retail Group Inc. 22,275
----------------------------------------------------------------------
800 Unitog Co. 19,400
----------------------------------------------------------------------
1,700 * Value City Department Stores, Inc. 28,050
----------------------------------------------------------------------
3,000 Venture Stores Inc. 67,125
----------------------------------------------------------------------
400 * Vista Research, Inc. 10,600
----------------------------------------------------------------------
1,400 VWR Corp. 18,550
----------------------------------------------------------------------
6,000 * Waban Inc. 75,750
----------------------------------------------------------------------
1,600 * Wet Seal, Inc. 7,400
----------------------------------------------------------------------
1,300 * Williams Sonoma Corp. 34,450
----------------------------------------------------------------------
2,300 * Windmere Corp. 18,975
----------------------------------------------------------------------
1,200 Wolverine World Wide, Inc. 37,350
---------------------------------------------------------------------- -----------
1,500 * Younkers Inc. 36,375
----------------------------------------------------------------------
Total 4,850,866
---------------------------------------------------------------------- -----------
CONSUMER PRODUCTS--0.0%
----------------------------------------------------------------------
2,400 Figgie International Holdings, Inc., Class A 36,600
---------------------------------------------------------------------- -----------
CONSUMER SERVICES--2.8%
----------------------------------------------------------------------
600 Airtran, Inc. 5,550
----------------------------------------------------------------------
2,300 Alaska Air Group, Inc. 36,800
----------------------------------------------------------------------
1,000 * AMC Entertainment, Inc. 13,625
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
CONSUMER SERVICES--CONTINUED
----------------------------------------------------------------------
2,700 American Studios, Inc. $ 18,225
----------------------------------------------------------------------
1,000 Anthony Industries, Inc 16,000
----------------------------------------------------------------------
1,125 Apple South, Inc. 25,313
----------------------------------------------------------------------
2,100 Applebees International, Inc. 54,600
----------------------------------------------------------------------
1,500 * Au Bon Pain Co., Inc., Class A 30,000
----------------------------------------------------------------------
6,300 * Aztar Corp. 44,100
----------------------------------------------------------------------
400 * Baldwin Piano & Organ Co. 6,750
----------------------------------------------------------------------
1,300 * Bally Gaming International, Inc. 29,250
----------------------------------------------------------------------
8,400 Bally Manufacturing Corp. 84,000
----------------------------------------------------------------------
1,000 * Bertuccis, Inc. 21,000
----------------------------------------------------------------------
300 Bowl America, Inc., Class A 6,450
----------------------------------------------------------------------
5,500 * Buffets, Inc. 129,250
----------------------------------------------------------------------
1,200 * CCAIR Inc. 8,550
----------------------------------------------------------------------
2,300 Callaway Golf Co. 133,400
----------------------------------------------------------------------
900 * Carmike Cinemas, Inc. 17,213
----------------------------------------------------------------------
900 * Chart House Enterprises, Inc. 9,338
----------------------------------------------------------------------
3,000 Comair Holdings, Inc. 93,750
----------------------------------------------------------------------
1,100 Cooker Restaurant Corp. 15,675
----------------------------------------------------------------------
800 Donnely Corp. 15,900
----------------------------------------------------------------------
2,100 * Elsinore Corp. 14,438
----------------------------------------------------------------------
6,500 * Foodmaker, Inc. 58,500
----------------------------------------------------------------------
300 Frischs Restaurants, Inc. 4,725
----------------------------------------------------------------------
800 * Ground Round Restaurants, Inc. 6,100
----------------------------------------------------------------------
1,800 Hollywood Park Inc. 54,000
----------------------------------------------------------------------
1,300 * IHOP Corp. 35,100
----------------------------------------------------------------------
2,000 * Image Entertainment, Inc. 15,000
----------------------------------------------------------------------
3,700 * International Family Entertainment, Inc., Class B 74,463
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
CONSUMER SERVICES--CONTINUED
----------------------------------------------------------------------
1,500 Jackpot Enterprises, Inc. $ 23,250
----------------------------------------------------------------------
800 * Johnson Worldwide Assoc., Inc. 17,800
----------------------------------------------------------------------
2,800 Karcher Carl Enterprises, Inc. 25,200
----------------------------------------------------------------------
600 * Krystal Co. 7,650
----------------------------------------------------------------------
2,400 La Quinta Motor Inns, Inc. 75,900
----------------------------------------------------------------------
1,200 Marcus Corp. 31,500
----------------------------------------------------------------------
2,700 * National Pizza Co., Class A 18,900
----------------------------------------------------------------------
1,900 * New Line Cinemas Corp. 47,500
----------------------------------------------------------------------
700 * Old Dominion Freight Lines, Inc. 13,475
----------------------------------------------------------------------
3,300 Outboard Marine Corp. 58,163
----------------------------------------------------------------------
500 Petroleum Helicopters, Inc. 8,000
----------------------------------------------------------------------
1,200 Piccadilly Cafeterias, Inc. 14,400
----------------------------------------------------------------------
800 * Players International Inc. 19,000
----------------------------------------------------------------------
500 PS Group, Inc. 5,375
----------------------------------------------------------------------
1,000 * Quantum Restaurant Group 10,500
----------------------------------------------------------------------
1,600 * Rallys, Inc. 15,600
----------------------------------------------------------------------
700 Raven Industries, Inc. 14,350
----------------------------------------------------------------------
666 * Recoton Corp. 15,485
----------------------------------------------------------------------
700 * RHI Entertainment, Inc. 15,838
----------------------------------------------------------------------
3,000 * Rio Hotel & Casino, Inc. 48,750
----------------------------------------------------------------------
4,400 Rollins Truck Leasing Corp. 78,650
----------------------------------------------------------------------
600 Roto Rooter, Inc. 17,850
----------------------------------------------------------------------
9,700 * Ryan's Family Steak Houses, Inc. 80,025
----------------------------------------------------------------------
400 * Sahara Gaming Co. 6,950
----------------------------------------------------------------------
400 Sands Regent 6,100
----------------------------------------------------------------------
1,400 Sbarro, Inc. 60,200
----------------------------------------------------------------------
600 * Sholodge Inc. 13,950
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
CONSUMER SERVICES--CONTINUED
----------------------------------------------------------------------
1,700 * Showbiz Pizza Time, Inc. $ 24,650
----------------------------------------------------------------------
2,000 Showboat, Inc. 39,750
----------------------------------------------------------------------
4,100 Sizzler International, Inc. 41,513
----------------------------------------------------------------------
800 Skywest Inc. 22,900
----------------------------------------------------------------------
1,100 * Sonic Corp. 27,775
----------------------------------------------------------------------
100 * Sportmart Inc. 1,138
----------------------------------------------------------------------
700 * Spaghetti Warehouse, Inc. 7,088
----------------------------------------------------------------------
2,500 TCBY Enterprises, Inc. 14,375
----------------------------------------------------------------------
3,300 * TPI Enterprises Inc. 39,188
----------------------------------------------------------------------
1,000 * United Gaming, Inc. 10,625
----------------------------------------------------------------------
1,500 * Uno Restaurant Corp. 14,625
----------------------------------------------------------------------
1,500 * Vicorp Restaurants, Inc. 31,125
----------------------------------------------------------------------
1,300 * Video Lotteries Technologies, Inc. 21,450
----------------------------------------------------------------------
2,400 * Worldcorp, Inc. 11,700
---------------------------------------------------------------------- -----------
Total 2,135,328
---------------------------------------------------------------------- -----------
ENERGY--3.3%
----------------------------------------------------------------------
1,300 * Addington Resources, Inc. 23,725
----------------------------------------------------------------------
12,600 * American Exploration Co. 18,900
----------------------------------------------------------------------
9,600 * American International Petroleum Corp. 42,000
----------------------------------------------------------------------
2,800 * Arabian Shield Development 7,700
----------------------------------------------------------------------
1,000 Ashland Coal, Inc. 28,000
----------------------------------------------------------------------
1,300 * Amos Energy Corp. 40,463
----------------------------------------------------------------------
800 * Atwood Oceanics, Inc. 9,600
----------------------------------------------------------------------
1,600 * Barrett Resources 19,200
----------------------------------------------------------------------
500 * Basin Exploration 7,375
----------------------------------------------------------------------
2,600 * Benton Oil & Gas Co. 18,200
----------------------------------------------------------------------
2,600 Berry Petroleum Co., Class A 23,725
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
ENERGY--CONTINUED
----------------------------------------------------------------------
2,600 * BJ Services Corp. $ 58,825
----------------------------------------------------------------------
3,000 * Box Energy Corp., Class A 61,500
----------------------------------------------------------------------
3,500 Cabot Oil & Gas Corp., Class A 84,000
----------------------------------------------------------------------
3,500 * Chiles Offshore Corp. 22,750
----------------------------------------------------------------------
1,600 * Coda Energy Inc. 10,000
----------------------------------------------------------------------
1,300 * Coho Energy 7,475
----------------------------------------------------------------------
900 Crown Center Petroleum Corp., Class A 14,175
----------------------------------------------------------------------
400 * Crystal Oil Corp. 10,550
----------------------------------------------------------------------
1,600 Dekalb Energy Co., Class B 27,600
----------------------------------------------------------------------
3,500 Devon Energy Corp. 70,438
----------------------------------------------------------------------
4,900 * Digicon, Inc. 13,475
----------------------------------------------------------------------
1,700 Energen Corp. 44,625
----------------------------------------------------------------------
15,600 * Energy Services, Inc. 54,600
----------------------------------------------------------------------
1,600 * Energy Ventures, Inc. 29,000
----------------------------------------------------------------------
3,300 * Forest Oil Corp. 13,200
----------------------------------------------------------------------
1,800 * Gerrity Oil & Gas Corp. 30,375
----------------------------------------------------------------------
1,100 Getty Petroleum Corp. 14,300
----------------------------------------------------------------------
1,200 Giant Industries, Inc. 14,100
----------------------------------------------------------------------
3,500 * Global Natural Resources, Inc. 30,188
----------------------------------------------------------------------
500 * Hadson Energy Resources Corp. 7,563
----------------------------------------------------------------------
400 Holly Corp. 11,100
----------------------------------------------------------------------
700 * Hondo Oil & Gas Co. 5,338
----------------------------------------------------------------------
1,500 * Hornbeck Offshore Service 27,938
----------------------------------------------------------------------
600 Howell Corp. 6,450
----------------------------------------------------------------------
1,300 * HS Resources, Inc. 31,525
----------------------------------------------------------------------
4,500 * INDRESCO, Inc. 56,813
----------------------------------------------------------------------
1,700 Kcs Group Inc. 49,513
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
ENERGY--CONTINUED
----------------------------------------------------------------------
1,600 * Kelley Oil Corp. $ 18,800
----------------------------------------------------------------------
1,100 Lufkin Industries, Inc. 23,925
----------------------------------------------------------------------
7,100 * Marine Drilling Cos., Inc. 53,250
----------------------------------------------------------------------
1,200 * Matrix Services Co. 11,100
----------------------------------------------------------------------
7,000 * Mesa, Inc. 52,500
----------------------------------------------------------------------
9,400 * Nabors Industries, Inc. 82,250
----------------------------------------------------------------------
5,300 * Noble Drilling Corp. 52,338
----------------------------------------------------------------------
1,200 * Nuevo Energy Co. 27,600
----------------------------------------------------------------------
4,000 * Oceaneering International, Inc. 68,500
----------------------------------------------------------------------
1,400 * Offshore Pipelines, Inc. 23,275
----------------------------------------------------------------------
9,100 * Parker Drilling Co. 62,563
----------------------------------------------------------------------
1,600 Petroleum Heat & Power, Inc., Class B 32,000
----------------------------------------------------------------------
796 Petroleum Heat & Power, Inc., Class A 7,562
----------------------------------------------------------------------
700 * Phoenix Resources Cos, Inc. 23,188
----------------------------------------------------------------------
1,700 Plains Petroleum Co. 41,650
----------------------------------------------------------------------
1,700 * Plains Resources, Inc. 15,088
----------------------------------------------------------------------
800 * Plexus Corp. 12,300
----------------------------------------------------------------------
4,700 * Pogo Producing Co. 85,775
----------------------------------------------------------------------
2,100 * Pool Energy Services, Co. 23,363
----------------------------------------------------------------------
2,600 * Pride Petroleum Services, Inc. 16,900
----------------------------------------------------------------------
1,300 Production Operations Corp. 35,100
----------------------------------------------------------------------
4,600 Quaker State Corp. 63,825
----------------------------------------------------------------------
5,800 * Reading & Bates Corp. 52,200
----------------------------------------------------------------------
1,000 * RPC Energy Services, Inc. 8,000
----------------------------------------------------------------------
6,100 * Smith International, Inc. 67,863
----------------------------------------------------------------------
3,500 Snyder Oil Corp. 70,000
----------------------------------------------------------------------
800 * Southern Union Co. 23,400
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
ENERGY--CONTINUED
----------------------------------------------------------------------
900 * Swift Energy Co. $ 11,475
----------------------------------------------------------------------
1,000 * Tejas Power Corp. 10,250
----------------------------------------------------------------------
2,100 * Tesoro Petroleum Corp. 14,175
----------------------------------------------------------------------
1,100 * Tide West Oil Co. 10,725
----------------------------------------------------------------------
2,700 * Tuboscope Vetco International Corp. 21,938
----------------------------------------------------------------------
3,600 * Unit Corp. 13,950
----------------------------------------------------------------------
1,400 * USX-Delhi Group 27,300
----------------------------------------------------------------------
4,800 * Varco International, Inc. 37,800
----------------------------------------------------------------------
1,500 Vintage Petroleum, Inc. 33,563
----------------------------------------------------------------------
3,200 * Wainoco Oil Corp. 13,600
----------------------------------------------------------------------
9,000 * Weatherford International 102,375
----------------------------------------------------------------------
2,700 * Western Co. Of North America 39,825
----------------------------------------------------------------------
500 Westmoreland Coal Co. 3,375
----------------------------------------------------------------------
1,751 Wilshire Oil Co. 12,038
----------------------------------------------------------------------
1,300 Wiser Oil Co. 23,563
----------------------------------------------------------------------
12,900 * Zapata Corp. 17,738
---------------------------------------------------------------------- -----------
Total 2,494,309
---------------------------------------------------------------------- -----------
FINANCE--15.6%
----------------------------------------------------------------------
600 1st Source Corp. 15,450
----------------------------------------------------------------------
1,600 * Advanced Polymer Systems, Inc. 10,000
----------------------------------------------------------------------
600 * Advantage Bancorp, Inc. 16,350
----------------------------------------------------------------------
2,500 * Albank Financial Corp. 50,000
----------------------------------------------------------------------
2,500 Alex Brown, Inc. 65,938
----------------------------------------------------------------------
3,400 Alfa Corp. 41,650
----------------------------------------------------------------------
800 Allied Capital Corp. 10,000
----------------------------------------------------------------------
2,000 Allied Capital Commercial Corp. 33,250
----------------------------------------------------------------------
1,200 Allied Group, Inc. 35,400
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
FINANCE--CONTINUED
----------------------------------------------------------------------
900 Amcore Financial, Inc. $ 24,750
----------------------------------------------------------------------
2,900 American Bankers Insurance Group, Inc. 76,488
----------------------------------------------------------------------
400 American Financial Enterprises 9,750
----------------------------------------------------------------------
900 American Heritage Life Investments 17,775
----------------------------------------------------------------------
2,500 American Income Holdings, Inc. 65,313
----------------------------------------------------------------------
2,100 * American Residential 48,300
----------------------------------------------------------------------
1,000 * American Savings 18,375
----------------------------------------------------------------------
1,500 * American Travellers Corp. 20,438
----------------------------------------------------------------------
5,300 * Americredit Corp. 41,075
----------------------------------------------------------------------
500 Amerifed Financial Corp. 16,438
----------------------------------------------------------------------
2,300 * Ampal American Israel Corp., Class A 28,463
----------------------------------------------------------------------
100 * Ampex, Inc., Class A 450
----------------------------------------------------------------------
2,400 * AmVestors Financial 25,500
----------------------------------------------------------------------
2,300 Anchor Bancorp Wi, Inc. 59,800
----------------------------------------------------------------------
3,700 Anchor Bancorp, Inc. 56,425
----------------------------------------------------------------------
2,200 * Anthem Electronics 70,675
----------------------------------------------------------------------
500 * Arbor National Holdings, Inc. 9,375
----------------------------------------------------------------------
2,100 Asset Investment Corp. 4,988
----------------------------------------------------------------------
2,090 Associated Banc Corp. 79,420
----------------------------------------------------------------------
1,200 * Atlanta Sosnoff Capital Corp. 12,150
----------------------------------------------------------------------
1,300 Avemco Corp. 26,975
----------------------------------------------------------------------
900 Baldwin & Lyons, Inc., Class B 39,600
----------------------------------------------------------------------
3,000 Baltimore Bancorp 38,250
----------------------------------------------------------------------
1,200 Bancorpsouth, Inc. 48,600
----------------------------------------------------------------------
100 Bank Atlantic 1,588
----------------------------------------------------------------------
800 Bank Granite Corp. 24,000
----------------------------------------------------------------------
7,800 Bank South Corp. 114,075
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
FINANCE--CONTINUED
----------------------------------------------------------------------
930 Bankers Corp. $ 33,248
----------------------------------------------------------------------
1,200 Banknorth Group, Inc. 24,600
----------------------------------------------------------------------
1,100 Bankworcester Corp. 34,925
----------------------------------------------------------------------
1,000 Bay View Capital Corp. 21,375
----------------------------------------------------------------------
1,000 * Bell Bancorp, Inc. 49,750
----------------------------------------------------------------------
1,000 BHC Financial, Inc. 29,000
----------------------------------------------------------------------
100 * BOK Financial Corp. 2,425
----------------------------------------------------------------------
1,600 * Borg-Warner Security Corp. 32,000
----------------------------------------------------------------------
1,100 Boston Bancorp 44,825
----------------------------------------------------------------------
400 Boulevard Bancorp, Inc. 9,725
----------------------------------------------------------------------
500 Brenton Banks, Inc. 14,063
----------------------------------------------------------------------
400 BSB Bancorp, Inc. 17,200
----------------------------------------------------------------------
525 BT Financial Corp. 16,538
----------------------------------------------------------------------
4,120 * California Federal Bank Los Angeles 52,015
----------------------------------------------------------------------
500 Cal Rep Bancorp Inc. 12,750
----------------------------------------------------------------------
2,000 Capital Re Corp. 52,500
----------------------------------------------------------------------
400 Capital Southwest Corp. 14,900
----------------------------------------------------------------------
800 Capitol Transamerica Corp. 14,600
----------------------------------------------------------------------
2,700 Capstead Management Corp. 104,625
----------------------------------------------------------------------
1,100 Cathay Bancorp, Inc. 16,363
----------------------------------------------------------------------
1,300 CCB Financial Corp. 46,800
----------------------------------------------------------------------
1,600 * Centerbank Waterbury Conn. 21,400
----------------------------------------------------------------------
1,100 Central Jersey Bancorp 26,675
----------------------------------------------------------------------
3,100 Centura Banks, Inc. 64,713
----------------------------------------------------------------------
945 Charter Bancshares Inc. 12,876
----------------------------------------------------------------------
2,700 Charter One Financial, Inc. 91,125
----------------------------------------------------------------------
980 Chemical Financial Corp. 46,550
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
FINANCE--CONTINUED
----------------------------------------------------------------------
1,000 Chittenden Corp. $ 18,750
----------------------------------------------------------------------
900 * Citadel Holding Corp. 15,638
----------------------------------------------------------------------
700 Citfed Bancorp Inc. 18,725
----------------------------------------------------------------------
1,900 Citizens Bancorp 53,200
----------------------------------------------------------------------
1,800 Citizens Banking Corp. 45,000
----------------------------------------------------------------------
7,400 Citizens First Bancorp, Inc. 55,500
----------------------------------------------------------------------
1,100 * Citizens, Inc., Class A 8,663
----------------------------------------------------------------------
6,200 City National Corp. 47,275
----------------------------------------------------------------------
1,700 CMAC Investment Corp. 57,588
----------------------------------------------------------------------
1,970 CNB Bancshares, Inc. 63,286
----------------------------------------------------------------------
800 * Coastal Banc Savings Association 10,900
----------------------------------------------------------------------
3,100 Coast Savings Financial, Inc. 45,338
----------------------------------------------------------------------
4,350 Collective Bancorp, Inc. 94,613
----------------------------------------------------------------------
1,100 Colonial Bancgroup, Inc., Class A 23,375
----------------------------------------------------------------------
500 * Columbia First Federal Savings 16,250
----------------------------------------------------------------------
920 Commerce Bancorp, Inc. 15,180
----------------------------------------------------------------------
1,050 * Commercial Assets Inc. 6,694
----------------------------------------------------------------------
2,300 * Commercial Federal Corp. 48,588
----------------------------------------------------------------------
500 Community Banking Systems, Inc. 15,250
----------------------------------------------------------------------
900 Community First Bankshares, Inc. 13,050
----------------------------------------------------------------------
1,800 * Concord EFS, Inc. 40,950
----------------------------------------------------------------------
4,900 Constellation Bancorp 53,900
----------------------------------------------------------------------
3,800 Countrywide Mortgage Investments, Inc. 38,950
----------------------------------------------------------------------
900 CPB, Inc. 23,400
----------------------------------------------------------------------
2,400 * Cragin Financial Corp. 88,200
----------------------------------------------------------------------
900 * Credit Acceptance Corp. 33,750
----------------------------------------------------------------------
1,600 * CSF Holdings, Inc. 36,800
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
FINANCE--CONTINUED
----------------------------------------------------------------------
1,720 Cullen Frost Bankers, Inc. $ 58,050
----------------------------------------------------------------------
400 Cumberland Federal Bancorporation 15,850
----------------------------------------------------------------------
700 CVB Financial Corp. 9,800
----------------------------------------------------------------------
1,400 * Danielson Holding Corp. 10,850
----------------------------------------------------------------------
400 Deerbank Corp. 15,000
----------------------------------------------------------------------
400 * Delphi Financial Group, Inc. 9,300
----------------------------------------------------------------------
3,000 Deposit Guaranty Corp. 87,375
----------------------------------------------------------------------
10,200 Dime Savings Bank New York 82,875
----------------------------------------------------------------------
1,600 Downey Savings & Loan Assn. 42,200
----------------------------------------------------------------------
3,000 Duff & Phelps Corp. 62,625
----------------------------------------------------------------------
1,500 Eaton Vance Corp. 52,500
----------------------------------------------------------------------
800 EMC Insurance Group, Inc. 7,000
----------------------------------------------------------------------
2,800 Enhance Financial Services Group 59,500
----------------------------------------------------------------------
1,500 * Equicredit Corp. 36,000
----------------------------------------------------------------------
500 Evergreen Bancorp, Inc. 6,250
----------------------------------------------------------------------
500 F & C Bancshares, Inc. 9,250
----------------------------------------------------------------------
600 F & M Bancorp 14,100
----------------------------------------------------------------------
1,500 F & M National Corp. 23,813
----------------------------------------------------------------------
400 Falls Financial, Inc. 9,900
----------------------------------------------------------------------
1,200 Farm & Home Financial Corp. 27,600
----------------------------------------------------------------------
600 Farmers Capital Bank Corp. 20,400
----------------------------------------------------------------------
1,050 Fidelity National Financial, Inc. 38,588
----------------------------------------------------------------------
500 * Financial Industries Corp. 9,500
----------------------------------------------------------------------
860 Financial Trust Corp. 36,980
----------------------------------------------------------------------
1,500 First American Financial Corp. 51,000
----------------------------------------------------------------------
800 * First Armarillo Bancorporation 21,200
----------------------------------------------------------------------
4,200 First Bancorp, Inc. 124,950
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
FINANCE--CONTINUED
----------------------------------------------------------------------
1,400 First Citizens Bancshares, Inc. $ 69,300
----------------------------------------------------------------------
1,200 First Colonial Bankshares Corp., Class A 22,200
----------------------------------------------------------------------
100 First Commerce Bancshares, Inc. 1,550
----------------------------------------------------------------------
400 First Commerce Bank 5,700
----------------------------------------------------------------------
2,100 First Commercial Corp. 69,825
----------------------------------------------------------------------
1,500 First Commonwealth Financial Corp. 48,000
----------------------------------------------------------------------
2,100 First Eastern Corp. 52,238
----------------------------------------------------------------------
600 First Federal Capital Corp. 10,650
----------------------------------------------------------------------
1,000 * First Federal Savings Bank 22,500
----------------------------------------------------------------------
** First Fidelity Bancorp 5
----------------------------------------------------------------------
1,200 First Financial Bancorp 66,600
----------------------------------------------------------------------
600 First Financial Caribbean 21,900
----------------------------------------------------------------------
600 First Financial Corp. 18,300
----------------------------------------------------------------------
3,900 First Financial Corp. 68,250
----------------------------------------------------------------------
600 First Financial Holdings, Inc. 9,000
----------------------------------------------------------------------
675 First Indiana Corp. 16,538
----------------------------------------------------------------------
600 First Merchants Corp. 18,600
----------------------------------------------------------------------
1,995 First Michigan Bank Corp. 56,858
----------------------------------------------------------------------
2,100 First Midwest Bancorp, Inc. 57,225
----------------------------------------------------------------------
1,850 First National Bancorp 37,925
----------------------------------------------------------------------
1,327 * First Republican Bancorp, Inc. 20,403
----------------------------------------------------------------------
1,300 * First Savings Bank 22,100
----------------------------------------------------------------------
600 First United Bancshares 17,700
----------------------------------------------------------------------
900 First United Bank Group, Inc. 22,500
----------------------------------------------------------------------
935 First Western Bancorp, Inc. 29,453
----------------------------------------------------------------------
1,000 Firstbank Illinois Co. 37,000
----------------------------------------------------------------------
600 * Firstfed Bancshares Indiana 13,125
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
FINANCE--CONTINUED
----------------------------------------------------------------------
1,800 * Firstfed Financial Corp. $ 32,850
----------------------------------------------------------------------
2,850 Firstfed Michigan Corp. 64,125
----------------------------------------------------------------------
900 F&M Distributors, Inc. 7,650
----------------------------------------------------------------------
2,700 Foothill Group, Inc. 38,138
----------------------------------------------------------------------
1,300 Foremost Corp. 46,800
----------------------------------------------------------------------
700 Fortune Bancorp, Inc. 19,775
----------------------------------------------------------------------
1,300 Fort Wayne National Corp. Inc. 52,000
----------------------------------------------------------------------
2,200 Fremont General Corp. 58,025
----------------------------------------------------------------------
1,070 Frontier Insurance Group, Inc. 53,500
----------------------------------------------------------------------
2,420 Fulton Financial Corp. 62,920
----------------------------------------------------------------------
2,614 Gainsco, Inc. 26,467
----------------------------------------------------------------------
2,700 Gallagher Arthur J & Co. 99,900
----------------------------------------------------------------------
800 GBC Bancorp 14,200
----------------------------------------------------------------------
700 Germantown Savings Bank 36,138
----------------------------------------------------------------------
140 * Glendale Federal Bank 1,068
----------------------------------------------------------------------
841 Great Lakes Bancorp And Federal Savings Bank 18,923
----------------------------------------------------------------------
2,200 Greater New York Savings Bank 16,500
----------------------------------------------------------------------
1,600 Grenada Sunburst Systems Corp. 39,600
----------------------------------------------------------------------
1,000 Guaranty National Corp. 21,250
----------------------------------------------------------------------
600 Harleysville Group, Inc. 15,900
----------------------------------------------------------------------
400 Harleysville National Corp. 16,800
----------------------------------------------------------------------
1,200 Hawkeye Bancorporation 23,100
----------------------------------------------------------------------
1,600 Health Care Retirement, Inc. 39,600
----------------------------------------------------------------------
500 Heritage Bankcorp, Inc. 16,375
----------------------------------------------------------------------
1,000 Heritage Financial Services, Inc. 16,750
----------------------------------------------------------------------
15,100 Hibernia Corp., Class A 118,913
----------------------------------------------------------------------
2,300 Hilb Rogal & Hamilton Co. 28,175
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
FINANCE--CONTINUED
----------------------------------------------------------------------
3,100 Home Beneficial Corp., Class B $ 73,625
----------------------------------------------------------------------
800 Horizon Bank and Savings 14,000
----------------------------------------------------------------------
1,210 Hubco, Inc. 27,830
----------------------------------------------------------------------
810 Huntington Bancshares, Inc. 20,453
----------------------------------------------------------------------
5,500 * I C H Corp. 29,563
----------------------------------------------------------------------
1,235 Imperial Bancorp 16,364
----------------------------------------------------------------------
1,500 * Imperial Credit Industries Inc. 23,625
----------------------------------------------------------------------
1,900 Independence Bancorp, Inc. 52,725
----------------------------------------------------------------------
1,300 Independent, Insurance Group, Inc. 20,800
----------------------------------------------------------------------
533 Indiana Federal Corp. 11,859
----------------------------------------------------------------------
1,400 Integon Corp. 29,225
----------------------------------------------------------------------
800 * Interactive Network Inc. 10,400
----------------------------------------------------------------------
500 Intercontinental Bank 9,813
----------------------------------------------------------------------
1,300 Inter Regional Financial Group, Inc. 40,300
----------------------------------------------------------------------
700 * Intercontinental Life Corp. 10,938
----------------------------------------------------------------------
800 Interwest Savings Bank Oak 11,400
----------------------------------------------------------------------
800 Iowa National Bankshares Corp. 20,000
----------------------------------------------------------------------
600 Irwin Financial Corp. 14,550
----------------------------------------------------------------------
800 Jefferies Group, Inc. 28,400
----------------------------------------------------------------------
2,500 Jefferson Bankshares, Inc. 51,250
----------------------------------------------------------------------
4,200 John Alden Financial Corp. 120,750
----------------------------------------------------------------------
2,200 JSB Financial, Inc. 53,075
----------------------------------------------------------------------
500 Kansas City Life Insurance Co. 27,250
----------------------------------------------------------------------
2,900 Keystone Financial, Inc. 92,438
----------------------------------------------------------------------
400 Keystone Heritage Group, Inc. 12,800
----------------------------------------------------------------------
300 LSB Bancshares, Inc. 6,225
----------------------------------------------------------------------
1,175 Lake Shore Bancorp, Inc. 35,838
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
FINANCE--CONTINUED
----------------------------------------------------------------------
700 Lawrence Insurance Group, Inc. $ 3,588
----------------------------------------------------------------------
1,875 Legg Mason Inc. 45,703
----------------------------------------------------------------------
2,000 Liberty Bancorp, Inc. 57,125
----------------------------------------------------------------------
3,100 Liberty Corp. S.C. 81,763
----------------------------------------------------------------------
2,100 Life Re Corp. 49,350
----------------------------------------------------------------------
3,300 * Lomas Financial Corp. 33,825
----------------------------------------------------------------------
1,500 Loyola Capital Corp. 24,938
----------------------------------------------------------------------
450 * MAF Bancorp, Inc. 9,900
----------------------------------------------------------------------
600 Magna Bancorp 24,300
----------------------------------------------------------------------
2,600 Margaretten Financial Corp. 37,700
----------------------------------------------------------------------
4,100 Magna Group, Inc. 79,438
----------------------------------------------------------------------
1,950 Mark Twain Bancshares, Inc. 52,650
----------------------------------------------------------------------
600 * Markel Corp. 23,850
----------------------------------------------------------------------
300 Maryland Federal Bancorp, Inc. 8,025
----------------------------------------------------------------------
1,000 McDonald & Co. Investors, Inc. 14,500
----------------------------------------------------------------------
1,300 * Medstat Group, Inc. 20,150
----------------------------------------------------------------------
400 Merchants Bancshares, Inc. 5,800
----------------------------------------------------------------------
300 Merchants Bank New York 16,500
----------------------------------------------------------------------
1,698 Meridian Bancorp, Inc. 51,789
----------------------------------------------------------------------
700 Meridian Insurance Group, Inc. 8,050
----------------------------------------------------------------------
900 Metro Bancshares, Inc. 15,638
----------------------------------------------------------------------
5,340 Metropolitan Financial Corp. 90,780
----------------------------------------------------------------------
832 Mid American Bancorp 16,016
----------------------------------------------------------------------
1,950 Mid American, Inc. 27,300
----------------------------------------------------------------------
400 * Mid State Federal Savings & Loan 15,700
----------------------------------------------------------------------
200 Midland Co. 9,300
----------------------------------------------------------------------
600 Midland Financial Group, Inc. 14,925
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
FINANCE--CONTINUED
----------------------------------------------------------------------
400 Money Stores, Inc. $ 10,850
----------------------------------------------------------------------
600 * Mobile America Corp. 9,900
----------------------------------------------------------------------
2,150 Morgan Keegan, Inc. 29,831
----------------------------------------------------------------------
400 Mountaineer Bankshares 17,200
----------------------------------------------------------------------
1,135 * Mutual Assurance 27,524
----------------------------------------------------------------------
1,400 N S Bancorp, Inc. 43,750
----------------------------------------------------------------------
700 National Bancorp Alaska, Inc. 39,200
----------------------------------------------------------------------
1,700 National Community Bancorp 61,200
----------------------------------------------------------------------
500 National Insurance Group 8,688
----------------------------------------------------------------------
1,070 National Penn Bancshares, Inc. 42,800
----------------------------------------------------------------------
400 * National Western Life Insurance, Co., Class A 21,800
----------------------------------------------------------------------
600 * Navigators Group, Inc. 23,250
----------------------------------------------------------------------
1,400 NBB Bancorp, Inc. 55,475
----------------------------------------------------------------------
300 NBSC Corp. 6,375
----------------------------------------------------------------------
1,100 NBT Bancorp, Inc. 20,350
----------------------------------------------------------------------
900 New York Bancorp, Inc. 19,688
----------------------------------------------------------------------
700 Neworld Bancorp, Inc. 23,188
----------------------------------------------------------------------
3,100 * Noel Group, Inc. 23,250
----------------------------------------------------------------------
2,800 North American Mortgage Co. 92,750
----------------------------------------------------------------------
2,300 North Fork Bancorp, Inc. 27,888
----------------------------------------------------------------------
720 North Side Savings Bank 15,120
----------------------------------------------------------------------
800 Nymagic, Inc. 21,500
----------------------------------------------------------------------
3,355 Old National Bancorp 126,651
----------------------------------------------------------------------
500 Omega Financial Corp. 12,750
----------------------------------------------------------------------
2,595 Onbancorp, Inc. 92,771
----------------------------------------------------------------------
1,780 One Valley Bancorp West Virginia, Inc. 51,175
----------------------------------------------------------------------
2,125 Orion Capital Corp. 90,313
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
FINANCE--CONTINUED
----------------------------------------------------------------------
2,100 Pacific Western Bancshares, Inc. $ 17,588
----------------------------------------------------------------------
3,000 Penncorp Financial Group, Inc. 62,625
----------------------------------------------------------------------
500 Peoples Bancorp Worcester Inc. 23,375
----------------------------------------------------------------------
1,200 Peoples Bank Bridgeport 10,950
----------------------------------------------------------------------
2,300 Peoples Heritage Financial Group 26,450
----------------------------------------------------------------------
400 Peoples Holding Co. 16,000
----------------------------------------------------------------------
800 Peoples Westchester Savings Bank 30,900
----------------------------------------------------------------------
1,000 Phoenix Resources Corp. 34,250
----------------------------------------------------------------------
375 Piedmont Bankgroup, Inc. 8,438
----------------------------------------------------------------------
500 * Piedmont Management, Inc. 7,375
----------------------------------------------------------------------
600 Pinnacle Banc Group, Inc. 21,000
----------------------------------------------------------------------
1,800 Pioneer Group, Inc. 46,800
----------------------------------------------------------------------
800 Piper Jaffray Cos, Inc. 26,900
----------------------------------------------------------------------
900 Poe & Assoc., Inc. 18,000
----------------------------------------------------------------------
4,620 * Premier Bancorp, Inc. 83,160
----------------------------------------------------------------------
760 Premier Bankshares Corp. 16,720
----------------------------------------------------------------------
2,900 Presidential Life Corp. 28,638
----------------------------------------------------------------------
2,300 Protective Life Corp. 112,125
----------------------------------------------------------------------
1,200 Provident Bancorp, Inc. 32,700
----------------------------------------------------------------------
1,000 Provident Bankshares Corp. 20,375
----------------------------------------------------------------------
2,000 * Quality Medical, Inc. 26,500
----------------------------------------------------------------------
1,040 Quick & Reilly Group, Inc. 37,310
----------------------------------------------------------------------
300 Railroadmens Federal Savings & Loan 12,000
----------------------------------------------------------------------
1,500 Raymond James Financial, Inc. 40,500
----------------------------------------------------------------------
900 Re Capital Corp. 13,500
----------------------------------------------------------------------
200 Reliable Life Insurance Co. 10,250
----------------------------------------------------------------------
3,600 Reliance Group Holdings, Inc. 33,300
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
FINANCE--CONTINUED
----------------------------------------------------------------------
1,540 Republic Bancorp, Inc. $ 23,100
----------------------------------------------------------------------
3,000 * Republic Waste Industries, Inc. 10,125
----------------------------------------------------------------------
2,700 Riggs National Corp. 24,975
----------------------------------------------------------------------
700 River Forest Bancorp 26,600
----------------------------------------------------------------------
2,100 Rochester Community Savings Bank 30,975
----------------------------------------------------------------------
900 Roosevelt Financial Group, Inc. 41,850
----------------------------------------------------------------------
400 RS Financial Corp. 8,100
----------------------------------------------------------------------
900 S & T Bancorp Inc. 32,738
----------------------------------------------------------------------
2,363 St. Paul Bancorp Inc. 65,869
----------------------------------------------------------------------
1,200 Santa Monica Bank California 8,550
----------------------------------------------------------------------
400 Scor U.S. Corp. 6,100
----------------------------------------------------------------------
700 Seacoast Banking Corp., Class A 12,600
----------------------------------------------------------------------
700 * Seacor Holdings, Inc. 17,675
----------------------------------------------------------------------
900 Seafield Capital Corp. 32,850
----------------------------------------------------------------------
1,700 Security Capital Bancorp 23,800
----------------------------------------------------------------------
2,300 Selective Insurance Group, Inc. 70,725
----------------------------------------------------------------------
1,200 SFFED Corp 22,200
----------------------------------------------------------------------
500 Shoreline Financial 14,750
----------------------------------------------------------------------
1,400 Silicon Valley Bancshares 15,050
----------------------------------------------------------------------
300 Simmons 1st National Corp., Class A 8,138
----------------------------------------------------------------------
5,500 Southern National Corp. 114,813
----------------------------------------------------------------------
400 Southwest National Corp. 15,000
----------------------------------------------------------------------
750 Southwest Securities Group, Inc. 9,000
----------------------------------------------------------------------
4,039 Sovereign Bancorp, Inc. 55,029
----------------------------------------------------------------------
1,349 SPI Pharmaceuticals, Inc. 18,543
----------------------------------------------------------------------
1,800 State Auto Financial Corp. 23,400
----------------------------------------------------------------------
1,900 Statesman Group, Inc. 26,363
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
FINANCE--CONTINUED
----------------------------------------------------------------------
700 Stewart Information Services Corp. $ 20,300
----------------------------------------------------------------------
600 Student Loan Corp. 11,700
----------------------------------------------------------------------
500 Suburban Bancorp, Class A 22,500
----------------------------------------------------------------------
300 Sumitomo Bank California 9,225
----------------------------------------------------------------------
4,500 Summit Bancorporation 97,313
----------------------------------------------------------------------
1,625 Susquehanna Bancshares, Inc. 45,906
----------------------------------------------------------------------
2,243 TCF Financial Corp. 80,468
----------------------------------------------------------------------
500 Tompkins County Trust Co. 22,000
----------------------------------------------------------------------
1,000 Trans Financial Bancorp, Inc. 15,500
----------------------------------------------------------------------
3,525 Trustco Bank Corp. 75,869
----------------------------------------------------------------------
4,200 Trustmark Corp. 75,600
----------------------------------------------------------------------
1,600 U.S. Trust Corp. 86,400
----------------------------------------------------------------------
600 * Unicare Financial Corp. 16,800
----------------------------------------------------------------------
3,300 Union Planters Corp. 85,388
----------------------------------------------------------------------
1,900 United Bankshares, Inc. 49,875
----------------------------------------------------------------------
2,400 United Carolina Bancshares 55,200
----------------------------------------------------------------------
1,200 United Companies Financial Corp. 43,800
----------------------------------------------------------------------
200 United Countrys Bancorporation 19,400
----------------------------------------------------------------------
700 United Federal Bancorp, Inc. 22,225
----------------------------------------------------------------------
400 United Fire & Casualty Co. 14,800
----------------------------------------------------------------------
1,000 * United Insurance Cos., Inc. 26,500
----------------------------------------------------------------------
2,000 United MO Bancshares 76,500
----------------------------------------------------------------------
318 United National Bancorp 10,057
----------------------------------------------------------------------
800 United Postal Bancorp 23,000
----------------------------------------------------------------------
1,500 UST Corp. 16,688
----------------------------------------------------------------------
1,700 USLico Corp. 29,963
----------------------------------------------------------------------
3,650 Valley Bancorporation 102,912
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
FINANCE--CONTINUED
----------------------------------------------------------------------
200 Value Line, Inc. $ 8,100
----------------------------------------------------------------------
400 Vermont Financial Services 7,400
----------------------------------------------------------------------
1,000 Victoria Bankshares, Inc. 28,000
----------------------------------------------------------------------
875 Warner Insurance Services, Inc. 4,922
----------------------------------------------------------------------
1,500 Washington National Corp. 35,250
----------------------------------------------------------------------
575 Waterhouse Investment Services, Inc. 27,169
----------------------------------------------------------------------
440 Webster Financial Corp. Waterbury 10,890
----------------------------------------------------------------------
1,300 WestAmerica Bancorporation 35,913
----------------------------------------------------------------------
1,100 Wesbanco, Inc. 34,375
----------------------------------------------------------------------
840 * Western Bank Cos. 14,280
----------------------------------------------------------------------
700 Westcorp, Inc. 7,175
----------------------------------------------------------------------
1,750 Whitney Holding Corp. 62,563
----------------------------------------------------------------------
2,300 Worthen Banking Corp. 55,775
----------------------------------------------------------------------
770 York Financial Corp. 16,748
----------------------------------------------------------------------
2,100 Zenith National Insurance Corp. 55,125
----------------------------------------------------------------------
2,000 Zions Bancorp 87,500
---------------------------------------------------------------------- -----------
Total 11,859,313
---------------------------------------------------------------------- -----------
GENERAL BUSINESS--6.5%
----------------------------------------------------------------------
1,100 * Acxiom Corp 24,475
----------------------------------------------------------------------
4,600 * Adaptec, Inc. 165,600
----------------------------------------------------------------------
400 * Adelphia Communications Corp. 10,200
----------------------------------------------------------------------
400 ADIA Services, Inc. 8,600
----------------------------------------------------------------------
3,300 Advo Inc. 47,850
----------------------------------------------------------------------
1,700 * Agency Rent A Car, Inc. 18,913
----------------------------------------------------------------------
600 * Allied Research Corp. 6,825
----------------------------------------------------------------------
800 American Building Maintenance Industries 13,100
----------------------------------------------------------------------
2,300 * American Business Information 32,200
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
GENERAL BUSINESS--CONTINUED
----------------------------------------------------------------------
1,300 American Business Products, Inc. $ 28,113
----------------------------------------------------------------------
500 * Ameriscribe Corp. 7,375
----------------------------------------------------------------------
2,650 Amtech Corp. 74,863
----------------------------------------------------------------------
900 Analysts International Corp. 15,750
----------------------------------------------------------------------
1,300 * Arch Communications Group, Inc. 20,800
----------------------------------------------------------------------
600 Atlantic Telephone Network, Inc. 8,550
----------------------------------------------------------------------
400 * Aydin Corp. 6,200
----------------------------------------------------------------------
400 * Baker Michael Corp. 3,600
----------------------------------------------------------------------
700 * Barra, Inc. 4,725
----------------------------------------------------------------------
2,500 * Bisys Group, Inc. 60,625
----------------------------------------------------------------------
2,500 Bolt Beranek & Newman, Inc. 33,750
----------------------------------------------------------------------
2,600 Bowne & Co., Inc. 52,975
----------------------------------------------------------------------
900 * Business Records Corporation Holdings Co. 24,525
----------------------------------------------------------------------
1,600 * Caere Corp. 11,200
----------------------------------------------------------------------
1,600 * Catalina Marketing Corp. 75,800
----------------------------------------------------------------------
9,600 * Catellus Development Corp. 74,400
----------------------------------------------------------------------
3,000 * Centex Telemanagement, Inc. 18,750
----------------------------------------------------------------------
700 * Centigram Communications 22,575
----------------------------------------------------------------------
1,500 * Chipcom Corp. 70,875
----------------------------------------------------------------------
4,000 * CIS Technologies, Inc. 16,000
----------------------------------------------------------------------
1,050 * Clear Channel Communications 45,413
----------------------------------------------------------------------
500 * Comcoa, Inc. 7,750
----------------------------------------------------------------------
6,900 * Comdata Holdings Corp. 22,425
----------------------------------------------------------------------
3,900 Commerce Clearing House, Class A 59,963
----------------------------------------------------------------------
2,100 * Compression Labs, Inc. 36,488
----------------------------------------------------------------------
400 Comptek Research, Inc. 7,000
----------------------------------------------------------------------
1,500 Computer Language Research, Inc. 9,375
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
GENERAL BUSINESS--CONTINUED
----------------------------------------------------------------------
700 Computer Task Group, Inc. $ 4,813
----------------------------------------------------------------------
900 * Corrections Corp America 6,975
----------------------------------------------------------------------
2,200 Cross (A.T.) Co., Class A 30,800
----------------------------------------------------------------------
400 * Crown Books Corp. 9,000
----------------------------------------------------------------------
2,300 CRS, Inc. 21,563
----------------------------------------------------------------------
1,200 * CSS Industries, Inc. 23,100
----------------------------------------------------------------------
1,200 * DeVRY, Inc. 33,600
----------------------------------------------------------------------
1,000 * Devon Group, Inc. 18,125
----------------------------------------------------------------------
1,100 Duplex Products, Inc. 11,825
----------------------------------------------------------------------
400 * Electro Rent 7,000
----------------------------------------------------------------------
2,900 Ennis Business Forms, Inc. 36,975
----------------------------------------------------------------------
2,700 * Enterra Corp. 63,450
----------------------------------------------------------------------
1,600 * Envoy Corp. 25,600
----------------------------------------------------------------------
1,100 * Excalibur Technologies Corp. 13,750
----------------------------------------------------------------------
1,210 * Executive Telecard Ltd. 17,243
----------------------------------------------------------------------
1,300 * Express Scripts Inc., Class A 59,150
----------------------------------------------------------------------
500 Fair Issac & Co., Inc. 11,250
----------------------------------------------------------------------
1,600 Foote Cone & Belding Communications 61,000
----------------------------------------------------------------------
1,200 Foxmeyer Corp. 13,950
----------------------------------------------------------------------
1,500 * Genta, Inc. 13,500
----------------------------------------------------------------------
600 * Geraghty & Miller, Inc. 5,850
----------------------------------------------------------------------
2,700 Gibson Greetings, Inc. 54,675
----------------------------------------------------------------------
800 Gilbert Association Inc., Class A 13,300
----------------------------------------------------------------------
850 * Gmis, Inc. 12,325
----------------------------------------------------------------------
800 Graphic Industries, Inc. 5,700
----------------------------------------------------------------------
2,000 * Great American Management & Investment, Inc. 65,000
----------------------------------------------------------------------
900 Greiner Engineering, Inc. 13,275
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
GENERAL BUSINESS--CONTINUED
----------------------------------------------------------------------
200 Grey Advertising, Inc. $ 35,700
----------------------------------------------------------------------
100 * Gymboree Corp. 101,588
----------------------------------------------------------------------
600 Haggar Corp. 10,950
----------------------------------------------------------------------
2,600 * Heritage Media Corp., Class A 44,525
----------------------------------------------------------------------
2,400 Houghton Mufflin Co. 113,700
----------------------------------------------------------------------
1,700 Hunt Manufacturers Co. 26,775
----------------------------------------------------------------------
1,800 * Imageamerica Corp. 6,975
----------------------------------------------------------------------
1,100 * IMRS, Inc. 27,775
----------------------------------------------------------------------
2,200 * Interleaf, Inc. 12,375
----------------------------------------------------------------------
4,300 * International Cablecasting Technology, Inc. 23,113
----------------------------------------------------------------------
3,000 * Intervoice, Inc. 46,500
----------------------------------------------------------------------
2,600 * Jacobs Engineering Group Inc. 61,425
----------------------------------------------------------------------
100 * Jones Spacelink LTD New 175
----------------------------------------------------------------------
1,600 * Kendall Square Research Corp. 26,200
----------------------------------------------------------------------
800 * Kronos Inc. 14,200
----------------------------------------------------------------------
1,300 Landauer, Inc. 20,638
----------------------------------------------------------------------
1,600 Lawyers Title Corp. 31,600
----------------------------------------------------------------------
1,100 Logicon, Inc. 31,488
----------------------------------------------------------------------
2,500 * MB Communications, Inc. 40,625
----------------------------------------------------------------------
1,500 * Mail Boxes, ETC. 19,500
----------------------------------------------------------------------
1,200 McGrath Rentcorp. 17,400
----------------------------------------------------------------------
1,600 * Medaphis Corp. 48,000
----------------------------------------------------------------------
2,400 Media General, Inc., Class A 72,000
----------------------------------------------------------------------
800 * Medical Marketing, Inc. 21,600
----------------------------------------------------------------------
2,100 Meredith Corp. 84,263
----------------------------------------------------------------------
800 Merrill Corp. 20,600
----------------------------------------------------------------------
1,100 * Metricom, Inc. 30,800
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
GENERAL BUSINESS--CONTINUED
----------------------------------------------------------------------
1,200 * Microage, Inc. $ 34,500
----------------------------------------------------------------------
1,300 * Millicom, Inc. 40,300
----------------------------------------------------------------------
1,100 Nashua Corp. 30,663
----------------------------------------------------------------------
2,200 National Data Corp. 39,875
----------------------------------------------------------------------
4,500 * National Education Corp. 26,438
----------------------------------------------------------------------
1,300 National Media Corp. 8,450
----------------------------------------------------------------------
2,700 * National Patent Development Corp. 15,525
----------------------------------------------------------------------
1,800 Nelson Thomas, Inc. 37,350
----------------------------------------------------------------------
2,000 New England Business Service 33,000
----------------------------------------------------------------------
900 * Nichols Research Corp. 11,475
----------------------------------------------------------------------
500 * Norstan, Inc. 8,125
----------------------------------------------------------------------
900 * Outlook Graphics Corp. 10,125
----------------------------------------------------------------------
400 * Park Communications, Inc. 9,400
----------------------------------------------------------------------
1,406 * Paxar Corp. 21,270
----------------------------------------------------------------------
700 * Payco American Corp. 5,600
----------------------------------------------------------------------
800 PCA International, Inc. 16,900
----------------------------------------------------------------------
900 * Perseptive Biosystems, Inc. 22,725
----------------------------------------------------------------------
800 * Pharmacy Management Services, Inc. 6,100
----------------------------------------------------------------------
700 * Pinkertons, Inc. 14,000
----------------------------------------------------------------------
2,300 * Playboy Enterprises, Inc., Class B 21,275
----------------------------------------------------------------------
800 Plenum Publishing Corp. 18,900
----------------------------------------------------------------------
1,200 * Possis Corp. 12,300
----------------------------------------------------------------------
420 Pulitzer Publishing Co. 14,123
----------------------------------------------------------------------
6,100 * Physician Corp. America 126,575
----------------------------------------------------------------------
1,200 * Quarterdeck Office Systems 2,625
----------------------------------------------------------------------
1,500 Radiation Systems, Inc. 23,625
----------------------------------------------------------------------
700 * Regis Corp Minnesota 7,875
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
GENERAL BUSINESS--CONTINUED
----------------------------------------------------------------------
1,400 * Robert Half International, Inc. $ 38,850
----------------------------------------------------------------------
4,500 Safecard Services, Inc. 58,500
----------------------------------------------------------------------
1,100 * Safety 1st Inc. 26,400
----------------------------------------------------------------------
700 * Saga Communications, Class A 13,213
----------------------------------------------------------------------
2,400 SEI Corp. 57,000
----------------------------------------------------------------------
3,600 * SGI International 11,475
----------------------------------------------------------------------
4,300 Spelling Entertainment Group, Inc. 43,000
----------------------------------------------------------------------
2,300 Standard Register 45,425
----------------------------------------------------------------------
900 * State of the Art, Inc. 7,425
----------------------------------------------------------------------
1,100 * Steris Corp. 21,725
----------------------------------------------------------------------
2,300 Stewart Enterprises, Inc., Class A 92,000
----------------------------------------------------------------------
1,600 Stone & Webster, Inc. 47,400
----------------------------------------------------------------------
10,400 Stone Container Corp. 74,100
----------------------------------------------------------------------
1,800 * Stratacom Inc. 29,025
----------------------------------------------------------------------
3,400 * Sun Guard Data Systems 124,950
----------------------------------------------------------------------
2,800 Sun Television & Appliances 63,700
----------------------------------------------------------------------
1,000 * Supercuts, Inc. 16,750
----------------------------------------------------------------------
700 * Syratech Corp 11,550
----------------------------------------------------------------------
2,100 * Systems & Computer Technology 36,225
----------------------------------------------------------------------
2,300 * T Cell Sciences, Inc. 17,250
----------------------------------------------------------------------
2,500 TCA Cable TV Inc. 73,125
----------------------------------------------------------------------
775 * Tetra Technology, Inc. 15,597
----------------------------------------------------------------------
6,800 * Topps Inc. 54,400
----------------------------------------------------------------------
1,100 Total System Services, Inc. 33,413
----------------------------------------------------------------------
500 * Trans World Music Corp. 6,875
----------------------------------------------------------------------
400 Treadco, Inc. 5,800
----------------------------------------------------------------------
600 * TRM Copy Centers Corp. 7,800
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
GENERAL BUSINESS--CONTINUED
----------------------------------------------------------------------
1,600 * U.S. Robotics, Inc. $ 42,600
----------------------------------------------------------------------
8,300 U.S. Shoe 90,263
----------------------------------------------------------------------
800 * Union Corp. 9,300
----------------------------------------------------------------------
2,200 United Stationers, Inc. 34,100
----------------------------------------------------------------------
800 * United Television, Inc. 31,600
----------------------------------------------------------------------
1,850 United Wisconsin Services, Inc. 52,725
----------------------------------------------------------------------
800 Wackenhut Corp. 11,025
----------------------------------------------------------------------
300 Waverly, Inc. 5,700
----------------------------------------------------------------------
2,900 * Western Publishing Group, Inc. 43,138
----------------------------------------------------------------------
1,200 * Weston (Roy F), Inc. 10,800
----------------------------------------------------------------------
600 Wiley (John) Sons, Class A 37,500
----------------------------------------------------------------------
3,000 * Zilog, Inc. 116,250
---------------------------------------------------------------------- -----------
Total 4,928,005
---------------------------------------------------------------------- -----------
HEALTHCARE--0.3%
----------------------------------------------------------------------
4,100 * Acuson Corp. 55,863
----------------------------------------------------------------------
1,300 Allied Healthcare Products 15,600
----------------------------------------------------------------------
800 * American Medical Response 20,600
----------------------------------------------------------------------
1,100 * Atrix Labs, Inc. 6,738
----------------------------------------------------------------------
1,500 * ATS Medical Inc. 8,625
----------------------------------------------------------------------
6,000 * Continental Medical System Inc. 57,750
----------------------------------------------------------------------
832 United Healthcare Corp. 58,136
---------------------------------------------------------------------- -----------
Total 223,312
---------------------------------------------------------------------- -----------
HOSPITAL SUPPLIES--0.1%
----------------------------------------------------------------------
4,300 * Mcgaw Inc. 43,000
---------------------------------------------------------------------- -----------
INDUSTRIAL PRODUCTS--0.1%
----------------------------------------------------------------------
3,100 Kaman Corp. Cl A 29,838
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
INDUSTRIAL PRODUCTS--CONTINUED
----------------------------------------------------------------------
3,100 * Rexnord Corp. $ 56,963
---------------------------------------------------------------------- -----------
Total 86,801
---------------------------------------------------------------------- -----------
INSURANCE--0.1%
----------------------------------------------------------------------
2,200 Acordia, Inc. 54,725
---------------------------------------------------------------------- -----------
MISCELLANEOUS--2.0%
----------------------------------------------------------------------
1,800 Actava Group, Inc. 14,400
----------------------------------------------------------------------
1,200 * Alltrista Corp. 21,600
----------------------------------------------------------------------
800 * Berlitz International, Inc. 10,400
----------------------------------------------------------------------
3,000 * BET Holdings, Class A 54,375
----------------------------------------------------------------------
1,000 * Boomtown, Inc. 19,750
----------------------------------------------------------------------
1,600 * Capsure Holdings Corp. 24,800
----------------------------------------------------------------------
900 * Casino American Inc. 19,800
----------------------------------------------------------------------
3,600 Crimi Mae Inc. 44,100
----------------------------------------------------------------------
900 * Crosscomm Corp. 28,350
----------------------------------------------------------------------
1,200 Dames & Moore Inc. 20,100
----------------------------------------------------------------------
700 * Data Race Inc. 5,775
----------------------------------------------------------------------
3,500 Dentsply International Inc. 133,000
----------------------------------------------------------------------
900 Dial Page Inc. 66,150
----------------------------------------------------------------------
900 * Education Alternatice 37,800
----------------------------------------------------------------------
2,400 * First Pacific Networks Inc. 32,100
----------------------------------------------------------------------
7,700 * Flagstar Cos, Inc. 82,775
----------------------------------------------------------------------
500 * Fritz Cos Inc. 15,125
----------------------------------------------------------------------
4,400 Geotek Industries Inc. 41,800
----------------------------------------------------------------------
1,200 * Global Industries Ltd. 21,600
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
MISCELLANEOUS--CONTINUED
----------------------------------------------------------------------
4,500 Imp Inc. 7,875
----------------------------------------------------------------------
900 Inacom Corp. 15,975
----------------------------------------------------------------------
900 Intercargo Corp. 13,050
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
MISCELLANEOUS--CONTINUED
----------------------------------------------------------------------
1,500 International Gaming Management $ 12,000
----------------------------------------------------------------------
3,200 International Multifoods Corp. 74,800
----------------------------------------------------------------------
2,900 * Interpool Inc. 57,638
----------------------------------------------------------------------
1,100 Jmc Group Inc. 11,138
----------------------------------------------------------------------
1,200 Katy Industries, Inc. 33,750
----------------------------------------------------------------------
2,700 * Kemet Corp. 40,500
----------------------------------------------------------------------
800 Knogo Corp. 8,500
----------------------------------------------------------------------
2,000 * Landstar System Inc. 33,500
----------------------------------------------------------------------
700 * Marine Harvest International, Inc. 7,350
----------------------------------------------------------------------
3,200 Maybelline, Inc. 74,800
----------------------------------------------------------------------
1,200 McAfee Associates, Inc. 6,750
----------------------------------------------------------------------
1,000 * Nautica Enterprises, Inc. 33,500
----------------------------------------------------------------------
1,300 * Nu-Kote Holdings, Inc., Class A 25,350
----------------------------------------------------------------------
400 Park National Corp. 30,800
----------------------------------------------------------------------
400 People First Corp. 16,600
----------------------------------------------------------------------
700 Pikeville National Corp. 24,150
----------------------------------------------------------------------
600 Puerto Rican Cem Inc. 15,900
----------------------------------------------------------------------
550 Putnam Tr Co. Greenwich 16,019
----------------------------------------------------------------------
2,900 * Retix 22,475
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
MISCELLANEOUS--CONTINUED
----------------------------------------------------------------------
1,400 Rival Co. 23,275
----------------------------------------------------------------------
1,100 * Sanmina Corp. 23,650
----------------------------------------------------------------------
400 Sanfilippo (John B & Sons), Inc. 5,900
----------------------------------------------------------------------
2,600 * Sepracor 20,475
----------------------------------------------------------------------
600 Suffolk Bancorp. 14,550
----------------------------------------------------------------------
2,500 Telxon Corp. 27,188
----------------------------------------------------------------------
1,300 The Colonial Group, Inc., Class A 40,950
----------------------------------------------------------------------
600 * Universal Studios Medical Labs 9,000
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
MISCELLANEOUS--CONTINUED
----------------------------------------------------------------------
1,800 * USMX Inc. $ 9,225
----------------------------------------------------------------------
1,000 * World Acceptance Corp. 19,750
----------------------------------------------------------------------
1,100 * Zoll Medical Corp. 40,975
---------------------------------------------------------------------- -----------
Total 1,511,158
---------------------------------------------------------------------- -----------
OFFICE EQUIPMENT & SUPPLIES--0.1%
----------------------------------------------------------------------
7,200 * Conner Peripherals, Inc. 87,300
---------------------------------------------------------------------- -----------
REAL ESTATE--1.1%
----------------------------------------------------------------------
1,800 Banyan Strategic Realty 8,325
----------------------------------------------------------------------
4,300 Berkshire Realty, Inc. 48,375
----------------------------------------------------------------------
2,700 Bradley Real Estate Trust 24,975
----------------------------------------------------------------------
200 * Christiana Companies, Inc. 4,600
----------------------------------------------------------------------
1,237 CV REIT, Inc. 11,442
----------------------------------------------------------------------
1,700 Developers Diversified Realty 48,875
----------------------------------------------------------------------
1,400 Dial REIT, Inc. 14,875
----------------------------------------------------------------------
5,400 Health & Rehabilitation Properties, Inc. 87,075
----------------------------------------------------------------------
2,200 Health Equity Properties, Inc. 21,725
----------------------------------------------------------------------
1,700 Koger Equity Inc. 15,513
----------------------------------------------------------------------
1,300 L T C Pptys Inc. 17,550
----------------------------------------------------------------------
1,800 * Mercer International Inc. 23,175
----------------------------------------------------------------------
2,300 Merry Land and Investment Co. 46,288
----------------------------------------------------------------------
1,600 Pennsylvania Real Estate Investment Trust 40,200
----------------------------------------------------------------------
500 Price Reit Inc. 16,125
----------------------------------------------------------------------
1,400 Real Estate Investment Trust 25,200
----------------------------------------------------------------------
3,400 Resource Management Capital, Inc. 108,800
----------------------------------------------------------------------
4,300 RPS Realty Trust 17,738
----------------------------------------------------------------------
800 * Schuler Homes Inc. 22,900
----------------------------------------------------------------------
</TABLE>
76
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
REAL ESTATE--CONTINUED
----------------------------------------------------------------------
1,400 Sizeler Property Investment, Inc. 19,075
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
REAL ESTATE--CONTINUED
----------------------------------------------------------------------
3,100 Storage Equities, Inc. $ 44,950
----------------------------------------------------------------------
1,300 Universal Health Realty Trust, Inc. 22,100
----------------------------------------------------------------------
1,600 Vanguard Real Estate 13,800
----------------------------------------------------------------------
4,800 Washington Real Estate Investment Trust 92,400
----------------------------------------------------------------------
1,100 Wellsford Residential Property Trust 32,725
----------------------------------------------------------------------
2,900 Western Investment Real Estate Trust 39,513
---------------------------------------------------------------------- -----------
Total 868,319
---------------------------------------------------------------------- -----------
RETAILERS--0.1%
----------------------------------------------------------------------
7,100 * Payless Cashways Inc. 85,200
---------------------------------------------------------------------- -----------
SHELTER--1.6%
----------------------------------------------------------------------
400 Ameron, Inc. 14,750
----------------------------------------------------------------------
1,700 * Atlantic Gulf Communities Corp. 11,475
----------------------------------------------------------------------
1,200 * Avatar Holdings, Inc. 41,100
----------------------------------------------------------------------
700 * Butler Manufacturing Co. 20,038
----------------------------------------------------------------------
1,100 * Champion Enterprises 20,350
----------------------------------------------------------------------
500 Consolidated Tomoka Co. 7,500
----------------------------------------------------------------------
400 Continental Homes Holdings Co. 8,700
----------------------------------------------------------------------
800 Elcor Chemical Corp. 18,100
----------------------------------------------------------------------
600 Engle Homes, Inc. 7,050
----------------------------------------------------------------------
2,400 Fastenal Co. 73,800
----------------------------------------------------------------------
1,100 Florida Rock Industries, Inc. 32,313
----------------------------------------------------------------------
600 Forest City Enterprises, Inc. 24,900
----------------------------------------------------------------------
2,000 Granite Construction, Inc. 38,500
----------------------------------------------------------------------
1,800 * Holnam, Inc. 8,775
----------------------------------------------------------------------
1,300 * Hovnanian Enterprises, Inc., Class A 23,075
----------------------------------------------------------------------
2,600 Justin Industries, Inc. 46,150
----------------------------------------------------------------------
4,900 * Kasler Corp. 37,975
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
SHELTER--CONTINUED
----------------------------------------------------------------------
100 * Kennedy-Wilson Inc. $ 438
----------------------------------------------------------------------
2,800 * M.D.C. Holdings, Inc. 18,200
----------------------------------------------------------------------
3,000 Medusa Corp. 82,500
----------------------------------------------------------------------
100 * Miles Homes, Inc. 800
----------------------------------------------------------------------
900 * Morgan Products LTD 6,975
----------------------------------------------------------------------
1,600 Ply-Gem Industries, Inc. 25,400
----------------------------------------------------------------------
1,000 Republic Gypsum Co. 9,125
----------------------------------------------------------------------
2,600 Ryland Group, Inc. 50,375
----------------------------------------------------------------------
3,100 Southdown, Inc. 75,563
----------------------------------------------------------------------
4,300 Standard Pacific Corp. 40,313
----------------------------------------------------------------------
2,000 TJ International Inc. 62,500
----------------------------------------------------------------------
3,000 * Toll Brothers, Inc. 47,250
----------------------------------------------------------------------
600 * U S Homecare Corp. 2,850
----------------------------------------------------------------------
6,301 * U S Home Corp. Class A 173,278
----------------------------------------------------------------------
55 * U S Home Corp., Class B 791
----------------------------------------------------------------------
6,702 * U.S.G. Corp. 147,444
----------------------------------------------------------------------
2,700 Webb (Del) Corp. 35,100
----------------------------------------------------------------------
600 Wolohan Lumber Co. 9,300
---------------------------------------------------------------------- -----------
Total 1,222,753
---------------------------------------------------------------------- -----------
STEEL--0.0%
----------------------------------------------------------------------
2,100 * Geneva Steel Cl A 30,975
---------------------------------------------------------------------- -----------
TECHNOLOGY--11.1%
----------------------------------------------------------------------
1,000 * ACX Technologies, Inc. 37,750
----------------------------------------------------------------------
700 * Advance Circuits, Inc. 8,138
----------------------------------------------------------------------
600 * Advanced Promotion 7,200
----------------------------------------------------------------------
1,800 * Advanced Technology Labs Inc. 31,050
----------------------------------------------------------------------
1,900 * Aldus Corp. 42,275
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
----------------------------------------------------------------------
1,600 * Alliant Techsystems, Inc. $ 46,600
----------------------------------------------------------------------
3,700 * Altera Corp. 102,213
----------------------------------------------------------------------
5,747 * American Annuity Group, Inc. 51,723
----------------------------------------------------------------------
400 * American City Business 9,950
----------------------------------------------------------------------
2,900 * American Management System, Inc. 63,438
----------------------------------------------------------------------
1,000 * America Online, Inc. 60,000
----------------------------------------------------------------------
3,100 American Software, Inc., Class A 22,475
----------------------------------------------------------------------
800 * American Superconductor Corp. 20,200
----------------------------------------------------------------------
4,200 * Amphenol Corp., Class A 57,750
----------------------------------------------------------------------
400 * Amplicon, Inc. 7,700
----------------------------------------------------------------------
5,900 * Anacomp, Inc. 19,175
----------------------------------------------------------------------
1,100 * Analogic Corp. 16,844
----------------------------------------------------------------------
2,100 * Andrew Corp. 79,275
----------------------------------------------------------------------
3,600 * Applied Magnetics Corp. 21,150
----------------------------------------------------------------------
1,700 * Artisoft, Inc. 18,063
----------------------------------------------------------------------
2,700 * ASK Group Inc. 37,800
----------------------------------------------------------------------
1,600 Aspect Telecommunications Corp. 62,800
----------------------------------------------------------------------
4,600 * AST Research, Inc., Class A 94,875
----------------------------------------------------------------------
3,000 * Atari Corp. 25,500
----------------------------------------------------------------------
2,600 Augat, Inc. 51,675
----------------------------------------------------------------------
4,600 * Autotote Corp. Class A 121,900
----------------------------------------------------------------------
800 * Babbages, Inc. 20,800
----------------------------------------------------------------------
1,300 Baldwin Technology, Inc. 6,256
----------------------------------------------------------------------
2,050 * Banctec, Inc. 39,463
----------------------------------------------------------------------
1,100 * Banner Aerospace, Inc. 4,813
----------------------------------------------------------------------
2,000 * Banyan Systems, Inc. 40,500
----------------------------------------------------------------------
2,100 * BE Aerospace Inc. 24,150
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
----------------------------------------------------------------------
1,040 Bell Industries $ 19,110
----------------------------------------------------------------------
400 * Benchmark Electros, Inc. 8,250
----------------------------------------------------------------------
200 BGS System, Inc. 5,300
----------------------------------------------------------------------
800 * BMC Industries Inc. 13,000
----------------------------------------------------------------------
600 * Boole & Babbage, Inc. 15,600
----------------------------------------------------------------------
400 Boston Acoustics, Inc. 6,000
----------------------------------------------------------------------
2,200 * Boston Technology, Inc. 21,175
----------------------------------------------------------------------
5,500 * Breed Technologies Inc. 82,500
----------------------------------------------------------------------
1,300 * Broderbund Software, Inc. 73,450
----------------------------------------------------------------------
2,700 * Brooktree Corp. 35,775
----------------------------------------------------------------------
1,200 * Brown Tom Inc. 17,250
----------------------------------------------------------------------
1,600 * Burr Brown Corp. 11,200
----------------------------------------------------------------------
400 * C COR Electros, Inc. 7,100
----------------------------------------------------------------------
7,300 * Cadence Design Systems Inc. 84,863
----------------------------------------------------------------------
1,900 * California Microwave 43,700
----------------------------------------------------------------------
800 * Cambex Corp. 4,800
----------------------------------------------------------------------
1,500 * Cerner Corp. 53,625
----------------------------------------------------------------------
1,600 * Checkpoint System, Inc. 18,800
----------------------------------------------------------------------
1,500 * Chips & Technologies, Inc. 8,625
----------------------------------------------------------------------
2,700 * Chipsoft Inc., Class A 40,500
----------------------------------------------------------------------
4,300 * Cirrus Logic, Inc. 150,500
----------------------------------------------------------------------
1,000 * Clinicom Inc. 21,000
----------------------------------------------------------------------
1,200 Communications System Inc. 18,300
----------------------------------------------------------------------
2,300 * Comptronix Corp. 10,925
----------------------------------------------------------------------
2,600 * Compucom System, Inc. 11,213
----------------------------------------------------------------------
3,200 * Computer Network Technology 27,200
----------------------------------------------------------------------
5,000 Computervision Corp. 13,750
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
----------------------------------------------------------------------
3,100 * Comverse Technology Inc. $ 47,663
----------------------------------------------------------------------
1,700 * Continuum Co. 33,150
----------------------------------------------------------------------
2,000 * Control Data Systems Inc. 18,500
----------------------------------------------------------------------
3,700 * Convex Computer Corp. 20,350
----------------------------------------------------------------------
2,900 * Copytele, Inc. 32,625
----------------------------------------------------------------------
1,100 * Corporate Software, Inc. 17,050
----------------------------------------------------------------------
3,300 * Cray Computer Corp. 10,313
----------------------------------------------------------------------
400 CTS Corp. 8,800
----------------------------------------------------------------------
600 Cubic Corp. 12,600
----------------------------------------------------------------------
400 Curtiss Wright Corp. 13,050
----------------------------------------------------------------------
100 * CyCare System Inc. 788
----------------------------------------------------------------------
6,100 * Cypress Semiconductor Corp. 72,438
----------------------------------------------------------------------
800 * DH Technology, Inc. 12,400
----------------------------------------------------------------------
4,200 * Dallas Semiconductor Corp. 69,825
----------------------------------------------------------------------
9,000 * Data General Corp. 85,500
----------------------------------------------------------------------
1,700 * Datapoint Corp. 12,963
----------------------------------------------------------------------
2,200 * Digi International, Inc. 48,950
----------------------------------------------------------------------
1,800 * Digital Communications Assoc. 33,300
----------------------------------------------------------------------
2,100 * Digital Microwave Corp. 48,825
----------------------------------------------------------------------
1,300 * Dionex Corp. 41,925
----------------------------------------------------------------------
1,600 * Dynatech Corp. 36,400
----------------------------------------------------------------------
2,200 * Egghead, Inc. 16,225
----------------------------------------------------------------------
1,400 * Electronics For Imaging 24,850
----------------------------------------------------------------------
1,200 * Empi, Inc. 33,000
----------------------------------------------------------------------
1,400 * Emulex Corp. 9,100
----------------------------------------------------------------------
500 * Essef Industries, Inc. 5,938
----------------------------------------------------------------------
1,400 * Evans & Sutherland Computer Co. 25,900
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
----------------------------------------------------------------------
3,800 * Exabyte Corp. $ 60,325
----------------------------------------------------------------------
800 * Exar Corp. 23,800
----------------------------------------------------------------------
300 * Exide Electros Group, Inc. 5,550
----------------------------------------------------------------------
1,200 * Fairchild Corp., Class A 3,750
----------------------------------------------------------------------
400 * Ferrofluidics Corp. 3,100
----------------------------------------------------------------------
1,700 * Filenet Corp. 31,875
----------------------------------------------------------------------
1,700 * Frame Technology Corp. 16,788
----------------------------------------------------------------------
800 * Franklin Electric Publishers, Inc. 11,200
----------------------------------------------------------------------
900 * Future Now Inc. 13,050
----------------------------------------------------------------------
700 * Gates/FA Distributions Inc. 12,338
----------------------------------------------------------------------
5,400 Gencorp, Inc. 85,050
----------------------------------------------------------------------
800 General Binding Corp. 11,600
----------------------------------------------------------------------
2,600 * General Datacomm Industries, Inc. 28,275
----------------------------------------------------------------------
3,200 * Genrad Inc. 15,600
----------------------------------------------------------------------
3,500 Gerber Scientific, Inc. 49,000
----------------------------------------------------------------------
900 * Glenayre Technologies, Inc. 85,725
----------------------------------------------------------------------
1,000 * Government Technology Services, Inc. 12,750
----------------------------------------------------------------------
600 * GTI Corp. 18,000
----------------------------------------------------------------------
1,800 * Gupta Corp. 27,000
----------------------------------------------------------------------
700 * Hadco Corp. 5,338
----------------------------------------------------------------------
2,500 HBO & Co. 97,813
----------------------------------------------------------------------
600 Henry Jack & Assoc., Inc. 9,900
----------------------------------------------------------------------
2,000 Hogan System, Inc. 22,250
----------------------------------------------------------------------
400 * Howtek, Inc. 3,600
----------------------------------------------------------------------
1,000 * Hutchinson Technology, Inc. 26,000
----------------------------------------------------------------------
1,700 * In Focus System, Inc. 26,775
----------------------------------------------------------------------
1,100 * Input/Output, Inc. 22,550
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
----------------------------------------------------------------------
2,100 * Insituform Technologies, Inc., Class A $ 33,863
----------------------------------------------------------------------
600 Instron Corp. 8,100
----------------------------------------------------------------------
850 * Integrated Circuit System, Inc. 13,813
----------------------------------------------------------------------
4,200 * Integrated Device Technology 61,950
----------------------------------------------------------------------
5,800 Intelligent Electros, Inc. 126,875
----------------------------------------------------------------------
5,900 * Interdigital Communications Corp. 41,300
----------------------------------------------------------------------
3,200 * International Rectifier Corp. 43,200
----------------------------------------------------------------------
1,600 * Intersolv, Inc. 12,400
----------------------------------------------------------------------
900 * Iomega Corp. 3,375
----------------------------------------------------------------------
1,200 Joslyn Technology Co. 30,150
----------------------------------------------------------------------
1,200 * Keane, Inc. 26,850
----------------------------------------------------------------------
700 * Key Tronic Corp. 5,075
----------------------------------------------------------------------
3,200 * KLA Instruments Corp. 70,400
----------------------------------------------------------------------
1,700 * Knowledgeware, Inc. 27,625
----------------------------------------------------------------------
2,900 * Komag, Inc. 46,400
----------------------------------------------------------------------
1,200 * Kopin Corp. 29,700
----------------------------------------------------------------------
1,300 * Kulicke & Soffa Industries 29,088
----------------------------------------------------------------------
4,200 * Lam Research Corp. 111,300
----------------------------------------------------------------------
1,900 * Landmark Graphics Corp. 46,550
----------------------------------------------------------------------
3,250 * Lattice Semiconductor 50,375
----------------------------------------------------------------------
900 * Learning Co. 17,100
----------------------------------------------------------------------
3,100 * LTX Corp. 15,113
----------------------------------------------------------------------
4,500 * M/A Com, Inc. 38,250
----------------------------------------------------------------------
2,000 MacNeal Schwendler Corp. 28,000
----------------------------------------------------------------------
1,300 * Marcam Corp. 13,975
----------------------------------------------------------------------
1,500 * Marshall Industries 71,063
----------------------------------------------------------------------
2,500 * Maxim Integrated Products, Inc. 101,875
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
----------------------------------------------------------------------
4,900 * Maxtor Corp. $ 29,400
----------------------------------------------------------------------
100 * Media Logic, Inc. 550
----------------------------------------------------------------------
1,300 * Medic Computer Systems, Inc. 16,250
----------------------------------------------------------------------
8,400 Mentor Graphics Corp. 98,700
----------------------------------------------------------------------
3,800 * Merisel, Inc. 59,850
----------------------------------------------------------------------
3,200 Methode Electronics, Inc., Class A 40,000
----------------------------------------------------------------------
600 * Micro Warehouse, Inc. 22,650
----------------------------------------------------------------------
2,400 * Microdyne Corp. 12,300
----------------------------------------------------------------------
1,100 * Micronics Computers, Inc. 6,600
----------------------------------------------------------------------
2,400 * Micropolis Corp. 18,900
----------------------------------------------------------------------
3,200 * Molten Metal Technology, Inc. 78,400
----------------------------------------------------------------------
2,300 National Computer System, Inc. 27,600
----------------------------------------------------------------------
1,500 * Netframe System Inc. 23,625
----------------------------------------------------------------------
1,800 * Network Computing Devices 14,850
----------------------------------------------------------------------
2,500 * Network Equipment Technologies 24,375
----------------------------------------------------------------------
2,400 * Network General Corp. 35,700
----------------------------------------------------------------------
5,200 * Network System Corp. 44,850
----------------------------------------------------------------------
700 * New Image Industries, Inc. 10,413
----------------------------------------------------------------------
2,500 OEA, Inc. 72,500
----------------------------------------------------------------------
2,800 * Octel Communications Corp. 70,000
----------------------------------------------------------------------
1,400 QMS Inc. 14,700
----------------------------------------------------------------------
800 * Optical Data System Inc. 8,700
----------------------------------------------------------------------
2,100 * Orbital Sciences Corp. 41,475
----------------------------------------------------------------------
900 Pacific Scientific Co. 16,875
----------------------------------------------------------------------
1,100 * Parallan Computer, Inc. 23,100
----------------------------------------------------------------------
1,300 * PDA Engineering 6,338
----------------------------------------------------------------------
1,000 * Phoenix Technology Ltd. 4,250
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
----------------------------------------------------------------------
500 * Photronic, Inc. $ 6,875
----------------------------------------------------------------------
2,500 * Picturetel Corp. 45,625
----------------------------------------------------------------------
1,800 Pittway Corp., Class A 46,125
----------------------------------------------------------------------
1,650 * Platinum Software Corp. 37,950
----------------------------------------------------------------------
2,100 * Platinum Technology I 18,113
----------------------------------------------------------------------
900 * Progress Software Corp. 49,163
----------------------------------------------------------------------
1,800 * Proteon, Inc. 9,225
----------------------------------------------------------------------
2,300 * Pyramid Technology Corp. 34,500
----------------------------------------------------------------------
1,900 * Quadrex Corp. 8,788
----------------------------------------------------------------------
600 * Rainbow Technologies, Inc. 12,600
----------------------------------------------------------------------
1,300 * Rasterop's 10,400
----------------------------------------------------------------------
6,200 * Read-Rite Corp. 73,625
----------------------------------------------------------------------
2,000 * Recognition International Inc. 34,000
----------------------------------------------------------------------
600 * Rex Stores Corp. 12,825
----------------------------------------------------------------------
2,900 * Rohr Industries, Inc. 22,838
----------------------------------------------------------------------
1,400 * Ross System, Inc. 12,075
----------------------------------------------------------------------
700 * Safeguard Scientifics, Inc. 15,225
----------------------------------------------------------------------
4,900 * SCI Systems, Inc. 89,425
----------------------------------------------------------------------
3,000 Sequa Corp., Class A 100,875
----------------------------------------------------------------------
5,400 * Sequent Computer System, Inc. 91,800
----------------------------------------------------------------------
3,800 Shared Medical Systems Corp. 95,000
----------------------------------------------------------------------
1,100 * Sierra On-Line, Inc. 26,125
----------------------------------------------------------------------
2,500 * Silicon General, Inc. 41,563
----------------------------------------------------------------------
2,000 Smith Corona Corp. 12,500
----------------------------------------------------------------------
500 * Software, Etc. Stores Inc. 10,438
----------------------------------------------------------------------
1,500 * Software PUBG Corp. 9,375
----------------------------------------------------------------------
500 * Software Spectrum, Inc. 12,000
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
----------------------------------------------------------------------
3,200 * Software Toolworks Inc. $ 48,800
----------------------------------------------------------------------
10,600 * Spectrum Information Technology Inc. 99,375
----------------------------------------------------------------------
1,900 * Standard Microsystems Corp. 40,850
----------------------------------------------------------------------
2,642 * Sterling Software, Inc. 85,855
----------------------------------------------------------------------
5,200 * Structural Dynamics Research Corp. 85,150
----------------------------------------------------------------------
1,500 * Sulcus Computer Corp. 14,438
----------------------------------------------------------------------
1,300 * Supermac Technology Inc. 25,675
----------------------------------------------------------------------
4,800 * Symantec Corp. 97,200
----------------------------------------------------------------------
3,500 * Symbol Technologies Inc. 59,063
----------------------------------------------------------------------
2,400 * Synopsys, Inc. 123,600
----------------------------------------------------------------------
2,000 * Syquest Technology Inc. 24,750
----------------------------------------------------------------------
2,800 System Software Association, Inc. 40,600
----------------------------------------------------------------------
1,200 * T*HQ, Inc. 4,163
----------------------------------------------------------------------
600 * Target Therapeutics Inc. 10,725
----------------------------------------------------------------------
2,900 * Tech Data Corp. 77,213
----------------------------------------------------------------------
1,000 * Tech Sym Corp. 19,875
----------------------------------------------------------------------
1,900 * Technology Solutions Co. 17,575
----------------------------------------------------------------------
2,600 Teleflex Inc. 75,075
----------------------------------------------------------------------
1,500 * Telco System, Inc. 15,000
----------------------------------------------------------------------
2,800 * Telematics International, Inc. 42,700
----------------------------------------------------------------------
2,100 * Tellabs, Inc. 145,950
----------------------------------------------------------------------
3,500 Thiokol Corp. 92,313
----------------------------------------------------------------------
2,200 * Triad System Corp. 11,825
----------------------------------------------------------------------
1,500 * Trident Microsystems Inc. 9,375
----------------------------------------------------------------------
2,400 * Trimble Navigation Ltd. 25,500
----------------------------------------------------------------------
3,000 * Trinzic Corp. 17,250
----------------------------------------------------------------------
2,100 Tseng Labs,Inc. 22,313
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
----------------------------------------------------------------------
3,100 * UNC, Inc. $ 24,413
----------------------------------------------------------------------
1,800 * Unitrode Corp. 25,200
----------------------------------------------------------------------
100 * Urethane Technologies 1,088
----------------------------------------------------------------------
1,000 Versa Technologies, Inc. 13,875
----------------------------------------------------------------------
2,600 * Vicor Corp. 48,100
----------------------------------------------------------------------
2,300 * Viewlogic System, Inc. 55,200
----------------------------------------------------------------------
2,000 * Vitesse Semiconductor Corp. 8,500
----------------------------------------------------------------------
6,100 * VLSI Technology, Inc. 85,400
----------------------------------------------------------------------
1,100 * Vmark Software Inc. 18,150
----------------------------------------------------------------------
500 * Volt Information Sciences 9,500
----------------------------------------------------------------------
2,100 * Walker Interactive System 18,900
----------------------------------------------------------------------
4,000 Wallace Computer Inc. 112,500
----------------------------------------------------------------------
1,000 Watkins Johnson Co. 21,500
----------------------------------------------------------------------
1,400 * Weitek Corp. 14,000
----------------------------------------------------------------------
800 * Westcott Communications, Inc. 26,800
----------------------------------------------------------------------
6,400 * Western Digital Corp. 50,400
----------------------------------------------------------------------
900 * Whittaker Corp. 11,813
----------------------------------------------------------------------
2,200 Wyle Labs 37,400
----------------------------------------------------------------------
1,500 * Xircom Inc. 25,125
----------------------------------------------------------------------
900 * Xyplex 15,300
----------------------------------------------------------------------
2,000 York Resh Corp., Class A 12,750
----------------------------------------------------------------------
1,000 * Zebra Technologies Corp., Class A 51,750
---------------------------------------------------------------------- -----------
Total 8,484,083
---------------------------------------------------------------------- -----------
TRANSPORTATION--1.4%
----------------------------------------------------------------------
3,500 Airborne Freight Corp. 105,438
----------------------------------------------------------------------
1,900 Airlines Express International Corp. 39,900
----------------------------------------------------------------------
2,500 * American Freightways Corp. 48,750
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
TRANSPORTATION--CONTINUED
----------------------------------------------------------------------
1,500 Arnold Industries, Inc. $ 60,000
----------------------------------------------------------------------
1,000 Carolina Freight Corp. 12,875
----------------------------------------------------------------------
5,500 Consolidated Freightways, Inc. 119,625
----------------------------------------------------------------------
1,000 Expeditores International Washington, Inc. 31,250
----------------------------------------------------------------------
600 Florida East Coast Industries, Inc. 38,700
----------------------------------------------------------------------
800 Frozen Food Express Industries, Inc. 16,600
----------------------------------------------------------------------
1,500 * GRC International 11,063
----------------------------------------------------------------------
2,400 * Greyhound Lines, Inc. 33,300
----------------------------------------------------------------------
1,800 Harper Group, Inc. 24,750
----------------------------------------------------------------------
900 * Intellicall Inc. 11,925
----------------------------------------------------------------------
300 International Shipbuilding Corp. 6,000
----------------------------------------------------------------------
1,200 Intertrans Corp. 14,700
----------------------------------------------------------------------
4,900 * Kirby Expl Inc. 93,713
----------------------------------------------------------------------
300 * KLLM Transportation Services, Inc. 4,575
----------------------------------------------------------------------
800 Kysor Indl. Corp. Del 13,200
----------------------------------------------------------------------
700 Liqui Box Corp. 27,300
----------------------------------------------------------------------
1,000 * M S Carriers, Inc. 23,500
----------------------------------------------------------------------
800 * Matlack Systems, Inc. 11,700
----------------------------------------------------------------------
3,000 * Offshore Logistics Inc. 49,500
----------------------------------------------------------------------
300 Oglebay Norton Co. 6,300
----------------------------------------------------------------------
4,200 OMI Corp. 26,775
----------------------------------------------------------------------
1,400 Smart & Final, Inc. 16,625
----------------------------------------------------------------------
200 * Swift Transportation, Inc. 6,400
----------------------------------------------------------------------
3,150 TNT Freightways Corp. 70,875
----------------------------------------------------------------------
300 * USA Truck Inc. 9,075
----------------------------------------------------------------------
2,200 Werner Enterprises, Inc. 59,950
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
TRANSPORTATION--CONTINUED
----------------------------------------------------------------------
1,400 * Wisconsin Central Transportation Corp. $ 71,400
---------------------------------------------------------------------- -----------
Total 1,065,764
---------------------------------------------------------------------- -----------
UTILITIES--5.7%
----------------------------------------------------------------------
950 ACC Corp. 18,763
----------------------------------------------------------------------
5,200 * ALC Communications Co. 156,000
----------------------------------------------------------------------
1,200 * Allegheny & Western Energy Corp. 9,300
----------------------------------------------------------------------
2,500 * American Oil & Gas 30,938
----------------------------------------------------------------------
1,000 Aquarion Co. 26,750
----------------------------------------------------------------------
2,200 Associated Natural Gas Corp. 82,775
----------------------------------------------------------------------
1,000 Bangor Hydro Electric Co. 19,875
----------------------------------------------------------------------
2,300 Bay State Gas Co. 72,163
----------------------------------------------------------------------
2,300 Black Hills Corp. 56,063
----------------------------------------------------------------------
800 California Water Service Co. 32,000
----------------------------------------------------------------------
800 Cascade Natural Gas Corp. 21,900
----------------------------------------------------------------------
1,500 * Cellular Communications 36,000
----------------------------------------------------------------------
1,400 * Cellular, Inc. 28,350
----------------------------------------------------------------------
900 * Centennial Cellular, Class A 20,475
----------------------------------------------------------------------
3,000 Central Hudson Gas & Electric Corp. 95,625
----------------------------------------------------------------------
4,000 Central LA Electric Co. 105,500
----------------------------------------------------------------------
1,850 Central VT Public Service Cp 42,781
----------------------------------------------------------------------
3,600 Chesapeake Corp. 79,200
----------------------------------------------------------------------
2,300 Cilcorp, Inc. 91,713
----------------------------------------------------------------------
1,300 Colonial Gas Co. 30,875
----------------------------------------------------------------------
1,900 Commonwealth Energy Systems 91,200
----------------------------------------------------------------------
500 Connecticut Water Service Inc. 14,875
----------------------------------------------------------------------
1,200 Connecticut Energy Corp. 30,150
----------------------------------------------------------------------
1,600 Connecticut Natural Gas Corp. 48,800
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
UTILITIES--CONTINUED
----------------------------------------------------------------------
800 Consumers Water Co. $ 15,200
----------------------------------------------------------------------
1,900 * C TEC Corp. 59,850
----------------------------------------------------------------------
2,100 * DWG Corp., Class A 64,838
----------------------------------------------------------------------
700 E Town 23,100
----------------------------------------------------------------------
3,400 Eastern Utilities Assn. 99,875
----------------------------------------------------------------------
5,300 * El Paso Electric Co. 15,238
----------------------------------------------------------------------
2,200 Empire District Electric Co. 52,525
----------------------------------------------------------------------
300 Energynorth, Inc. 6,600
----------------------------------------------------------------------
700 Green Mountain Power Corp. 24,150
----------------------------------------------------------------------
400 GWC Corp. 7,400
----------------------------------------------------------------------
4,050 Indiana Energy Inc. 92,644
----------------------------------------------------------------------
1,600 Interstate Power Co. 48,400
----------------------------------------------------------------------
800 IWC Resources Corp. 18,600
----------------------------------------------------------------------
2,550 K. N. Energy, Inc. 70,125
----------------------------------------------------------------------
1,300 Laclede Gas Co. 62,725
----------------------------------------------------------------------
6,100 * LDDS Communications, Inc. 306,525
----------------------------------------------------------------------
2,500 Lincoln Telecommunications Co. 100,625
----------------------------------------------------------------------
1,800 Madison Gas & Electric Co. 63,000
----------------------------------------------------------------------
700 Middlesex Water Co. 14,875
----------------------------------------------------------------------
300 Mobile Gas Services Corp. 7,688
----------------------------------------------------------------------
500 National Gas & Oil Co. 8,125
----------------------------------------------------------------------
2,800 New Jersey Resources Corp. 77,000
----------------------------------------------------------------------
1,100 North Carolina Natural Gas Corp. 31,488
----------------------------------------------------------------------
2,200 Northwestern Natural Gas Co. 79,750
----------------------------------------------------------------------
1,300 Northwestern Public Service Co. 38,513
----------------------------------------------------------------------
2,600 * NTN Communications, Inc. 26,000
----------------------------------------------------------------------
1,100 NUI Corp. 31,213
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
UTILITIES--CONTINUED
----------------------------------------------------------------------
1,900 Otter Tail Power Co. $ 64,125
----------------------------------------------------------------------
700 Pennsylvania Enterprises 20,300
----------------------------------------------------------------------
1,200 * Peoples Telephone Co. 15,600
----------------------------------------------------------------------
1,600 Philadelphia Suburban Corp. 31,600
----------------------------------------------------------------------
4,700 Piedmond Nat. Gas Inc. 119,263
----------------------------------------------------------------------
800 Providence Energy Corp. 16,100
----------------------------------------------------------------------
2,700 Public Service Co. N C Inc. 46,575
----------------------------------------------------------------------
7,600 * Public Service Co. Nm 84,550
----------------------------------------------------------------------
4,700 Sierra Pacific Resources 99,875
----------------------------------------------------------------------
400 SJW Corp. 15,150
----------------------------------------------------------------------
1,624 South Jersey Industries, Inc. 40,397
----------------------------------------------------------------------
500 * Southeastern Public Service 11,875
----------------------------------------------------------------------
1,200 Southern California Water Co. 27,300
----------------------------------------------------------------------
2,800 Southern Indiana Gas & Electric Co. 99,400
----------------------------------------------------------------------
1,765 Southeastern Michigan Gas Energy 45,008
----------------------------------------------------------------------
3,500 Southwest Gas Corp. 62,125
----------------------------------------------------------------------
4,600 Southwestern Energy Co. 95,450
----------------------------------------------------------------------
600 St. Joseph Light & Power Co. 21,075
----------------------------------------------------------------------
1,500 * Tanknology Environment, Inc. 6,750
----------------------------------------------------------------------
1,100 * Tejas Gas Corp. 62,975
----------------------------------------------------------------------
1,700 * Thermo Power Corp. 17,213
----------------------------------------------------------------------
1,600 TNP Enterprises, Inc. 27,000
----------------------------------------------------------------------
7,300 Transco Energy Co. 117,713
----------------------------------------------------------------------
27,200 * Tucson Electric Power Co. 115,600
----------------------------------------------------------------------
1,900 * U.S. Long Distance Corp. 39,188
----------------------------------------------------------------------
1,700 United Cities Gas Co. 32,725
----------------------------------------------------------------------
3,500 United Water Resources, Inc. 53,813
----------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ---------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
UTILITIES--CONTINUED
----------------------------------------------------------------------
400 Unitil Corp. $ 8,800
----------------------------------------------------------------------
3,900 Washington Energy Co. 77,513
----------------------------------------------------------------------
2,700 WICOR, Inc. 86,063
----------------------------------------------------------------------
1,800 Yankee Energy Systems, Inc. 51,750
---------------------------------------------------------------------- -----------
Total 4,301,014
---------------------------------------------------------------------- -----------
TOTAL COMMON STOCKS (IDENTIFIED COST $59,950,150) 63,855,269
---------------------------------------------------------------------- -----------
PREFERRED STOCKS--0.7%
- ----------------------------------------------------------------------------------
CONSUMER BASICS--0.0%
----------------------------------------------------------------------
192 * Lynx Therapeutic Inc. Preferred (Series Xxx) A 192
---------------------------------------------------------------------- -----------
REAL ESTATE--0.7%
----------------------------------------------------------------------
3,700 American Health Properties, Inc. 102,675
----------------------------------------------------------------------
1,600 BRE Properties, Inc. 53,200
----------------------------------------------------------------------
2,200 Burnham Pacific Properties, Inc. 43,175
----------------------------------------------------------------------
2,500 Cousins Properties, Inc. 43,125
----------------------------------------------------------------------
1,500 CRI Liquidating REIT, Inc. 14,063
----------------------------------------------------------------------
3,300 First Union Real Estate Equity Rights 37,125
----------------------------------------------------------------------
600 HRE Properties, Inc. 9,000
----------------------------------------------------------------------
4,500 IRT Property Co. 54,000
----------------------------------------------------------------------
1,900 MGI Properties, Inc. 27,313
----------------------------------------------------------------------
6,300 Rockefeller Center Properties, Inc. 41,738
----------------------------------------------------------------------
7,500 United Dominion Realty Trust, Inc. 120,000
---------------------------------------------------------------------- -----------
TOTAL 545,414
---------------------------------------------------------------------- -----------
TOTAL PREFERRED STOCKS (IDENTIFIED COST $545,486) 545,606
---------------------------------------------------------------------- -----------
</TABLE>
MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL
AMOUNT VALUE
- ----------- ------------------------------------------------------------------- -----------
<C> <C> <S> <C>
SHORT-TERM U.S. GOVERNMENT OBLIGATIONS--0.8%
- ------------------------------------------------------------------------------------
$ 50,000 United States Treasury Bill, 2.91%, 12/30/93 $ 248,808
-------------------------------------------------------------------
300,000 United States Treasury Bill, 2.93%, 12/30/93 298,559
-------------------------------------------------------------------
50,000 United States Treasury Bill, 2.94%, 12/23/93 49,788
------------------------------------------------------------------- -----------
TOTAL SHORT-TERM GOVERNMENT OBLIGATIONS (IDENTIFIED COST $597,155) 597,155
------------------------------------------------------------------- -----------
***REPURCHASE AGREEMENT--18.9%
- ------------------------------------------------------------------------------------
$14,395,000 J.P. Morgan Securities, Inc., 2.99%, dated 10/29/93, due 11/1/93
(at amortized cost) (Note 2B) $14,395,000
------------------------------------------------------------------- -----------
TOTAL INVESTMENTS (IDENTIFIED COST $75,487,791) $79,393,030+
------------------------------------------------------------------- -----------
</TABLE>
The following abbreviations are used in this portfolio:
<TABLE>
<S> <C>
REIT-- Real Estate Investment Trust
</TABLE>
* Non-income producing securities.
** Fractional Share.
*** The repurchase agreement is fully collateralized by U.S. government
obligations. The investment in the repurchase agreement is through
participation in a joint account with other Federated Investors funds.
+ The cost for federal tax purposes amounts to $75,487,791. The net unrealized
appreciation of investments on a federal tax basis amounts to $3,905,239,
which is comprised of $7,267,779 appreciation and $3,362,540 depreciation at
October 31, 1993.
Note: The categories of investments are shown as a percentage of net assets
($76,138,965) at October 31, 1993.
(See Notes which are an integral part of the Financial Statements)
MINI-CAP FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1993
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------
Investments in repurchase agreement (Note 2B) $14,395,000
- -------------------------------------------------------------------
Investments in securities at value 64,998,030
- ------------------------------------------------------------------- -----------
Total investments at amortized cost and value (Note 2A)
(identified and tax cost $75,487,791) $79,393,030
- ---------------------------------------------------------------------------------
Cash 180,545
- ---------------------------------------------------------------------------------
Receivable for investments sold 8,607,330
- ---------------------------------------------------------------------------------
Receivable for Fund shares sold 264,225
- ---------------------------------------------------------------------------------
Dividends and interest receivable 71,958
- ---------------------------------------------------------------------------------
Receivable for daily variation margin on open futures contracts (Note 2F) 7,655
- ---------------------------------------------------------------------------------
Deferred expenses (Note 2D) 6,616
- --------------------------------------------------------------------------------- -----------
Total assets 88,531,359
- ---------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------
Payable for investments purchased 12,318,972
- -------------------------------------------------------------------
Payable for Fund shares redeemed 3,319
- -------------------------------------------------------------------
Accrued expenses and other liabilities 70,103
- ------------------------------------------------------------------- -----------
Total liabilities 12,392,394
- --------------------------------------------------------------------------------- -----------
NET ASSETS for 6,012,200 shares of beneficial interest outstanding $76,138,965
- --------------------------------------------------------------------------------- -----------
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------
Paid-in capital $67,117,560
- ---------------------------------------------------------------------------------
Net unrealized appreciation on investments and futures contracts (Note 2F) 4,100,653
- ---------------------------------------------------------------------------------
Accumulated undistributed net realized gain on investments and futures contracts
(Note 2F) 4,891,323
- ---------------------------------------------------------------------------------
Undistributed net investment income 29,429
- --------------------------------------------------------------------------------- -----------
Total $76,138,965
- --------------------------------------------------------------------------------- -----------
NET ASSET VALUE, Offering Price and Redemption Price Per Share:
($76,138,965 / 6,012,200 shares of beneficial interest outstanding) $12.66
- --------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
MINI-CAP FUND
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1993
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------
INCOME--
- ----------------------------------------------------------------------------------------
Dividends $ 622,873
- ----------------------------------------------------------------------------------------
Interest 230,277
- ---------------------------------------------------------------------------------------- ----------
Total investment income (Note 2G) 853,150
- ----------------------------------------------------------------------------------------
EXPENSES--
- ----------------------------------------------------------------------------------------
Management fee (Note 5) $230,734
- ----------------------------------------------------------------------------
Printing and postage 19,715
- ----------------------------------------------------------------------------
Legal 6,696
- ----------------------------------------------------------------------------
Custodian, transfer and dividend disbursing agent fees and expenses 245,748
- ----------------------------------------------------------------------------
Trustees' fees 2,263
- ----------------------------------------------------------------------------
Auditing fees 12,568
- ----------------------------------------------------------------------------
Fund share registration costs 39,680
- ----------------------------------------------------------------------------
Insurance 5,860
- ----------------------------------------------------------------------------
Taxes 35
- ----------------------------------------------------------------------------
Miscellaneous 2,994
- ---------------------------------------------------------------------------- --------
Total expenses 566,293
- ----------------------------------------------------------------------------
Deduct--
- -----------------------------------------------------------------
Waiver of Management fee (Note 5) $230,734
- -----------------------------------------------------------------
Reimbursement of other operating expenses (Note 5) 163,469 394,203
- ----------------------------------------------------------------- -------- --------
Net expenses 172,090
- ---------------------------------------------------------------------------------------- ----------
Net investment income 681,060
- ---------------------------------------------------------------------------------------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES CONTRACTS:
- ----------------------------------------------------------------------------------------
Net realized gain on investment transactions and futures contracts
(identified cost basis) 4,886,059
- ----------------------------------------------------------------------------------------
Net change in unrealized appreciation on investment transactions and futures contracts 3,911,777
- ------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments and futures contracts 8,797,836
- ---------------------------------------------------------------------------------------- ----------
Change in net assets resulting from operations $9,478,896
- ---------------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
MINI-CAP FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31,
-------------------------
1993 1992*
----------- ----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- --------------------------------------------------------------------
OPERATIONS--
- --------------------------------------------------------------------
Net investment income $ 681,060 $ 16,684
- --------------------------------------------------------------------
Net realized gain on investment transactions and futures contracts
($5,086,354 and $384 net gains, respectively, as computed for
federal tax purposes) 4,886,059 5,264
- --------------------------------------------------------------------
Net change in unrealized appreciation on investments and futures
contracts 3,911,777 188,876
- -------------------------------------------------------------------- ----------- ----------
Change in net assets resulting from operations 9,478,896 210,824
- -------------------------------------------------------------------- ----------- ----------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 3)--
- --------------------------------------------------------------------
Dividends to shareholders from net investment income (661,325) (6,990)
- -------------------------------------------------------------------- ----------- ----------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 4)--
- --------------------------------------------------------------------
Proceeds from sale of shares 81,602,389 8,129,286
- --------------------------------------------------------------------
Net asset value of shares issued to shareholders electing to receive
payment of dividends in Fund shares 154,900 4,285
- --------------------------------------------------------------------
Cost of shares redeemed (22,187,110) (586,190)
- -------------------------------------------------------------------- ----------- ----------
Change in net assets from Fund share transactions 59,570,179 7,547,381
- -------------------------------------------------------------------- ----------- ----------
Change in net assets 68,387,750 7,751,215
- --------------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------------
Beginning of period 7,751,215 --
- -------------------------------------------------------------------- ----------- ----------
End of period (including undistributed net investment income
of $29,429 and $9,694, respectively) $76,138,965 $7,751,215
- -------------------------------------------------------------------- ----------- ----------
</TABLE>
* For the period from August 10, 1992 (commencement of operations) to October
31, 1992.
(See Notes which are an integral part of the Financial Statements)
MINI-CAP FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1993
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Federated Index Trust (the "Trust") is registered under the Investment Company
Act of 1940, as amended, as a diversified, open-end, management investment
company with three portfolios. The financial statements included herein are only
those of Mini-Cap Fund (the "Fund"). 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.
(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. The
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS--Equity portfolio securities listed on the New York
Stock Exchange or any other national securities exchange are valued at the
last sale price or, if there has been no sale on that day, at the mean
between bid and asked prices. Short-term obligations are valued at the mean
between bid and asked prices as furnished by an independent pricing service.
Short-term obligations with maturities of sixty days or less are valued at
amortized cost, which approximates value. All other securities are appraised
at fair value as determined in good faith by the Board of Trustees.
B. REPURCHASE AGREEMENTS--It is the policy of the Trust to require the custodian
bank to take possession, to have legally segregated in the Federal Reserve
Book Entry System or to have segregated within the custodian bank's vault,
all securities held as collateral in support of repurchase agreement
investments. Additionally, procedures have been established by the Trust to
monitor, on a daily basis, the market value of each repurchase agreement's
underlying 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 manager to be creditworthy pursuant to guidelines established by
the Trustees. Risks may arise from the potential inability of counterparties
to honor the terms of a repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral securities.
C. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute to shareholders each year all of its taxable income, including any
net realized gains on investments. Accordingly, no provision for federal tax
is necessary.
MINI-CAP FUND
- --------------------------------------------------------------------------------
D. DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering the shares, have been deferred and are being amortized
using the straight-line method over a period of five years from the Fund's
commencement date.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery 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 objectives 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. FUTURES CONTRACTS--Upon entering into a stock index futures contract with a
broker, the Fund is required to deposit in a segregated account an amount
("initial margin") of cash or U.S. government securities approximately equal
to a percentage of the contract value. The Fund agrees to receive from or pay
the broker an amount of cash equal to a specific dollar amount times the
difference between the closing value of the stock index and the price at
which the contract was made. On a daily basis, the value of a stock index
futures contract is determined and any difference between such value and the
original futures contract value is reflected in the "daily variation margin"
account. Daily variation margin adjustments, arising from this "marking to
market" process, are recorded by the Fund as unrealized gains or losses.
The Fund may decide to close its position on a contract at any time prior to
the contract's expiration. When a contract is closed, the Fund recognizes a
realized gain or loss. Risks of entering into futures contracts include the
possibility that there may be an illiquid market and that a change in the
value of the contract may not correlate with changes in the value of the
underlying securities,
G. INCOME--Dividend income is recorded on the ex-dividend date. 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. Dividends to shareholders and capital
gain distributions, if any, are recorded on the ex-dividend date.
H. OTHER--Investment transactions are accounted for on the trade date of the
transaction.
(3) DIVIDENDS AND DISTRIBUTIONS
Dividends are declared and paid quarterly to all shareholders invested in the
Fund on the record date. Dividends are paid from the net investment income of
the Fund. Net investment income consists of all dividends or interest received
by the Fund less its expenses. Capital gains realized by the Fund, if any, are
distributed at least once every twelve months.
MINI-CAP FUND
- --------------------------------------------------------------------------------
(4) 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>
YEAR ENDED OCTOBER
31,
---------------------
1993 1992*
- ----------------------------------------------------------------------- ---------- -------
<S> <C> <C>
Shares outstanding, beginning of period 746,072 --
- -----------------------------------------------------------------------
Shares sold 7,198,018 803,137
- -----------------------------------------------------------------------
Shares issued to shareholders electing to receive payment of dividends
in Fund shares 13,554 422
- -----------------------------------------------------------------------
Shares redeemed (1,945,444) (57,487)
- ----------------------------------------------------------------------- ---------- -------
Shares outstanding, end of period 6,012,200 746,072
- ----------------------------------------------------------------------- ---------- -------
</TABLE>
* The period from August 10, 1992 (commencement of operations) to October 31,
1992.
(5) MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Federated Management, the Fund's Manager ("Manager"), receives for its services
an annual management fee equal to .50 of 1% of the Fund's average daily net
assets. Under the Management Contract, which provides for the voluntary waiver
of fee by the Manager, the Manager will voluntarily waive some or all of the
management fee. The Manager can terminate its voluntary waiver of some or all of
its management fee at any time in its sole discretion. For the fiscal year ended
October 31, 1993, the Fund's Manager earned a management fee of $230,734, all of
which was voluntarily waived. In addition, the Manager voluntarily reimbursed
$163,469 of the Fund's other operating expenses.
Organization expenses of $22,217 were borne initially by the Manager. The Fund
has agreed to pay the Manager, at an annual rate .005 of 1% of average daily net
assets for organization expenses until expenses borne by the Manager are
reimbursed. During the year ended October 31, 1993, the Fund paid $2,469
pursuant to this agreement. This commitment will expire five years from the date
the Trust's portfolio became effective.
Certain of the Officers and Trustees of the Fund are Officers and Directors of
the above corporations.
MINI-CAP FUND
- --------------------------------------------------------------------------------
(6) INVESTMENT TRANSACTIONS
Purchases, and sales (excluding short-term obligations) of investments, for the
year ended October 31, 1993, were as follows:
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------
PURCHASES--
- -------------------------------------------------------------------------------
Stocks $70,563,504
- ------------------------------------------------------------------------------- -----------
SALES--
- -------------------------------------------------------------------------------
Stocks $18,945,780
- ------------------------------------------------------------------------------- -----------
</TABLE>
(7) FINANCIAL FUTURES CONTRACTS
At October 31, 1993 open positions in stock index futures contracts were as
follows:
<TABLE>
<CAPTION>
UNREALIZED
EXPIRATION OPEN CONTRACTS POSITION APPRECIATION
- -------------- --------------------------- ---------- ---------------
<S> <C> <C> <C>
December 1993 21 S&P 400 Index Futures Long $ 34,415
December 1993 40 S&P 500 Index Futures Long $161,000
</TABLE>
At October 31, 1993, the Fund has deposited in a segregated account, $400,000 of
U.S. Treasury Bills, to cover margin requirements on open futures contracts.
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
To the Trustees and Shareholders of
FEDERATED INDEX TRUST:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Mini-Cap Fund (a portfolio of Federated Index
Trust), as of October 31, 1993, and the related statement of operations for the
year then ended and the statement of changes in net assets for year-ended
October 31, 1993 and for the period from August 10, 1992 (commencement of
operations) to October 31, 1992, and financial highlights (see page 2 of this
prospectus) for the year ended October 31, 1993 and for the period from August
10, 1992 (commencement of operations) to October 31, 1992. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1993, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Mini-Cap Fund of Federated Index Trust at October 31, 1993, the results of its
operations for the year then ended, and the changes in its net assets and
financial highlights for the year then ended and for the period from August 10,
1992 to October 31, 1992, in conformity with generally accepted accounting
principles.
ERNST & YOUNG
Pittsburgh, Pennsylvania
December 10, 1993
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Mini-Cap Fund Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- --------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- --------------------------------------------------------------------------------------------------
Manager
Federated Management Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- --------------------------------------------------------------------------------------------------
Sub-Manager
ANB Investment Management One North LaSalle Street
and Trust Co. Chicago, Illinois 60690
- --------------------------------------------------------------------------------------------------
Custodian
State Street Bank and P.O. Box 8602
Trust Company Boston, Massachusetts 02266-8602
- --------------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- --------------------------------------------------------------------------------------------------
Legal Counsel
Houston, Houston & Donnelly 2510 Centre City Tower
Pittsburgh, Pennsylvania 15222
- --------------------------------------------------------------------------------------------------
Legal Counsel
Dickstein, Shapiro & Morin 2101 L Street, N.W.
Washington, D.C. 20037
- --------------------------------------------------------------------------------------------------
Independent Auditors
Ernst & Young One Oxford Centre
Pittsburgh, PA 15219
- --------------------------------------------------------------------------------------------------
</TABLE>
MINI-CAP FUND
(A PORTFOLIO OF FEDERATED INDEX TRUST)
PROSPECTUS
A No-Load, Open-End, Diversified
Management Investment Company
Prospectus dated December 31, 1993
FEDERATED SECURITIES CORP.
(LOGO)
- ---------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
2062305A (12/93)
MINI-CAP FUND
(A PORTFOLIO OF FEDERATED INDEX TRUST)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the prospectus of
the Fund dated December 31, 1993.
This Statement is not a prospectus itself. To receive a copy of the prospectus,
write or call the Mini-Cap Fund.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Statement dated December 31, 1993
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
GENERAL INFORMATION ABOUT THE FUND 1
- ----------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES 1
- ----------------------------------------------------------------
Types of Investments 1
When-Issued and Delayed
Delivery Transactions 3
Lending of Portfolio Securities 3
Reverse Repurchase Agreements 3
Portfolio Turnover 3
Investment Limitations 3
TRUST MANAGEMENT 5
- ----------------------------------------------------------------
Officers and Trustees 5
Funds 7
Fund Ownership 7
Trustee Liability 8
MANAGEMENT SERVICES 8
- ----------------------------------------------------------------
Managers to the Fund 8
Management Fees 8
Other Related Services 8
ADMINISTRATIVE SERVICES 9
- ----------------------------------------------------------------
BROKERAGE TRANSACTIONS 9
- ----------------------------------------------------------------
PURCHASING SHARES 9
- ----------------------------------------------------------------
Conversion to Federal Funds 9
Exchanging Securities for Fund Shares 9
DETERMINING NET ASSET VALUE 10
- ----------------------------------------------------------------
Determining Market Value of Securities 10
REDEEMING SHARES 10
- ----------------------------------------------------------------
Redemption in Kind 10
TAX STATUS 10
- ----------------------------------------------------------------
The Fund's Tax Status 10
Shareholders' Tax Status 10
Capital Gains 10
TOTAL RETURN 11
- ----------------------------------------------------------------
YIELD 11
- ----------------------------------------------------------------
PERFORMANCE COMPARISONS 11
- ----------------------------------------------------------------
FRANK RUSSELL COMPANY 12
- ----------------------------------------------------------------
GENERAL INFORMATION ABOUT THE FUND
- --------------------------------------------------------------------------------
The Mini-Cap Fund (the "Fund") is a portfolio of Federated Index Trust (the
"Trust"), which was established as a Massachusetts business trust under a
Declaration of Trust dated January 30, 1990.
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------
The Fund's investment objective is to provide investment results that correspond
to the aggregate price and dividend performance of the approximately 2,000
publicly traded common stocks that are ranked in terms of capitalization below
the top 1,000 stocks that comprise the large and mid-range capitalization sector
of the United States equity market. These stocks are included in the Russell
2000 Small Stock Index (the "Index"), an index of small capitalization stocks.
The Fund is neither affiliated with nor sponsored by the Frank Russell Company.
Frank Russell's only relationship to the Fund is the licensing of the use of the
Index. Frank Russell Company is the owner of the trademarks and copyrights
relating to the Index.
The investment objective cannot be changed without the approval of shareholders.
The policies described below may be changed by the Board of Trustees
("Trustees") without shareholder approval. Shareholders will be notified before
any material change in these policies becomes effective.
TYPES OF INVESTMENTS
In addition to the common stocks described in the prospectus, the Fund may also
invest in money market instruments and U.S. government obligations and
securities in such proportions as, in the judgment of the sub-manager,
prevailing market conditions warrant.
MONEY MARKET INSTRUMENTS
The Fund may invest in the following money market instruments:
- instruments of domestic banks and savings and loans having capital,
surplus, and undivided profits of over $100,000,000, or if the
principal amount of the instrument is insured in full by the Federal
Deposit Insurance Corporation; and
- prime commercial paper (rated A-1 by Standard and Poor's Corporation,
Prime-1 by Moody's Investors Service, Inc., or F-1 by Fitch Investors
Service).
REPURCHASE AGREEMENTS
The Fund requires its custodian to take possession of the securities
subject to repurchase agreements, and these securities are marked to
market daily. To the extent that the original seller does not repurchase
the securities from the Fund, the Fund could receive less than the
repurchase price on any sale of such securities. In the event that such a
defaulting seller files for bankruptcy or becomes insolvent, disposition
of such securities by the Fund might be delayed pending court action. The
Fund believes that under the regular procedures normally in effect for
custody of the Fund's portfolio securities subject to repurchase
agreements, a court of competent jurisdiction would rule in favor of the
Fund and allow retention or disposition of such securities. 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 sub-manager to be creditworthy pursuant to guidelines established
by the Trustees.
U.S. GOVERNMENT OBLIGATIONS
The types of U.S. government obligations in which the Fund may invest
generally include direct obligations of the U.S. Treasury (such as U.S.
Treasury bills, notes, and bonds) and obligations issued or guaranteed by
U.S. government agencies or instrumentalities. These securities are
backed by:
- the full faith and credit of the U.S. Treasury;
- the issuer's right to borrow from the U.S. Treasury;
- the discretionary authority of the U.S. government to purchase certain
obligations of agencies or instrumentalities; or
- the credit of the agency or instrumentality issuing the obligations.
Examples of agencies and instrumentalities which may not always receive
financial support from the U.S. government are:
- Federal Land Banks;
- Central Bank for Cooperatives;
- Federal Intermediate Credit Banks;
- --------------------------------------------------------------------------------
- Federal Home Loan Banks;
- Farmers Home Administration; and
- Federal National Mortgage Association.
STOCK INDEX FUTURES AND OPTIONS
The Fund may utilize stock index futures contracts and options on stocks,
stock indices and stock index futures contracts for the purposes of
managing cash flows into and out of the Fund's portfolio and potentially
reducing transactional costs. The Fund may not use stock index futures
contracts and options for speculative purposes.
As a means of reducing fluctuations in the net asset value of shares of
the Fund, the Fund may attempt to hedge all or a portion of its portfolio
through the purchase of listed put options on stocks, stock indices, and
stock index futures contracts. These options will be used as a form of
forward pricing to protect portfolio securities against decreases in
value resulting from market factors such as an anticipated increase in
interest rates. A put option gives the Fund, in return for a premium, the
right to sell the underlying security to the writer (seller) at a
specified price during the term of the option. Put options on stock
indices are similar to put options on stocks except for the delivery
requirements. Instead of giving the Fund the right to make delivery of
stock at a specified price, a put option on a stock index gives the Fund,
as holder, the right to receive an amount of cash upon exercise of the
option.
The Fund may also write covered call options. As the writer of a call
option, the Fund has the obligation upon exercise of the option during
the option period to deliver the underlying security upon payment of the
exercise price.
The Fund may only: (1) buy listed put options on stock indices and stock
index futures contracts; (2) buy listed put options on securities held in
its portfolio; and (3) sell listed call options either on securities held
in its portfolio or on securities which it has the right to obtain
without payment of further consideration (or has segregated cash in the
amount of any such additional consideration). The Fund will maintain its
positions in securities, option rights, and segregated cash subject to
puts and calls until the options are exercised, closed, or expired.
The Fund may also enter into stock index futures contracts. A stock index
futures contract is a bilateral agreement which obligates the seller to
deliver (and the purchaser to take delivery of) an amount of cash equal
to a specific dollar amount times the difference between the value of a
specific stock index at the close of trading of the contract and the
price at which the agreement is originally made. There is no physical
delivery of the stocks constituting the index, and no price is paid upon
entering into a futures contract.
In general, contracts are closed out prior to their expiration. The Fund,
when purchasing or selling a futures contract, will initially be required
to deposit in a segregated account in the broker's name with the Fund's
custodian an amount of cash or U.S. government securities approximately
equal to 5%-10% of the contract value. This amount is known as "initial
margin," and it is subject to change by the exchange or board of trade on
which the contract is traded. Subsequent payments to and from the broker
are made on a daily basis as the price of the index or the securities
underlying the futures contract fluctuates. These payments are known as
"variation margins," and the fluctuation in value of the long and short
positions in the futures contract is a process referred to as "marking to
market." The Fund may decide to close its position on a contract at any
time prior to the contract's expiration. This is accomplished by the Fund
taking an opposite position at the then prevailing price, thereby
terminating its existing position in the contract. Because the initial
margin resembles a performance bond or good faith deposit on the
contract, it is returned to the Fund upon the termination of the
contract, assuming that all contractual obligations have been satisfied.
Therefore, the margin utilized in futures contracts is readily
distinguishable from the margin employed in security transactions, since
the margin employed in futures contracts does not involve the borrowing
of funds to finance the transaction.
RESTRICTIONS ON THE USE OF FUTURES CONTRACTS AND OPTIONS
The Fund will not enter into futures contracts to the extent that,
immediately thereafter, the sum of its initial margin deposits on open
contracts exceeds 5% of the market value of the Fund's total assets.
Further, the Fund will enter into stock index futures contracts only for
bona fide hedging purposes or such other purposes permitted under Part 4
of the regulations promulgated by the Commodity Futures Trading
Commission ("CFTC"). Also, the Fund may not enter into stock index
futures contracts and options to the extent that the value of such
contracts would exceed 20% of the Fund's total net assets and may not
purchase put options to the extent that more than 5% of the value of the
Fund's total assets would be invested in premiums on open put option
positions.
- --------------------------------------------------------------------------------
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an advantageous
price and yield for the Fund. Settlement dates may be a month or more after
entering into these transactions, and the market values of the securities
purchased may vary from the purchase prices.
No fees or other expenses, other than normal transaction costs, are incurred.
However, liquid assets of the Fund sufficient to make payment for the securities
to be purchased are segregated at the trade date. These securities are marked to
market daily and are maintained until the transaction is settled. As a matter of
policy, the Fund does not intend to engage in when-issued and delayed delivery
transactions to an extent that would cause the segregation of more than 20% of
the total value of its assets.
LENDING OF PORTFOLIO SECURITIES
The Fund may lend its portfolio securities up to one-third of the value of its
total assets to broker/dealers, banks, or other institutional borrowers of
securities. The Fund will only enter into loan arrangements with broker/dealers,
banks, or other institutions which the sub-manager has determined are
creditworthy under guidelines established by the Trustees and will receive
collateral equal to at least 100% of the value of the securities loaned.
The collateral received when the Fund lends portfolio securities must be valued
daily and, should the market value of the loaned securities increase, the
borrower must furnish additional collateral to the Fund. During the time
portfolio securities are on loan, the borrower pays the Fund any dividends or
interest paid on such securities. Loans are subject to termination at the option
of the Fund or the borrower. The Fund may pay reasonable administrative and
custodial fees in connection with a loan and may pay a negotiated portion of the
interest earned on the cash or equivalent collateral to the borrower or placing
broker. The Fund does not have the right to vote securities on loan, but would
terminate the loan and regain the right to vote if that were considered
important with respect to the investment.
REVERSE REPURCHASE AGREEMENTS
The Fund may also enter into reverse repurchase agreements. A reverse repurchase
transaction is similar to borrowing cash. In a reverse repurchase agreement the
Fund transfers possession of a portfolio instrument to another person, such as a
financial institution, broker, or dealer, in return for a percentage of the
instrument's market value in cash, and agrees that on a stipulated date in the
future the Fund will repurchase the portfolio instrument by remitting the
original consideration plus interest at an agreed upon rate. The use of reverse
repurchase agreements may enable the Fund to avoid selling portfolio instruments
at a time when a sale may be deemed to be disadvantageous, but the ability to
enter into reverse repurchase agreements does not ensure that the Fund will be
able to avoid selling portfolio instruments at a disadvantageous time.
When effecting reverse repurchase agreements, liquid assets of the Fund, in a
dollar amount sufficient to make payment for the obligations to be purchased,
are segregated at the trade date. These securities are marked to market daily
and are maintained until the transaction is settled.
PORTFOLIO TURNOVER
The Fund will not attempt to set or meet a portfolio turnover rate since any
turnover would be incidental to transactions undertaken in an attempt to achieve
the Fund's investment objective. For the fiscal year ended October 31, 1993 and
for the period from August 10, 1992 (commencement of operations) to October 31,
1992, the portfolio turnover rate for the Fund was 48% and 1%, respectively.
INVESTMENT LIMITATIONS
INVESTING IN COMMODITIES
The Fund will not purchase or sell commodities. However, the Fund may
purchase stock index futures contracts and put options on stock indices
and stock index futures contracts to the extent that not more than 5% of
the Fund's total assets are required as initial margin deposit for
futures contracts and not more than 20% of the Fund's total net assets
are invested in futures and options at any time.
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities on
margin, other than in connection with buying stock index futures
contracts and put options on stock index futures contracts, but may
obtain such short-term credits as are necessary for the clearance of
transactions.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets, except portfolio securities up
to one-third of the value of its total assets. This shall not prevent the
Fund from purchasing or holding U.S. government obligations, money market
instruments, bonds, debentures, notes, certificates of indebtedness or
other debt securities, entering into
- --------------------------------------------------------------------------------
repurchase agreements, or engaging in other transactions where permitted
by the Fund's investment objective and policies and Declaration of Trust
of the Trust.
UNDERWRITING
The Fund will not underwrite any issue of securities, except as it may be
deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of restricted securities which the Fund may
purchase pursuant to its investment objective, policies, and limitations.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities, except that the Fund may
borrow money and engage in reverse repurchase agreements in amounts up to
one-third of the value of its total assets, including the amounts
borrowed. The Fund will not borrow money or engage in reverse repurchase
agreements for investment leverage, but rather as a temporary,
extraordinary, or emergency measure or to facilitate management of the
portfolio by enabling the Fund to meet redemption requests when the
liquidation of portfolio securities is deemed to be inconvenient or
disadvantageous. The Fund will not purchase any securities while
borrowings in excess of 5% of its total assets are outstanding. During
the period any reverse repurchase agreements are outstanding, but only to
the extent necessary to assure completion of the reverse repurchase
agreements, the Fund will restrict the purchase of portfolio instruments
to money market instruments maturing on or before the expiration date of
the reverse repurchase agreements.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. In those cases, it may pledge assets having
a market value not exceeding the lesser of the dollar amounts borrowed or
10% of the value of total assets at the time of the borrowing.
DIVERSIFICATION OF INVESTMENTS
The Fund will not invest more than 5% of the value of its total assets in
the securities of any one issuer, except U.S. government securities, or
invest in more than 10% of the voting securities of any one issuer.
CONCENTRATION OF INVESTMENTS
The Fund will not invest 25% or more of the value of its total assets in
securities of companies in any one industry. However, investing in U.S.
government obligations shall not be considered investing in any one
industry.
INVESTING IN REAL ESTATE
The Fund will not buy or sell real estate, including partnership
interests in real estate, although it may invest in securities of
companies whose business involves the purchase or sale of real estate or
in securities which are secured by real estate or interests in real
estate.
INVESTING IN RESTRICTED SECURITIES
To comply with requirements of a particular state, the Fund will limit
its investment in restricted securities to 5% of the value of its total
assets in securities subject to restrictions on resale under the Security
Act of 1933.
The above investment limitations cannot be changed without shareholder approval.
The following investment limitations, however, may be changed by the Trustees
without shareholder approval. Shareholders will be notified before any material
change in these policies becomes effective.
INVESTING IN NEW ISSUERS
The Fund will not invest more than 5% of the value of its total assets in
securities of issuers which have records of less than three years of
operating history, including the operation of any predecessor.
INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS AND TRUSTEES OF
THE TRUST
The Fund will not purchase or retain the securities of any issuer if the
Officers and Trustees of the Trust or the Fund's manager or sub-manager
owning individually more than 1/2 of 1% of the issuer's securities
together own more than 5% of the issuer's securities.
WRITING COVERED CALL OPTIONS
The Fund will not write call options on securities unless the securities
are held in the Fund's portfolio or unless the Fund is entitled to them
in deliverable form without further payment or after segregating cash in
the amount of any further payment.
- --------------------------------------------------------------------------------
INVESTING IN PUT OPTIONS
The Fund will not purchase put options on securities, other than put
options on stock, stock indices and stock index futures contracts, unless
the securities are held in the Fund's portfolio and not more than 5% of
the value of the Fund's total assets would be invested in premiums on
open put option positions and not more than 20% of the Fund's total net
assets are invested in put options and future contracts at any time.
INVESTING IN MINERALS
The Fund will not purchase interests in oil, gas, or other mineral
exploration or development programs or leases, although it may purchase
the securities of issuers which invest in or sponsor such programs.
ACQUIRING SECURITIES
The Fund will not purchase securities of other investment companies
except to the extent permitted by the Investment Company Act of 1940, or
except as part of a merger, consolidation, or other acquisition. It will
not invest in securities for the purpose of exercising control or
management.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 15% of its net assets in securities
which are illiquid, including certain restricted securities and
repurchase agreements providing for settlement more than seven days after
notice.
INVESTING IN WARRANTS
The Fund will not invest in warrants.
Except with respect to borrowing money, if a percentage limitation is adhered to
at the time of investment, a later increase or decrease in percentage resulting
from any change in value or net assets will not result in a violation of such
restriction.
The Fund does not expect to borrow money or pledge securities in excess of 5% of
the value of its net assets during the coming fiscal year.
TRUST MANAGEMENT
- --------------------------------------------------------------------------------
OFFICERS AND TRUSTEES
Officers and Trustees are listed with their addresses, principal occupations,
and present positions, including any affiliation with Federated Investors,
Federated Management, Federated Securities Corp., and Federated Administrative
Services, Inc.
<TABLE>
<CAPTION>
POSITIONS WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS THE TRUST DURING PAST FIVE YEARS
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
John F. Donahue+* Chairman Chairman and Trustee, Federated Investors; Chairman and Trustee, Federated
Federated Investors and Trustee Advisers, Federated Management, and Federated Research; Director, AEtna Life
Tower and Casualty Company; Chief Executive Officer and Director, Trustee, or
Pittsburgh, PA Managing General Partner of the Funds; formerly, Director, The Standard Fire
Insurance Company. Mr. Donahue is the father of J. Christopher Donahue, Vice
President and Trustee of the Trust.
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
John T. Conroy, Jr. Trustee President, Investment Properties Corporation; Senior Vice-President, John R.
Wood/IPC Commercial Wood and Associates, Inc., Realtors; President, Northgate Village
Department Development Corporation; General Partner or Trustee in private real estate
John R. Wood and ventures in Southwest Florida; Director, Trustee, or Managing General
Associates, Inc., Realtors Partner of the Funds; formerly, President, Naples Property Management, Inc.
3255 Tamiami Trail North
Naples, FL
- --------------------------------------------------------------------------------------------------------------------------------
William J. Copeland Trustee Director and Member of the Executive Committee, Michael Baker, Inc.;
One PNC Plaza Director, Trustee, or Managing General Partner of the Funds; formerly, Vice
23rd Floor Chairman, and Director, PNC Bank, N.A., and PNC Bank Corp. and Director,
Pittsburgh, PA Ryan Homes, Inc.
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POSITIONS WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS THE TRUST DURING PAST FIVE YEARS
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
J. Christopher Donahue* Vice President President and Trustee, Federated Investors; Trustee, Federated Advisers,
Federated Investors and Trustee Federated Management, and Federated Research; President and Director,
Tower Federated Administrative Services, Inc.; Trustee, Federated Services
Pittsburgh, PA Company; President or Vice President of the Funds; Director, Trustee or
Managing General Partner of some of the Funds. Mr. Donahue is the son of
John F. Donahue, Chairman and Trustee of the Trust.
- --------------------------------------------------------------------------------------------------------------------------------
James E. Dowd Trustee Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director,
571 Hayward Mill Road Trustee, or Managing General Partner of the Funds; formerly, Director, Blue
Concord, MA. Cross of Massachusetts, Inc.
- --------------------------------------------------------------------------------------------------------------------------------
Lawrence D. Ellis, M.D. Trustee Hematologist, Oncologist, and Internist, Presbyterian and Montefiore
3471 Fifth Avenue Hospitals; Clinical Professor of Medicine and Trustee, University of
Suite 1111 Pittsburgh; Director, Trustee, or Managing General Partner of the Funds.
Pittsburgh, PA
- --------------------------------------------------------------------------------------------------------------------------------
Edward L. Flaherty, Jr.+ Trustee Attorney-at-law; Partner, Meyer and Flaherty; Director, Eat'N Park
5916 Penn Mall Restaurants, Inc., and Statewide Settlement Agency, Inc.; Director, Trustee,
Pittsburgh, PA or Managing General Partner of the Funds; formerly, Counsel, Horizon
Financial, F.A., Western Region.
- --------------------------------------------------------------------------------------------------------------------------------
Peter E. Madden Trustee Consultant; State Representative, Commonwealth of Massachusetts; Director,
225 Franklin Street Trustee, or Managing General Partner of the Funds; formerly, President,
Boston, MA State Street Bank and Trust Company and State Street Boston Corporation and
Trustee, Lahey Clinic Foundation, Inc.
- --------------------------------------------------------------------------------------------------------------------------------
Gregor F. Meyer Trustee Attorney-at-law; Partner, Meyer and Flaherty; Chairman, Meritcare, Inc.;
5916 Penn Mall Director, Eat'N Park Restaurants, Inc.; Director, Trustee, or Managing
Pittsburgh, PA General Partner of the Funds; formerly, Vice Chairman, Horizon Financial,
F.A.
- --------------------------------------------------------------------------------------------------------------------------------
Wesley W. Posvar Trustee Professor, Foreign Policy and Management Consultant; Trustee, Carnegie
1202 Cathedral of Endowment for International Peace, RAND Corporation; Online Computer Library
Learning Center, Inc., and U.S. Space Foundation; Chairman, Czecho Slovak Management
University of Pittsburgh Center; Director, Trustee, or Managing General Partner of the Funds;
Pittsburgh, PA President Emeritus, University of Pittsburgh, formerly, Chairman, National
Advisory Council for Environmental Policy and Technology.
- --------------------------------------------------------------------------------------------------------------------------------
Marjorie P. Smuts Trustee Public relations/marketing consultant; Director, Trustee, or Managing
4905 Bayard Street General Partner of the Funds.
Pittsburgh, PA
- --------------------------------------------------------------------------------------------------------------------------------
Glen R. Johnson President Trustee, Federated Investors; President and/or Trustee of some of the Funds;
Federated Investors staff member, Federated Securities Corp., Federated Administrative Services
Tower and Federated Administrative Services, Inc.
Pittsburgh, PA
- --------------------------------------------------------------------------------------------------------------------------------
Richard B. Fisher Vice President Executive Vice President and Trustee, Federated Investors; Chairman and
Federated Investors Director, Federated Securities Corp.; President or Vice President of the
Tower Funds; Director or Trustee of some of the Funds.
Pittsburgh, PA
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POSITIONS WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS THE TRUST DURING PAST FIVE YEARS
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
Edward C. Gonzales Vice President Vice President, Treasurer and Trustee, Federated Investors; Vice President
Federated Investors and Treasurer and Treasurer, Federated Advisers, Federated Management, and Federated
Tower Research; Executive Vice President, Treasurer, and Director, Federated
Pittsburgh, PA Securities Corp.; Chairman, Treasurer, and Director, Federated
Administrative Services, Inc.; Trustee or Director of some of the Funds;
Vice President and Treasurer of the Funds.
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John W. McGonigle Vice President Vice President, Secretary, General Counsel, and Trustee, Federated
Federated Investors and Secretary Investors; Vice President, Secretary and Trustee, Federated Advisers,
Tower Federated Management, and Federated Research; Executive Vice President,
Pittsburgh, PA Secretary, and Director, Federated Administrative Services, Inc.; Director
and Executive Vice President, Federated Securities Corp.; Vice President and
Secretary of the Funds.
- --------------------------------------------------------------------------------------------------------------------------------
John A. Staley, IV Vice President Vice President and Trustee, Federated Investors; Executive Vice President,
Federated Investors Federated Securities Corp.; President and Trustee, Federated Advisers,
Tower Federated Management, and Federated Research; Vice President of the Funds;
Pittsburgh, PA Director, Trustee, or Managing General Partner of some of the Funds;
formerly, Vice President, The Standard Fire Insurance Company and President
of its Federated Research Division.
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</TABLE>
* This Trustee is deemed to be an "interested person" of the Fund or the Trust
as defined in the Investment Company Act of 1940.
+ Members of the Trust's Executive Committee. The Executive Committee of the
Board of Trustees handles the responsibilities of the Board of Trustees
between meetings of the Board.
THE FUNDS
"The Funds" and "Funds" mean the following investment companies: A.T. Ohio
Tax-Free Money Fund; American Leaders Fund, Inc.; Annuity Management Series;
Automated Cash Management Trust; Automated Government Money Trust; The Boulevard
Funds; California Municipal Cash Trust; Cash Trust Series II; Cash Trust Series,
Inc.; DG Investor Series; Edward D. Jones & Co. Daily Passport Cash Trust; FT
Series, Inc.; Federated ARMs Fund; Federated Exchange Fund, Ltd.; Federated GNMA
Trust; Federated Government Trust; Federated Growth Trust; Federated High Yield
Trust; Federated Income Securities Trust; Federated Income Trust; Federated
Intermediate Government Trust; Federated Master Trust; Federated Municipal
Trust; Federated Short-Intermediate Government Trust; Federated Short-Term U.S.
Government Trust; Federated Stock Trust; Federated Tax-Free Trust; Federated
U.S. Government Bond Fund; First Priority Funds; Fixed Income Securities, Inc.;
Fortress Adjustable Rate U.S. Government Fund, Inc.; Fortress Municipal Income
Fund, Inc.; Fortress Utility Fund, Inc.; Fund for U.S. Government Securities,
Inc.; Government Income Securities, Inc.; High Yield Cash Trust; Intermediate
Municipal Trust; Investment Series Funds, Inc.; Investment Series Trust; Liberty
Equity Income Fund, Inc.; Liberty High Income Bond Fund, Inc.; Liberty Municipal
Securities Fund, Inc.; Liberty U.S. Government Money Market Trust; Liberty
Utility Fund, Inc.; Liberty Term Trust, Inc.-1999; Liquid Cash Trust; Mark Twain
Funds; Money Market Management, Inc.; Money Market Obligations Trust; Money
Market Trust; Municipal Securities Income Trust; New York Municipal Cash Trust;
111 Corcoran Funds; The Planters Funds; Portage Funds; RIMCO Monument Funds; The
Shawmut Funds; Short-Term Municipal Trust; Signet Select Funds; Star Funds; The
Starburst Funds; The Starburst Funds II; Stock and Bond Fund, Inc.; Sunburst
Funds; Targeted Duration Trust; Tax-Free Instruments Trust; Trademark Funds;
Trust for Financial Institutions; Trust For Government Cash Reserves; Trust for
Short-Term U.S. Government Securities; Trust for U.S. Treasury Obligations.
FUND OWNERSHIP
Officers and Trustees own less than 1% of the Fund's outstanding shares.
As of November 29, 1993, the following shareholders of record owned 5% or more
of the outstanding shares of the Fund: Citizens Trust Co., Providence, Rhode
Island, owned approximately 610,124 shares (9.6%), JATO, Minneapolis, Minnesota,
owned approximately 517,456 shares (8.1%); and Bozworth Company, Little Rock,
Arkansas, owned approximately 1,027,044 shares (16.2%).
- --------------------------------------------------------------------------------
TRUSTEE LIABILITY
The Trust's Declaration of Trust provides that the Trustees will not be liable
for errors of judgment or mistakes of fact or law. However, they are not
protected against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office.
MANAGEMENT SERVICES
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MANAGERS TO THE FUND
The Fund's Manager is Federated Management. It is a subsidiary of Federated
Investors. All the voting securities of Federated Investors are owned by a
trust, the trustees of which are John F. Donahue, his wife, and his son, J.
Christopher Donahue. John F. Donahue is Chairman and Trustee of Federated
Management, Chairman and Trustee of Federated Investors and Chairman and Trustee
of the Trust. John A. Staley, IV is President and Trustee of Federated
Management, Vice President and Trustee of Federated Investors, Executive Vice
President of Federated Securities Corp., and Vice President of the Trust. J.
Christopher Donahue, Trustee of Federated Management, is President and Trustee
of Federated Investors, President and Director of Federated Administrative
Services, Inc., and Vice President and Trustee of the Trust. John W. McGonigle,
Vice President, Secretary and Trustee of Federated Management, is Trustee, Vice
President, Secretary, and General Counsel of Federated Investors, Executive Vice
President, Secretary, and Director of Federated Administrative Services, Inc.,
Director and Executive Vice President of Federated Securities Corp. and Vice
President and Secretary of the Trust.
The Fund's sub-manager is ANB Investment Management and Trust Company ("ANB").
It is a wholly-owned subsidiary of American National Bank and Trust Company of
Chicago. American National Bank and Trust Company of Chicago is a wholly-owned
subsidiary of American National Corporation, which, in turn, is a wholly-owned
subsidiary of First Chicago Corporation. The sub-manager's directors are John R.
Tilton, Thomas P. Michaels, Olivia C. Martinez, Stephen P. Manus, Neil R.
Wright, Peter J. Kartalia, and Ronald J. Grayheck. The officers of ANB are John
R. Tilton, President and Chief Investment Officer, and Thomas P. Michaels,
Secretary, Treasurer, and Legal Counsel.
Neither the manager nor the sub-manager shall be liable to the Trust, the Fund,
or any shareholder of the Fund for any losses that may be sustained in the
purchase, holding, or sale of any security or for anything done or omitted by
the manager or sub-manager, except acts or omissions involving willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
imposed upon either of them by their respective contracts.
MANAGEMENT FEES
For their management services, Federated Management receives an annual fee as
described in the prospectus. ANB receives an annual fee for its services, which
will be paid by the manager, as described in the prospectus.
For the fiscal year ended October 31, 1993 and for the period from August 10,
1992 (commencement of operations) to October 31, 1992 the manager earned
$230,734, and $4,073 all of which was voluntarily waived due to undertaking to
limit the funds expenses.
STATE EXPENSE LIMITATIONS
The Manager has undertaken to comply with the expense limitation
established by certain states for investment companies whose shares are
registered for sale in those states. If the Fund's normal operating
expenses (including the management fee, but not including brokerage
commissions, interest, taxes, and extraordinary expenses) exceed 2 1/2%
per year of the first $30 million of average net assets, 2% per year of
the next $70 million of average net assets, and 1 1/2% per year of the
remaining average net assets, the Manager will reimburse the Fund for its
expenses over the limitation.
If the Fund's monthly projected operating expenses exceed this expense
limitation, the management fee paid will be reduced by the amount of the
excess, subject to an annual adjustment. If the expense limitation is
exceeded, the amount to be reimbursed by the Manager will be limited, in
any single fiscal year, by the amount of the management fee.
This arrangement is not part of the Management Contract and may be
amended or rescinded in the future.
OTHER RELATED SERVICES
Affiliates of the manager may, from time to time, provide certain electronic
equipment and software to institutional customers in order to facilitate the
purchase of shares of funds offered by Federated Securities Corp.
ADMINISTRATIVE SERVICES
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Federated Administrative Services, Inc., a subsidiary of Federated Investors,
provides administrative personnel and services to the Fund at approximate cost
through an agreement with the Fund's manager. John A. Staley, IV, an officer of
the Trust, and Dr. Henry J. Gailliot, an officer of Federated Management, the
adviser to the Fund, each hold approximately 15% and 20%, respectively, of the
outstanding common stock and serve as directors of Commercial Data Services,
Inc., a company which provides computer processing services to Federated
Administrative Services, Inc. For the fiscal years ended October 31, 1993 and
1992, Federated Administrative Services, Inc. paid approximately $165,431 and
$189,741 for services provided by Commercial Data Services, Inc.
BROKERAGE TRANSACTIONS
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The managers may select brokers and dealers who offer brokerage and research
services. These services may be furnished directly to the Fund or to the
Managers and may include:
- - advice as to the advisability of investing in securities;
- - security analysis and reports;
- - economic studies;
- - industry studies;
- - receipt of quotations for portfolio evaluations; and
- - similar services.
The Managers and their affiliates exercise reasonable business judgment in
selecting brokers who offer brokerage and research services to execute
securities transactions. They determine in good faith that commissions charged
by such persons are reasonable in relationship to the value of the brokerage and
research services provided.
Research services provided by brokers and dealers may be used by the Managers or
by affiliates of Federated Investors in advising Federated Funds and other
accounts. To the extent that receipt of these services may supplant services for
which the Managers or their affiliates might otherwise have paid, it would tend
to reduce their expenses.
For the fiscal year ended October 31, 1993, and for the period from August 10,
1992 (commencement of operations) to October 31, 1992, the Fund paid $165,152,
and $11,504 in commissions on brokerage transactions.
PURCHASING SHARES
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Shares are sold at their net asset value without a sales charge on days the New
York Stock Exchange is open for business. The procedure for purchasing shares of
the Fund is explained in the prospectus under "Investing in the Fund."
CONVERSION TO FEDERAL FUNDS
It is the Fund's policy to be as fully invested as possible so that maximum
interest may be earned. To this end, all payments from shareholders must be in
federal funds or be converted into federal funds. State Street Bank acts as the
shareholder's agent in depositing checks and converting them to federal funds.
EXCHANGING SECURITIES FOR FUND SHARES
Investors may exchange securities they already own for Fund shares, or they may
exchange a combination of securities and cash for Fund shares. Any securities to
be exchanged must meet the investment objective and policies of the Fund, must
have a readily ascertainable market value, must be liquid, and must not be
subject to restrictions on resale. An investor should forward the securities in
negotiable form with an authorized letter of transmittal to Federated Securities
Corp. The Fund will notify the investor of its acceptance and valuation of the
securities within five business days of their receipt by State Street Bank.
The Fund values such securities in the same manner as the Fund values its
assets. The basis of the exchange will depend upon the net asset value of Fund
shares on the day the securities are valued. One share of the Fund will be
issued for each equivalent amount of securities accepted.
Any interest earned on the securities prior to the exchange will be considered
in valuing the securities. All interest, dividends, subscription, conversion, or
other rights attached to the securities become the property of the Fund, along
with the securities.
TAX CONSEQUENCES
Exercise of this exchange privilege is treated as a sale for federal
income tax purposes. Depending upon the cost basis of the securities
exchanged for Fund shares, a gain or loss may be realized by the
investor.
DETERMINING NET ASSET VALUE
- --------------------------------------------------------------------------------
Net asset value generally changes each day. The days on which net asset value is
calculated by the Fund are described in the prospectus.
DETERMINING MARKET VALUE OF SECURITIES
Market values of the Fund's portfolio securities are determined as follows:
- - for equity securities, according to the last sale price on a national
securities exchange, if available;
- - in the absence of recorded sales for equity securities, according to the mean
between the last closing bid and asked prices;
- - for bonds and other fixed income securities, at the last sale price on a
national securities exchange if available, otherwise as determined by an
independent pricing service;
- - for short-term obligations, according to the mean between bid and asked prices
as furnished by an independent pricing service or for short-term obligations
with maturities of less than 60 days, at amortized cost; or
- - for all other securities, at fair value as determined in good faith by the
Trustees.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may reflect: institutional trading in
similar groups of securities, yield, quality, coupon rate, maturity, type of
issue, trading characteristics, and other market data.
The Fund will value stock index futures contracts and options on stocks, stock
indices and stock index futures contracts at their market values established by
the exchanges at the close of option trading on such exchanges unless the
Trustees determine in good faith that another method of valuing option positions
is necessary to appraise their fair value.
REDEEMING SHARES
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The Fund redeems shares at the next computed net asset value after State Street
Bank receives the redemption request. Redemption procedures are explained in the
prospectus under "Redeeming Shares."
REDEMPTION IN KIND
Although the Fund intends to redeem shares in cash, it reserves the right under
certain circumstances to pay the redemption price in whole or in part with
securities from the Fund's portfolio.
Such securities will be valued with the same valuation techniques employed in
determining net asset value, and the securities will be selected in a manner the
Trustees determine to be fair and equitable.
The Fund has elected to be governed by Rule 18f-1 of the Investment Company Act
of 1940 under which the Fund will redeem shares for any one shareholder in cash
up to the lesser of $250,000 or 1% of the Fund's net asset value during any
90-day period.
TAX STATUS
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THE FUND'S TAX STATUS
The Fund will pay no federal income tax because the Fund expects to meet the
requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies and to receive the special tax treatment afforded
to such companies. To qualify for this treatment, the Fund must, among other
requirements:
- - derive at least 90% of its gross income from dividends, interest, and gains
from the sale of securities;
- - derive less than 30% of its gross income from the sale of securities held less
than three months;
- - invest in securities within certain statutory limits; and
- - distribute to its shareholders at least 90% of its net income earned during
the year.
SHAREHOLDERS' TAX STATUS
Shareholders are subject to federal income tax on dividends received as cash or
additional shares. No portion of any income dividend paid by the Fund is
eligible for the dividends received deduction available to corporations. These
dividends, and any short-term capital gains, are taxable as ordinary income.
CAPITAL GAINS
Shareholders will pay federal tax at capital gains rates on long-term
capital gains distributed to them regardless of how long they have held
the Fund shares.
TOTAL RETURN
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The Fund's average annual total return for the one-year period ended October 31,
1993, and for the period from September 16, 1992 (the effective date of the
Fund's registration statement) to October 31, 1993, was 23.73% and 24.50%,
respectively.
The average annual total return for the Trust is the average compounded rate of
return for a given period that would equate a $1,000 initial investment to the
ending redeemable value of that investment. The ending redeemable value is
computed by multiplying the number of shares owned at the end of the period by
the offering price per share at the end of the period. The number of shares
owned at the end of the period is based on the number of shares purchased at the
beginning of the period with $1,000, adjusted over the period by any additional
shares, assuming the monthly/ quarterly reinvestment of all dividends and
distributions.
YIELD
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The Fund's yield for the thirty-day period ended October 31, 1993 was 1.14%.
The yield for the Fund is determined by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by the Fund
over a thirty-day period by the offering price per share of the Fund on the last
day of the period. This value is annualized using semi-annual compounding. This
means that the amount of income generated during the thirty-day period is
assumed to be generated each month over a twelve month period and is reinvested
every six months. The yield does not necessarily reflect income actually earned
by the Fund because of certain adjustments required by the Securities and
Exchange Commission and, therefore, may not correlate to the dividends or other
distributions paid to shareholders.
To the extent that financial institutions and broker/dealers charge fees in
connection with services provided in conjunction with an investment in the Fund,
performance will be reduced for those shareholders paying those fees.
PERFORMANCE COMPARISONS
- --------------------------------------------------------------------------------
The Fund's performance depends upon such variables as:
- - portfolio quality;
- - average portfolio maturity;
- - type of instruments in which the portfolio is invested;
- - changes in interest rates and market value of portfolio securities;
- - changes in Fund expenses;
- - the relative amount of Fund cash flow; and
- - various other factors.
The Fund's performance fluctuates on a daily basis largely because net earnings
and offering price per share fluctuate daily. Both net earnings and offering
price per share are factors in the computation of yield and total return.
From time to time, the Fund may advertise its performance compared to similar
funds or portfolios using the following:
- - LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes the
reinvestment of all capital gains distributions and income dividends and takes
into account any change in offering price over a specific period of time. From
time to time, the Fund will quote its Lipper ranking in the "index funds"
category in advertising and sales literature.
- - RUSSELL 2000 INDEX--is a broadly diversified index consisting of approximately
2,000 small capitalization common stocks that can be used to compare to the
total returns of funds whose portfolios are invested primarily in small
capitalization common stocks.
- - STANDARD & POOR'S DAILY STOCK PRICE INDEX OF 500 COMMON STOCKS--is a composite
index of common stocks in industry, transportation, and financial and public
utility companies that can be used to compare to the total returns of funds
whose portfolios are invested primarily in common stocks. In addition, the
Standard & Poor's index assumes reinvestments of all dividends paid by stocks
listed on its index. Taxes due on any of these distributions are not included,
nor are brokerage or other fees calculated in Standard & Poor's figures.
- - WILSHIRE 5000 EQUITY INDEXES--consists of nearly 5,000 common equity
securities, covering all stocks in the U.S. for which daily pricing is
available, and can be used to compare to the total returns of funds whose
portfolios are invested primarily in common stocks.
- - MORNINGSTAR, INC., an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for two
weeks.
- --------------------------------------------------------------------------------
Investors may use such indices or reporting services in addition to the Fund's
prospectus to obtain a more complete view of the Fund's performance before
investing. Of course, when comparing Fund performance to any index, conditions
such as composition of the index and prevailing market conditions should be
considered in assessing the significance of such comparisons. When comparing
funds using reporting services, or total return and yield, investors should take
into consideration any relevant differences in funds such as permitted portfolio
compositions and methods used to value portfolio securities and compute offering
price.
Advertisements and other sales literature for the Fund may quote total returns
which are calculated on nonstandardized base periods. These total returns also
represent the historic change in the value of an investment in the Fund based on
quarterly reinvestment of dividends over a specified period of time.
FRANK RUSSELL COMPANY
- --------------------------------------------------------------------------------
Frank Russell Company reserves the right, at any time and without notice, to
alter, amend, terminate or in any way change its Index. Frank Russell Company
has no obligation to take the needs of any particular fund or its participants
or any other product or person into consideration in determining, composing or
calculating the index.
Frank Russell Company's publication of the Index in no way suggests or implies
an opinion by Frank Russell Company as to the attractiveness or appropriateness
of investment in any or all securities upon which the Index is based. FRANK
RUSSELL COMPANY MAKES NO REPRESENTATION, WARRANTY, OR GUARANTEE AS TO THE
ACCURACY, COMPLETENESS, RELIABILITY, OR OTHERWISE OF THE INDEX OR ANY DATA
INCLUDED IN THE INDEX. FRANK RUSSELL COMPANY MAKES NO REPRESENTATION OR WARRANTY
REGARDING THE USE OR THE RESULTS OF USE, OF THE INDEX OR ANY DATA INCLUDED
THEREIN, OR ANY SECURITY (OR COMBINATION THEREOF) COMPRISING THE INDEX. FRANK
RUSSELL COMPANY MAKES NO OTHER EXPRESS OR IMPLIED WARRANTY, AND EXPRESSLY
DISCLAIMS ANY WARRANTY, OF ANY KIND, INCLUDING, WITHOUT MEANS OF LIMITATION, ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO
THE INDEX OR ANY DATA OR ANY SECURITY (OR COMBINATION THEREOF) INCLUDED THEREIN.
2062305B (12/93)
MINI-CAP FUND
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INVESTMENT REVIEW
The total return of the Mini-Cap Fund over the past 12 months was
23.73%.
Over the 12 months ended October 31, 1993, U.S. stocks have registered
excellent results. Driven by the recovery in corporate profits, falling
interest rates, and large flows of money into mutual funds, the S&P 500
Index recorded a total return of 14.92% for the year ended October 31,
1993. Small capitalization stocks were the standout, however, as the
Russell 2000 Index had a total return of 32.41% for the same period.
Perhaps the most important factor was the decline in interest rates. The
yield on the 30-year U.S. Treasury bond dropped from 6.7% to 5.7% between
May and September. Interest rate sensitive groups such as the Finance and
Utility sectors performed well in response. Expected market weakness in
September and October proved to be unfounded, although the market advance
became more labored as a number of groups experienced minor corrections.
Sustainability of market strength over the coming year will be
importantly influenced by strength in corporate profits and interest rates.
We expect the economy to continue on its recovery path well into 1994 with
further significant gains in corporate profits. Assuming the pace of the
recovery remains in the 3% (real GDP--annual rate) area, inflation should
remain subdued, and any backup in interest rates should not be too damaging
to the stock market. Over the next 12 months we expect positive returns
from U.S. equities, although probably less than the outstanding performance
in the year ended October 31, 1993.
PERFORMANCE COMPARISON
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COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL $10,000 PURCHASE
IN MINI-CAP FUND AND RUSSELL 2000 INDEX+.
Graphic representation "D omitted. See Appendix.
Past Performance is not indicative of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost. Mutual funds are not obligations of or
guaranteed by any bank and are not federally insured.
This annual report incorporates by reference and accompanies the prospectus
dated December 31, 1993.
* Reflects operations of Mini-Cap Fund from the start of business 9/16/92
through 10/31/93.
** The Fund's performance assumes the reinvestment of all dividends and
distributions. The Russell 2000 Index is adjusted to reflect reinvestment
of dividends on securities in the index.
+ The Russell 2000 Index is not adjusted to reflect sales loads, expenses, or
other fees that the SEC requires to be reflected in the Fund's performance.
++ Returns reflect maximum applicable fees.
FEDERATED SECURITIES CORP.
(LOGO)
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Distributor
3110508-ARS (12/93)
Appendix
A. The graphic presentation here displayed consists of a line graph
comparison of the change in value of a $10,000 purchase in the Max-Cap
Fund Institutional Service Shares against the Standard and Poor's 500
Index (S & P 500). The "x" axis reflects the costs of investments, the
"y" axis reflects the computation periods from September 6, 1993 through
October 31, 1993. A dotted line represents an investment in the S & P
500 Index of $10,000 on September 6, 1993 and tracks its growth to
$10,211 on October 31, 1993. A solid line directly beneath the dotted
line shows an investment in the Max-Cap Fund Institutional Service
Shares of $10,000. This $10,000 investment on September 6, 1993, is
showing growth to $10,170 by October 31, 1993. The chart further
indicates the average annual total return for the period ended October
31, 1993. It shows a 1.70% return since September 6, 1993, the date
from the start of business to October 31, 1993.
B. The graphic presentation here displayed consists of a line graph
comparison of the change in value of a $10,000 purchase in the Max-Cap
Institutional Shares against the Standard & Poor's 500 Index (S & P
500). The "x" axis reflects the costs of investments, the "y" axis
reflects the computation periods from July 11, 1990 through October 31,
1993. A dotted line represents an investment in the S & P 500 of
$10,000 on July 11, 1990 and tracks its growth to $14,281 on October 31,
1993. A solid line line shows an investment in the Max-Cap
Institutional Shares of $10,000. This $10,000 investment on July 11,
1990, is showing growth to $14,328 by October 31, 1993. The chart
further indicates the average annual total return for the period ended
October 31, 1993. It shows an 11.38% return since July 11, 1990 to
October 31, 1993, and a 14.35% return for 1 year.
C. The graphic presentation here displayed consists of a line graph
comparison of the change in value of a $10,000 purchase in the Mid-Cap
Fund against the Standard and Poor's MidCap 400 Index (S & P MidCap
400). The "x" axis reflects the costs of investments, the "y" axis
reflects the computation periods from November 5, 1992 through October
31, 1993. A dotted line represents an investment in the S & P MidCap
400 of $10,000 on November 5, 1992 and tracks its growth to $12,155 on
October 31, 1993. A line directly beneath the dotted line shows an
investment in the Mid-Cap Fund of $10,000. This $10,000 investment on
November 5, 1992, is showing growth to $11,733 by October 31, 1993. The
chart further indicates the average annual total return for the period
ended October 31, 1993. It shows a 17.33% return since November 5,
1992, the date from the start of business to October 31, 1993.
D. The graphic presentation here displayed consists of a line graph
comparision of the change in value of a $10,000 purchase in the Mini-cap
Fund against the Russell 2000 Index. The "x" axis reflects the costs of
invesments, the "y" axis reflects the computation periods from September
16, 1992 through October 31, 1993. A dotted line represents an
investment in the Russell 2000 Index of $10,000 on September 16, 1992
and tracks its growth to $13,662 on October 31, 1993. A line directly
beneath the dotted line shows an investment in the Mini-Cap Fund of
$10,000. This $10,000 investment on September 16, 1992 is showing growth
to $12,682 by October 31, 1993. The chart further indicates the average
annual total return for the period ended October 31, 1993. It shows a
24.50% return since September 16, 1992, to October 31, 1993 and a 23.73%
return for 1 year.
