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Federated Max-Cap Fund
(A Portfolio of Federated Index Trust)
Institutional Shares
Prospectus
The Institutional Shares of Federated 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 Ratings Group.
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, 1995, 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 or a paper copy of this prospectus, if you have received your
prospectus electronically, 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, 1995
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
Investment Limitations.....................................................7
Federated Index Trust Information............................................7
Management of the Trust....................................................7
Distribution of Institutional Shares.......................................9
Fund Administration........................................................9
Net Asset Value.............................................................10
Investing in the Institutional Shares.......................................10
Share Purchases...........................................................10
Minimum Investment Required...............................................11
What Shares Cost..........................................................11
Sub-Accounting Services...................................................11
Certificates and Confirmations............................................11
Dividends.................................................................11
Capital Gains.............................................................11
Redeeming Institutional Shares..............................................11
Telephone Redemption......................................................11
Written Requests..........................................................12
Accounts with Low Balances................................................12
Shareholder Information.....................................................13
Voting Rights.............................................................13
Tax Information.............................................................13
Federal Income Tax........................................................13
Performance Information.....................................................13
Other Classes of Shares.....................................................14
Financial Highlights--
Institutional Service Shares..............................................15
Financial Statements........................................................16
Report of Ernst & Young LLP,
Independent Auditors......................................................44
Addresses....................................................Inside Back Cover
SUMMARY OF FUND EXPENSES
FEDERATED MAX-CAP FUND
Institutional Shares
Shareholder Transaction Expenses
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)....................................None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price)............................... None
Contingent Deferred Sales Charge (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 Operating Expenses
(As a percentage of average net assets)
Management Fee (after waiver) (1)................................... 0.22%
12b-1 Fee........................................................... None
Total Other Expenses................................................ 0.09%
Shareholder Services Fee (after waiver) (2).................... 0.00%
Total Fund Operating Expenses (3)......................... 0.31%
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.30%.
(2) The maximum shareholder services fee is 0.25%.
(3) The total operating expenses would have been 0.64% absent the voluntary
waivers of a portion of the management fee and the shareholder services
fee.
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Institutional Shares of
the Fund will bear, either directly or indirectly. For more complete
descriptions of the various costs and expenses, see "Investing in
Institutional Shares" and "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....................................... $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.
1
<TABLE>
<CAPTION>
FEDERATED MAX-CAP FUND
(formerly, Max-Cap Fund)
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
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(For a share outstanding throughout each period)
Reference is made to the Report of Ernst & Young LLP, Independent Auditors, on
page 44.
<S> <C> <C> <C> <C> <C> <C>
Year Ended October 31,
------------------------------------------------------------------
1995 1994 1993 1992 1991 1990(a)
------ ------ ------ ------ ------ ------
Net asset value, beginning of period $12.02 $12.24 $11.64 $11.07 $ 8.60 $10.00
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Income from investment operations
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Net investment income 0.38 0.32 0.30 0.32 0.37 0.12
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Net realized and unrealized gain (loss)
on investments and futures contracts 2.70 0.10 1.29 0.71 2.46 (1.43)
- ------------------------------------------ ------ ------ ------ ------ ------ ------
Total from investment operations 3.08 0.42 1.59 1.03 2.83 (1.31)
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Less distributions
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Distributions from net investment income (0.34) (0.30) (0.30) (0.34) (0.36) (0.09)
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Distributions from net realized gain on
investment transactions and futures
contracts (0.02) (0.34) (0.69) (0.12) -- --
- ------------------------------------------ ------ ------ ------ ------ ------ ------
Total distributions (0.36) (0.64) (0.99) (0.46) (0.36) (0.09)
- ------------------------------------------ ------ ------ ------ ------ ------ ------
Net asset value, end of period $14.74 $12.02 $12.24 $11.64 $11.07 $ 8.60
- ------------------------------------------ ------ ------ ------ ------ ------ ------
Total return (b) 26% 3.59% 14.35% 9.51% 33.31% (14.46)%
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Ratios to average net assets
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Expenses 0.31% 0.32% 0.31% 0.30% 0.24% 0.00%*
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Net investment income 2.91% 2.70% 2.60% 2.92% 3.74% 5.19%*
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Expense waiver/reimbursement (c) 0.33% 0.07% 0.09% 0.18% 0.45% 0.94%*
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Supplemental data
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Net assets, end of period (000 omitted) $679,237 $443,815 $407,246 $309,614 $144,528 $25,129
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Portfolio turnover 57% 2% 13% 46% 6% 0%
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</TABLE>
* Computed on an annualized basis.
(a) 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.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
Further information about the Fund's performance is contained in the Fund's
annual report dated
October 31, 1995 which can be obtained free of charge.
2
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 Ratings Group ("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.
3
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 Farm
Credit System including the National Bank for Cooperatives, Farm Credit
Banks, and Banks for Cooperatives, 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. govern-
4
ment 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 a published interest rate or interest rate index.
Cash Items. The Fund may also invest in cash items.
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
5
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. There is the risk that when lending portfolio securities,
the securities may not be available to the Fund on a timely basis and the Fund
may, therefore, lose the opportunity to sell the securities at a desirable
price. In addition, in the event that a borrower of securities would file for
bankruptcy or become insolvent, disposition of the securities may be delayed
pending court action.
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 seller's failure to complete these transactions may cause the Fund
to miss a price or yield considered to be advantageous. 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.
Accordingly, the Fund may pay more/less than the market value of the
securities on the settlement date.
The Fund may dispose of a commitment prior to settlement if the managers deem
it appropriate to do so. In addition, the Fund may enter in transactions to
sell its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at
later dates. The Fund may realize short-term profits or losses upon the sale
of such commitments.
6
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
The Trust is managed by the Trustees. The Trustees are 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 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
7
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.
Both the Trust and the Manager have adopted strict codes of ethics governing
the conduct of all employees who manage the Fund and its portfolio securities.
These codes recognize that such persons owe a fiduciary duty to the Fund's
shareholders and must place the interests of shareholders ahead of the
employees' own interest. Among other things, the codes: require preclearance
and periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered for
purchase or sale, by the Fund; prohibit purchasing securities in initial
public offerings; and prohibit taking profits on securities held for less than
sixty days. Violations of the codes are subject to review by the Trustees, and
could result in severe penalties.
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. With over $72 billion invested across more than 260
funds under management and/or administration by its subsidiaries, as of
December 31, 1994, Federated Investors is one of the largest mutual fund
investment managers in the United States. With more than 1,750 employees,
Federated continues to be led by the management who founded the company in
1955. Federated funds are presently at work in and through 4,000 financial
institutions nationwide. More than 100,000 investment professionals have
selected Federated funds for their clients.
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 manage-
8
ment, .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 First Chicago Investment
Management Company 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, 1995, placed approximately $20.6 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 331 nationwide
non-financial institution clients invest. In total, ANB manages 77
commingled/common trust funds. Also, since 1990, ANB has served as Sub-Manager
for the Federated Mini-Cap Fund and for the Federated Mid-Cap Fund, which are
also portfolios of the Trust.
Supplemental Payments to
Financial Institutions
In addition to periodic payments to financial institutions under the
Shareholder Services Agreement, certain financial institutions may be
compensated by the Manager or its affiliates for the continued investment of
customers' assets in certain funds, including the Fund, advised by those
entities. These payments will be made directly by the distributor or Manager
from their assets, and will not be made from the assets of the Fund or by the
assessment of a sales charge on shares.
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 S&P for the right to use the Index in connection with the
sub-management activities for the Fund. Federated Securities Corp. is not
affiliated with S&P.
Fund Administration
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.
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.
Shareholder Services
The Fund has entered into a Shareholder Services Agreement with Federated
Shareholder Services, a subsidiary of Federated Investors, under which the
Fund may make payments up to 0.25 of 1% of the average daily net asset value
of the Shares,
9
computed at an annual rate, to obtain certain personal services for
shareholders and for the maintenance of shareholder accounts ("shareholder
services"). From time to time and for such periods as deemed appropriate, the
amount stated above may be reduced voluntarily. Under the Shareholder Services
Agreement, Federated Shareholder Services will either perform shareholder
services directly or will select financial institutions to perform shareholder
services. Financial institutions will receive fees 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 Fund
and Federated Shareholder Services.
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 Institutional Shares outstanding. The net asset value for
Institutional 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. (Eastern 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. (Eastern time). The order is considered received
immediately. Payment by federal funds must be received before 4:00 p.m.
(Eastern time) on the next business day following the order. Federal funds
should be wired as follows: Federated Services Company, c/o State Street Bank
and Trust Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit to:
Federated Index Trust, Federated 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. Shares cannot be purchased by wire on holidays when wire transfers
are restricted. Questions on wire purchases should be directed to your
shareholder services representative at the telephone number listed on your
account statement.
By Mail
To purchase Shares of the Fund by mail, send a check made payable to Federated
Index Trust, Federated Max-Cap Fund--Institutional Shares to the Fund's
transfer agent, Federated Services Company, P.O. Box 8600, Boston,
Massachusetts 02266-8600.
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.
10
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 as of the close of trading (normally 4:00
p.m., Eastern time) on the New York Stock Exchange, 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.
Sub-Accounting 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. State securities
laws may require certain financial institutions such as depository
institutions to register as dealers.
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 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.
(Eastern time). However, in order to maximize the Fund's
11
ability to track the Index, shareholders are urged to telephone the Fund prior
to 2:00 p.m. (Eastern 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. Proceeds from redemption requests received on holidays when wire
transfers are restricted will be wired the following business day. Questions
about telephone redemptions on days when wire transfers are restricted should
be directed to your shareholder services representative at the telephone
number listed on your account statement. 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 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 their signatures 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 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.
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 mini-
12
mum 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.
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.
State and Local Taxes
In the opinion of Houston, Houston & Donnelly, counsel to the Trust, 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
13
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.
From time to time, advertisements for the Fund may refer to ratings, rankings,
and other information in certain financial publications and/or compare the
Fund's 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 management fee is the same for both classes of shares.
To obtain more information and a prospectus for Institutional Service Shares,
investors may call 1-800-235-4669.
14
<TABLE>
<CAPTION>
FEDERATED MAX-CAP FUND
(formerly, Max-Cap Fund)
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
- ------------------------------------------------------------------------------
(For a share outstanding throughout each period)
Reference is made to the Report of Ernst & Young LLP, Independent Auditors, on
page 44.
<S> <C> <C> <C>
Year Ended October 31,
-------------------------------
1995 1994 1993(a)
- -------------------------------------------------------------------------- ------ ------ -------
Net asset value, beginning of period $12.02 $12.24 $12.12
- --------------------------------------------------------------------------
Income from investment operations
- --------------------------------------------------------------------------
Net investment income 0.33 0.28(b) 0.07
- --------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and futures
contracts 2.69 0.11 0.12
- -------------------------------------------------------------------------- ------ ------ -------
Total from investment operations 3.02 0.39 0.19
- --------------------------------------------------------------------------
Less distributions
- --------------------------------------------------------------------------
Distributions from net investment income (0.30) (0.27) (0.07 )
- --------------------------------------------------------------------------
Distributions from net realized gain on investment transactions
and futures contracts (0.02) (0.34) --
- -------------------------------------------------------------------------- ------ ------ -------
Total distributions (0.32) (0.61) (0.07 )
- -------------------------------------------------------------------------- ------ ------ -------
Net asset value, end of period $14.72 $12.02 $12.24
- -------------------------------------------------------------------------- ------ ------ -------
Total return (c) 25.52% 3.30% 1.70 %
- --------------------------------------------------------------------------
Ratios to average net assets
- --------------------------------------------------------------------------
Expenses 0.61% 0.62% 0.61 %*
- --------------------------------------------------------------------------
Net investment income 2.55% 2.35% 1.52 %*
- --------------------------------------------------------------------------
Expense waiver/reimbursement (d) 0.33% 0.26% 0.09 %*
- --------------------------------------------------------------------------
Supplemental data
- --------------------------------------------------------------------------
Net assets, end of period (000 omitted) $35,195 $8,617 $2,493
- --------------------------------------------------------------------------
Portfolio turnover 57% 2% 13 %
- --------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from August 30, 1993 (date of initial
public investment) to October 31, 1993.
(b) Per share information presented is based upon the monthly average number
of shares outstanding due to large fluctuations in the number of shares
outstanding during the period.
(c) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
Further information about the Fund's performance is continued in the Fund's
annual report dated October 31, 1995 which can be obtained free of charge.
15
Federated Max-Cap Fund
(formerly, Max-Cap Fund)
Portfolio of Investments
October 31, 1995
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares Value
- ------------ ------------------------------------------------------------------ ------------
*Common Stocks--82.9%
- --------------------------------------------------------------------------------------
Commercial Services--1.0%
------------------------------------------------------------------
7,500 (a) Alco Standard Corp. $ 663,750
------------------------------------------------------------------
11,400 Deluxe Corp. 306,375
------------------------------------------------------------------
20,900 Donnelley (R.R.) & Sons Co. 762,850
------------------------------------------------------------------
13,500 Dow Jones & Co. 475,875
------------------------------------------------------------------
23,400 Dun & Bradstreet Corp. 1,398,150
------------------------------------------------------------------
5,200 Fleming Cos., Inc. 117,650
------------------------------------------------------------------
7,000 Grainger (W.W.), Inc. 437,500
------------------------------------------------------------------
4,600 Handleman Co. 35,650
------------------------------------------------------------------
4,200 Harland (John H.) Co. 87,150
------------------------------------------------------------------
10,600 Interpublic Group Cos., Inc. 410,750
------------------------------------------------------------------
6,900 McGraw-Hill Cos., Inc. 564,938
------------------------------------------------------------------
13,800 Moore Corp. Ltd. 263,925
------------------------------------------------------------------
6,700 Ogden Corp. 152,425
------------------------------------------------------------------
8,050 Safety-Kleen Corp. 123,769
------------------------------------------------------------------
9,700 Super Valu Stores, Inc. 298,275
------------------------------------------------------------------
25,200 Sysco Corp. 765,450
------------------------------------------------------------------ ------------
Total 6,864,482
------------------------------------------------------------------ ------------
Consumer Durables--2.4%
------------------------------------------------------------------
10,300 American Greetings Corp., Class A 324,450
------------------------------------------------------------------
2,037 Bassett Furniture Industries, Inc. 40,995
------------------------------------------------------------------
11,700 Black & Decker Corp. 396,337
------------------------------------------------------------------
4,000 Briggs & Stratton Corp. 161,500
------------------------------------------------------------------
13,200 Brunswick Corp. 257,400
------------------------------------------------------------------
3,900 Centex Corp. 127,725
------------------------------------------------------------------
48,984 Chrysler Corp. 2,528,799
------------------------------------------------------------------
16
Federated Max-Cap Fund
(formerly, Max-Cap Fund)
- ------------------------------------------------------------------------------
Shares Value
- ------------ ------------------------------------------------------------------ ------------
*Common Stocks--Continued
- --------------------------------------------------------------------------------------
Consumer Durables--Continued
------------------------------------------------------------------
11,500 Cooper Tire & Rubber Co. $ 265,937
------------------------------------------------------------------
46,900 Eastman Kodak Co. 2,937,112
------------------------------------------------------------------
8,200 Echlin, Inc. 293,150
------------------------------------------------------------------
6,400 Fleetwood Enterprises, Inc. 131,200
------------------------------------------------------------------
141,400 Ford Motor Co. 4,065,250
------------------------------------------------------------------
17,000 Genuine Parts Co. 673,625
------------------------------------------------------------------
20,900 Goodyear Tire & Rubber Co. 794,200
------------------------------------------------------------------
12,200 Hasbro, Inc. 372,100
------------------------------------------------------------------
5,653 Jostens, Inc. 127,899
------------------------------------------------------------------
4,500 Kaufman & Broad Homes Corp. 52,312
------------------------------------------------------------------
30,740 Mattel, Inc. 883,775
------------------------------------------------------------------
14,800 Maytag Corp. 281,200
------------------------------------------------------------------
21,800 Newell Co. 525,925
------------------------------------------------------------------
2,700 Outboard Marine Corp. 56,025
------------------------------------------------------------------
6,400 Polaroid Corp. 273,600
------------------------------------------------------------------
3,800 Pulte Corp. 120,175
------------------------------------------------------------------
22,200 Rubbermaid, Inc. 579,975
------------------------------------------------------------------
5,900 Snap-On Tools Corp. 250,013
------------------------------------------------------------------
6,200 Stanley Works 296,050
------------------------------------------------------------------
10,400 Whirlpool Corp. 551,200
------------------------------------------------------------------
6,300 (a) Zenith Electronics Corp. 52,763
------------------------------------------------------------------ ------------
Total 17,420,692
------------------------------------------------------------------ ------------
Consumer Non-Durables--9.7%
------------------------------------------------------------------
3,800 Alberto-Culver Co., Class B 119,225
------------------------------------------------------------------
26,300 American Brands, Inc. 1,127,612
------------------------------------------------------------------
35,700 Anheuser-Busch Companies, Inc. 2,356,200
------------------------------------------------------------------
9,500 Avon Products, Inc. 675,687
------------------------------------------------------------------
2,400 Brown Group, Inc. 33,000
------------------------------------------------------------------
17
Federated Max-Cap Fund
(formerly, Max-Cap Fund)
- ------------------------------------------------------------------------------
Shares Value
- ------------ ------------------------------------------------------------------ ------------
*Common Stocks--Continued
- --------------------------------------------------------------------------------------
Consumer Non-Durables--Continued
------------------------------------------------------------------
9,600 Brown-Forman Corp., Class B $ 366,000
------------------------------------------------------------------
20,300 CPC International, Inc. 1,347,412
------------------------------------------------------------------
34,300 Campbell Soup Co. 1,796,462
------------------------------------------------------------------
7,300 Clorox Co. 523,775
------------------------------------------------------------------
177,200 Coca-Cola Co. 12,736,250
------------------------------------------------------------------
20,100 Colgate-Palmolive Co. 1,391,925
------------------------------------------------------------------
34,300 ConAgra, Inc. 1,324,837
------------------------------------------------------------------
5,200 Coors Adolph Co., Class B 92,950
------------------------------------------------------------------
9,700 (a) Fruit of the Loom, Inc., Class A 168,537
------------------------------------------------------------------
21,800 General Mills, Inc. 1,250,775
------------------------------------------------------------------
61,100 Gillette Co. 2,955,712
------------------------------------------------------------------
33,600 Heinz (H.J.) Co. 1,562,400
------------------------------------------------------------------
11,900 Hershey Foods Corp. 711,025
------------------------------------------------------------------
15,400 International Flavors & Fragrances, Inc. 743,050
------------------------------------------------------------------
30,600 Kellogg Co. 2,210,850
------------------------------------------------------------------
10,700 Liz Claiborne, Inc. 303,613
------------------------------------------------------------------
20,000 Nike, Inc., Class B 1,135,000
------------------------------------------------------------------
109,200 PepsiCo, Inc. 5,760,300
------------------------------------------------------------------
117,400 Philip Morris Cos., Inc. 9,920,300
------------------------------------------------------------------
94,700 Procter & Gamble Co. 7,670,700
------------------------------------------------------------------
18,500 Quaker Oats Co. 631,313
------------------------------------------------------------------
13,900 Ralston Purina Co. 825,313
------------------------------------------------------------------
11,200 Reebok International Ltd. 380,800
------------------------------------------------------------------
5,600 Russell Corp. 138,600
------------------------------------------------------------------
66,100 Sara Lee Corp. 1,941,688
------------------------------------------------------------------
51,400 Seagram Co. Ltd. 1,850,400
------------------------------------------------------------------
6,700 Stride Rite Corp. 75,375
------------------------------------------------------------------
27,700 UST, Inc. 831,000
------------------------------------------------------------------
18
Federated Max-Cap Fund
(formerly, Max-Cap Fund)
- ------------------------------------------------------------------------------
Shares Value
- ------------ ------------------------------------------------------------------ ------------
*Common Stocks--Continued
- --------------------------------------------------------------------------------------
Consumer Non-Durables--Continued
------------------------------------------------------------------
22,100 Unilever N.V., ADR $ 2,895,100
------------------------------------------------------------------
8,900 V.F. Corp. 426,088
------------------------------------------------------------------
16,100 Wrigley (Wm.), Jr. Co. 748,650
------------------------------------------------------------------ ------------
Total 69,027,924
------------------------------------------------------------------ ------------
Consumer Services--3.5%
------------------------------------------------------------------
6,500 (a) Bally Entertainment Group 71,500
------------------------------------------------------------------
14,500 Block (H&R), Inc. 598,125
------------------------------------------------------------------
8,440 CBS, Inc. 681,530
------------------------------------------------------------------
23,050 (a) CUC International, Inc. 798,106
------------------------------------------------------------------
21,300 Capital Cities/ABC, Inc. 2,526,712
------------------------------------------------------------------
33,050 Comcast Corp., Class A 590,769
------------------------------------------------------------------
21,800 Darden Restaurants, Inc. 247,975
------------------------------------------------------------------
71,600 Disney (Walt) Co. 4,125,950
------------------------------------------------------------------
19,200 Gannett Co., Inc. 1,044,000
------------------------------------------------------------------
14,150 (a) Harrah's Entertainment, Inc. 350,212
------------------------------------------------------------------
6,700 Hilton Hotels Corp. 448,900
------------------------------------------------------------------
5,050 (a) King World Productions, Inc. 176,119
------------------------------------------------------------------
7,400 Knight-Ridder, Inc. 410,700
------------------------------------------------------------------
3,350 Luby's Cafeterias, Inc. 69,513
------------------------------------------------------------------
17,200 Marriott Corp. 634,250
------------------------------------------------------------------
96,300 McDonald's Corp. 3,948,300
------------------------------------------------------------------
3,800 Meredith Corp. 135,850
------------------------------------------------------------------
13,700 New York Times Co., Class A 380,175
------------------------------------------------------------------
7,400 (a) Ryan's Family Steak Houses, Inc. 57,350
------------------------------------------------------------------
13,000 Service Corp. International 521,625
------------------------------------------------------------------
5,700 (a) Shoney's, Inc. 63,413
------------------------------------------------------------------
87,400 (a) Tele-Communications, Inc., Class A 1,485,800
------------------------------------------------------------------
52,240 Time Warner, Inc. 1,906,760
------------------------------------------------------------------
19
Federated Max-Cap Fund
(formerly, Max-Cap Fund)
- ------------------------------------------------------------------------------
Shares Value
- ------------ ------------------------------------------------------------------ ------------
*Common Stocks--Continued
- --------------------------------------------------------------------------------------
Consumer Services--Continued
------------------------------------------------------------------
15,400 Times Mirror Co., Class A $ 446,600
------------------------------------------------------------------
9,300 Tribune Co. 587,063
------------------------------------------------------------------
49,268 (a) Viacom, Inc., Class B 2,463,400
------------------------------------------------------------------
14,000 Wendy's International, Inc. 278,250
------------------------------------------------------------------ ------------
Total 25,048,947
------------------------------------------------------------------ ------------
Electronic Technology--8.7%
------------------------------------------------------------------
29,980 AMP, Inc. 1,176,715
------------------------------------------------------------------
14,800 (a) Advanced Micro Devices, Inc. 353,350
------------------------------------------------------------------
16,100 (a) Amdahl Corp. 148,925
------------------------------------------------------------------
5,250 (a) Andrew Corp. 221,812
------------------------------------------------------------------
16,700 Apple Computer, Inc. 606,419
------------------------------------------------------------------
23,200 (a) Applied Materials, Inc. 1,162,900
------------------------------------------------------------------
46,900 Boeing Co. 3,077,812
------------------------------------------------------------------
9,800 (a) Cabletron Systems, Inc. 770,525
------------------------------------------------------------------
6,200 (a) Ceridian Corp. 269,700
------------------------------------------------------------------
37,100 (a) Cisco Systems, Inc. 2,875,250
------------------------------------------------------------------
36,100 (a) Compaq Computer Corp. 2,012,575
------------------------------------------------------------------
7,600 (a) Computer Sciences Corp. 508,250
------------------------------------------------------------------
3,500 (a) Cray Research, Inc. 72,625
------------------------------------------------------------------
15,600 (a) DSC Communications Corp. 577,200
------------------------------------------------------------------
5,100 (a) Data General Corp. 58,650
------------------------------------------------------------------
20,200 (a) Digital Equipment Corp. 1,093,325
------------------------------------------------------------------
7,600 EG & G, Inc. 141,550
------------------------------------------------------------------
8,620 General Dynamics Corp. 477,332
------------------------------------------------------------------
5,400 Harris Corp. 313,875
------------------------------------------------------------------
70,400 Hewlett-Packard Co. 6,520,800
------------------------------------------------------------------
114,300 Intel Corp. 7,986,712
------------------------------------------------------------------
6,200 (a) Intergraph Corp. 75,175
------------------------------------------------------------------
20
Federated Max-Cap Fund
(formerly, Max-Cap Fund)
- ------------------------------------------------------------------------------
Shares Value
- ------------ ------------------------------------------------------------------ ------------
*Common Stocks--Continued
- --------------------------------------------------------------------------------------
Electronic Technology--Continued
------------------------------------------------------------------
81,000 International Business Machines Corp. $ 7,877,250
------------------------------------------------------------------
31,488 Lockheed Martin Corp. 2,145,120
------------------------------------------------------------------
23,600 Loral Corp. 699,150
------------------------------------------------------------------
16,300 McDonnell-Douglas Corp. 1,332,525
------------------------------------------------------------------
28,400 Micron Technology, Inc. 2,005,750
------------------------------------------------------------------
80,900 Motorola, Inc. 5,309,063
------------------------------------------------------------------
17,200 (a) National Semiconductor Corp. 419,250
------------------------------------------------------------------
34,900 Northern Telecom Ltd. 1,256,400
------------------------------------------------------------------
6,800 Northrop Corp. 389,300
------------------------------------------------------------------
50,600 (a) Novell, Inc. 834,900
------------------------------------------------------------------
5,800 Perkin-Elmer Corp. 203,725
------------------------------------------------------------------
34,000 Raytheon Co. 1,483,250
------------------------------------------------------------------
29,900 Rockwell International Corp. 1,330,550
------------------------------------------------------------------
10,500 Scientific-Atlanta, Inc. 129,938
------------------------------------------------------------------
19,900 (a) Silicon Graphics, Inc. 661,675
------------------------------------------------------------------
13,200 (a) Sun Microsystems, Inc. 1,029,600
------------------------------------------------------------------
16,000 (a) Tandem Computers, Inc. 180,000
------------------------------------------------------------------
4,300 Tektronix, Inc. 254,775
------------------------------------------------------------------
12,200 (a) Tellabs, Inc. 414,800
------------------------------------------------------------------
25,500 Texas Instruments, Inc. 1,740,375
------------------------------------------------------------------
23,700 (a) Unisys Corp. 133,313
------------------------------------------------------------------
16,900 United Technologies Corp. 1,499,875
------------------------------------------------------------------ ------------
Total 61,832,061
------------------------------------------------------------------ ------------
Energy Minerals--6.7%
------------------------------------------------------------------
12,900 Amerada-Hess Corp. 582,112
------------------------------------------------------------------
68,600 Amoco Corp. 4,381,825
------------------------------------------------------------------
8,400 Ashland, Inc. 265,650
------------------------------------------------------------------
22,200 Atlantic Richfield Co. 2,369,850
------------------------------------------------------------------
21
Federated Max-Cap Fund
(formerly, Max-Cap Fund)
- ------------------------------------------------------------------------------
Shares Value
- ------------ ------------------------------------------------------------------ ------------
*Common Stocks--Continued
- --------------------------------------------------------------------------------------
Energy Minerals--Continued
------------------------------------------------------------------
17,500 Burlington Resources, Inc. $ 630,000
------------------------------------------------------------------
89,900 Chevron Corp. 4,202,825
------------------------------------------------------------------
171,300 Exxon Corp. 13,083,037
------------------------------------------------------------------
7,100 Kerr-McGee Corp. 391,388
------------------------------------------------------------------
4,600 Louisiana Land & Exploration Co. 162,725
------------------------------------------------------------------
54,600 Mobil Corp. 5,500,950
------------------------------------------------------------------
43,100 Occidental Petroleum Corp. 926,650
------------------------------------------------------------------
13,600 (a) Oryx Energy Co. 156,400
------------------------------------------------------------------
6,300 Pennzoil Co. 237,825
------------------------------------------------------------------
36,100 Phillips Petroleum Co. 1,164,225
------------------------------------------------------------------
5,700 Pittston Co. 156,750
------------------------------------------------------------------
73,900 Royal Dutch Petroleum Co., ADR 9,080,463
------------------------------------------------------------------
12,412 (a) Santa Fe Energy Resource, Inc. 110,157
------------------------------------------------------------------
14,537 Sun Co., Inc. 416,122
------------------------------------------------------------------
35,800 Texaco, Inc. 2,438,875
------------------------------------------------------------------
39,600 USX Corp. 702,900
------------------------------------------------------------------
33,600 Unocal Corp. 882,000
------------------------------------------------------------------ ------------
Total 47,842,729
------------------------------------------------------------------ ------------
Finance--10.3%
------------------------------------------------------------------
15,500 Aetna Life & Casualty Co. 1,090,812
------------------------------------------------------------------
16,100 Ahmanson (H.F.) & Co. 402,500
------------------------------------------------------------------
6,100 Alexander & Alexander Services, Inc. 136,487
------------------------------------------------------------------
62,405 Allstate Corp. 2,293,384
------------------------------------------------------------------
68,300 American Express Co. 2,774,687
------------------------------------------------------------------
28,100 American General Corp. 923,787
------------------------------------------------------------------
65,493 American International Group, Inc. 5,525,972
------------------------------------------------------------------
56,025 Banc One Corp. 1,890,844
------------------------------------------------------------------
14,800 Bank of Boston Corp. 658,600
------------------------------------------------------------------
22
Federated Max-Cap Fund
(formerly, Max-Cap Fund)
- ------------------------------------------------------------------------------
Shares Value
- ------------ ------------------------------------------------------------------ ------------
*Common Stocks--Continued
- --------------------------------------------------------------------------------------
Finance--Continued
------------------------------------------------------------------
25,900 Bank of New York Co., Inc. $ 1,087,800
------------------------------------------------------------------
51,676 BankAmerica Corp. 2,971,370
------------------------------------------------------------------
10,800 Bankers Trust New York Corp. 688,500
------------------------------------------------------------------
13,300 Barnett Banks, Inc. 734,825
------------------------------------------------------------------
7,200 Beneficial Corp. 352,800
------------------------------------------------------------------
17,600 Boatmen's Bancshares, Inc. 668,800
------------------------------------------------------------------
10,000 CIGNA Corp. 991,250
------------------------------------------------------------------
24,500 Chase Manhattan Corp. 1,396,500
------------------------------------------------------------------
33,690 Chemical Banking Corp. 1,916,119
------------------------------------------------------------------
12,000 Chubb Corp. 1,078,500
------------------------------------------------------------------
54,300 Citicorp 3,522,712
------------------------------------------------------------------
20,000 Corestates Financial Corp. 727,500
------------------------------------------------------------------
23,521 Dean Witter, Discover & Co. 1,170,170
------------------------------------------------------------------
24,900 Federal Home Loan Mortgage Corp. 1,724,325
------------------------------------------------------------------
37,700 Federal National Mortgage Association 3,953,787
------------------------------------------------------------------
18,800 First Bank System, Inc. 935,300
------------------------------------------------------------------
11,300 First Fidelity Bancorporation 738,737
------------------------------------------------------------------
10,900 First Interstate Bancorp 1,406,100
------------------------------------------------------------------
24,200 First Union Corp. 1,200,925
------------------------------------------------------------------
19,400 Fleet Financial Group, Inc. 751,750
------------------------------------------------------------------
11,300 General RE Corp. 1,637,087
------------------------------------------------------------------
8,300 Golden West Financial Corp. 416,037
------------------------------------------------------------------
18,500 Great Western Financial Corp. 418,562
------------------------------------------------------------------
13,200 Household International, Inc. 742,500
------------------------------------------------------------------
26,100 J.P. Morgan & Co., Inc. 2,012,963
------------------------------------------------------------------
6,750 Jefferson-Pilot Corp. 445,500
------------------------------------------------------------------
33,200 KeyCorp. 1,120,500
------------------------------------------------------------------
13,100 Lincoln National Corp. 584,588
------------------------------------------------------------------
23
Federated Max-Cap Fund
(formerly, Max-Cap Fund)
- ------------------------------------------------------------------------------
Shares Value
- ------------ ------------------------------------------------------------------ ------------
*Common Stocks--Continued
- --------------------------------------------------------------------------------------
Finance--Continued
------------------------------------------------------------------
20,450 MBNA Corp. $ 754,094
------------------------------------------------------------------
10,200 Marsh & McLennan Cos., Inc. 835,125
------------------------------------------------------------------
20,300 Mellon Bank Corp. 1,017,538
------------------------------------------------------------------
25,900 Merrill Lynch & Co., Inc. 1,437,450
------------------------------------------------------------------
10,600 Morgan Stanley & Co., Inc. 922,200
------------------------------------------------------------------
22,050 NBD Bancorp, Inc. 837,900
------------------------------------------------------------------
20,400 National City Corp. 629,850
------------------------------------------------------------------
38,146 NationsBank Corp. 2,508,100
------------------------------------------------------------------
42,600 Norwest Corp. 1,256,700
------------------------------------------------------------------
32,400 PNC Financial Corp. 850,500
------------------------------------------------------------------
13,300 Providian Corp. 522,025
------------------------------------------------------------------
7,200 Republic New York Corp. 422,100
------------------------------------------------------------------
10,900 Ryder Systems, Inc. 262,963
------------------------------------------------------------------
8,600 SAFECO Corp. 552,013
------------------------------------------------------------------
14,600 Salomon, Inc. 527,425
------------------------------------------------------------------
16,600 Shawmut National Corp. 562,325
------------------------------------------------------------------
11,600 St. Paul Companies, Inc. 588,700
------------------------------------------------------------------
16,200 SunTrust Banks, Inc. 1,044,900
------------------------------------------------------------------
9,750 Torchmark Corp. 404,625
------------------------------------------------------------------
9,700 Transamerica Corp. 657,175
------------------------------------------------------------------
221 (a) Transport Holdings, Inc., Class A 8,670
------------------------------------------------------------------
44,178 Travelers Group, Inc. 2,230,989
------------------------------------------------------------------
13,550 U.S. Bancorp. 401,419
------------------------------------------------------------------
10,000 UNUM Corp. 526,250
------------------------------------------------------------------
13,100 USF&G Corp. 219,425
------------------------------------------------------------------
4,800 USLIFE Corp. 136,800
------------------------------------------------------------------
24
Federated Max-Cap Fund
(formerly, Max-Cap Fund)
- ------------------------------------------------------------------------------
Shares Value
- ------------ ------------------------------------------------------------------ ------------
*Common Stocks--Continued
- --------------------------------------------------------------------------------------
Finance--Continued
------------------------------------------------------------------
23,600 Wachovia Corp. $ 1,041,350
------------------------------------------------------------------
7,100 Wells Fargo & Co. 1,491,888
------------------------------------------------------------------ ------------
Total 73,743,079
------------------------------------------------------------------ ------------
Health Services--0.9%
------------------------------------------------------------------
11,800 (a) Beverly Enterprises, Inc. 138,650
------------------------------------------------------------------
60,938 Columbia/HCA Healthcare Corp. 2,993,579
------------------------------------------------------------------
6,100 (a) Community Psychiatric Centers 66,337
------------------------------------------------------------------
8,650 Manor Care, Inc. 283,288
------------------------------------------------------------------
3,200 Shared Medical Systems Corp. 123,600
------------------------------------------------------------------
27,600 (a) Tenet Healthcare Corp. 493,350
------------------------------------------------------------------
22,100 U.S. Healthcare, Inc. 850,850
------------------------------------------------------------------
23,800 United Healthcare Corp. 1,264,375
------------------------------------------------------------------ ------------
Total 6,214,029
------------------------------------------------------------------ ------------
Health Technology--7.5%
------------------------------------------------------------------
110,600 Abbott Laboratories 4,396,350
------------------------------------------------------------------
8,800 Allergan, Inc. 258,500
------------------------------------------------------------------
268 (a) Allergan Ligand Retinoid Therapeutics, Inc. 3,986
------------------------------------------------------------------
11,300 (a) Alza Corp. 248,600
------------------------------------------------------------------
42,100 American Home Products Corp. 3,731,112
------------------------------------------------------------------
36,600 (a) Amgen, Inc. 1,756,800
------------------------------------------------------------------
7,200 Bard (C.R.), Inc. 203,400
------------------------------------------------------------------
8,100 Bausch & Lomb, Inc. 280,462
------------------------------------------------------------------
38,800 Baxter International, Inc. 1,498,650
------------------------------------------------------------------
9,200 Becton, Dickinson & Co. 598,000
------------------------------------------------------------------
16,100 (a) Biomet, Inc. 267,662
------------------------------------------------------------------
20,700 (a) Boston Scientific Corp. 871,987
------------------------------------------------------------------
70,400 Bristol-Myers Squibb Co. 5,368,000
------------------------------------------------------------------
88,600 Johnson & Johnson 7,220,900
------------------------------------------------------------------
25
Federated Max-Cap Fund
(formerly, Max-Cap Fund)
- ------------------------------------------------------------------------------
Shares Value
- ------------ ------------------------------------------------------------------ ------------
*Common Stocks--Continued
- --------------------------------------------------------------------------------------
Health Technology--Continued
------------------------------------------------------------------
40,300 Lilly (Eli) & Co. $ 3,893,988
------------------------------------------------------------------
10,600 Mallinckrodt Group, Inc. 368,350
------------------------------------------------------------------
31,800 Medtronic, Inc. 1,836,450
------------------------------------------------------------------
173,500 Merck & Co., Inc. 9,976,250
------------------------------------------------------------------
86,700 Pfizer, Inc. 4,974,413
------------------------------------------------------------------
51,400 Schering Plough Corp. 2,756,325
------------------------------------------------------------------
6,300 (a) St. Jude Medical, Inc. 335,475
------------------------------------------------------------------
7,800 United States Surgical Corp. 191,100
------------------------------------------------------------------
23,900 Upjohn Co. 1,212,925
------------------------------------------------------------------
18,600 Warner-Lambert Co. 1,583,325
------------------------------------------------------------------ ------------
Total 53,833,010
------------------------------------------------------------------ ------------
Industrial Services--1.1%
------------------------------------------------------------------
19,400 Baker Hughes, Inc. 380,725
------------------------------------------------------------------
27,300 Browning-Ferris Industries, Inc. 795,112
------------------------------------------------------------------
11,400 Fluor Corp. 644,100
------------------------------------------------------------------
5,000 Foster Wheeler Corp. 187,500
------------------------------------------------------------------
15,700 Halliburton Co. 651,550
------------------------------------------------------------------
3,400 Helmerich & Payne, Inc. 87,975
------------------------------------------------------------------
38,300 Laidlaw, Inc., Class B 344,700
------------------------------------------------------------------
7,400 McDermott International, Inc. 117,475
------------------------------------------------------------------
4,500 (a) Morrison Knudsen Corp. 29,250
------------------------------------------------------------------
11,600 (a) Rowan Companies, Inc. 76,850
------------------------------------------------------------------
33,500 Schlumberger Ltd. 2,085,375
------------------------------------------------------------------
66,700 WMX Technologies, Inc. 1,875,938
------------------------------------------------------------------
7,300 (a) Western Atlas, Inc. 320,288
------------------------------------------------------------------ ------------
Total 7,596,838
------------------------------------------------------------------ ------------
26
Federated Max-Cap Fund
(formerly, Max-Cap Fund)
- ------------------------------------------------------------------------------
Shares Value
- ------------ ------------------------------------------------------------------ ------------
*Common Stocks--Continued
- --------------------------------------------------------------------------------------
Non-Energy Minerals--1.6%
------------------------------------------------------------------
5,800 ASARCO, Inc. $ 187,050
------------------------------------------------------------------
31,000 Alcan Aluminum Ltd. 980,375
------------------------------------------------------------------
24,700 Aluminum Co. of America 1,259,700
------------------------------------------------------------------
14,500 (a) Armco, Inc. 88,812
------------------------------------------------------------------
48,300 Barrick Gold Corp. 1,116,937
------------------------------------------------------------------
15,100 (a) Bethlehem Steel Corp. 198,188
------------------------------------------------------------------
12,850 Cyprus Amax Minerals 335,706
------------------------------------------------------------------
15,500 Echo Bay Mines Ltd. 139,500
------------------------------------------------------------------
1,984 (a) FirstMiss Gold, Inc. 35,706
------------------------------------------------------------------
12,400 Georgia-Pacific Corp. 1,023,000
------------------------------------------------------------------
19,000 Homestake Mining Co. 292,125
------------------------------------------------------------------
16,100 Inco Ltd. 553,437
------------------------------------------------------------------
6,200 Inland Steel Industries, Inc. 144,925
------------------------------------------------------------------
15,500 Louisiana-Pacific Corp. 370,063
------------------------------------------------------------------
11,911 Newmont Mining Corp. 449,640
------------------------------------------------------------------
12,000 Nucor Corp. 577,500
------------------------------------------------------------------
6,100 (a) Owens-Corning Fiberglass Corp. 258,488
------------------------------------------------------------------
9,800 Phelps Dodge Corp. 621,075
------------------------------------------------------------------
32,900 Placer Dome, Inc. 719,688
------------------------------------------------------------------
8,600 Reynolds Metals Co. 433,225
------------------------------------------------------------------
18,135 Santa Fe Pacific Gold 179,083
------------------------------------------------------------------
10,520 USX-U.S. Steel Group, Inc. 314,285
------------------------------------------------------------------
28,300 Weyerhaeuser Co. 1,248,738
------------------------------------------------------------------
12,550 Worthington Industries, Inc. 208,644
------------------------------------------------------------------ ------------
Total 11,735,890
------------------------------------------------------------------ ------------
27
Federated Max-Cap Fund
(formerly, Max-Cap Fund)
- ------------------------------------------------------------------------------
Shares Value
- ------------ ------------------------------------------------------------------ ------------
*Common Stocks--Continued
- --------------------------------------------------------------------------------------
Process Industries--4.4%
------------------------------------------------------------------
15,400 Air Products & Chemicals, Inc. $ 795,025
------------------------------------------------------------------
74,680 Archer-Daniels-Midland Co. 1,204,214
------------------------------------------------------------------
7,400 Avery Dennison Corp. 331,150
------------------------------------------------------------------
4,100 Ball Corp. 113,262
------------------------------------------------------------------
7,100 Bemis Co., Inc. 184,600
------------------------------------------------------------------
6,500 Boise Cascade Corp. 235,625
------------------------------------------------------------------
12,800 Champion International Corp. 684,800
------------------------------------------------------------------
31,400 Corning, Inc. 820,325
------------------------------------------------------------------
12,300 (a) Crown Cork & Seal Co., Inc. 428,962
------------------------------------------------------------------
38,300 Dow Chemical Co. 2,628,337
------------------------------------------------------------------
72,600 Du Pont (E.I.) de Nemours & Co. 4,528,425
------------------------------------------------------------------
11,425 Eastman Chemical Co. 679,787
------------------------------------------------------------------
9,040 Ecolab, Inc. 262,160
------------------------------------------------------------------
19,663 Engelhard Corp. 489,104
------------------------------------------------------------------
5,900 Federal Paper Board Co., Inc. 247,800
------------------------------------------------------------------
28,500 (a) Freeport-McMoRan Copper & Gold, Inc., Class B 648,375
------------------------------------------------------------------
3,600 Goodrich (B.F.) Co. 237,150
------------------------------------------------------------------
13,000 Grace (W.R.) & Co. 724,750
------------------------------------------------------------------
9,500 Great Lakes Chemical Corp. 637,687
------------------------------------------------------------------
16,200 Hercules, Inc. 864,675
------------------------------------------------------------------
34,400 International Paper Co. 1,272,800
------------------------------------------------------------------
11,300 James River Corp. of Virginia 363,012
------------------------------------------------------------------
22,300 Kimberly-Clark Corp. 1,619,538
------------------------------------------------------------------
7,900 Mead Corp. 455,238
------------------------------------------------------------------
6,400 Millipore Corp. 226,400
------------------------------------------------------------------
16,000 Monsanto Co. 1,676,000
------------------------------------------------------------------
20,400 Morton International, Inc. 622,200
------------------------------------------------------------------
9,500 Nalco Chemical Co. 285,000
------------------------------------------------------------------
28
Federated Max-Cap Fund
(formerly, Max-Cap Fund)
- ------------------------------------------------------------------------------
Shares Value
- ------------ ------------------------------------------------------------------ ------------
*Common Stocks--Continued
- --------------------------------------------------------------------------------------
Process Industries--Continued
------------------------------------------------------------------
28,500 PPG Industries, Inc. $ 1,211,250
------------------------------------------------------------------
16,033 Pall Corp. 390,804
------------------------------------------------------------------
11,700 Pioneer Hi-Bred International 580,613
------------------------------------------------------------------
4,100 Potlatch Corp. 172,713
------------------------------------------------------------------
18,900 Praxair, Inc. 510,300
------------------------------------------------------------------
9,400 Rohm & Haas Co. 519,350
------------------------------------------------------------------
20,800 Scott Paper Co. 1,107,600
------------------------------------------------------------------
11,700 Sherwin-Williams Co. 440,213
------------------------------------------------------------------
6,900 Sigma-Aldrich Corp. 327,750
------------------------------------------------------------------
2,500 Springs Industries, Inc., Class A 107,188
------------------------------------------------------------------
12,508 Stone Container Corp. 206,382
------------------------------------------------------------------
7,800 Temple-Inland, Inc. 354,900
------------------------------------------------------------------
9,600 Union Camp Corp. 488,400
------------------------------------------------------------------
20,400 Union Carbide Corp. 772,650
------------------------------------------------------------------
13,950 Westvaco Corp. 387,113
------------------------------------------------------------------
7,700 Willamette Industries, Inc. 446,600
------------------------------------------------------------------ ------------
Total 31,290,227
------------------------------------------------------------------ ------------
Producer Manufacturing--6.2%
------------------------------------------------------------------
39,000 Allied-Signal, Inc. 1,657,500
------------------------------------------------------------------
5,200 Armstrong World Industries, Inc. 308,750
------------------------------------------------------------------
27,700 Caterpillar, Inc. 1,554,662
------------------------------------------------------------------
4,600 Cincinnati Milacron, Inc. 118,450
------------------------------------------------------------------
16,100 Cooper Industries, Inc. 543,375
------------------------------------------------------------------
4,100 Crane Co. 145,037
------------------------------------------------------------------
5,800 Cummins Engine Co., Inc. 203,725
------------------------------------------------------------------
13,700 Dana Corp. 351,062
------------------------------------------------------------------
11,900 Deere & Co. 1,063,562
------------------------------------------------------------------
12,800 Dial Corp. Del. 312,000
------------------------------------------------------------------
29
Federated Max-Cap Fund
(formerly, Max-Cap Fund)
- ------------------------------------------------------------------------------
Shares Value
- ------------ ------------------------------------------------------------------ ------------
*Common Stocks--Continued
- --------------------------------------------------------------------------------------
Producer Manufacturing--Continued
------------------------------------------------------------------
15,800 Dover Corp. $ 624,100
------------------------------------------------------------------
25,200 Dresser Industries, Inc. 522,900
------------------------------------------------------------------
10,800 Eaton Corp. 553,500
------------------------------------------------------------------
30,900 Emerson Electric Co. 2,201,625
------------------------------------------------------------------
5,000 (a) FMC Corp. 358,125
------------------------------------------------------------------
235,800 General Electric Co. 14,914,350
------------------------------------------------------------------
6,500 General Signal Corp. 207,187
------------------------------------------------------------------
4,700 Giddings & Lewis, Inc. 75,787
------------------------------------------------------------------
6,378 Harnischfeger Industries, Inc. 200,907
------------------------------------------------------------------
17,800 Honeywell, Inc. 747,600
------------------------------------------------------------------
14,700 ITT Corp. 1,800,750
------------------------------------------------------------------
15,700 Illinois Tool Works, Inc. 912,562
------------------------------------------------------------------
14,600 Ingersoll-Rand Co. 516,475
------------------------------------------------------------------
5,700 Johnson Controls, Inc. 332,025
------------------------------------------------------------------
8,000 Loews Corp. 1,173,000
------------------------------------------------------------------
22,100 Masco Industries, Inc. 621,563
------------------------------------------------------------------
58,000 Minnesota Mining & Manufacturing Co. 3,298,750
------------------------------------------------------------------
1,300 NACCO Industries, Inc., Class A 74,425
------------------------------------------------------------------
6,800 National Service Industries, Inc. 202,300
------------------------------------------------------------------
10,370 (a) Navistar International Corp. 106,293
------------------------------------------------------------------
5,440 PACCAR, Inc. 227,120
------------------------------------------------------------------
10,200 Parker-Hannifin Corp. 344,250
------------------------------------------------------------------
21,500 Pitney Bowes, Inc. 937,938
------------------------------------------------------------------
6,100 Raychem Corp. 282,888
------------------------------------------------------------------
8,900 TRW, Inc. 585,175
------------------------------------------------------------------
7,600 Teledyne, Inc. 189,050
------------------------------------------------------------------
26,000 Tenneco, Inc. 1,140,750
------------------------------------------------------------------
12,100 Textron, Inc. 831,875
------------------------------------------------------------------
30
Federated Max-Cap Fund
(formerly, Max-Cap Fund)
- ------------------------------------------------------------------------------
Shares Value
- ------------ ------------------------------------------------------------------ ------------
*Common Stocks--Continued
- --------------------------------------------------------------------------------------
Producer Manufacturing--Continued
------------------------------------------------------------------
2,600 Thomas & Betts Corp. $ 168,025
------------------------------------------------------------------
4,300 Timken Co. 173,075
------------------------------------------------------------------
4,000 Trinova Corp. 112,500
------------------------------------------------------------------
10,100 Tyco Laboratories, Inc. 613,575
------------------------------------------------------------------
5,880 (a) Varity Corp. 213,150
------------------------------------------------------------------
49,000 Westinghouse Electric Corp. 692,125
------------------------------------------------------------------
14,600 Whitman Corp. 310,250
------------------------------------------------------------------
14,600 Xerox Corp. 1,894,350
------------------------------------------------------------------
1,800 Zurn Industries, Inc. 45,000
------------------------------------------------------------------ ------------
Total 44,463,443
------------------------------------------------------------------ ------------
Retail Trade--3.8%
------------------------------------------------------------------
35,100 Albertsons, Inc. 1,167,075
------------------------------------------------------------------
20,500 American Stores Co. 612,437
------------------------------------------------------------------
14,200 Charming Shoppes, Inc. 40,825
------------------------------------------------------------------
13,200 Circuit City Store, Inc. 440,550
------------------------------------------------------------------
9,800 Dayton-Hudson Corp. 673,750
------------------------------------------------------------------
15,700 Dillard Department Stores, Inc., Class A 425,862
------------------------------------------------------------------
20,000 Gap (The), Inc. 787,500
------------------------------------------------------------------
8,200 Giant Foods, Inc., Class A 263,425
------------------------------------------------------------------
5,200 Great Atlantic & Pacific Tea Co., Inc. 105,300
------------------------------------------------------------------
9,400 Harcourt General, Inc. 372,475
------------------------------------------------------------------
62,600 Home Depot, Inc. 2,331,850
------------------------------------------------------------------
63,000 K Mart Corp. 511,875
------------------------------------------------------------------
16,200 (a) Kroger Co., Inc. 540,675
------------------------------------------------------------------
49,300 Limited, Inc. 905,888
------------------------------------------------------------------
2,900 Longs Drug Stores Corp. 116,000
------------------------------------------------------------------
22,000 Lowe's Cos., Inc. 594,000
------------------------------------------------------------------
34,200 May Department Stores Co. 1,342,350
------------------------------------------------------------------
31
Federated Max-Cap Fund
(formerly, Max-Cap Fund)
- ------------------------------------------------------------------------------
Shares Value
- ------------ ------------------------------------------------------------------ ------------
*Common Stocks--Continued
- --------------------------------------------------------------------------------------
Retail Trade--Continued
------------------------------------------------------------------
14,500 Melville Corp. $ 464,000
------------------------------------------------------------------
5,000 Mercantile Stores Co., Inc. 224,375
------------------------------------------------------------------
11,300 Nordstrom, Inc. 418,806
------------------------------------------------------------------
32,000 Penney (J.C.) Co., Inc. 1,348,000
------------------------------------------------------------------
8,400 Pep Boys-Manny Moe & Jack 183,750
------------------------------------------------------------------
8,700 Premark International, Inc. 402,375
------------------------------------------------------------------
26,850 (a) Price Co. 456,450
------------------------------------------------------------------
11,600 Rite Aid Corp. 313,200
------------------------------------------------------------------
53,400 Sears, Roebuck & Co. 1,815,600
------------------------------------------------------------------
10,000 TJX Cos., Inc. 135,000
------------------------------------------------------------------
10,065 Tandy Corp. 496,959
------------------------------------------------------------------
38,300 (a) Toys "R" Us, Inc. 837,813
------------------------------------------------------------------
317,000 Wal-Mart Stores, Inc. 6,855,125
------------------------------------------------------------------
33,900 Walgreen Co. 966,150
------------------------------------------------------------------
10,300 Winn-Dixie Stores, Inc. 669,500
------------------------------------------------------------------
18,300 (a) Woolworth (F.W.) Co. 267,638
------------------------------------------------------------------ ------------
Total 27,086,578
------------------------------------------------------------------ ------------
Technology Services--2.8%
------------------------------------------------------------------
6,500 Autodesk, Inc. 221,000
------------------------------------------------------------------
19,700 Automatic Data Processing, Inc. 1,408,550
------------------------------------------------------------------
37,850 Computer Associates International, Inc. 2,081,750
------------------------------------------------------------------
16,600 First Data Corp., Class 1,097,675
------------------------------------------------------------------
103,900 General Motors Corp. 4,545,625
------------------------------------------------------------------
80,100 (a) Microsoft Corp. 8,010,000
------------------------------------------------------------------
59,300 (a) Oracle Corp. 2,586,963
------------------------------------------------------------------ ------------
Total 19,951,563
------------------------------------------------------------------ ------------
32
Federated Max-Cap Fund
(formerly, Max-Cap Fund)
- ------------------------------------------------------------------------------
Shares Value
- ------------ ------------------------------------------------------------------ ------------
*Common Stocks--Continued
- --------------------------------------------------------------------------------------
Transportation--1.4%
------------------------------------------------------------------
10,500 (a) AMR Corp. $ 693,000
------------------------------------------------------------------
20,912 Burlington Northern Santa Fe 1,753,955
------------------------------------------------------------------
14,500 CSX Corp. 1,214,375
------------------------------------------------------------------
5,900 Consolidated Freightways, Inc. 137,175
------------------------------------------------------------------
10,900 Consolidated Rail Corp. 749,375
------------------------------------------------------------------
7,000 Delta Air Lines, Inc. 459,375
------------------------------------------------------------------
7,800 (a) Federal Express Corp. 640,575
------------------------------------------------------------------
18,600 Norfolk Southern Corp. 1,436,850
------------------------------------------------------------------
5,500 Roadway Services, Inc. 246,125
------------------------------------------------------------------
19,700 Southwest Airlines Co. 394,000
------------------------------------------------------------------
8,300 (a) USAir Group, Inc. 113,088
------------------------------------------------------------------
28,400 Union Pacific Corp. 1,856,650
------------------------------------------------------------------
3,900 (a) Yellow Corp. 51,188
------------------------------------------------------------------ ------------
Total 9,745,731
------------------------------------------------------------------ ------------
Utilities--10.9%
------------------------------------------------------------------
215,678 AT&T Corp. 13,803,392
------------------------------------------------------------------
68,000 Airtouch Communications, Inc. 1,938,000
------------------------------------------------------------------
26,000 Alltel Corp. 796,250
------------------------------------------------------------------
25,500 American Electric Power Co., Inc. 972,188
------------------------------------------------------------------
76,100 Ameritech Corp. 4,109,400
------------------------------------------------------------------
20,350 Baltimore Gas & Electric Co. 544,362
------------------------------------------------------------------
60,200 Bell Atlantic Corp. 3,830,225
------------------------------------------------------------------
68,500 BellSouth Corp. 5,240,250
------------------------------------------------------------------
21,600 Carolina Power & Light Co. 707,400
------------------------------------------------------------------
26,200 Central & SouthWest Corp. 700,850
------------------------------------------------------------------
21,340 Cinergy Corp. 605,522
------------------------------------------------------------------
14,400 Coastal Corp. 466,200
------------------------------------------------------------------
7,000 (a) Columbia Gas System, Inc. 269,500
------------------------------------------------------------------
33
Federated Max-Cap Fund
(formerly, Max-Cap Fund)
- ------------------------------------------------------------------------------
Shares Value
- ------------ ------------------------------------------------------------------ ------------
*Common Stocks--Continued
- --------------------------------------------------------------------------------------
Utilities--Continued
------------------------------------------------------------------
32,400 Consolidated Edison Co. $ 984,150
------------------------------------------------------------------
12,800 Consolidated Natural Gas Co. 486,400
------------------------------------------------------------------
20,000 Detroit Edison Co. 675,000
------------------------------------------------------------------
23,750 Dominion Resources, Inc. 944,062
------------------------------------------------------------------
28,300 Duke Power Co. 1,266,425
------------------------------------------------------------------
2,900 Eastern Enterprises 86,637
------------------------------------------------------------------
34,900 Enron Corp. 1,199,687
------------------------------------------------------------------
9,300 Enserch Corp. 134,850
------------------------------------------------------------------
31,300 Entergy Corp. 892,050
------------------------------------------------------------------
25,800 FPL Group, Inc. 1,080,375
------------------------------------------------------------------
132,800 GTE Corp. 5,478,000
------------------------------------------------------------------
15,900 General Public Utilities 496,875
------------------------------------------------------------------
18,100 Houston Industries, Inc. 839,388
------------------------------------------------------------------
93,800 MCI Communications Corp. 2,339,138
------------------------------------------------------------------
7,200 NICOR, Inc. 193,500
------------------------------------------------------------------
58,200 NYNEX Corp. 2,735,400
------------------------------------------------------------------
19,800 Niagara Mohawk Power Corp. 212,850
------------------------------------------------------------------
16,800 Noram Energy Corp. 130,200
------------------------------------------------------------------
9,300 Northern States Power Co. 439,425
------------------------------------------------------------------
21,100 Ohio Edison Co. 482,663
------------------------------------------------------------------
3,700 Oneok, Inc. 90,188
------------------------------------------------------------------
11,300 Pacific Enterprises 279,675
------------------------------------------------------------------
59,600 Pacific Gas & Electric Co. 1,750,750
------------------------------------------------------------------
58,500 Pacific Telesis Group 1,776,938
------------------------------------------------------------------
39,100 Pacificorp 738,013
------------------------------------------------------------------
20,600 Panhandle Eastern Corp. 520,150
------------------------------------------------------------------
30,600 Peco Energy Co. 895,050
------------------------------------------------------------------
4,800 Peoples Energy Corp. 138,000
------------------------------------------------------------------
34
Federated Max-Cap Fund
(formerly, Max-Cap Fund)
- ------------------------------------------------------------------------------
Shares Value
- ------------ ------------------------------------------------------------------ ------------
*Common Stocks--Continued
- --------------------------------------------------------------------------------------
Utilities--Continued
------------------------------------------------------------------
33,700 Public Service Enterprises Group, Inc. $ 989,938
------------------------------------------------------------------
82,800 SBC Communications, Inc. 4,626,450
------------------------------------------------------------------
61,700 SCE Corp. 1,048,900
------------------------------------------------------------------
12,000 Sonat, Inc. 345,000
------------------------------------------------------------------
90,200 Southern Co. 2,153,525
------------------------------------------------------------------
48,100 Sprint Corp. 1,851,850
------------------------------------------------------------------
31,100 Texas Utilities Co. 1,142,925
------------------------------------------------------------------
62,900 U.S. West, Inc. 2,995,613
------------------------------------------------------------------
29,500 Unicom Corp. 966,125
------------------------------------------------------------------
14,100 Union Electric Co. 549,900
------------------------------------------------------------------
14,000 Williams Companies, Inc. (The) 540,750
------------------------------------------------------------------ ------------
Total 78,480,354
------------------------------------------------------------------ ------------
Total Common Stocks (identified cost $539,333,079) 592,177,577
------------------------------------------------------------------ ------------
35
Federated Max-Cap Fund
(formerly, Max-Cap Fund)
- ------------------------------------------------------------------------------
Principal
Amount Value
- ------------ ------------------------------------------------------------------ ------------
Short-Term U.S. Government Obligations--0.6%
- --------------------------------------------------------------------------------------
$ 4,500,000 United States Treasury Bill, 11/30/1995 (at amortized cost) $ 4,483,080
------------------------------------------------------------------ ------------
(b) Repurchase Agreement--15.8%
- --------------------------------------------------------------------------------------
112,855,000 J.P. Morgan Securities, Inc., 5.90%, dated 10/31/1995, due
11/1/1995 112,855,000
------------------------------------------------------------------ ------------
Total Investments (identified cost $656,671,159)(c) $709,515,657
------------------------------------------------------------------ ------------
</TABLE>
* The Fund purchases Index futures contracts to efficiently manage cash flows
resulting from shareholder purchases and redemptions, dividend and capital
gain payments to shareholders and corporate actions while maintaining
exposure to the Index and minimizing trading costs. The total market value
of open Index futures contracts is $117,937,700 at October 31, 1995, which
represents 16.5% of net assets. Taking into consideration these open Index
futures contracts, the Fund's effective, total exposure to the Index is
99.4%
(a) Non-income producing.
(b) The repurchase agreement is fully collateralized by U.S. government
obligations based on market prices at the date of the portfolio. The
investment in the repurchase agreement is through participation in a joint
account with other Federated funds.
(c) The cost of investments for federal tax purposes amounts to $660,350,985.
The net unrealized appreciation of investments on a federal tax basis
amounts to $49,164,672 which is comprised of $65,340,734 appreciation and
$16,176,062 depreciation at October 31, 1995.
Note: The categories of investments are shown as a percentage of net assets
($714,432,451) at October 31, 1995.
The following acronym is used throughout this portfolio:
ADR -- American Depository Receipt
(See Notes which are an integral part of the Financial Statements)
36
Federated Max-Cap Fund
(formerly, Max-Cap Fund)
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
October 31, 1995
- ------------------------------------------------------------------------------
<S> <C> <C>
Assets:
- --------------------------------------------------------------------
Investments in repurchase agreements $112,855,000
- --------------------------------------------------------------------
Investments in securities 596,660,657
- -------------------------------------------------------------------- ------------
Total investments in securities, at value
(identified cost $656,671,159 and tax cost $660,350,985) $709,515,657
- -----------------------------------------------------------------------------------
Income receivable 990,626
- -----------------------------------------------------------------------------------
Receivable for shares sold 6,040,960
- -----------------------------------------------------------------------------------
Deferred expenses 250
- ----------------------------------------------------------------------------------- ------------
Total assets 716,547,493
- -----------------------------------------------------------------------------------
Liabilities:
- -----------------------------------------------------------------------------------
Payable for shares redeemed 433,930
- --------------------------------------------------------------------
Payable to Bank 966,946
- --------------------------------------------------------------------
Payable for taxes withheld 1,784
- --------------------------------------------------------------------
Payable for daily variation margin 553,860
- --------------------------------------------------------------------
Accrued expenses 158,522
- -------------------------------------------------------------------- ------------
Total liabilities 2,115,042
- ----------------------------------------------------------------------------------- ------------
Net Assets for 48,467,529 shares outstanding $714,432,451
- ----------------------------------------------------------------------------------- ------------
Net Assets Consist of:
- -----------------------------------------------------------------------------------
Paid in capital $558,632,158
- -----------------------------------------------------------------------------------
Net unrealized appreciation on investments and futures contracts 53,339,758
- -----------------------------------------------------------------------------------
Accumulated net realized gain on investments and futures contracts 99,397,047
- -----------------------------------------------------------------------------------
Undistributed net investment income 3,063,488
- ----------------------------------------------------------------------------------- ------------
Total Net Assets $714,432,451
- ----------------------------------------------------------------------------------- ------------
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
- -----------------------------------------------------------------------------------
Institutional Shares:
- -----------------------------------------------------------------------------------
$679,237,383 / 46,076,825 shares outstanding $14.74
- ----------------------------------------------------------------------------------- ------------
Institutional Service Shares:
- -----------------------------------------------------------------------------------
$35,195,068 / 2,390,704 shares outstanding $14.72
- ----------------------------------------------------------------------------------- ------------
(See Notes which are an integral part of the Financial Statements)
37
Federated Max-Cap Fund
(formerly, Max-Cap Fund)
Statement of Operations
Year Ended October 31, 1995
- ------------------------------------------------------------------------------
Investment Income:
- ---------------------------------------------------------------------------------------------------
Dividends $ 12,163,449
- ---------------------------------------------------------------------------------------------------
Interest 6,393,059
- --------------------------------------------------------------------------------------------------- -----------
Total income 18,556,508
- ---------------------------------------------------------------------------------------------------
Expenses:
- ---------------------------------------------------------------------------------------------------
Management fee $ 1,727,669
- ------------------------------------------------------------------------------------
Custodian fees 150,587
- ------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 112,420
- ------------------------------------------------------------------------------------
Directors'/Trustees' fees 5,093
- ------------------------------------------------------------------------------------
Auditing fees 13,109
- ------------------------------------------------------------------------------------
Legal fees 8,985
- ------------------------------------------------------------------------------------
Portfolio accounting fees 48,764
- ------------------------------------------------------------------------------------
Distribution services fee--Institutional Service Shares 67,923
- ------------------------------------------------------------------------------------
Shareholder services fee--Institutional Shares 1,383,122
- ------------------------------------------------------------------------------------
Shareholder services fee--Institutional Service Shares 56,603
- ------------------------------------------------------------------------------------
Share registration costs 113,689
- ------------------------------------------------------------------------------------
Printing and postage 42,190
- ------------------------------------------------------------------------------------
Insurance premiums 11,366
- ------------------------------------------------------------------------------------
Taxes 1,984
- ------------------------------------------------------------------------------------
Miscellaneous 6,788
- ------------------------------------------------------------------------------------ ----------
Total expenses 3,750,292
- ------------------------------------------------------------------------------------
Waivers--
- ------------------------------------------------------------------------------------
Waiver of management fee $ (433,282)
- ----------------------------------------------------------------------
Waiver of distribution services fee--Institutional Service Shares (56,603)
- ----------------------------------------------------------------------
Waiver of shareholder services fee--Institutional Shares (1,383,122)
- ---------------------------------------------------------------------- ----------
Total waivers (1,873,007)
- ------------------------------------------------------------------------------------ ----------
Net expenses 1,877,285
- --------------------------------------------------------------------------------------------------- -----------
Net investment income 16,679,223
- --------------------------------------------------------------------------------------------------- -----------
Realized and Unrealized Gain (Loss) on Investments and Futures Contracts:
- ---------------------------------------------------------------------------------------------------
Net realized gain on investments and futures contracts 99,787,657
- ---------------------------------------------------------------------------------------------------
Net change in unrealized appreciation on investments and futures contracts 21,104,700
- --------------------------------------------------------------------------------------------------- -----------
Net realized and unrealized gain on investments and futures contracts 120,892,357
- --------------------------------------------------------------------------------------------------- -----------
Change in net assets resulting from operations $137,571,580
- --------------------------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
38
Federated Max-Cap Fund
(formerly, Max-Cap Fund)
Statement of Changes in Net Assets
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
Year Ended October 31,
------------------------------
1995 1994
------------- -------------
Increase (Decrease) in Net Assets:
- ------------------------------------------------------------------
Operations--
- ------------------------------------------------------------------
Net investment income $ 16,679,223 $ 11,562,305
- ------------------------------------------------------------------
Net realized gain (loss) on investments and futures contracts
($103,347,377 and $741,350 net gains respectively, as computed for
federal tax purposes) 99,787,657 1,155,375
- ------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 21,104,700 3,003,321
- ------------------------------------------------------------------ ------------- -------------
Change in net assets resulting from operations 137,571,580 15,721,001
- ------------------------------------------------------------------ ------------- -------------
Distributions to Shareholders--
- ------------------------------------------------------------------
Distributions from net investment income
- ------------------------------------------------------------------
Institutional Shares (14,071,338) (10,781,243)
- ------------------------------------------------------------------
Institutional Service Shares (505,602) (115,401)
- ------------------------------------------------------------------
Distributions from net realized gain on investment transactions
and futures contracts
- ------------------------------------------------------------------
Institutional Shares (729,209) (11,507,864)
- ------------------------------------------------------------------
Institutional Service Shares (14,188) (108,965)
- ------------------------------------------------------------------ ------------- -------------
Change in net assets resulting from distributions to
shareholders (15,320,337) (22,513,473)
- ------------------------------------------------------------------ ------------- -------------
Share Transactions--
- ------------------------------------------------------------------
Proceeds from sale of shares 374,533,702 215,864,930
- ------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 6,003,498 8,535,336
- ------------------------------------------------------------------
Cost of shares redeemed (240,788,349) (174,914,182)
- ------------------------------------------------------------------ ------------- -------------
Change in net assets resulting from share transactions 139,748,851 49,486,084
- ------------------------------------------------------------------ ------------- -------------
Change in net assets 262,000,094 42,693,612
- ------------------------------------------------------------------
Net Assets:
- ------------------------------------------------------------------
Beginning of period 452,432,357 409,738,745
- ------------------------------------------------------------------ ------------- -------------
End of period (including undistributed net investment income of
$3,063,488 and $961,205, respectively) $ 714,432,451 $ 452,432,357
- ------------------------------------------------------------------ ------------- -------------
(See Notes which are an integral part of the Financial Statements)
</TABLE>
39
Federated Max-Cap Fund
(formerly, Max-Cap Fund)
Notes to Financial Statements
October 31, 1995
- ------------------------------------------------------------------------------
(1) Organization
Federated Index Trust (the "Trust") is registered under the Investment Company
Act of 1940, as amended (the "Act"), as an open-end, management investment
company. The Trust consists of three diversified portfolios. The financial
statements included herein present only those of Federated 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. The Fund offers
two classes of Shares: Institutional Shares and Institutional Service Shares.
Effective December 5, 1994, the Board of Trustees ("Trustees") changed the
name of the Fund from Max-Cap Fund to Federated Max-Cap Fund
(2) Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
Investment Valuations--Short-term securities with remaining maturities of
sixty days or less at the time of purchase may be valued at amortized
cost, which approximates fair market value. All other securities are
valued at the prices provided by an independent pricing service.
Repurchase Agreements--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under
repurchase agreement transactions. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of
each repurchase agreement's collateral to ensure that the value of
collateral at least equals the repurchase price to be paid under the
repurchase agreement transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are
deemed by the Fund's adviser to be creditworthy pursuant to the
guidelines and/or standards reviewed or established by the Board of
Trustees (the "Trustees"). Risks may arise from the potential inability
of counterparties to honor the terms of the repurchase agreement.
Accordingly, the Fund could receive less than the repurchase price on the
sale of collateral securities.
Investment Income, Expenses and Distributions--Interest income and
expenses are accrued daily. Bond premium and discount, if applicable, are
amortized as required by the Internal Revenue Code, as amended (the
"Code"). Dividend income and distributions to shareholders are recorded
on the ex-dividend date.
40
Federated Max-Cap Fund
(formerly, Max-Cap Fund)
- ------------------------------------------------------------------------------
Federal Taxes--It is the Fund's policy to comply with the provisions of
the Code applicable to regulated investment companies and to distribute
to shareholders each year substantially all of its income. Accordingly,
no provisions for federal tax are necessary.
When-Issued and Delayed Delivery Transactions--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records
when-issued securities on the trade date and maintains security positions
such that sufficient liquid assets will be available to make payment for
the securities purchased. Securities purchased on a when-issued or
delayed delivery basis are marked to market daily and begin earning
interest on the settlement date.
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 its shares, have been deferred and are
being amortized using the straight-line method not to exceed a period of
five years from the Fund's commencement date.
Futures Contracts--The Fund purchases stock index futures contracts to
manage cashflows, enhance yield, and to potentially reduce transaction
costs. Upon entering into a stock futures contract with a broker, the
Fund is required to deposit in a segregated account an amount of cash or
U.S. government securities. Futures contracts are valued daily and
unrealized gains or losses are recorded in a "variation margin" account.
Daily the Fund receives from or pays to the broker a specified amount of
cash based upon changes in the variation margin account. When a contract
is closed, the Fund recognizes a realized gain or loss.
Futures contracts have market risks, including the risk that the change
in the value of the contract may not correlate with changes in the value
of the underlying securities. For the period ended October 31, 1995, the
Fund had realized gains of $24,549,912 on future contracts. At October
31, 1995, the Fund had outstanding futures contracts as set forth below:
<TABLE>
<CAPTION>
<C> <C> <C> <C>
Unrealized
Contracts to Appreciation
Expiration Date Deliver/Receive Position (Depreciation)
---------------- ------------------------------ ---------------- ----------------
December 1995 404 S&P 500 Index Futures Long $495,260
</TABLE>
Other--Investment transactions are accounted for on the trade date.
(3) Shares of Beneficial Interest
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares.
41
Federated Max-Cap Fund
(formerly, Max-Cap Fund)
- ------------------------------------------------------------------------------
Transactions in shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Year Ended October 31,
--------------------------------------------------------------
1995 1994
---------------------------- ----------------------------
Institutional Shares Shares Amount Shares Amount
- --------------------------------------------- ----------- ------------- ----------- -------------
Shares sold 26,132,335 $ 343,592,917 17,555,003 $ 207,304,786
- ---------------------------------------------
Shares issued to shareholders in
payment of distributions declared 420,935 5,512,947 718,661 8,439,495
- ---------------------------------------------
Shares redeemed (17,407,051) (230,818,438) (14,617,884) (172,243,416)
- --------------------------------------------- ----------- ------------- ----------- -------------
Net change resulting from Institutional
Share transactions 9,146,219 $ 118,287,426 3,655,780 $ 43,500,865
- --------------------------------------------- ----------- ------------- ----------- -------------
Year Ended October 31,
--------------------------------------------------------------
1995 1994
---------------------------- ----------------------------
Institutional Service Shares Shares Amount Shares Amount
- --------------------------------------------- ----------- ------------- ----------- -------------
Shares sold 2,368,216 $ 30,940,785 734,647 $ 8,560,144
- ---------------------------------------------
Shares issued to shareholders in payment of
distributions declared 36,486 490,551 8,223 95,841
- ---------------------------------------------
Shares redeemed (730,897) (9,969,911) (229,644) (2,670,766)
- --------------------------------------------- ----------- ------------- ----------- -------------
Net change resulting from Institutional
Service Share transactions 1,673,805 $ 21,461,425 513,226 $ 5,985,219
- --------------------------------------------- ----------- ------------- ----------- -------------
Net change resulting from
share transactions 10,820,024 $ 139,748,851 4,169,006 $ 49,486,084
- --------------------------------------------- ----------- ------------- ----------- -------------
</TABLE>
(4) Management Fee and Other Transactions with Affiliates
Management Fee--Federated Management, the Fund's manager (the "Manager"),
receives for its services an annual management fee equal to .30 of 1% of the
Fund's average daily net assets. The Manager has entered into a sub-management
contract with ANB Investment Management and Trust Company ("Sub-Manager"). The
Manager shall pay the Sub-Manager an investment advisory fee based on the
average daily net assets of the Fund as follows: .05 of 1% on the first $100
million, .02 of 1% on the next $100 million, and .01 of 1% thereafter. The
Manager may voluntarily choose to waive a portion of its fees. The Manager can
modify or terminate this voluntary waiver at any time at its sole discretion.
Shareholder Services Fee--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25
of 1% of daily average net assets of the Fund for the period. This fee is to
obtain certain services for shareholders and to maintain shareholder accounts.
FSS may voluntarily choose to waive a portion of its fee. FSS can modify or
terminate this voluntary waiver
42
Federated Max-Cap Fund
(formerly, Max-Cap Fund)
- ------------------------------------------------------------------------------
at any time at its sole discretion. For the fiscal year ended October 31,
1995, Institutional Shares fully waived its shareholder services fee.
Distribution Services Fee--The Fund has adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the
Fund will compensate Federated Securities Corp, ("FSC"), the principal
distributor, from the net assets of the Fund to finance activities intended to
result in the sale of the Fund's Institutional Service Shares. The Plan
provides that the Fund may incur distribution expenses up to .30 of 1% of the
average daily net assets of the Institutional Service Shares to compensate
FSC. The distributor may voluntarily choose to waive any portion of its fee.
The distributor can modify or terminate this voluntary waiver at any time at
its sole discretion.
Transfer and Dividend Disbursing Agent Fees and Expenses--Federated Services
Company ("FServ") serves as transfer and dividend disbursing agent for the
Fund. This fee is based on the size, type, and number of accounts and
transactions made by shareholders.
Portfolio Accounting Fees--FServ also maintains the Fund's accounting records
for which it receives a fee. The fee is based on the level of the Fund's
average daily net assets for the period, plus out-of-pocket expenses.
General--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
(5) Investment Transactions
Purchases and sales of investments, excluding short-term securities, for the
year ended October 31, 1995, were as follows:
- ------------------------------------------------------------------------------
Purchases $406,176,148
- ------------------------------------------------------------------------------
Sales $271,130,091
- ------------------------------------------------------------------------------
43
Report of Ernst & Young LLP,
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 Federated Max-Cap Fund (a portfolio
of Federated Index Trust), as of October 31, 1995, 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 the financial
highlights (see pages 2 and 15 of this prospectus) for each of the periods
presented therein. 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, 1995, 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
Federated Max-Cap Fund of Federated Index Trust at October 31, 1995, 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 therein, in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
December 8, 1995
44
<TABLE>
<CAPTION>
Addresses
- ------------------------------------------------------------------------------
<S> <C> <C>
Federated 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 8600
Trust Company Boston, Massachusetts 02266-8600
- ------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company P.O. Box 8600
Boston, Massachusetts 02266-8600
- ------------------------------------------------------------------------------------------
Independent Auditors
Ernst & Young LLP One Oxford Centre
Pittsburgh, Pennsylvania 15219
- ------------------------------------------------------------------------------------------
</TABLE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Federated Max-Cap Fund
(A Portfolio of Federated Index Trust)
Institutional Shares
Prospectus
An Open-End, Diversified
Management Investment Company
Prospectus dated December 31, 1995
FEDERATED SECURITIES CORP.
(LOGO)
- ---------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
CUSIP 31420E106
0032104A-IS (12/95)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FEDERATED MAX-CAP FUND
(A PORTFOLIO OF FEDERATED INDEX TRUST)
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
The Institutional Service Shares of Federated 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 Ratings Group.
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, 1995,
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 or a paper copy of this prospectus, if you have received your
prospectus electronically, 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, 1995
TABLE OF CONTENTS
Summary of Fund Expenses.......................................................1
Financial Highlights--
Institutional Service Shares.................................................2
General Information............................................................3
Investment Information.........................................................3
Investment Objective.........................................................3
Investment Policies..........................................................3
Investment Limitations.......................................................7
Federated Index Trust Information..............................................7
Management of the Trust......................................................7
Distribution of Institutional Service Shares.................................9
Fund Administration.........................................................10
Net Asset Value...............................................................10
Investing in Institutional Service Shares.....................................10
Share Purchases.............................................................10
Minimum Investment Required.................................................11
What Shares Cost............................................................11
Sub-Accounting Services.....................................................11
Certificates and Confirmations..............................................11
Dividends...................................................................11
Capital Gains...............................................................12
Redeeming Institutional Service Shares........................................12
Telephone Redemption........................................................12
Written Requests............................................................12
Accounts with Low Balances..................................................13
Shareholder Information.......................................................13
Voting Rights...............................................................13
Tax Information...............................................................13
Federal Income Tax..........................................................13
Performance Information.......................................................14
Other Classes of Shares.......................................................14
Financial Highlights--
Institutional Shares........................................................15
Financial Statements..........................................................16
Report of Ernst & Young LLP,
Independent Auditors........................................................44
Addresses......................................................Inside Back Cover
SUMMARY OF FUND EXPENSES
FEDERATED MAX-CAP FUND
INSTITUTIONAL SERVICE SHARES
<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price).................................................... None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price).................................................... None
Contingent Deferred Sales Charge (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 OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver) (1)........................................................ 0.22%
12b-1 Fee (after waiver) (2)............................................................. 0.05%
Total Other Expenses..................................................................... 0.34%
Shareholder Services Fee................................................... 0.25%
Total Fund Operating Expenses (3).............................................. 0.61%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.30%.
(2) The maximum 12b-1 fee is 0.30%.
(3) The total operating expenses would have been 0.94% absent the voluntary
waivers of a portion of the management fee and a portion of the 12b-1 fee.
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.
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, 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.
<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....................................... $6 $20 $34 $ 76
</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.
FEDERATED MAX-CAP FUND
(FORMERLY MAX-CAP FUND)
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Ernst & Young LLP, Independent Auditors, on
page 44.
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-------------------------------
1995 1994 1993(A)
- -------------------------------------------------------------------------- ------ ------ -------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $12.02 $12.24 $12.12
- --------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------
Net investment income 0.33 0.28(b) 0.07
- --------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments
and futures contracts 2.69 0.11 0.12
- -------------------------------------------------------------------------- ------ ------ -------
Total from investment operations 3.02 0.39 0.19
- --------------------------------------------------------------------------
LESS DISTRIBUTIONS
- --------------------------------------------------------------------------
Distributions from net investment income (0.30) (0.27) (0.07 )
- --------------------------------------------------------------------------
Distributions from net realized gain on investment transactions
and futures contracts (0.02) (0.34) --
- -------------------------------------------------------------------------- ------ ------ -------
Total distributions (0.32) (0.61) (0.07 )
- -------------------------------------------------------------------------- ------ ------ -------
NET ASSET VALUE, END OF PERIOD $14.72 $12.02 $12.24
- -------------------------------------------------------------------------- ------ ------ -------
TOTAL RETURN (C) 25.52% 3.30% 1.70 %
- --------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------------------------------------
Expenses 0.61% 0.62% 0.61 %*
- --------------------------------------------------------------------------
Net investment income 2.55% 2.35% 1.52 %*
- --------------------------------------------------------------------------
Expense waiver/reimbursement (d) 0.33% 0.26% 0.09 %*
- --------------------------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------------------------
Net assets, end of period (000 omitted) $35,195 $8,617 $2,493
- --------------------------------------------------------------------------
Portfolio turnover 57% 2% 13 %
- --------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from August 30, 1993 (date of initial
public investment) to October 31, 1993.
(b) Per share information presented is based upon the monthly average number of
shares outstanding due to large fluctuations in the number of shares
outstanding during the period.
(c) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
Further information about the Fund's performance is contained in the Fund's
annual report dated October 31, 1995 which can be obtained free of charge.
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 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
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 Ratings Group ("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 Farm
Credit System including the National Bank for Cooperatives, Farm Credit Banks,
and Banks for Cooperatives, 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 a
published interest rate or interest rate index.
CASH ITEMS. The Fund may also invest in cash items.
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. There is the risk that when lending portfolio securities, the securities
may not be available to the Fund on a timely basis and the Fund may, therefore,
lose the opportunity to sell the securities at a desirable price. In addition,
in the event that a borrower of securities would file for bankruptcy or become
insolvent, disposition of the securities may be delayed pending court action.
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
seller's failure to complete these transactions may cause the Fund to miss a
price or yield considered to be advantageous. 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. Accordingly, the Fund
may pay more/less than the market value of the securities on the settlement
date.
The Fund may dispose of a commitment prior to settlement if the managers deem it
appropriate to do so. In addition, the Fund may enter in transactions to sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Fund may realize short-term profits or losses upon the sale of such
commitments.
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
The Trust is managed by the Trustees. The Trustees are 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
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 func-
tions. 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.
Both the Trust and the Manager have adopted strict codes of ethics governing the
conduct of all employees who manage the Fund and its portfolio securities. These
codes recognize that such persons owe a fiduciary duty to the Fund's
shareholders and must place the interests of shareholders ahead of the
employees' own interest. Among other things, the codes: require preclearance and
periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered for
purchase or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less than sixty
days. Violations of the codes are subject to review by the Trustees, and could
result in severe penalties.
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. With
over $72 billion invested across more than 260 funds under management and/or
administration by its subsidiaries, as of December 31, 1994, Federated Investors
is one of the largest mutual fund investment managers in the United States. With
more than 1,750 employees, Federated continues to be led by the management who
founded the company in 1955. Federated funds are presently at work in and
through 4,000 financial institutions nationwide. More than 100,000 investment
professionals have selected Federated funds for their clients.
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 manage-
ment, .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 First Chicago Investment Management
Company 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, 1995,
placed approximately $20.6 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 331 nationwide non-financial institution clients
invest. In total, ANB manages 77 commingled/common trust funds. Also, since
1990, ANB has served as Sub-Manager for the Federated Mini-Cap Fund and for the
Federated Mid-Cap Fund, which are also portfolios of the Trust.
SUPPLEMENTAL PAYMENTS TO
FINANCIAL INSTITUTIONS
In addition to periodic payments to financial institutions under the
Distribution Plan and Shareholder Services Agreement, certain financial
institutions may be compensated by the Manager or its affiliates for the
continued investment of customers' assets in certain funds, including the Fund,
advised by those entities. These payments will be made directly by the
distributor or Manager from their assets, and will not be made from the assets
of the Fund or by the assessment of a sales charge on Shares.
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 S&P for the right to use the Index in connection with the management
activities for the Fund. Federated Securities Corp. is not affiliated with S&P.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES
Under a distribution plan adopted in accordance with Investment Company Act Rule
12b-1 (the "Distribution Plan"), the Fund will pay to the distributor an amount,
computed at an annual rate of 0.30 of 1% of the average daily net asset value of
Shares to finance any activity which is principally intended to result in the
sale of Shares subject to the Distribution Plan. The distributor may select
financial institutions such as banks, fiduciaries, custodians for public funds,
investment advisers and broker/dealers to provide sales services or
distribution-related support services as agents for their clients or customers.
The Distribution 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 amount or may earn a profit from future payments made by the Fund
under the Distribution Plan.
In addition, the Fund has entered into a Shareholder Services Agreement with
Federated Share-
holder Services, a subsidiary of Federated Investors, under which the Fund may
make payments up to 0.25 of 1% of the average daily net asset value of Shares,
computed at an annual rate, to obtain certain personal services for shareholders
and for the maintenance of shareholder accounts ("shareholder services"). From
time to time and for such periods as deemed appropriate, the amount stated above
may be reduced voluntarily. Under the Shareholder Services Agreement, Federated
Shareholder Services will either perform Shareholder Services directly or will
select financial institutions to perform shareholder services. Financial
institutions will receive fees 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 Fund and Federated Shareholder
Services.
FUND ADMINISTRATION
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.
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.
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 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 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. (Eastern 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. (Eastern time). The order is considered received immediately.
Payment by federal funds must be received before 4:00 p.m. (Eastern time) on the
next business day following the order. Federal funds should be wired as follows:
Federated Ser-
vices Company, c/o State Street Bank and Trust Company, Boston, Massachusetts;
Attention: EDGEWIRE; For Credit to: Federated Index Trust, Federated 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. Shares cannot be purchased by
wire on holidays when wire transfers are restricted. Questions on wire purchases
should be directed to your shareholder services representative at the telephone
number listed on your account statement.
BY MAIL
To purchase Shares of the Fund by mail, send a check made payable to Federated
Index Trust, Federated Max-Cap Fund--Institutional Service Shares to the Fund's
transfer agent, Federated Services Company, P.O. Box 8600, Boston, Massachusetts
02266-8600. 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 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 as of the close of trading (normally 4:00
p.m., Eastern time) on the New York Stock Exchange, 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.
SUB-ACCOUNTING 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. State securities laws may require certain
financial institutions such as depository institutions to register as dealers.
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.
(Eastern 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. (Eastern
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. Proceeds from
redemption requests received on holidays when wire transfers are restricted will
be wired the following business day. Questions about telephone redemptions on
days when wire transfers are restricted should be directed to your shareholder
services representative at the telephone number listed on your account
statement. 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 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 their signatures 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 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.
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 December 4, 1995, Alltell Corp.
Thrift Plan, San Francisco, CA, owned 26.63% of the voting securities 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.
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.
STATE AND LOCAL TAXES
In the opinion of Houston, Houston & Donnelly, counsel to the Trust, 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.
From time to time, advertisements for the Fund may refer to ratings, rankings,
and other information in certain financial publications and/or compare the
Fund's 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.
To obtain more information and a prospectus for Institutional Shares, investors
may call 1-800-235-4669.
FEDERATED MAX-CAP FUND
(FORMERLY, MAX-CAP FUND)
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Ernst & Young LLP, Independent Auditors, on
page 44.
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
------------------------------------------------------------------
1995 1994 1993 1992 1991 1990(A)
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $12.02 $12.24 $11.64 $11.07 $ 8.60 $10.00
- ------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------
Net investment income 0.38 0.32 0.30 0.32 0.37 0.12
- ------------------------------------------
Net realized and unrealized gain (loss)
on investments and futures contracts 2.70 0.10 1.29 0.71 2.46 (1.43)
- ------------------------------------------ ------ ------ ------ ------ ------ ------
Total from investment operations 3.08 0.42 1.59 1.03 2.83 (1.31)
- ------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------
Distributions from net investment income (0.34) (0.30) (0.30) (0.34) (0.36) (0.09)
- ------------------------------------------
Distributions from net realized gain on
investment transactions and futures
contracts (0.02) (0.34) (0.69) (0.12) -- --
- ------------------------------------------ ------ ------ ------ ------ ------ ------
Total distributions (0.36) (0.64) (0.99) (0.46) (0.36) (0.09)
- ------------------------------------------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $14.74 $12.02 $12.24 $11.64 $11.07 $ 8.60
- ------------------------------------------ ------ ------ ------ ------ ------ ------
TOTAL RETURN (B) 26% 3.59% 14.35% 9.51% 33.31% (14.46)%
- ------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------
Expenses 0.31% 0.32% 0.31% 0.30% 0.24% 0.00%*
- ------------------------------------------
Net investment income 2.91% 2.70% 2.60% 2.92% 3.74% 5.19%*
- ------------------------------------------
Expense waiver/reimbursement (c) 0.33% 0.07% 0.09% 0.18% 0.45% 0.94%*
- ------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------
Net assets, end of period (000 omitted) $679,237 $443,815 $407,246 $309,614 $144,528 $25,129
- ------------------------------------------
Portfolio turnover 57% 2% 13% 46% 6% 0%
- ------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) 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.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
Further information about the Fund's performance is contained in the Fund's
annual report dated October 31, 1995 which can be obtained free of charge.
FEDERATED MAX-CAP FUND
(FORMERLY, MAX-CAP FUND)
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
*COMMON STOCKS--82.9%
- --------------------------------------------------------------------------------------
COMMERCIAL SERVICES--1.0%
------------------------------------------------------------------
7,500 (a) Alco Standard Corp. $ 663,750
------------------------------------------------------------------
</TABLE>
<TABLE>
<C> <C> <S> <C>
11,400 Deluxe Corp. 306,375
------------------------------------------------------------------
20,900 Donnelley (R.R.) & Sons Co. 762,850
------------------------------------------------------------------
13,500 Dow Jones & Co. 475,875
------------------------------------------------------------------
23,400 Dun & Bradstreet Corp. 1,398,150
------------------------------------------------------------------
5,200 Fleming Cos., Inc. 117,650
------------------------------------------------------------------
7,000 Grainger (W.W.), Inc. 437,500
------------------------------------------------------------------
4,600 Handleman Co. 35,650
------------------------------------------------------------------
4,200 Harland (John H.) Co. 87,150
------------------------------------------------------------------
10,600 Interpublic Group Cos., Inc. 410,750
------------------------------------------------------------------
6,900 McGraw-Hill Cos., Inc. 564,938
------------------------------------------------------------------
13,800 Moore Corp. Ltd. 263,925
------------------------------------------------------------------
6,700 Ogden Corp. 152,425
------------------------------------------------------------------
8,050 Safety-Kleen Corp. 123,769
------------------------------------------------------------------
9,700 Super Valu Stores, Inc. 298,275
------------------------------------------------------------------
25,200 Sysco Corp. 765,450
------------------------------------------------------------------ ------------
Total 6,864,482
------------------------------------------------------------------ ------------
CONSUMER DURABLES--2.4%
------------------------------------------------------------------
10,300 American Greetings Corp., Class A 324,450
------------------------------------------------------------------
2,037 Bassett Furniture Industries, Inc. 40,995
------------------------------------------------------------------
11,700 Black & Decker Corp. 396,337
------------------------------------------------------------------
4,000 Briggs & Stratton Corp. 161,500
------------------------------------------------------------------
13,200 Brunswick Corp. 257,400
------------------------------------------------------------------
3,900 Centex Corp. 127,725
------------------------------------------------------------------
48,984 Chrysler Corp. 2,528,799
------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
(FORMERLY, MAX-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
CONSUMER DURABLES--CONTINUED
------------------------------------------------------------------
11,500 Cooper Tire & Rubber Co. $ 265,937
------------------------------------------------------------------
46,900 Eastman Kodak Co. 2,937,112
------------------------------------------------------------------
8,200 Echlin, Inc. 293,150
------------------------------------------------------------------
6,400 Fleetwood Enterprises, Inc. 131,200
------------------------------------------------------------------
141,400 Ford Motor Co. 4,065,250
------------------------------------------------------------------
17,000 Genuine Parts Co. 673,625
------------------------------------------------------------------
20,900 Goodyear Tire & Rubber Co. 794,200
------------------------------------------------------------------
12,200 Hasbro, Inc. 372,100
------------------------------------------------------------------
5,653 Jostens, Inc. 127,899
------------------------------------------------------------------
4,500 Kaufman & Broad Homes Corp. 52,312
------------------------------------------------------------------
30,740 Mattel, Inc. 883,775
------------------------------------------------------------------
14,800 Maytag Corp. 281,200
------------------------------------------------------------------
21,800 Newell Co. 525,925
------------------------------------------------------------------
2,700 Outboard Marine Corp. 56,025
------------------------------------------------------------------
6,400 Polaroid Corp. 273,600
------------------------------------------------------------------
3,800 Pulte Corp. 120,175
------------------------------------------------------------------
22,200 Rubbermaid, Inc. 579,975
------------------------------------------------------------------
5,900 Snap-On Tools Corp. 250,013
------------------------------------------------------------------
6,200 Stanley Works 296,050
------------------------------------------------------------------
10,400 Whirlpool Corp. 551,200
------------------------------------------------------------------
6,300 (a) Zenith Electronics Corp. 52,763
------------------------------------------------------------------ ------------
Total 17,420,692
------------------------------------------------------------------ ------------
CONSUMER NON-DURABLES--9.7%
------------------------------------------------------------------
3,800 Alberto-Culver Co., Class B 119,225
------------------------------------------------------------------
26,300 American Brands, Inc. 1,127,612
------------------------------------------------------------------
35,700 Anheuser-Busch Companies, Inc. 2,356,200
------------------------------------------------------------------
9,500 Avon Products, Inc. 675,687
------------------------------------------------------------------
2,400 Brown Group, Inc. 33,000
------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
(FORMERLY, MAX-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
CONSUMER NON-DURABLES--CONTINUED
------------------------------------------------------------------
9,600 Brown-Forman Corp., Class B $ 366,000
------------------------------------------------------------------
20,300 CPC International, Inc. 1,347,412
------------------------------------------------------------------
34,300 Campbell Soup Co. 1,796,462
------------------------------------------------------------------
7,300 Clorox Co. 523,775
------------------------------------------------------------------
177,200 Coca-Cola Co. 12,736,250
------------------------------------------------------------------
20,100 Colgate-Palmolive Co. 1,391,925
------------------------------------------------------------------
34,300 ConAgra, Inc. 1,324,837
------------------------------------------------------------------
5,200 Coors Adolph Co., Class B 92,950
------------------------------------------------------------------
9,700 (a) Fruit of the Loom, Inc., Class A 168,537
------------------------------------------------------------------
21,800 General Mills, Inc. 1,250,775
------------------------------------------------------------------
61,100 Gillette Co. 2,955,712
------------------------------------------------------------------
33,600 Heinz (H.J.) Co. 1,562,400
------------------------------------------------------------------
11,900 Hershey Foods Corp. 711,025
------------------------------------------------------------------
15,400 International Flavors & Fragrances, Inc. 743,050
------------------------------------------------------------------
30,600 Kellogg Co. 2,210,850
------------------------------------------------------------------
10,700 Liz Claiborne, Inc. 303,613
------------------------------------------------------------------
20,000 Nike, Inc., Class B 1,135,000
------------------------------------------------------------------
109,200 PepsiCo, Inc. 5,760,300
------------------------------------------------------------------
117,400 Philip Morris Cos., Inc. 9,920,300
------------------------------------------------------------------
94,700 Procter & Gamble Co. 7,670,700
------------------------------------------------------------------
18,500 Quaker Oats Co. 631,313
------------------------------------------------------------------
13,900 Ralston Purina Co. 825,313
------------------------------------------------------------------
11,200 Reebok International Ltd. 380,800
------------------------------------------------------------------
5,600 Russell Corp. 138,600
------------------------------------------------------------------
66,100 Sara Lee Corp. 1,941,688
------------------------------------------------------------------
51,400 Seagram Co. Ltd. 1,850,400
------------------------------------------------------------------
6,700 Stride Rite Corp. 75,375
------------------------------------------------------------------
27,700 UST, Inc. 831,000
------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
(FORMERLY, MAX-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
CONSUMER NON-DURABLES--CONTINUED
------------------------------------------------------------------
22,100 Unilever N.V., ADR $ 2,895,100
------------------------------------------------------------------
8,900 V.F. Corp. 426,088
------------------------------------------------------------------
16,100 Wrigley (Wm.), Jr. Co. 748,650
------------------------------------------------------------------ ------------
Total 69,027,924
------------------------------------------------------------------ ------------
CONSUMER SERVICES--3.5%
------------------------------------------------------------------
6,500 (a) Bally Entertainment Group 71,500
------------------------------------------------------------------
14,500 Block (H&R), Inc. 598,125
------------------------------------------------------------------
8,440 CBS, Inc. 681,530
------------------------------------------------------------------
23,050 (a) CUC International, Inc. 798,106
------------------------------------------------------------------
21,300 Capital Cities/ABC, Inc. 2,526,712
------------------------------------------------------------------
33,050 Comcast Corp., Class A 590,769
------------------------------------------------------------------
21,800 Darden Restaurants, Inc. 247,975
------------------------------------------------------------------
71,600 Disney (Walt) Co. 4,125,950
------------------------------------------------------------------
19,200 Gannett Co., Inc. 1,044,000
------------------------------------------------------------------
14,150 (a) Harrah's Entertainment, Inc. 350,212
------------------------------------------------------------------
6,700 Hilton Hotels Corp. 448,900
------------------------------------------------------------------
5,050 (a) King World Productions, Inc. 176,119
------------------------------------------------------------------
7,400 Knight-Ridder, Inc. 410,700
------------------------------------------------------------------
3,350 Luby's Cafeterias, Inc. 69,513
------------------------------------------------------------------
17,200 Marriott Corp. 634,250
------------------------------------------------------------------
96,300 McDonald's Corp. 3,948,300
------------------------------------------------------------------
3,800 Meredith Corp. 135,850
------------------------------------------------------------------
13,700 New York Times Co., Class A 380,175
------------------------------------------------------------------
7,400 (a) Ryan's Family Steak Houses, Inc. 57,350
------------------------------------------------------------------
13,000 Service Corp. International 521,625
------------------------------------------------------------------
5,700 (a) Shoney's, Inc. 63,413
------------------------------------------------------------------
87,400 (a) Tele-Communications, Inc., Class A 1,485,800
------------------------------------------------------------------
52,240 Time Warner, Inc. 1,906,760
------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
(FORMERLY, MAX-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
CONSUMER SERVICES--CONTINUED
------------------------------------------------------------------
15,400 Times Mirror Co., Class A $ 446,600
------------------------------------------------------------------
9,300 Tribune Co. 587,063
------------------------------------------------------------------
49,268 (a) Viacom, Inc., Class B 2,463,400
------------------------------------------------------------------
14,000 Wendy's International, Inc. 278,250
------------------------------------------------------------------ ------------
Total 25,048,947
------------------------------------------------------------------ ------------
ELECTRONIC TECHNOLOGY--8.7%
------------------------------------------------------------------
29,980 AMP, Inc. 1,176,715
------------------------------------------------------------------
14,800 (a) Advanced Micro Devices, Inc. 353,350
------------------------------------------------------------------
16,100 (a) Amdahl Corp. 148,925
------------------------------------------------------------------
5,250 (a) Andrew Corp. 221,812
------------------------------------------------------------------
16,700 Apple Computer, Inc. 606,419
------------------------------------------------------------------
23,200 (a) Applied Materials, Inc. 1,162,900
------------------------------------------------------------------
46,900 Boeing Co. 3,077,812
------------------------------------------------------------------
9,800 (a) Cabletron Systems, Inc. 770,525
------------------------------------------------------------------
6,200 (a) Ceridian Corp. 269,700
------------------------------------------------------------------
37,100 (a) Cisco Systems, Inc. 2,875,250
------------------------------------------------------------------
36,100 (a) Compaq Computer Corp. 2,012,575
------------------------------------------------------------------
7,600 (a) Computer Sciences Corp. 508,250
------------------------------------------------------------------
3,500 (a) Cray Research, Inc. 72,625
------------------------------------------------------------------
15,600 (a) DSC Communications Corp. 577,200
------------------------------------------------------------------
5,100 (a) Data General Corp. 58,650
------------------------------------------------------------------
20,200 (a) Digital Equipment Corp. 1,093,325
------------------------------------------------------------------
7,600 EG & G, Inc. 141,550
------------------------------------------------------------------
8,620 General Dynamics Corp. 477,332
------------------------------------------------------------------
5,400 Harris Corp. 313,875
------------------------------------------------------------------
70,400 Hewlett-Packard Co. 6,520,800
------------------------------------------------------------------
114,300 Intel Corp. 7,986,712
------------------------------------------------------------------
6,200 (a) Intergraph Corp. 75,175
------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
(FORMERLY, MAX-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
ELECTRONIC TECHNOLOGY--CONTINUED
------------------------------------------------------------------
81,000 International Business Machines Corp. $ 7,877,250
------------------------------------------------------------------
31,488 Lockheed Martin Corp. 2,145,120
------------------------------------------------------------------
23,600 Loral Corp. 699,150
------------------------------------------------------------------
16,300 McDonnell-Douglas Corp. 1,332,525
------------------------------------------------------------------
28,400 Micron Technology, Inc. 2,005,750
------------------------------------------------------------------
80,900 Motorola, Inc. 5,309,063
------------------------------------------------------------------
17,200 (a) National Semiconductor Corp. 419,250
------------------------------------------------------------------
34,900 Northern Telecom Ltd. 1,256,400
------------------------------------------------------------------
6,800 Northrop Corp. 389,300
------------------------------------------------------------------
50,600 (a) Novell, Inc. 834,900
------------------------------------------------------------------
5,800 Perkin-Elmer Corp. 203,725
------------------------------------------------------------------
34,000 Raytheon Co. 1,483,250
------------------------------------------------------------------
29,900 Rockwell International Corp. 1,330,550
------------------------------------------------------------------
10,500 Scientific-Atlanta, Inc. 129,938
------------------------------------------------------------------
19,900 (a) Silicon Graphics, Inc. 661,675
------------------------------------------------------------------
13,200 (a) Sun Microsystems, Inc. 1,029,600
------------------------------------------------------------------
16,000 (a) Tandem Computers, Inc. 180,000
------------------------------------------------------------------
4,300 Tektronix, Inc. 254,775
------------------------------------------------------------------
12,200 (a) Tellabs, Inc. 414,800
------------------------------------------------------------------
25,500 Texas Instruments, Inc. 1,740,375
------------------------------------------------------------------
23,700 (a) Unisys Corp. 133,313
------------------------------------------------------------------
16,900 United Technologies Corp. 1,499,875
------------------------------------------------------------------ ------------
Total 61,832,061
------------------------------------------------------------------ ------------
ENERGY MINERALS--6.7%
------------------------------------------------------------------
12,900 Amerada-Hess Corp. 582,112
------------------------------------------------------------------
68,600 Amoco Corp. 4,381,825
------------------------------------------------------------------
8,400 Ashland, Inc. 265,650
------------------------------------------------------------------
22,200 Atlantic Richfield Co. 2,369,850
------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
(FORMERLY, MAX-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
ENERGY MINERALS--CONTINUED
------------------------------------------------------------------
17,500 Burlington Resources, Inc. $ 630,000
------------------------------------------------------------------
89,900 Chevron Corp. 4,202,825
------------------------------------------------------------------
171,300 Exxon Corp. 13,083,037
------------------------------------------------------------------
7,100 Kerr-McGee Corp. 391,388
------------------------------------------------------------------
4,600 Louisiana Land & Exploration Co. 162,725
------------------------------------------------------------------
54,600 Mobil Corp. 5,500,950
------------------------------------------------------------------
43,100 Occidental Petroleum Corp. 926,650
------------------------------------------------------------------
13,600 (a) Oryx Energy Co. 156,400
------------------------------------------------------------------
6,300 Pennzoil Co. 237,825
------------------------------------------------------------------
36,100 Phillips Petroleum Co. 1,164,225
------------------------------------------------------------------
5,700 Pittston Co. 156,750
------------------------------------------------------------------
73,900 Royal Dutch Petroleum Co., ADR 9,080,463
------------------------------------------------------------------
12,412 (a) Santa Fe Energy Resource, Inc. 110,157
------------------------------------------------------------------
14,537 Sun Co., Inc. 416,122
------------------------------------------------------------------
35,800 Texaco, Inc. 2,438,875
------------------------------------------------------------------
39,600 USX Corp. 702,900
------------------------------------------------------------------
33,600 Unocal Corp. 882,000
------------------------------------------------------------------ ------------
Total 47,842,729
------------------------------------------------------------------ ------------
FINANCE--10.3%
------------------------------------------------------------------
15,500 Aetna Life & Casualty Co. 1,090,812
------------------------------------------------------------------
16,100 Ahmanson (H.F.) & Co. 402,500
------------------------------------------------------------------
6,100 Alexander & Alexander Services, Inc. 136,487
------------------------------------------------------------------
62,405 Allstate Corp. 2,293,384
------------------------------------------------------------------
68,300 American Express Co. 2,774,687
------------------------------------------------------------------
28,100 American General Corp. 923,787
------------------------------------------------------------------
65,493 American International Group, Inc. 5,525,972
------------------------------------------------------------------
56,025 Banc One Corp. 1,890,844
------------------------------------------------------------------
14,800 Bank of Boston Corp. 658,600
------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
(FORMERLY, MAX-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
FINANCE--CONTINUED
------------------------------------------------------------------
25,900 Bank of New York Co., Inc. $ 1,087,800
------------------------------------------------------------------
51,676 BankAmerica Corp. 2,971,370
------------------------------------------------------------------
10,800 Bankers Trust New York Corp. 688,500
------------------------------------------------------------------
13,300 Barnett Banks, Inc. 734,825
------------------------------------------------------------------
7,200 Beneficial Corp. 352,800
------------------------------------------------------------------
17,600 Boatmen's Bancshares, Inc. 668,800
------------------------------------------------------------------
10,000 CIGNA Corp. 991,250
------------------------------------------------------------------
24,500 Chase Manhattan Corp. 1,396,500
------------------------------------------------------------------
33,690 Chemical Banking Corp. 1,916,119
------------------------------------------------------------------
12,000 Chubb Corp. 1,078,500
------------------------------------------------------------------
54,300 Citicorp 3,522,712
------------------------------------------------------------------
20,000 Corestates Financial Corp. 727,500
------------------------------------------------------------------
23,521 Dean Witter, Discover & Co. 1,170,170
------------------------------------------------------------------
24,900 Federal Home Loan Mortgage Corp. 1,724,325
------------------------------------------------------------------
37,700 Federal National Mortgage Association 3,953,787
------------------------------------------------------------------
18,800 First Bank System, Inc. 935,300
------------------------------------------------------------------
11,300 First Fidelity Bancorporation 738,737
------------------------------------------------------------------
10,900 First Interstate Bancorp 1,406,100
------------------------------------------------------------------
24,200 First Union Corp. 1,200,925
------------------------------------------------------------------
19,400 Fleet Financial Group, Inc. 751,750
------------------------------------------------------------------
11,300 General RE Corp. 1,637,087
------------------------------------------------------------------
8,300 Golden West Financial Corp. 416,037
------------------------------------------------------------------
18,500 Great Western Financial Corp. 418,562
------------------------------------------------------------------
13,200 Household International, Inc. 742,500
------------------------------------------------------------------
26,100 J.P. Morgan & Co., Inc. 2,012,963
------------------------------------------------------------------
6,750 Jefferson-Pilot Corp. 445,500
------------------------------------------------------------------
33,200 KeyCorp. 1,120,500
------------------------------------------------------------------
13,100 Lincoln National Corp. 584,588
------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
(FORMERLY, MAX-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
FINANCE--CONTINUED
------------------------------------------------------------------
20,450 MBNA Corp. $ 754,094
------------------------------------------------------------------
10,200 Marsh & McLennan Cos., Inc. 835,125
------------------------------------------------------------------
20,300 Mellon Bank Corp. 1,017,538
------------------------------------------------------------------
25,900 Merrill Lynch & Co., Inc. 1,437,450
------------------------------------------------------------------
10,600 Morgan Stanley & Co., Inc. 922,200
------------------------------------------------------------------
22,050 NBD Bancorp, Inc. 837,900
------------------------------------------------------------------
20,400 National City Corp. 629,850
------------------------------------------------------------------
38,146 NationsBank Corp. 2,508,100
------------------------------------------------------------------
42,600 Norwest Corp. 1,256,700
------------------------------------------------------------------
32,400 PNC Financial Corp. 850,500
------------------------------------------------------------------
13,300 Providian Corp. 522,025
------------------------------------------------------------------
7,200 Republic New York Corp. 422,100
------------------------------------------------------------------
10,900 Ryder Systems, Inc. 262,963
------------------------------------------------------------------
8,600 SAFECO Corp. 552,013
------------------------------------------------------------------
14,600 Salomon, Inc. 527,425
------------------------------------------------------------------
16,600 Shawmut National Corp. 562,325
------------------------------------------------------------------
11,600 St. Paul Companies, Inc. 588,700
------------------------------------------------------------------
16,200 SunTrust Banks, Inc. 1,044,900
------------------------------------------------------------------
9,750 Torchmark Corp. 404,625
------------------------------------------------------------------
9,700 Transamerica Corp. 657,175
------------------------------------------------------------------
221 (a) Transport Holdings, Inc., Class A 8,670
------------------------------------------------------------------
44,178 Travelers Group, Inc. 2,230,989
------------------------------------------------------------------
13,550 U.S. Bancorp. 401,419
------------------------------------------------------------------
10,000 UNUM Corp. 526,250
------------------------------------------------------------------
13,100 USF&G Corp. 219,425
------------------------------------------------------------------
4,800 USLIFE Corp. 136,800
------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
(FORMERLY, MAX-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
FINANCE--CONTINUED
------------------------------------------------------------------
23,600 Wachovia Corp. $ 1,041,350
------------------------------------------------------------------
7,100 Wells Fargo & Co. 1,491,888
------------------------------------------------------------------ ------------
Total 73,743,079
------------------------------------------------------------------ ------------
HEALTH SERVICES--0.9%
------------------------------------------------------------------
11,800 (a) Beverly Enterprises, Inc. 138,650
------------------------------------------------------------------
60,938 Columbia/HCA Healthcare Corp. 2,993,579
------------------------------------------------------------------
6,100 (a) Community Psychiatric Centers 66,337
------------------------------------------------------------------
8,650 Manor Care, Inc. 283,288
------------------------------------------------------------------
3,200 Shared Medical Systems Corp. 123,600
------------------------------------------------------------------
27,600 (a) Tenet Healthcare Corp. 493,350
------------------------------------------------------------------
22,100 U.S. Healthcare, Inc. 850,850
------------------------------------------------------------------
23,800 United Healthcare Corp. 1,264,375
------------------------------------------------------------------ ------------
Total 6,214,029
------------------------------------------------------------------ ------------
HEALTH TECHNOLOGY--7.5%
------------------------------------------------------------------
110,600 Abbott Laboratories 4,396,350
------------------------------------------------------------------
8,800 Allergan, Inc. 258,500
------------------------------------------------------------------
268 (a) Allergan Ligand Retinoid Therapeutics, Inc. 3,986
------------------------------------------------------------------
11,300 (a) Alza Corp. 248,600
------------------------------------------------------------------
42,100 American Home Products Corp. 3,731,112
------------------------------------------------------------------
36,600 (a) Amgen, Inc. 1,756,800
------------------------------------------------------------------
7,200 Bard (C.R.), Inc. 203,400
------------------------------------------------------------------
8,100 Bausch & Lomb, Inc. 280,462
------------------------------------------------------------------
38,800 Baxter International, Inc. 1,498,650
------------------------------------------------------------------
9,200 Becton, Dickinson & Co. 598,000
------------------------------------------------------------------
16,100 (a) Biomet, Inc. 267,662
------------------------------------------------------------------
20,700 (a) Boston Scientific Corp. 871,987
------------------------------------------------------------------
70,400 Bristol-Myers Squibb Co. 5,368,000
------------------------------------------------------------------
88,600 Johnson & Johnson 7,220,900
------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
(FORMERLY, MAX-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
HEALTH TECHNOLOGY--CONTINUED
------------------------------------------------------------------
40,300 Lilly (Eli) & Co. $ 3,893,988
------------------------------------------------------------------
10,600 Mallinckrodt Group, Inc. 368,350
------------------------------------------------------------------
31,800 Medtronic, Inc. 1,836,450
------------------------------------------------------------------
173,500 Merck & Co., Inc. 9,976,250
------------------------------------------------------------------
86,700 Pfizer, Inc. 4,974,413
------------------------------------------------------------------
51,400 Schering Plough Corp. 2,756,325
------------------------------------------------------------------
6,300 (a) St. Jude Medical, Inc. 335,475
------------------------------------------------------------------
7,800 United States Surgical Corp. 191,100
------------------------------------------------------------------
23,900 Upjohn Co. 1,212,925
------------------------------------------------------------------
18,600 Warner-Lambert Co. 1,583,325
------------------------------------------------------------------ ------------
Total 53,833,010
------------------------------------------------------------------ ------------
INDUSTRIAL SERVICES--1.1%
------------------------------------------------------------------
19,400 Baker Hughes, Inc. 380,725
------------------------------------------------------------------
27,300 Browning-Ferris Industries, Inc. 795,112
------------------------------------------------------------------
11,400 Fluor Corp. 644,100
------------------------------------------------------------------
5,000 Foster Wheeler Corp. 187,500
------------------------------------------------------------------
15,700 Halliburton Co. 651,550
------------------------------------------------------------------
3,400 Helmerich & Payne, Inc. 87,975
------------------------------------------------------------------
38,300 Laidlaw, Inc., Class B 344,700
------------------------------------------------------------------
7,400 McDermott International, Inc. 117,475
------------------------------------------------------------------
4,500 (a) Morrison Knudsen Corp. 29,250
------------------------------------------------------------------
11,600 (a) Rowan Companies, Inc. 76,850
------------------------------------------------------------------
33,500 Schlumberger Ltd. 2,085,375
------------------------------------------------------------------
66,700 WMX Technologies, Inc. 1,875,938
------------------------------------------------------------------
7,300 (a) Western Atlas, Inc. 320,288
------------------------------------------------------------------ ------------
Total 7,596,838
------------------------------------------------------------------ ------------
</TABLE>
FEDERATED MAX-CAP FUND
(FORMERLY, MAX-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
NON-ENERGY MINERALS--1.6%
------------------------------------------------------------------
5,800 ASARCO, Inc. $ 187,050
------------------------------------------------------------------
31,000 Alcan Aluminum Ltd. 980,375
------------------------------------------------------------------
24,700 Aluminum Co. of America 1,259,700
------------------------------------------------------------------
14,500 (a) Armco, Inc. 88,812
------------------------------------------------------------------
48,300 Barrick Gold Corp. 1,116,937
------------------------------------------------------------------
15,100 (a) Bethlehem Steel Corp. 198,188
------------------------------------------------------------------
12,850 Cyprus Amax Minerals 335,706
------------------------------------------------------------------
15,500 Echo Bay Mines Ltd. 139,500
------------------------------------------------------------------
1,984 (a) FirstMiss Gold, Inc. 35,706
------------------------------------------------------------------
12,400 Georgia-Pacific Corp. 1,023,000
------------------------------------------------------------------
19,000 Homestake Mining Co. 292,125
------------------------------------------------------------------
16,100 Inco Ltd. 553,437
------------------------------------------------------------------
6,200 Inland Steel Industries, Inc. 144,925
------------------------------------------------------------------
15,500 Louisiana-Pacific Corp. 370,063
------------------------------------------------------------------
11,911 Newmont Mining Corp. 449,640
------------------------------------------------------------------
12,000 Nucor Corp. 577,500
------------------------------------------------------------------
6,100 (a) Owens-Corning Fiberglass Corp. 258,488
------------------------------------------------------------------
9,800 Phelps Dodge Corp. 621,075
------------------------------------------------------------------
32,900 Placer Dome, Inc. 719,688
------------------------------------------------------------------
8,600 Reynolds Metals Co. 433,225
------------------------------------------------------------------
18,135 Santa Fe Pacific Gold 179,083
------------------------------------------------------------------
10,520 USX-U.S. Steel Group, Inc. 314,285
------------------------------------------------------------------
28,300 Weyerhaeuser Co. 1,248,738
------------------------------------------------------------------
12,550 Worthington Industries, Inc. 208,644
------------------------------------------------------------------ ------------
Total 11,735,890
------------------------------------------------------------------ ------------
</TABLE>
FEDERATED MAX-CAP FUND
(FORMERLY, MAX-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
PROCESS INDUSTRIES--4.4%
------------------------------------------------------------------
15,400 Air Products & Chemicals, Inc. $ 795,025
------------------------------------------------------------------
74,680 Archer-Daniels-Midland Co. 1,204,214
------------------------------------------------------------------
7,400 Avery Dennison Corp. 331,150
------------------------------------------------------------------
4,100 Ball Corp. 113,262
------------------------------------------------------------------
7,100 Bemis Co., Inc. 184,600
------------------------------------------------------------------
6,500 Boise Cascade Corp. 235,625
------------------------------------------------------------------
12,800 Champion International Corp. 684,800
------------------------------------------------------------------
31,400 Corning, Inc. 820,325
------------------------------------------------------------------
12,300 (a) Crown Cork & Seal Co., Inc. 428,962
------------------------------------------------------------------
38,300 Dow Chemical Co. 2,628,337
------------------------------------------------------------------
72,600 Du Pont (E.I.) de Nemours & Co. 4,528,425
------------------------------------------------------------------
11,425 Eastman Chemical Co. 679,787
------------------------------------------------------------------
9,040 Ecolab, Inc. 262,160
------------------------------------------------------------------
19,663 Engelhard Corp. 489,104
------------------------------------------------------------------
5,900 Federal Paper Board Co., Inc. 247,800
------------------------------------------------------------------
28,500 (a) Freeport-McMoRan Copper & Gold, Inc., Class B 648,375
------------------------------------------------------------------
3,600 Goodrich (B.F.) Co. 237,150
------------------------------------------------------------------
13,000 Grace (W.R.) & Co. 724,750
------------------------------------------------------------------
9,500 Great Lakes Chemical Corp. 637,687
------------------------------------------------------------------
16,200 Hercules, Inc. 864,675
------------------------------------------------------------------
34,400 International Paper Co. 1,272,800
------------------------------------------------------------------
11,300 James River Corp. of Virginia 363,012
------------------------------------------------------------------
22,300 Kimberly-Clark Corp. 1,619,538
------------------------------------------------------------------
7,900 Mead Corp. 455,238
------------------------------------------------------------------
6,400 Millipore Corp. 226,400
------------------------------------------------------------------
16,000 Monsanto Co. 1,676,000
------------------------------------------------------------------
20,400 Morton International, Inc. 622,200
------------------------------------------------------------------
9,500 Nalco Chemical Co. 285,000
------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
(FORMERLY, MAX-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
PROCESS INDUSTRIES--CONTINUED
------------------------------------------------------------------
28,500 PPG Industries, Inc. $ 1,211,250
------------------------------------------------------------------
16,033 Pall Corp. 390,804
------------------------------------------------------------------
11,700 Pioneer Hi-Bred International 580,613
------------------------------------------------------------------
4,100 Potlatch Corp. 172,713
------------------------------------------------------------------
18,900 Praxair, Inc. 510,300
------------------------------------------------------------------
9,400 Rohm & Haas Co. 519,350
------------------------------------------------------------------
20,800 Scott Paper Co. 1,107,600
------------------------------------------------------------------
11,700 Sherwin-Williams Co. 440,213
------------------------------------------------------------------
6,900 Sigma-Aldrich Corp. 327,750
------------------------------------------------------------------
2,500 Springs Industries, Inc., Class A 107,188
------------------------------------------------------------------
12,508 Stone Container Corp. 206,382
------------------------------------------------------------------
7,800 Temple-Inland, Inc. 354,900
------------------------------------------------------------------
9,600 Union Camp Corp. 488,400
------------------------------------------------------------------
20,400 Union Carbide Corp. 772,650
------------------------------------------------------------------
13,950 Westvaco Corp. 387,113
------------------------------------------------------------------
7,700 Willamette Industries, Inc. 446,600
------------------------------------------------------------------ ------------
Total 31,290,227
------------------------------------------------------------------ ------------
PRODUCER MANUFACTURING--6.2%
------------------------------------------------------------------
39,000 Allied-Signal, Inc. 1,657,500
------------------------------------------------------------------
5,200 Armstrong World Industries, Inc. 308,750
------------------------------------------------------------------
27,700 Caterpillar, Inc. 1,554,662
------------------------------------------------------------------
4,600 Cincinnati Milacron, Inc. 118,450
------------------------------------------------------------------
16,100 Cooper Industries, Inc. 543,375
------------------------------------------------------------------
4,100 Crane Co. 145,037
------------------------------------------------------------------
5,800 Cummins Engine Co., Inc. 203,725
------------------------------------------------------------------
13,700 Dana Corp. 351,062
------------------------------------------------------------------
11,900 Deere & Co. 1,063,562
------------------------------------------------------------------
12,800 Dial Corp. Del. 312,000
------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
(FORMERLY, MAX-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
PRODUCER MANUFACTURING--CONTINUED
------------------------------------------------------------------
15,800 Dover Corp. $ 624,100
------------------------------------------------------------------
25,200 Dresser Industries, Inc. 522,900
------------------------------------------------------------------
10,800 Eaton Corp. 553,500
------------------------------------------------------------------
30,900 Emerson Electric Co. 2,201,625
------------------------------------------------------------------
5,000 (a) FMC Corp. 358,125
------------------------------------------------------------------
235,800 General Electric Co. 14,914,350
------------------------------------------------------------------
6,500 General Signal Corp. 207,187
------------------------------------------------------------------
4,700 Giddings & Lewis, Inc. 75,787
------------------------------------------------------------------
6,378 Harnischfeger Industries, Inc. 200,907
------------------------------------------------------------------
17,800 Honeywell, Inc. 747,600
------------------------------------------------------------------
14,700 ITT Corp. 1,800,750
------------------------------------------------------------------
15,700 Illinois Tool Works, Inc. 912,562
------------------------------------------------------------------
14,600 Ingersoll-Rand Co. 516,475
------------------------------------------------------------------
5,700 Johnson Controls, Inc. 332,025
------------------------------------------------------------------
8,000 Loews Corp. 1,173,000
------------------------------------------------------------------
22,100 Masco Industries, Inc. 621,563
------------------------------------------------------------------
58,000 Minnesota Mining & Manufacturing Co. 3,298,750
------------------------------------------------------------------
1,300 NACCO Industries, Inc., Class A 74,425
------------------------------------------------------------------
6,800 National Service Industries, Inc. 202,300
------------------------------------------------------------------
10,370 (a) Navistar International Corp. 106,293
------------------------------------------------------------------
5,440 PACCAR, Inc. 227,120
------------------------------------------------------------------
10,200 Parker-Hannifin Corp. 344,250
------------------------------------------------------------------
21,500 Pitney Bowes, Inc. 937,938
------------------------------------------------------------------
6,100 Raychem Corp. 282,888
------------------------------------------------------------------
8,900 TRW, Inc. 585,175
------------------------------------------------------------------
7,600 Teledyne, Inc. 189,050
------------------------------------------------------------------
26,000 Tenneco, Inc. 1,140,750
------------------------------------------------------------------
12,100 Textron, Inc. 831,875
------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
(FORMERLY, MAX-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
PRODUCER MANUFACTURING--CONTINUED
------------------------------------------------------------------
2,600 Thomas & Betts Corp. $ 168,025
------------------------------------------------------------------
4,300 Timken Co. 173,075
------------------------------------------------------------------
4,000 Trinova Corp. 112,500
------------------------------------------------------------------
10,100 Tyco Laboratories, Inc. 613,575
------------------------------------------------------------------
5,880 (a) Varity Corp. 213,150
------------------------------------------------------------------
49,000 Westinghouse Electric Corp. 692,125
------------------------------------------------------------------
14,600 Whitman Corp. 310,250
------------------------------------------------------------------
14,600 Xerox Corp. 1,894,350
------------------------------------------------------------------
1,800 Zurn Industries, Inc. 45,000
------------------------------------------------------------------ ------------
Total 44,463,443
------------------------------------------------------------------ ------------
RETAIL TRADE--3.8%
------------------------------------------------------------------
35,100 Albertsons, Inc. 1,167,075
------------------------------------------------------------------
20,500 American Stores Co. 612,437
------------------------------------------------------------------
14,200 Charming Shoppes, Inc. 40,825
------------------------------------------------------------------
13,200 Circuit City Store, Inc. 440,550
------------------------------------------------------------------
9,800 Dayton-Hudson Corp. 673,750
------------------------------------------------------------------
15,700 Dillard Department Stores, Inc., Class A 425,862
------------------------------------------------------------------
20,000 Gap (The), Inc. 787,500
------------------------------------------------------------------
8,200 Giant Foods, Inc., Class A 263,425
------------------------------------------------------------------
5,200 Great Atlantic & Pacific Tea Co., Inc. 105,300
------------------------------------------------------------------
9,400 Harcourt General, Inc. 372,475
------------------------------------------------------------------
62,600 Home Depot, Inc. 2,331,850
------------------------------------------------------------------
63,000 K Mart Corp. 511,875
------------------------------------------------------------------
16,200 (a) Kroger Co., Inc. 540,675
------------------------------------------------------------------
49,300 Limited, Inc. 905,888
------------------------------------------------------------------
2,900 Longs Drug Stores Corp. 116,000
------------------------------------------------------------------
22,000 Lowe's Cos., Inc. 594,000
------------------------------------------------------------------
34,200 May Department Stores Co. 1,342,350
------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
(FORMERLY, MAX-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
RETAIL TRADE--CONTINUED
------------------------------------------------------------------
14,500 Melville Corp. $ 464,000
------------------------------------------------------------------
5,000 Mercantile Stores Co., Inc. 224,375
------------------------------------------------------------------
11,300 Nordstrom, Inc. 418,806
------------------------------------------------------------------
32,000 Penney (J.C.) Co., Inc. 1,348,000
------------------------------------------------------------------
8,400 Pep Boys-Manny Moe & Jack 183,750
------------------------------------------------------------------
8,700 Premark International, Inc. 402,375
------------------------------------------------------------------
26,850 (a) Price Co. 456,450
------------------------------------------------------------------
11,600 Rite Aid Corp. 313,200
------------------------------------------------------------------
53,400 Sears, Roebuck & Co. 1,815,600
------------------------------------------------------------------
10,000 TJX Cos., Inc. 135,000
------------------------------------------------------------------
10,065 Tandy Corp. 496,959
------------------------------------------------------------------
38,300 (a) Toys "R" Us, Inc. 837,813
------------------------------------------------------------------
317,000 Wal-Mart Stores, Inc. 6,855,125
------------------------------------------------------------------
33,900 Walgreen Co. 966,150
------------------------------------------------------------------
10,300 Winn-Dixie Stores, Inc. 669,500
------------------------------------------------------------------
18,300 (a) Woolworth (F.W.) Co. 267,638
------------------------------------------------------------------ ------------
Total 27,086,578
------------------------------------------------------------------ ------------
TECHNOLOGY SERVICES--2.8%
------------------------------------------------------------------
6,500 Autodesk, Inc. 221,000
------------------------------------------------------------------
19,700 Automatic Data Processing, Inc. 1,408,550
------------------------------------------------------------------
37,850 Computer Associates International, Inc. 2,081,750
------------------------------------------------------------------
16,600 First Data Corp., Class 1,097,675
------------------------------------------------------------------
103,900 General Motors Corp. 4,545,625
------------------------------------------------------------------
80,100 (a) Microsoft Corp. 8,010,000
------------------------------------------------------------------
59,300 (a) Oracle Corp. 2,586,963
------------------------------------------------------------------ ------------
Total 19,951,563
------------------------------------------------------------------ ------------
</TABLE>
FEDERATED MAX-CAP FUND
(FORMERLY, MAX-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
TRANSPORTATION--1.4%
------------------------------------------------------------------
10,500 (a) AMR Corp. $ 693,000
------------------------------------------------------------------
20,912 Burlington Northern Santa Fe 1,753,955
------------------------------------------------------------------
14,500 CSX Corp. 1,214,375
------------------------------------------------------------------
5,900 Consolidated Freightways, Inc. 137,175
------------------------------------------------------------------
10,900 Consolidated Rail Corp. 749,375
------------------------------------------------------------------
7,000 Delta Air Lines, Inc. 459,375
------------------------------------------------------------------
7,800 (a) Federal Express Corp. 640,575
------------------------------------------------------------------
18,600 Norfolk Southern Corp. 1,436,850
------------------------------------------------------------------
5,500 Roadway Services, Inc. 246,125
------------------------------------------------------------------
19,700 Southwest Airlines Co. 394,000
------------------------------------------------------------------
8,300 (a) USAir Group, Inc. 113,088
------------------------------------------------------------------
28,400 Union Pacific Corp. 1,856,650
------------------------------------------------------------------
3,900 (a) Yellow Corp. 51,188
------------------------------------------------------------------ ------------
Total 9,745,731
------------------------------------------------------------------ ------------
UTILITIES--10.9%
------------------------------------------------------------------
215,678 AT&T Corp. 13,803,392
------------------------------------------------------------------
68,000 Airtouch Communications, Inc. 1,938,000
------------------------------------------------------------------
26,000 Alltel Corp. 796,250
------------------------------------------------------------------
25,500 American Electric Power Co., Inc. 972,188
------------------------------------------------------------------
76,100 Ameritech Corp. 4,109,400
------------------------------------------------------------------
20,350 Baltimore Gas & Electric Co. 544,362
------------------------------------------------------------------
60,200 Bell Atlantic Corp. 3,830,225
------------------------------------------------------------------
68,500 BellSouth Corp. 5,240,250
------------------------------------------------------------------
21,600 Carolina Power & Light Co. 707,400
------------------------------------------------------------------
26,200 Central & SouthWest Corp. 700,850
------------------------------------------------------------------
21,340 Cinergy Corp. 605,522
------------------------------------------------------------------
14,400 Coastal Corp. 466,200
------------------------------------------------------------------
7,000 (a) Columbia Gas System, Inc. 269,500
------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
(FORMERLY, MAX-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
UTILITIES--CONTINUED
------------------------------------------------------------------
32,400 Consolidated Edison Co. $ 984,150
------------------------------------------------------------------
12,800 Consolidated Natural Gas Co. 486,400
------------------------------------------------------------------
20,000 Detroit Edison Co. 675,000
------------------------------------------------------------------
23,750 Dominion Resources, Inc. 944,062
------------------------------------------------------------------
28,300 Duke Power Co. 1,266,425
------------------------------------------------------------------
2,900 Eastern Enterprises 86,637
------------------------------------------------------------------
34,900 Enron Corp. 1,199,687
------------------------------------------------------------------
9,300 Enserch Corp. 134,850
------------------------------------------------------------------
31,300 Entergy Corp. 892,050
------------------------------------------------------------------
25,800 FPL Group, Inc. 1,080,375
------------------------------------------------------------------
132,800 GTE Corp. 5,478,000
------------------------------------------------------------------
15,900 General Public Utilities 496,875
------------------------------------------------------------------
18,100 Houston Industries, Inc. 839,388
------------------------------------------------------------------
93,800 MCI Communications Corp. 2,339,138
------------------------------------------------------------------
7,200 NICOR, Inc. 193,500
------------------------------------------------------------------
58,200 NYNEX Corp. 2,735,400
------------------------------------------------------------------
19,800 Niagara Mohawk Power Corp. 212,850
------------------------------------------------------------------
16,800 Noram Energy Corp. 130,200
------------------------------------------------------------------
9,300 Northern States Power Co. 439,425
------------------------------------------------------------------
21,100 Ohio Edison Co. 482,663
------------------------------------------------------------------
3,700 Oneok, Inc. 90,188
------------------------------------------------------------------
11,300 Pacific Enterprises 279,675
------------------------------------------------------------------
59,600 Pacific Gas & Electric Co. 1,750,750
------------------------------------------------------------------
58,500 Pacific Telesis Group 1,776,938
------------------------------------------------------------------
39,100 Pacificorp 738,013
------------------------------------------------------------------
20,600 Panhandle Eastern Corp. 520,150
------------------------------------------------------------------
30,600 Peco Energy Co. 895,050
------------------------------------------------------------------
4,800 Peoples Energy Corp. 138,000
------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
(FORMERLY, MAX-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
UTILITIES--CONTINUED
------------------------------------------------------------------
33,700 Public Service Enterprises Group, Inc. $ 989,938
------------------------------------------------------------------
82,800 SBC Communications, Inc. 4,626,450
------------------------------------------------------------------
61,700 SCE Corp. 1,048,900
------------------------------------------------------------------
12,000 Sonat, Inc. 345,000
------------------------------------------------------------------
90,200 Southern Co. 2,153,525
------------------------------------------------------------------
48,100 Sprint Corp. 1,851,850
------------------------------------------------------------------
31,100 Texas Utilities Co. 1,142,925
------------------------------------------------------------------
62,900 U.S. West, Inc. 2,995,613
------------------------------------------------------------------
29,500 Unicom Corp. 966,125
------------------------------------------------------------------
14,100 Union Electric Co. 549,900
------------------------------------------------------------------
14,000 Williams Companies, Inc. (The) 540,750
------------------------------------------------------------------ ------------
Total 78,480,354
------------------------------------------------------------------ ------------
TOTAL COMMON STOCKS (IDENTIFIED COST $539,333,079) 592,177,577
------------------------------------------------------------------ ------------
</TABLE>
FEDERATED MAX-CAP FUND
(FORMERLY, MAX-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
SHORT-TERM U.S. GOVERNMENT OBLIGATIONS--0.6%
- --------------------------------------------------------------------------------------
$ 4,500,000 United States Treasury Bill, 11/30/1995 (at amortized cost) $ 4,483,080
------------------------------------------------------------------ ------------
(B) REPURCHASE AGREEMENT--15.8%
- --------------------------------------------------------------------------------------
112,855,000 J.P. Morgan Securities, Inc., 5.90%, dated 10/31/1995, due
11/1/1995 112,855,000
------------------------------------------------------------------ ------------
TOTAL INVESTMENTS (IDENTIFIED COST $656,671,159)(C) $709,515,657
------------------------------------------------------------------ ------------
</TABLE>
* The Fund purchases Index futures contracts to efficiently manage cash flows
resulting from shareholder purchases and redemptions, dividend and capital
gain payments to shareholders and corporate actions while maintaining exposure
to the Index and minimizing trading costs. The total market value of open
Index futures contracts is $117,937,700 at October 31, 1995, which represents
16.5% of net assets. Taking into consideration these open Index futures
contracts, the Fund's effective, total exposure to the Index is 99.4%
(a) Non-income producing security.
(b) The repurchase agreement is fully collateralized by U.S. government
obligations based on market prices at the date of the portfolio. The
investment in the repurchase agreement is through participation in a joint
account with other Federated funds.
(c) The cost of investments for federal tax purposes amounts to $660,350,985.
The net unrealized appreciation of investments on a federal tax basis
amounts to $49,164,672 which is comprised of $65,340,734 appreciation and
$16,176,062 depreciation at October 31, 1995.
Note: The categories of investments are shown as a percentage of net assets
($714,432,451) at October 31, 1995.
The following acronym is used throughout this portfolio:
ADR -- American Depository Receipt
(See Notes which are an integral part of the Financial Statements)
FEDERATED MAX-CAP FUND
(FORMERLY, MAX-CAP FUND)
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------
Investments in repurchase agreements $112,855,000
- --------------------------------------------------------------------
Investments in securities 596,660,657
- -------------------------------------------------------------------- ------------
Total investments in securities, at value
(identified cost $656,671,159 and tax cost $660,350,985) $709,515,657
- -----------------------------------------------------------------------------------
Income receivable 990,626
- -----------------------------------------------------------------------------------
Receivable for shares sold 6,040,960
- -----------------------------------------------------------------------------------
Deferred expenses 250
- ----------------------------------------------------------------------------------- ------------
Total assets 716,547,493
- -----------------------------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------------------------
Payable for shares redeemed 433,930
- --------------------------------------------------------------------
Payable to Bank 966,946
- --------------------------------------------------------------------
Payable for taxes withheld 1,784
- --------------------------------------------------------------------
Payable for daily variation margin 553,860
- --------------------------------------------------------------------
Accrued expenses 158,522
- -------------------------------------------------------------------- ------------
Total liabilities 2,115,042
- ----------------------------------------------------------------------------------- ------------
Net Assets for 48,467,529 shares outstanding $714,432,451
- ----------------------------------------------------------------------------------- ------------
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------
Paid in capital $558,632,158
- -----------------------------------------------------------------------------------
Net unrealized appreciation on investments and futures contracts 53,339,758
- -----------------------------------------------------------------------------------
Accumulated net realized gain on investments and futures contracts 99,397,047
- -----------------------------------------------------------------------------------
Undistributed net investment income 3,063,488
- ----------------------------------------------------------------------------------- ------------
Total Net Assets $714,432,451
- ----------------------------------------------------------------------------------- ------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- -----------------------------------------------------------------------------------
INSTITUTIONAL SHARES:
- -----------------------------------------------------------------------------------
$679,237,383 / 46,076,825 shares outstanding $14.74
- ----------------------------------------------------------------------------------- ------------
INSTITUTIONAL SERVICE SHARES:
- -----------------------------------------------------------------------------------
$35,195,068 / 2,390,704 shares outstanding $14.72
- ----------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MAX-CAP FUND
(FORMERLY, MAX-CAP FUND)
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Dividends $ 12,163,449
- ---------------------------------------------------------------------------------------------------
Interest 6,393,059
- --------------------------------------------------------------------------------------------------- -----------
Total income 18,556,508
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------------------------
Management fee $ 1,727,669
- ------------------------------------------------------------------------------------
Custodian fees 150,587
- ------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 112,420
- ------------------------------------------------------------------------------------
Directors'/Trustees' fees 5,093
- ------------------------------------------------------------------------------------
Auditing fees 13,109
- ------------------------------------------------------------------------------------
Legal fees 8,985
- ------------------------------------------------------------------------------------
Portfolio accounting fees 48,764
- ------------------------------------------------------------------------------------
Distribution services fee--Institutional Service Shares 67,923
- ------------------------------------------------------------------------------------
Shareholder services fee--Institutional Shares 1,383,122
- ------------------------------------------------------------------------------------
Shareholder services fee--Institutional Service Shares 56,603
- ------------------------------------------------------------------------------------
Share registration costs 113,689
- ------------------------------------------------------------------------------------
Printing and postage 42,190
- ------------------------------------------------------------------------------------
Insurance premiums 11,366
- ------------------------------------------------------------------------------------
Taxes 1,984
- ------------------------------------------------------------------------------------
Miscellaneous 6,788
- ------------------------------------------------------------------------------------ ----------
Total expenses 3,750,292
- ------------------------------------------------------------------------------------
Waivers--
- ------------------------------------------------------------------------------------
Waiver of management fee $ (433,282)
- ----------------------------------------------------------------------
Waiver of distribution services fee--Institutional Service Shares (56,603)
- ----------------------------------------------------------------------
Waiver of shareholder services fee--Institutional Shares (1,383,122)
- ---------------------------------------------------------------------- ----------
Total waivers (1,873,007)
- ------------------------------------------------------------------------------------ ----------
Net expenses 1,877,285
- --------------------------------------------------------------------------------------------------- -----------
Net investment income 16,679,223
- --------------------------------------------------------------------------------------------------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES CONTRACTS:
- ---------------------------------------------------------------------------------------------------
Net realized gain on investments and futures contracts 99,787,657
- ---------------------------------------------------------------------------------------------------
Net change in unrealized appreciation on investments and futures contracts 21,104,700
- --------------------------------------------------------------------------------------------------- -----------
Net realized and unrealized gain on investments and futures contracts 120,892,357
- --------------------------------------------------------------------------------------------------- -----------
Change in net assets resulting from operations $137,571,580
- --------------------------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MAX-CAP FUND
(FORMERLY, MAX-CAP FUND)
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
------------------------------
1995 1994
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------------------------------------
OPERATIONS--
- ------------------------------------------------------------------
Net investment income $ 16,679,223 $ 11,562,305
- ------------------------------------------------------------------
Net realized gain (loss) on investments and futures contracts
($103,347,377 and $741,350 net gains respectively, as computed for
federal tax purposes) 99,787,657 1,155,375
- ------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 21,104,700 3,003,321
- ------------------------------------------------------------------ ------------- -------------
Change in net assets resulting from operations 137,571,580 15,721,001
- ------------------------------------------------------------------ ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ------------------------------------------------------------------
Distributions from net investment income
- ------------------------------------------------------------------
Institutional Shares (14,071,338) (10,781,243)
- ------------------------------------------------------------------
Institutional Service Shares (505,602) (115,401)
- ------------------------------------------------------------------
Distributions from net realized gain on investment transactions
and futures contracts
- ------------------------------------------------------------------
Institutional Shares (729,209) (11,507,864)
- ------------------------------------------------------------------
Institutional Service Shares (14,188) (108,965)
- ------------------------------------------------------------------ ------------- -------------
Change in net assets resulting from distributions to
shareholders (15,320,337) (22,513,473)
- ------------------------------------------------------------------ ------------- -------------
SHARE TRANSACTIONS--
- ------------------------------------------------------------------
Proceeds from sale of shares 374,533,702 215,864,930
- ------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 6,003,498 8,535,336
- ------------------------------------------------------------------
Cost of shares redeemed (240,788,349) (174,914,182)
- ------------------------------------------------------------------ ------------- -------------
Change in net assets resulting from share transactions 139,748,851 49,486,084
- ------------------------------------------------------------------ ------------- -------------
Change in net assets 262,000,094 42,693,612
- ------------------------------------------------------------------
NET ASSETS:
- ------------------------------------------------------------------
Beginning of period 452,432,357 409,738,745
- ------------------------------------------------------------------ ------------- -------------
End of period (including undistributed net investment income of
$3,063,488 and $961,205, respectively) $ 714,432,451 $ 452,432,357
- ------------------------------------------------------------------ ------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MAX-CAP FUND
(FORMERLY, MAX-CAP FUND)
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Federated Index Trust (the "Trust") is registered under the Investment Company
Act of 1940, as amended (the "Act"), as an open-end, management investment
company. The Trust consists of three diversified portfolios. The financial
statements included herein present only those of Federated 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. The Fund offers
two classes of Shares: Institutional Shares and Institutional Service Shares.
Effective December 5, 1994, the Board of Trustees ("Trustees") changed the name
of the Fund from Max-Cap Fund to Federated Max-Cap Fund
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Short-term securities with remaining maturities of
sixty days or less at the time of purchase may be valued at amortized cost,
which approximates fair market value. All other securities are valued at
the prices provided by an independent pricing service.
REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral
securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code"). Dividend
income and distributions to shareholders are recorded on the ex-dividend
date.
FEDERATED MAX-CAP FUND
(FORMERLY, MAX-CAP FUND)
- --------------------------------------------------------------------------------
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
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 its shares, have been deferred and are being
amortized using the straight-line method not to exceed a period of five
years from the Fund's commencement date.
FUTURES CONTRACTS--The Fund purchases stock index futures contracts to
manage cashflows, enhance yield, and to potentially reduce transaction
costs. Upon entering into a stock futures contract with a broker, the Fund
is required to deposit in a segregated account an amount of cash or U.S.
government securities. Futures contracts are valued daily and unrealized
gains or losses are recorded in a "variation margin" account. Daily the
Fund receives from or pays to the broker a specified amount of cash based
upon changes in the variation margin account. When a contract is closed,
the Fund recognizes a realized gain or loss.
Futures contracts have market risks, including the risk that the change in
the value of the contract may not correlate with changes in the value of
the underlying securities. For the period ended October 31, 1995, the Fund
had realized gains of $24,549,912 on future contracts. At October 31, 1995,
the Fund had outstanding futures contracts as set forth below:
<TABLE>
<CAPTION>
UNREALIZED
CONTRACTS TO APPRECIATION
EXPIRATION DATE DELIVER/RECEIVE POSITION (DEPRECIATION)
---------------- ------------------------------ ---------------- ----------------
<S> <C> <C> <C>
December 1995 404 S&P 500 Index Futures Long $495,260
</TABLE>
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares.
FEDERATED MAX-CAP FUND
(FORMERLY, MAX-CAP FUND)
- --------------------------------------------------------------------------------
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
1995 1994
---------------------------- ----------------------------
INSTITUTIONAL SHARES SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold 26,132,335 $ 343,592,917 17,555,003 $ 207,304,786
- ---------------------------------------------
Shares issued to shareholders in
payment of distributions declared 420,935 5,512,947 718,661 8,439,495
- ---------------------------------------------
Shares redeemed (17,407,051) (230,818,438) (14,617,884) (172,243,416)
- --------------------------------------------- ----------- ------------- ----------- -------------
Net change resulting from Institutional
Share transactions 9,146,219 $ 118,287,426 3,655,780 $ 43,500,865
- --------------------------------------------- ----------- ------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
1995 1994
---------------------------- ----------------------------
INSTITUTIONAL SERVICE SHARES SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold 2,368,216 $ 30,940,785 734,647 $ 8,560,144
- ---------------------------------------------
Shares issued to shareholders in payment of
distributions declared 36,486 490,551 8,223 95,841
- ---------------------------------------------
Shares redeemed (730,897) (9,969,911) (229,644) (2,670,766)
- --------------------------------------------- ----------- ------------- ----------- -------------
Net change resulting from Institutional
Service Share transactions 1,673,805 $ 21,461,425 513,226 $ 5,985,219
- --------------------------------------------- ----------- ------------- ----------- -------------
Net change resulting from
share transactions 10,820,024 $ 139,748,851 4,169,006 $ 49,486,084
- --------------------------------------------- ----------- ------------- ----------- -------------
</TABLE>
(4) MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEE--Federated Management, the Fund's manager (the "Manager"),
receives for its services an annual management fee equal to .30 of 1% of the
Fund's average daily net assets. The Manager has entered into a sub-management
contract with ANB Investment Management and Trust Company ("Sub-Manager"). The
Manager shall pay the Sub-Manager an investment advisory fee based on the
average daily net assets of the Fund as follows: .05 of 1% on the first $100
million, .02 of 1% on the next $100 million, and .01 of 1% thereafter. The
Manager may voluntarily choose to waive a portion of its fees. The Manager can
modify or terminate this voluntary waiver at any time at its sole discretion.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of
1% of daily average net assets of the Fund for the period. This fee is to obtain
certain services for shareholders and to maintain shareholder accounts. FSS may
voluntarily choose to waive a portion of its fee. FSS can modify or terminate
this voluntary waiver
FEDERATED MAX-CAP FUND
(FORMERLY, MAX-CAP FUND)
- --------------------------------------------------------------------------------
at any time at its sole discretion. For the fiscal year ended October 31, 1995,
Institutional Shares fully waived its shareholder services fee.
DISTRIBUTION SERVICES FEE--The Fund has adopted a Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will
compensate Federated Securities Corp, ("FSC"), the principal distributor, from
the net assets of the Fund to finance activities intended to result in the sale
of the Fund's Institutional Service Shares. The Plan provides that the Fund may
incur distribution expenses up to .30 of 1% of the average daily net assets of
the Institutional Service Shares to compensate FSC. The distributor may
voluntarily choose to waive any portion of its fee. The distributor can modify
or terminate this voluntary waiver at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services
Company ("FServ") serves as transfer and dividend disbursing agent for the Fund.
This fee is based on the size, type, and number of accounts and transactions
made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ also maintains the Fund's accounting records
for which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
year ended October 31, 1995, were as follows:
<TABLE>
<S> <C>
- ----------------------------------------------------------------------------------
PURCHASES $406,176,148
- ---------------------------------------------------------------------------------- ------------
SALES $271,130,091
- ---------------------------------------------------------------------------------- ------------
</TABLE>
REPORT OF ERNST & YOUNG LLP,
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 Federated Max-Cap Fund (a portfolio of
Federated Index Trust), as of October 31, 1995, 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 the financial highlights
(see pages 2 and 15 of this prospectus) for each of the periods presented
therein. 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, 1995, 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
Federated Max-Cap Fund of Federated Index Trust at October 31, 1995, 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 therein, in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
December 8, 1995
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Federated 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 8600
Trust Company Boston, Massachusetts 02266-8600
- ------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company P.O. Box 8600
Boston, Massachusetts 02266-8600
- ------------------------------------------------------------------------------------------
Independent Auditors
Ernst & Young LLP One Oxford Centre
Pittsburgh, Pennsylvania 15219
- ------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FEDERATED MAX-CAP FUND
(A PORTFOLIO OF FEDERATED INDEX TRUST)
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
An Open-End, Diversified
Management Investment Company
Prospectus dated December 31, 1995
FEDERATED SECURITIES CORP.
(LOGO)
- ---------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
CUSIP 31420E403
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Federated 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). Federated Mid-Cap Fund (the "Fund"), a portfolio of
the Trust, 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 Ratings Group.
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, 1995, 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 or a paper copy of this prospectus, if you have
received your prospectus electronically, 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, 1995
TABLE OF CONTENTS
Summary of Fund Expenses.....................................................1
Financial Highlights.........................................................2
General Information..........................................................3
Investment Information.......................................................3
Investment Objective.......................................................3
Investment Policies........................................................3
Investment Risks...........................................................6
Investment Limitations.....................................................6
Federated Index Trust Information............................................7
Management of the Trust....................................................7
Distribution of Fund Shares................................................9
Fund Administration........................................................9
Net Asset Value.............................................................10
Investing in the Fund.......................................................10
Share Purchases...........................................................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......................................................11
Written Requests..........................................................12
Accounts with Low Balances................................................12
Shareholder Information.....................................................13
Voting Rights.............................................................13
Tax Information.............................................................13
Federal Income Tax........................................................13
Performance Information.....................................................13
Financial Statements........................................................14
Report of Ernst & Young LLP,
Independent Auditors......................................................39
Addresses...................................................................40
SUMMARY OF FUND EXPENSES
FEDERATED MID-CAP FUND
Shareholder Transaction Expenses
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)............................... None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price)............................... None
Contingent Deferred Sales Charge (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).......................................0.20%
12b-1 Fee...............................................................None
Total Other Expenses....................................................0.40%
Shareholder Services Fee (after waiver) (2)...................0.07%
Total Operating Expenses (3).......................................0.60%
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.40%.
(2) The maximum shareholder services fee is 0.25%.
(3) The total operating expenses in the table above are based on expenses
expected during the fiscal year ending October 31, 1996. The total
operating expenses were 0.60% for the fiscal year ended October 31, 1995
and would have been 1.01% absent the voluntary waivers of a portion of the
management fee and a portion of the shareholder services fee.
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>
<S> <C> <C> <C> <C>
EXAMPLE 1 year 3 years 5 years 10 years
- ------------------------------------------------------------ ------ ------- ------- --------
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....................................... $6 $19 $33 $ 75
The above example should not be considered a representation of past or
future expenses. Actual expenses may be greater or less than those shown.
</TABLE>
1
FEDERATED MID-CAP FUND
(formerly, Mid-Cap Fund)
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------------
(For a share outstanding throughout each period)
Reference is made to the Report of Ernst & Young LLP, Independent Auditors, on
page 39.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Year Ended October 31,
----------------------------------------
1995 1994 1993 1992(a)
- ------------------------------------------------------ ------ ------ ------ -------
Net asset value, beginning of period $11.02 $11.57 $ 9.99 $10.00
- ------------------------------------------------------
Income from investment operations
- ------------------------------------------------------
Net investment income 0.22 0.21 0.25 0.080
- ------------------------------------------------------
Net realized and unrealized gain (loss) on
investments and futures contracts 1.93 (0.07) 1.56 (0.086 )
- ------------------------------------------------------ ------ ------ ------ ------
Total from investment operations 2.15 0.14 1.81 (0.006 )
- ------------------------------------------------------ ------ ------ ------ ------
Less distributions
- ------------------------------------------------------
Distributions from net investment income (0.20) (0.19) (0.23) (0.004 )
- ------------------------------------------------------
Distributions from net realized gain on investment
transactions and futures contracts (0.19) (0.50) -- --
- ------------------------------------------------------ ------ ------ ------ ------
Total distributions (0.39) (0.69) (0.23) (0.004 )
- ------------------------------------------------------ ------ ------ ------ ------
Net asset value, end of period $12.78 $11.02 $11.57 $ 9.99
-----
- ------------------------------------------------------ ------ ------ ------
Total return (b) 20.12% 1.25% 17.33% 0.00 %
- ------------------------------------------------------
Ratios to average net assets
- ------------------------------------------------------
Expenses 0.60% 0.54% 0.00% 0.00 %
- ------------------------------------------------------
Net investment income 1.89% 1.84% 2.33% 0.93 %*
- ------------------------------------------------------
Expense waiver/reimbursement (c) 0.41% 0.59% 1.75% 0.40 %*
- ------------------------------------------------------
Supplemental Data
- ------------------------------------------------------
Net assets, end of period (000 omitted) $62,580 $44,012 $16,192 $3
- ------------------------------------------------------
Portfolio turnover 26% 30% 59% 0 %
- ------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from September 3, 1992 (date of initial
public investment) to
October 31, 1992.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
Further information about the Fund's performance is contained in the Fund's
annual report for the fiscal year ended October 31, 1995, which can be
obtained free of charge.
2
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 Ratings Group ("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 in-
3
vested 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.
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 are 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 Farm
Credit System, including the National Bank for Cooperatives, Farm Credit
Banks, and Banks for Cooperatives, 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 repur-
4
chase 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 associations (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 borrow-
5
ers 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. There is the risk that
when lending portfolio securities, the securities may not be available to the
Fund on a timely basis and the Fund may, therefore, lose the opportunity to
sell the securities at a desirable price. In addition, in the event that a
borrower of securities would file for bankruptcy or become insolvent,
disposition of the securities may be delayed pending court action.
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 seller's failure to complete these transactions may cause the Fund
to miss a price or yield considered to be advantageous. 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.
Accordingly, the Fund may pay more/less than the market value of the
securities on the settlement date.
The Fund may dispose of a commitment prior to settlement if the managers deem
it appropriate to do so. In addition, the Fund may enter in transactions to
sell its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at
later dates. The Fund may realize short-term profits or losses upon the sale
of such commitments.
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 Composite Stock Price 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
Composite Stock Price 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 bor-
6
row 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
The Trust is managed by the Trustees. The Trustees are 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 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 Man-
7
ager receives an annual fee from the Fund for performing its responsibilities
under the Management Contract.
Both the Trust and the Manager have adopted strict codes of ethics governing
the conduct of all employees who manage the Fund and its portfolio securities.
These codes recognize that such persons owe a fiduciary duty to the Fund's
shareholders and must place the interests of shareholders ahead of the
employees' own interest. Among other things, the codes: require preclearance
and periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered for
purchase or sale, by the Fund; prohibit purchasing securities in initial
public offerings; and prohibit taking profits on securities held for less than
sixty days. Violations of the codes are subject to review by the Trustees, and
could result in severe penalties.
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. With over $72 billion invested across more than 260
funds under management and/or administration by its subsidiaries, as of
December 31, 1994, Federated Investors is one of the largest mutual fund
investment managers in the United States. With more than 1,750 employees,
Federated continues to be led by the management who founded the company in
1955. Federated funds are presently at work in and through 4,000 financial
institutions nationwide. More than 100,000 investment professionals have
selected Federated funds for their clients.
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 First Chicago Investment Manage-
8
ment Company 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,
1995, placed approximately $20.6 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 331 nationwide non-financial institution
clients invest. In total, ANB manages 77 commingled/common trust funds. Also,
since 1990, ANB has served as Sub-Manager for the Federated Max-Cap Fund
(formerly the S&P 500 Fund), which is another portfolio of the Trust. ANB also
serves as Sub-Manager for the Federated Mini-Cap Fund, another portfolio of
the Trust.
Supplemental Payments to Financial Institutions
In addition to periodic payments to financial institutions under the
Shareholder Services Agreement, certain financial institutions may be
compensated by the Manager or its affiliates for the continued investment of
customers' assets in certain funds, including the Fund, advised by those
entities. These payments will be made directly by the distributor or Manager
from their assets, and will not be made from the assets of the Fund or by the
assessment of a sales charge on shares.
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 S&P for the right to use the Index in connection
with the management activities for the Fund. Federated Securities Corp. is not
affiliated with S&P.
Fund Administration
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.
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.
Shareholder Services
The Fund has entered into a Shareholder Services Agreement with Federated
Shareholder Services, a subsidiary of Federated Investors, under which the
Fund may make payments up to 0.25 of 1% of the average daily net asset value
of the shares, computed at an annual rate, to obtain certain personal services
for shareholders and for the maintenance of shareholder accounts ("shareholder
services"). From time to time and for such periods as deemed appropriate, the
amount stated above may be reduced voluntarily. Under the Shareholder Services
Agreement, Federated Shareholder Services will either perform shareholder
services directly or will select financial
9
institutions to perform shareholder services. Financial institutions will
receive fees 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 Fund and Federated Shareholder Services.
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. (Eastern 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.
(Eastern time) on the next business day following the order. Federal funds
should be wired as follows: Federated Services Company, c/o State Street Bank
and Trust Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit to:
Federated Index Trust, Federated Mid-Cap Fund; Group Number or Order Number;
Nominee or Institution Name; ABA Number 011000028. Shares cannot be purchased
by wire on holidays when wire transfers are restricted. Questions on wire
purchases should be directed to your shareholder services representative at
the telephone number listed on your account statement.
By Mail
To purchase shares of the Fund by mail, send a check made payable to Federated
Index Trust, Federated Mid-Cap Fund, to the Fund's transfer agent, Federated
Services Company, P.O. Box 8600, Boston, Massachusetts 02266-8600. 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 as of the close of trading (normally 4:00
p.m., Eastern time) on the New York Stock Exchange, 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.
10
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
three 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.
State securities laws may require certain financial institutions such as
depository institutions to register as dealers.
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.
(Eastern 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.
Proceeds from redemption requests on holidays when wire transfers are
restricted will be wired the following business day. Questions about telephone
redemptions on days when wire transfers are restricted should be directed to
your shareholder services representative at the telephone number listed on
your account statement. If at any time, the Fund
11
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. 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 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 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 their signatures 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 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.
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.
12
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.
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.
State and Local Taxes
In the opinion of Houston, Houston & Donnelly, counsel to the Trust, 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, advertisements for the Fund may refer to ratings, rankings,
and other information in certain financial publications and/or compare the
Fund's performance to certain indices.
13
Federated Mid-Cap Fund
(formerly, Mid-Cap Fund)
<TABLE>
<CAPTION>
Portfolio of Investments
October 31, 1995
- ------------------------------------------------------------------------------
<S> <C> <C>
Shares Value
- ----------- --------------------------------------------------------------------- -----------
*Common Stocks--88.6%
- ----------------------------------------------------------------------------------------
Commercial Services--3.6%
---------------------------------------------------------------------
900 Angelica Corp. $ 20,250
---------------------------------------------------------------------
2,000 Banta Corp. 86,500
---------------------------------------------------------------------
4,600 Cintas Corp. 193,200
---------------------------------------------------------------------
1,600 Ennis Business Forms, Inc. 22,400
---------------------------------------------------------------------
7,500 Equifax, Inc. 292,500
---------------------------------------------------------------------
3,100 Flightsafety International, Inc. 148,025
---------------------------------------------------------------------
3,775 Kelly Services, Inc., Class A 94,847
---------------------------------------------------------------------
1,200 Lawson Products, Inc. 28,800
---------------------------------------------------------------------
7,400 Manpower, Inc. 200,725
---------------------------------------------------------------------
4,100 Olsten Corp. 157,850
---------------------------------------------------------------------
3,600 Omnicom Group, Inc. 229,950
---------------------------------------------------------------------
4,450 Paychex, Inc. 193,019
---------------------------------------------------------------------
4,100 Reynolds & Reynolds Co., Class A 146,062
---------------------------------------------------------------------
3,500 Rollins, Inc. 73,500
---------------------------------------------------------------------
7,200 Sensormatic Electronics Corp. 153,900
---------------------------------------------------------------------
2,800 Standard Register 63,000
---------------------------------------------------------------------
2,200 Wallace Computer, Inc. 124,025
--------------------------------------------------------------------- -----------
Total 2,228,553
--------------------------------------------------------------------- -----------
Consumer Durables--2.3%
---------------------------------------------------------------------
6,700 Callaway Golf Co. 109,713
---------------------------------------------------------------------
1,500 Carlisle Cos., Inc. 61,688
---------------------------------------------------------------------
7,425 Clayton Homes, Inc. 194,906
---------------------------------------------------------------------
1,600 Cross (A.T.) Co., Class A 22,800
---------------------------------------------------------------------
5,000 (a) Electronic Arts, Inc. 183,125
---------------------------------------------------------------------
14
Federated Mid-Cap Fund
(formerly, Mid-Cap Fund)
- ------------------------------------------------------------------------------
Shares Value
- ----------- --------------------------------------------------------------------- -----------
Common Stocks--Continued
- ----------------------------------------------------------------------------------------
Consumer Durables--Continued
---------------------------------------------------------------------
1,600 (a) Gibson Greetings, Inc. $ 22,200
---------------------------------------------------------------------
7,400 Harley Davidson, Inc. 197,950
---------------------------------------------------------------------
12,800 International Game Technology 148,800
---------------------------------------------------------------------
8,200 Leggett and Platt, Inc. 196,800
---------------------------------------------------------------------
700 National Presto Industries, Inc. 28,350
---------------------------------------------------------------------
13,400 Shaw Industries, Inc. 170,850
---------------------------------------------------------------------
1,900 Stanhome, Inc. 57,950
---------------------------------------------------------------------
4,600 (a) Topps Co. 28,175
--------------------------------------------------------------------- -----------
Total 1,423,307
--------------------------------------------------------------------- -----------
Consumer Non-Durables--3.4%
---------------------------------------------------------------------
1,900 Church and Dwight, Inc. 38,713
---------------------------------------------------------------------
12,800 Coca Cola Enterprises, Inc. 340,800
---------------------------------------------------------------------
3,900 Dean Foods Co. 108,713
---------------------------------------------------------------------
1,300 Dreyers Grand Ice Cream, Inc. 44,850
---------------------------------------------------------------------
2,100 First Brands Corp. 96,075
---------------------------------------------------------------------
3,900 Flowers Industries, Inc. 84,338
---------------------------------------------------------------------
4,700 IBP, Inc. 281,413
---------------------------------------------------------------------
1,800 International Multifoods Corp. 36,900
---------------------------------------------------------------------
2,600 (a) Jones Apparel Group, Inc. 89,050
---------------------------------------------------------------------
3,000 Lance, Inc. 50,625
---------------------------------------------------------------------
8,000 McCormick & Co., Inc. 198,000
---------------------------------------------------------------------
1,900 Michael Foods, Inc. 23,037
---------------------------------------------------------------------
2,600 Savannah Foods & Industries, Inc. 32,500
---------------------------------------------------------------------
2,900 Smucker (J.M.) Co., Class A 56,912
---------------------------------------------------------------------
3,600 Tambrands, Inc. 161,100
---------------------------------------------------------------------
14,200 Tyson Foods, Inc., Class A 339,025
---------------------------------------------------------------------
15
Federated Mid-Cap Fund
(formerly, Mid-Cap Fund)
- ------------------------------------------------------------------------------
Shares Value
- ----------- --------------------------------------------------------------------- -----------
Common Stocks--Continued
- ----------------------------------------------------------------------------------------
Consumer Non-Durables--Continued
---------------------------------------------------------------------
3,500 Universal Corp. $ 73,500
---------------------------------------------------------------------
2,600 Universal Foods Corp. 89,050
--------------------------------------------------------------------- -----------
Total 2,144,601
--------------------------------------------------------------------- -----------
Consumer Services--4.4%
---------------------------------------------------------------------
3,900 Belo (A.H.) Corp., Series A 135,038
---------------------------------------------------------------------
4,200 Bob Evans Farms, Inc. 75,600
---------------------------------------------------------------------
7,475 (a) Brinker International, Inc. 90,634
---------------------------------------------------------------------
3,100 (a) Buffets, Inc. 38,750
---------------------------------------------------------------------
2,821 (a) Chris Craft Industries, Inc. 112,487
---------------------------------------------------------------------
10,100 (a) Circus Circus Enterprises, Inc. 268,913
---------------------------------------------------------------------
5,950 Cracker Barrel Old Country Store 101,150
---------------------------------------------------------------------
4,900 (a) HFS, Inc. 300,125
---------------------------------------------------------------------
1,400 Houghton Mifflin Co. 57,400
---------------------------------------------------------------------
2,300 (a) International Dairy Queen, Inc., Class A 48,875
---------------------------------------------------------------------
2,300 Lee Enterprises, Inc. 91,712
---------------------------------------------------------------------
2,600 Media General, Inc., Class A 72,150
---------------------------------------------------------------------
9,000 Mirage Resorts, Inc. 294,750
---------------------------------------------------------------------
3,450 Morrison Restaurants, Inc. 53,906
---------------------------------------------------------------------
3,700 Multi Media, Inc. 163,725
---------------------------------------------------------------------
4,200 (a) Outback Steakhouse, Inc. 131,775
---------------------------------------------------------------------
5,100 (a) Promus Hotel Corp. 112,200
---------------------------------------------------------------------
2,000 Sbarro, Inc. 41,750
---------------------------------------------------------------------
1,500 (a) Scholastic Corp. 92,625
---------------------------------------------------------------------
2,700 Sizzler International, Inc. 9,450
---------------------------------------------------------------------
5,500 Sothebys Holdings, Inc., Class A 76,312
---------------------------------------------------------------------
2,400 TCA Cable TV, Inc. 71,100
---------------------------------------------------------------------
16
Federated Mid-Cap Fund
(formerly, Mid-Cap Fund)
- ------------------------------------------------------------------------------
Shares Value
- ----------- --------------------------------------------------------------------- -----------
Common Stocks--Continued
- ----------------------------------------------------------------------------------------
Consumer Services--Continued
---------------------------------------------------------------------
1,100 Washington Post Co., Class B $ 319,000
---------------------------------------------------------------------
2,100 (a) Western Publishing Group, Inc. 17,194
--------------------------------------------------------------------- -----------
Total 2,776,621
--------------------------------------------------------------------- -----------
Electronic Technology--12.0%
---------------------------------------------------------------------
6,100 (a) ADC Telecommunications, Inc. 244,000
---------------------------------------------------------------------
4,321 (a) AST Research, Inc. 38,349
---------------------------------------------------------------------
4,300 (a) Altera Corp. 260,150
---------------------------------------------------------------------
7,500 (a) Analog Devices, Inc. 270,938
---------------------------------------------------------------------
9,400 (a) Atmel Corp. 293,750
---------------------------------------------------------------------
11,462 (a) Bay Networks, Inc. 759,357
---------------------------------------------------------------------
2,900 Beckman Instruments, Inc. 96,063
---------------------------------------------------------------------
6,100 (a) Cirrus Logic, Inc. 256,963
---------------------------------------------------------------------
5,200 Conner Peripherals, Inc. 93,600
---------------------------------------------------------------------
2,600 (a) Convex Computer Corp. 11,700
---------------------------------------------------------------------
4,000 (a) Cypress Semiconductor Corp. 141,000
---------------------------------------------------------------------
9,000 (a) Dell Computer Corp. 419,625
---------------------------------------------------------------------
21,100 (a) EMC Corp. Mass 327,050
---------------------------------------------------------------------
2,100 (a) Exabyte Corp. 27,169
---------------------------------------------------------------------
3,200 GenCorp, Inc. 33,600
---------------------------------------------------------------------
7,600 (a) Integrated Device Technology, Inc. 144,400
---------------------------------------------------------------------
12,700 (a) LSI Logic Corp. 598,487
---------------------------------------------------------------------
7,200 Linear Technology Corp. 315,000
---------------------------------------------------------------------
4,500 (a) Litton Industries, Inc. 178,312
---------------------------------------------------------------------
1,500 Measurex Corp. 46,125
---------------------------------------------------------------------
5,100 (a) Mentor Graphics Corp. 107,100
---------------------------------------------------------------------
10,000 Molex, Inc. 330,000
---------------------------------------------------------------------
2,000 (a) OEA, Inc. 54,500
---------------------------------------------------------------------
17
Federated Mid-Cap Fund
(formerly, Mid-Cap Fund)
- ------------------------------------------------------------------------------
Shares Value
- ----------- --------------------------------------------------------------------- -----------
Common Stocks--Continued
- ----------------------------------------------------------------------------------------
Electronic Technology--Continued
---------------------------------------------------------------------
2,300 (a) Octel Communications Corp. $ 78,487
---------------------------------------------------------------------
5,100 (a) Quantum Corp. 88,612
---------------------------------------------------------------------
1,800 (a) Rohr, Inc. 26,775
---------------------------------------------------------------------
7,000 (a) Seagate Technology, Inc. 313,250
---------------------------------------------------------------------
1,000 (a) Sequa Corp., Class A 25,750
---------------------------------------------------------------------
3,100 (a) Sequent Computer System, Inc. 53,862
---------------------------------------------------------------------
5,180 (a) Storage Technology Corp. 127,557
---------------------------------------------------------------------
2,300 (a) Stratus Computer, Inc. 71,587
---------------------------------------------------------------------
3,100 Sundstrand Corp. 189,875
---------------------------------------------------------------------
2,500 (a) Symbol Technologies, Inc. 87,187
---------------------------------------------------------------------
7,400 (a) Teradyne, Inc. 246,975
---------------------------------------------------------------------
1,800 Thiokol Corp. 62,325
---------------------------------------------------------------------
4,000 (a) U S Robotics Corp. 370,000
---------------------------------------------------------------------
3,000 Varian Association, Inc. 154,125
---------------------------------------------------------------------
2,200 (a) Verifone, Inc. 59,400
---------------------------------------------------------------------
5,200 (a) Vishay Intertechnology, Inc. 183,300
---------------------------------------------------------------------
6,900 (a) Xilinx, Inc. 317,400
--------------------------------------------------------------------- -----------
Total 7,503,705
--------------------------------------------------------------------- -----------
Energy Minerals--2.4%
---------------------------------------------------------------------
5,800 Anadarko Petroleum Corp. 251,575
---------------------------------------------------------------------
8,400 Apache Corp. 214,200
---------------------------------------------------------------------
2,900 Diamond Shamrock, Inc. 74,675
---------------------------------------------------------------------
7,900 Lyondell Petrochemical Co. 168,862
---------------------------------------------------------------------
2,900 Mapco, Inc. 149,350
---------------------------------------------------------------------
4,400 Murphy Oil Corp. 166,650
---------------------------------------------------------------------
4,900 Noble Affiliates, Inc. 121,275
---------------------------------------------------------------------
3,400 Parker & Parsley Petroleum Co. 62,900
---------------------------------------------------------------------
18
Federated Mid-Cap Fund
(formerly, Mid-Cap Fund)
- ------------------------------------------------------------------------------
Shares Value
- ----------- --------------------------------------------------------------------- -----------
Common Stocks--Continued
- ----------------------------------------------------------------------------------------
Energy Minerals--Continued
---------------------------------------------------------------------
3,100 Quaker State Corp. $ 40,687
---------------------------------------------------------------------
9,700 Ranger Oil Ltd. 55,775
---------------------------------------------------------------------
3,700 Tosco Corp. 127,650
---------------------------------------------------------------------
4,300 Valero Energy Corp. 101,587
--------------------------------------------------------------------- -----------
Total 1,535,186
--------------------------------------------------------------------- -----------
Finance--13.3%
---------------------------------------------------------------------
10,650 AON Corp. 437,981
---------------------------------------------------------------------
9,550 Aflac, Inc. 389,163
---------------------------------------------------------------------
4,150 Bancorp Hawaii, Inc. 139,025
---------------------------------------------------------------------
11,615 Bear Stearns Cos., Inc. 230,853
---------------------------------------------------------------------
3,850 Central Fidelity Banks, Inc. 119,350
---------------------------------------------------------------------
4,500 City National Corp. 59,625
---------------------------------------------------------------------
3,500 Comdisco, Inc. 106,750
---------------------------------------------------------------------
11,300 Comerica, Inc. 379,963
---------------------------------------------------------------------
3,700 Crestar Financial Corp. 210,900
---------------------------------------------------------------------
3,000 Dauphin Deposit Corp. 87,000
---------------------------------------------------------------------
6,125 Edwards(AG), Inc. 156,188
---------------------------------------------------------------------
6,400 Fifth Third Bancorp 430,400
---------------------------------------------------------------------
6,200 First America Bank Corp. 264,275
---------------------------------------------------------------------
4,900 First Security Corp. 160,475
---------------------------------------------------------------------
3,400 First Tennessee National Corp. 181,900
---------------------------------------------------------------------
3,400 First Virginia Bank, Inc. 138,975
---------------------------------------------------------------------
8,000 Franklin Resources, Inc. 406,000
---------------------------------------------------------------------
2,000 GATX Corp. 95,000
---------------------------------------------------------------------
13,400 Green Tree Financial Corp. 356,775
---------------------------------------------------------------------
2,000 Hartford Steam Boiler Insurance 93,250
---------------------------------------------------------------------
11,800 Hibernia Corp., Class A 116,525
---------------------------------------------------------------------
19
Federated Mid-Cap Fund
(formerly, Mid-Cap Fund)
- ------------------------------------------------------------------------------
Shares Value
- ----------- --------------------------------------------------------------------- -----------
Common Stocks--Continued
- ----------------------------------------------------------------------------------------
Finance--Continued
---------------------------------------------------------------------
3,400 Kemper Corp. $ 164,900
---------------------------------------------------------------------
9,100 Marshall & Ilsley Corp. 220,675
---------------------------------------------------------------------
5,550 Mercantile Bancorporation, Inc. 244,200
---------------------------------------------------------------------
4,700 Mercantile Bankshares Corp. 129,250
---------------------------------------------------------------------
5,700 Meridian Bancorp, Inc. 243,675
---------------------------------------------------------------------
5,500 Northern Trust Corp. 262,625
---------------------------------------------------------------------
1,700 PHH Corp. 74,375
---------------------------------------------------------------------
9,800 PaineWebber Group, Inc. 215,600
---------------------------------------------------------------------
1,900 (a) Policy Management System Corp. 89,537
---------------------------------------------------------------------
7,100 Progressive Corp. Ohio 294,650
---------------------------------------------------------------------
4,500 Provident Life & Accidental, Inc., Class B 120,375
---------------------------------------------------------------------
4,530 Regions Financial Corp. 180,634
---------------------------------------------------------------------
17,250 Schwab (Charles) Corp. 394,594
---------------------------------------------------------------------
8,100 SouthTrust Corp. 203,512
---------------------------------------------------------------------
8,200 State Street Boston Corp. 318,775
---------------------------------------------------------------------
2,300 Transatlantic Holdings, Inc. 154,962
---------------------------------------------------------------------
5,700 UJB Financial Corp. 181,687
---------------------------------------------------------------------
3,600 West One Bancorp. 153,000
---------------------------------------------------------------------
3,500 Wilmington Trust Corp. 103,250
--------------------------------------------------------------------- -----------
Total 8,310,649
--------------------------------------------------------------------- -----------
Health Services--3.5%
---------------------------------------------------------------------
2,800 (a) Applied Bioscience International, Inc. 17,850
---------------------------------------------------------------------
3,965 Bergen Brunswig Corp., Class A 82,274
---------------------------------------------------------------------
4,175 Cardinal Health, Inc. 214,491
---------------------------------------------------------------------
3,927 (a) Coram Healthcare Corp. 15,708
---------------------------------------------------------------------
3,900 (a) FHP International Corp. 94,575
---------------------------------------------------------------------
5,600 (a) Foundation Health Corp 237,300
---------------------------------------------------------------------
20
Federated Mid-Cap Fund
(formerly, Mid-Cap Fund)
- ------------------------------------------------------------------------------
Shares Value
- ----------- --------------------------------------------------------------------- -----------
Common Stocks--Continued
- ----------------------------------------------------------------------------------------
Health Services--Continued
---------------------------------------------------------------------
10,500 (a) HEALTHSOUTH Rehabilitation $ 274,313
---------------------------------------------------------------------
3,400 (a) HealthCare COMPARE Corp. 125,800
---------------------------------------------------------------------
3,100 (a) Healthcare & Retirement Corp. 91,063
---------------------------------------------------------------------
3,100 (a) Healthsource, Inc. 164,300
---------------------------------------------------------------------
4,935 (a) Horizon/CMS Healthcare Corp. 99,933
---------------------------------------------------------------------
12,100 (a) Laboratory Corporation of America Holdings 102,850
---------------------------------------------------------------------
4,300 McKesson Corp. 205,325
---------------------------------------------------------------------
6,400 (a) NovaCare, Inc. 40,000
---------------------------------------------------------------------
3,000 (a) PacifiCare Health Systems, Inc., Class B 218,250
---------------------------------------------------------------------
3,800 Surgical Care Affiliates, Inc. 112,575
---------------------------------------------------------------------
5,195 (a) Value Health, Inc. 118,824
--------------------------------------------------------------------- -----------
Total 2,215,431
--------------------------------------------------------------------- -----------
Health Technology--3.9%
---------------------------------------------------------------------
2,800 (a) Acuson Corp. 32,550
---------------------------------------------------------------------
1,300 (a) Advanced Technology Labs, Inc. 23,400
---------------------------------------------------------------------
3,300 (a) Biogen, Inc. 202,125
---------------------------------------------------------------------
4,600 Carter Wallace, Inc. 48,300
---------------------------------------------------------------------
5,700 (a) Centocor, Inc. 64,125
---------------------------------------------------------------------
3,956 (a) Chiron Corp. 359,996
---------------------------------------------------------------------
1,600 (a) Cordis Corp. 176,800
---------------------------------------------------------------------
1,600 (a) Datascope Corp. 38,000
---------------------------------------------------------------------
2,600 Dentsply International, Inc. 89,700
---------------------------------------------------------------------
1,300 Diagnostic Products Corp. 48,100
---------------------------------------------------------------------
4,500 (a) Forest Labratories, Inc., Class A 186,188
---------------------------------------------------------------------
2,600 (a) Genzyme Corp. 151,450
---------------------------------------------------------------------
11,300 Ivax Corp. 257,075
---------------------------------------------------------------------
11,700 Mylan Laboratories, Inc. 222,300
---------------------------------------------------------------------
21
Federated Mid-Cap Fund
(formerly, Mid-Cap Fund)
- ------------------------------------------------------------------------------
Shares Value
- ----------- --------------------------------------------------------------------- -----------
Common Stocks--Continued
- ----------------------------------------------------------------------------------------
Health Technology--Continued
---------------------------------------------------------------------
2,700 (a) Nellcor, Inc. $ 155,250
---------------------------------------------------------------------
7,500 (a) Perrigo Co. 91,875
---------------------------------------------------------------------
2,300 (a) Scherer (R.P.) Corp. 102,350
---------------------------------------------------------------------
4,800 (a) Stryker Corp. 216,600
--------------------------------------------------------------------- -----------
Total 2,466,184
--------------------------------------------------------------------- -----------
Industrial Services--1.4%
---------------------------------------------------------------------
7,359 (a) AES Corp. 145,340
---------------------------------------------------------------------
3,200 (a) Air and Water Technology Corp., Class A 16,000
---------------------------------------------------------------------
2,800 (a) BJ Services Co. 65,800
---------------------------------------------------------------------
4,900 (a) California Energy Co., Inc. 88,813
---------------------------------------------------------------------
16,300 (a) Global Marine, Inc. 105,950
---------------------------------------------------------------------
1,200 Granite Construction, Inc. 34,050
---------------------------------------------------------------------
2,500 (a) Jacobs Engineering Group, Inc. 54,688
---------------------------------------------------------------------
8,300 (a) Nabors Industries, Inc. 71,587
---------------------------------------------------------------------
5,500 (a) Parker Drilling Co. 28,875
---------------------------------------------------------------------
6,000 (a) Rollins Environmental Services, Inc. 20,250
---------------------------------------------------------------------
3,900 (a) Smith International, Inc. 62,400
---------------------------------------------------------------------
3,000 (a) Varco International, Inc. 27,375
---------------------------------------------------------------------
2,282 (a) Weatherford Enterra, Inc. 55,041
---------------------------------------------------------------------
5,400 (a) Weatherford International, Inc. 130,275
--------------------------------------------------------------------- -----------
Total 906,444
--------------------------------------------------------------------- -----------
Non-Energy Minerals--1.5%
---------------------------------------------------------------------
6,900 Allegheny Ludlum Corp. 116,438
---------------------------------------------------------------------
4,400 (a) Alumax, Inc. 129,800
---------------------------------------------------------------------
8,000 Battle Mountain Gold Co. 61,000
---------------------------------------------------------------------
1,600 Brush Wellman, Inc. 26,800
---------------------------------------------------------------------
2,300 CalMat Co. 38,813
---------------------------------------------------------------------
22
Federated Mid-Cap Fund
(formerly, Mid-Cap Fund)
- ------------------------------------------------------------------------------
Shares Value
- ----------- --------------------------------------------------------------------- -----------
Common Stocks--Continued
- ----------------------------------------------------------------------------------------
Non-Energy Minerals--Continued
---------------------------------------------------------------------
1,600 Carpenter Technology Corp. $ 60,600
---------------------------------------------------------------------
1,200 Cleveland Cliffs, Inc. 44,850
---------------------------------------------------------------------
1,400 Lukens, Inc. 43,050
---------------------------------------------------------------------
900 (a) Maxxam, Inc. 33,300
---------------------------------------------------------------------
1,900 Oregon Steel Mills 27,075
---------------------------------------------------------------------
2,900 Rayonier, Inc. 108,750
---------------------------------------------------------------------
1,700 (a) Southdown, Inc. 27,625
---------------------------------------------------------------------
3,500 Vulcan Materials Co. 194,687
--------------------------------------------------------------------- -----------
Total 912,788
--------------------------------------------------------------------- -----------
Process Industries--6.3%
---------------------------------------------------------------------
3,000 Albany International Corp., Class A 62,250
---------------------------------------------------------------------
6,500 Albemarle Corp. 121,063
---------------------------------------------------------------------
2,700 Betz Laboratories, Inc. 108,675
---------------------------------------------------------------------
3,800 Bowater, Inc. 168,150
---------------------------------------------------------------------
6,400 (a) Burlington Industries, Inc. 71,200
---------------------------------------------------------------------
3,800 CBI Industries, Inc. 118,275
---------------------------------------------------------------------
3,800 Cabot Corp. 180,500
---------------------------------------------------------------------
4,000 Calgon Carbon Corp. 45,500
---------------------------------------------------------------------
2,300 Chesapeake Corp. 70,438
---------------------------------------------------------------------
4,400 Consolidated Papers, Inc. 251,900
---------------------------------------------------------------------
4,800 Crompton and Knowles Corp. 60,600
---------------------------------------------------------------------
2,400 Dexter Corp. 57,300
---------------------------------------------------------------------
5,900 Dole Food, Inc. 221,988
---------------------------------------------------------------------
2,600 Donaldson Company, Inc. 63,375
---------------------------------------------------------------------
11,700 Ethyl Corp. 130,163
---------------------------------------------------------------------
2,700 Ferro Corp. 62,438
---------------------------------------------------------------------
1 (a) Freeport-McMoRan Copper & Gold, Inc., Class B 12
---------------------------------------------------------------------
23
Federated Mid-Cap Fund
(formerly, Mid-Cap Fund)
- ------------------------------------------------------------------------------
Shares Value
- ----------- --------------------------------------------------------------------- -----------
Common Stocks--Continued
- ----------------------------------------------------------------------------------------
Process Industries--Continued
---------------------------------------------------------------------
1,400 Fuller (H.B.) Co. $ 44,100
---------------------------------------------------------------------
3,800 Georgia Gulf Corp. 125,875
---------------------------------------------------------------------
4,400 Glatfelter (P.H.) Co. 81,400
---------------------------------------------------------------------
3,500 Hanna (M.A.) Co. 89,688
---------------------------------------------------------------------
2,900 IMC Global, Inc. 203,000
---------------------------------------------------------------------
4,400 Lawter International, Inc. 46,750
---------------------------------------------------------------------
3,500 Loctite Corp. 165,375
---------------------------------------------------------------------
5,100 Longview Fibre Co. 73,950
---------------------------------------------------------------------
6,400 Lubrizol Corp. 184,000
---------------------------------------------------------------------
800 NCH, Corp. 43,500
---------------------------------------------------------------------
5,600 RPM, Inc. 108,500
---------------------------------------------------------------------
3,725 Schulman (A.), Inc. 69,844
---------------------------------------------------------------------
6,300 (a) Sealed Air Corp. 166,162
---------------------------------------------------------------------
9,085 Sonoco Products Co. 224,854
---------------------------------------------------------------------
5,500 (a) Sterling Chemicals, Inc. 44,000
---------------------------------------------------------------------
6,700 Unifi, Inc. 150,750
---------------------------------------------------------------------
2,914 Wausau Paper Mills Co. 71,393
---------------------------------------------------------------------
3,300 Wellman, Inc. 77,550
---------------------------------------------------------------------
5,500 Witco Corp. 155,375
--------------------------------------------------------------------- -----------
Total 3,919,893
--------------------------------------------------------------------- -----------
Producer Manufacturing--5.5%
---------------------------------------------------------------------
5,200 American Financial Group, Inc. 145,600
---------------------------------------------------------------------
9,100 (a) American Power Conversion Corp. 93,275
---------------------------------------------------------------------
3,300 Ametek, Inc. 58,163
---------------------------------------------------------------------
2,200 Arvin Industries, Inc. 39,050
---------------------------------------------------------------------
5,800 Danaher Corp. 179,800
---------------------------------------------------------------------
2,975 Diebold, Inc. 157,675
---------------------------------------------------------------------
24
Federated Mid-Cap Fund
(formerly, Mid-Cap Fund)
- ------------------------------------------------------------------------------
Shares Value
- ----------- --------------------------------------------------------------------- -----------
Common Stocks--Continued
- ----------------------------------------------------------------------------------------
Producer Manufacturing--Continued
---------------------------------------------------------------------
1,900 Duriron, Inc. $ 50,825
---------------------------------------------------------------------
4,500 Federal Signal Corp. 100,688
---------------------------------------------------------------------
3,400 Federal-Mogul Corp. 60,775
---------------------------------------------------------------------
2,100 Goulds Pumps, Inc. 49,875
---------------------------------------------------------------------
3,000 HON Industries, Inc. 83,250
---------------------------------------------------------------------
2,500 Harsco Corp. 131,875
---------------------------------------------------------------------
3,240 Hubbell, Inc., Class B 195,210
---------------------------------------------------------------------
1,600 Kaydon Corp. 46,200
---------------------------------------------------------------------
2,600 Kennametal, Inc. 80,925
---------------------------------------------------------------------
3,500 Keystone International, Inc. 77,875
---------------------------------------------------------------------
2,933 Lancaster Colony Corp. 97,522
---------------------------------------------------------------------
2,400 Magnetek, Inc. 23,700
---------------------------------------------------------------------
5,962 Mark IV Industries, Inc. 116,259
---------------------------------------------------------------------
2,400 Miller Herman, Inc. 71,100
---------------------------------------------------------------------
2,900 Modine Manufacturing Co. 79,750
---------------------------------------------------------------------
1,800 Nordson Corp. 103,950
---------------------------------------------------------------------
2,400 Olin Corp. 153,600
---------------------------------------------------------------------
1,800 Pentair, Inc. 90,900
---------------------------------------------------------------------
1,950 Precision Castparts Corp. 69,712
---------------------------------------------------------------------
3,300 Stewart & Stevenson Services 75,075
---------------------------------------------------------------------
2,900 Superior Industries International, Inc. 81,562
---------------------------------------------------------------------
2,200 Tecumseh Products Co., Class A 103,400
---------------------------------------------------------------------
1,700 Teleflex, Inc. 72,037
---------------------------------------------------------------------
8,200 (a) Thermo Electron Corp. 377,200
---------------------------------------------------------------------
3,950 Trinity Industries, Inc. 117,019
---------------------------------------------------------------------
25
Federated Mid-Cap Fund
(formerly, Mid-Cap Fund)
- ------------------------------------------------------------------------------
Shares Value
- ----------- --------------------------------------------------------------------- -----------
Common Stocks--Continued
- ----------------------------------------------------------------------------------------
Producer Manufacturing--Continued
---------------------------------------------------------------------
2,900 Watts Industries, Inc., Class A $ 59,812
---------------------------------------------------------------------
4,100 York International Corp. 179,375
--------------------------------------------------------------------- -----------
Total 3,423,034
--------------------------------------------------------------------- -----------
Retail Trade--4.3%
---------------------------------------------------------------------
2,300 (a) Ann Taylor Stores Corp. 25,300
---------------------------------------------------------------------
4,200 (a) Best Buy Co., Inc. 87,150
---------------------------------------------------------------------
4,950 CML Group, Inc. 28,463
---------------------------------------------------------------------
1,400 CPI Corp. 25,550
---------------------------------------------------------------------
2,100 Claire's Stores, Inc. 41,213
---------------------------------------------------------------------
6,578 Dollar General Corp. 161,161
---------------------------------------------------------------------
2,700 Duty Free International, Inc. 38,475
---------------------------------------------------------------------
2,200 Edison Brothers Stores, Inc. 7,975
---------------------------------------------------------------------
5,600 Family Dollar Stores, Inc. 85,400
---------------------------------------------------------------------
4,500 Fingerhut Companies, Inc. 61,313
---------------------------------------------------------------------
2,100 Hancock Fabrics, Inc. 18,375
---------------------------------------------------------------------
4,200 Hannaford Brothers Co. 109,725
---------------------------------------------------------------------
4,750 Heilig-Meyers Co. 87,281
---------------------------------------------------------------------
8,979 (a) Home Shopping Network, Inc. 72,954
---------------------------------------------------------------------
3,400 Intelligent Electronics, Inc. 25,925
---------------------------------------------------------------------
3,600 (a) Kohl's Corp. 163,350
---------------------------------------------------------------------
3,400 Lands' End, Inc. 51,000
---------------------------------------------------------------------
2,500 (a) MacFrugal's Bargains CloseOuts, Inc. 29,687
---------------------------------------------------------------------
2,600 (a) Meyer (Fred), Inc. 48,425
---------------------------------------------------------------------
2,900 (a) Micro Warehouse, Inc. 129,050
---------------------------------------------------------------------
3,400 (a) Nine West Group, Inc. 151,300
---------------------------------------------------------------------
14,725 (a) Office Depot, Inc. 421,503
---------------------------------------------------------------------
6,600 (a) Revco D. S., Inc. 156,750
---------------------------------------------------------------------
26
Federated Mid-Cap Fund
(formerly, Mid-Cap Fund)
- ------------------------------------------------------------------------------
Shares Value
- ----------- --------------------------------------------------------------------- -----------
Common Stocks--Continued
- ----------------------------------------------------------------------------------------
Retail Trade--Continued
---------------------------------------------------------------------
6,900 Ruddick Corp. $ 87,975
---------------------------------------------------------------------
9,800 (a) Service Merchandise, Inc. 52,675
---------------------------------------------------------------------
10,350 (a) Staples, Inc. 275,569
---------------------------------------------------------------------
1,600 Tiffany & Co. 69,800
---------------------------------------------------------------------
4,300 (a) Vons Companies, Inc. 109,112
---------------------------------------------------------------------
3,300 (a) Waban, Inc. 51,562
--------------------------------------------------------------------- -----------
Total 2,674,018
--------------------------------------------------------------------- -----------
Technology Services--4.8%
---------------------------------------------------------------------
6,200 Adobe System, Inc. 353,400
---------------------------------------------------------------------
4,575 (a) Arrow Electronics, Inc. 232,181
---------------------------------------------------------------------
4,000 Avnet, Inc. 201,500
---------------------------------------------------------------------
5,000 (a) BMC Software, Inc. 178,125
---------------------------------------------------------------------
2,700 (a) Borland International, Inc. 36,788
---------------------------------------------------------------------
5,400 (a) Cadence Design Systems, Inc. 174,150
---------------------------------------------------------------------
4,500 (a) Compuware Corp. 102,375
---------------------------------------------------------------------
4,400 (a) FIserv, Inc. 113,300
---------------------------------------------------------------------
9,991 First Data Corp., Class 660,666
---------------------------------------------------------------------
2,600 (a) Information Resources, Inc. 28,275
---------------------------------------------------------------------
13,200 (a) Informix Corp. 384,450
---------------------------------------------------------------------
6,100 (a) Parametric Technology Corp. 408,700
---------------------------------------------------------------------
2,900 (a) Structural Dynamics Research Corp. 52,925
---------------------------------------------------------------------
3,800 (a) Symantec Corp. 92,387
--------------------------------------------------------------------- -----------
Total 3,019,222
--------------------------------------------------------------------- -----------
Transportation--1.6%
---------------------------------------------------------------------
2,100 Airborne Freight Corp. 55,125
---------------------------------------------------------------------
1,300 (a) Alaska Air Group, Inc. 19,338
---------------------------------------------------------------------
4,500 Alexander and Baldwin, Inc. 103,500
---------------------------------------------------------------------
27
Federated Mid-Cap Fund
(formerly, Mid-Cap Fund)
- ------------------------------------------------------------------------------
Shares Value
- ----------- --------------------------------------------------------------------- -----------
Common Stocks--Continued
- ----------------------------------------------------------------------------------------
Transportation--Continued
---------------------------------------------------------------------
2,300 American President Cos., Ltd. $ 55,775
---------------------------------------------------------------------
2,600 Arnold Industries, Inc. 42,250
---------------------------------------------------------------------
3,300 Atlantic Southeast Airlines, Inc. 81,675
---------------------------------------------------------------------
3,800 Hunt (J.B.) Transportation Services, Inc. 58,900
---------------------------------------------------------------------
4,200 Illinois Central Corp. 160,650
---------------------------------------------------------------------
4,300 Kansas City Southern Industries, Inc. 200,487
---------------------------------------------------------------------
3,600 Overseas Shipholding Group, Inc. 61,200
---------------------------------------------------------------------
5,300 Tidewater, Inc. 139,787
--------------------------------------------------------------------- -----------
Total 978,687
--------------------------------------------------------------------- -----------
Utilities--14.4%
---------------------------------------------------------------------
11,800 Allegheny Power Systems, Inc. 311,225
---------------------------------------------------------------------
2,700 Atlanta Gas Light Co. 104,288
---------------------------------------------------------------------
5,300 Atlantic Energy, Inc. NJ 102,688
---------------------------------------------------------------------
1,400 Black Hills Corp. 35,175
---------------------------------------------------------------------
4,700 Brooklyn Union Gas Co. 118,088
---------------------------------------------------------------------
8,700 CMS Energy Corp. 240,338
---------------------------------------------------------------------
2,200 Central LA Electric Co. 59,125
---------------------------------------------------------------------
3,200 Central Maine Power Co. 44,400
---------------------------------------------------------------------
5,800 Century Telephone Enterprises, Inc. 168,200
---------------------------------------------------------------------
4,700 Comsat Corp. 93,413
---------------------------------------------------------------------
5,900 Delmarva Power and Light Co. 129,800
---------------------------------------------------------------------
3,500 El Paso Natural Gas 94,500
---------------------------------------------------------------------
9,400 Florida Progress Corp. 311,375
---------------------------------------------------------------------
15,900 Frontier Corp. 429,300
---------------------------------------------------------------------
2,900 Hawaiian Electric Industries, Inc. 113,100
---------------------------------------------------------------------
3,700 Idaho Power Co. 102,675
---------------------------------------------------------------------
7,500 Illinova Corp. 212,813
---------------------------------------------------------------------
28
Federated Mid-Cap Fund
(formerly, Mid-Cap Fund)
- ------------------------------------------------------------------------------
Shares Value
- ----------- --------------------------------------------------------------------- -----------
Common Stocks--Continued
- ----------------------------------------------------------------------------------------
Utilities--Continued
---------------------------------------------------------------------
2,250 Indiana Energy, Inc. $ 47,531
---------------------------------------------------------------------
3,700 Ipalco Enterprises, Inc. 136,438
---------------------------------------------------------------------
6,100 Kansas City Power And Light Co. 151,738
---------------------------------------------------------------------
3,300 LG&E Energy Corp. 136,950
---------------------------------------------------------------------
3,600 Lincoln Telecommunications Co. 62,100
---------------------------------------------------------------------
6,500 MCN Corp. 141,375
---------------------------------------------------------------------
9,922 MidAmerican Energy Co. 158,752
---------------------------------------------------------------------
3,100 Minnesota Power And Light Co. 88,737
---------------------------------------------------------------------
5,300 Montana Power Co. 120,575
---------------------------------------------------------------------
19,100 (a) NEXTEL Communications, Inc. 265,012
---------------------------------------------------------------------
6,300 NIPSCO Industries, Inc. 229,950
---------------------------------------------------------------------
3,700 National Fuel Gas Co. 110,075
---------------------------------------------------------------------
4,500 Nevada Power Co. 98,437
---------------------------------------------------------------------
6,400 New England Electric System 249,600
---------------------------------------------------------------------
7,100 New York State Electric and Gas Corp. 179,275
---------------------------------------------------------------------
12,400 Northeast Utilities Co. 306,900
---------------------------------------------------------------------
4,000 Oklahoma Gas and Electric Co. 160,000
---------------------------------------------------------------------
8,600 Pinnacle West Capital Corp. 236,500
---------------------------------------------------------------------
5,000 Portland General Corp. 135,625
---------------------------------------------------------------------
11,700 Potomac Electric Power Co. 292,500
---------------------------------------------------------------------
6,200 Public Service Co. Colo 211,575
---------------------------------------------------------------------
4,100 (a) Public Service Co. New Mexico 68,675
---------------------------------------------------------------------
6,300 Puget Sound Power & Light Co. 143,325
---------------------------------------------------------------------
4,000 Questar Corp. 120,500
---------------------------------------------------------------------
10,200 SCANA Corp. 258,825
---------------------------------------------------------------------
3,600 (a) Seagull Energy Corp. 61,650
---------------------------------------------------------------------
6,400 Southern New England Telecommunications 231,200
---------------------------------------------------------------------
29
Federated Mid-Cap Fund
(formerly, Mid-Cap Fund)
- ------------------------------------------------------------------------------
Shares Value
- ----------- --------------------------------------------------------------------- -----------
Common Stocks--Continued
- ----------------------------------------------------------------------------------------
Utilities--Continued
---------------------------------------------------------------------
4,000 Southwestern Public Service Co. $ 131,500
---------------------------------------------------------------------
11,500 TECO Energy, Inc. 271,687
---------------------------------------------------------------------
5,600 Telephone and Data System, Inc. 224,000
---------------------------------------------------------------------
4,400 Utilicorp United, Inc. 127,050
---------------------------------------------------------------------
4,100 (a) Vanguard Cellular System, Inc., Class A 91,737
---------------------------------------------------------------------
3,000 WPL Holdings, Inc. 91,500
---------------------------------------------------------------------
4,200 Washington Gas Light Co. 80,325
---------------------------------------------------------------------
10,800 Wisconsin Energy Corp. 318,600
---------------------------------------------------------------------
18,818 (a) WorldCom, Inc. 613,937
--------------------------------------------------------------------- -----------
Total 9,024,659
--------------------------------------------------------------------- -----------
Total Common Stocks (identified cost $50,087,295) 55,462,982
--------------------------------------------------------------------- -----------
30
Federated Mid-Cap Fund
(formerly, Mid-Cap Fund)
- ------------------------------------------------------------------------------
Principal
Amount Value
- ----------- --------------------------------------------------------------------- -----------
Short-Term U.S. Government Obligations--0.3%
- ----------------------------------------------------------------------------------------
$200,000 United States Treasury Bills, 12/14/1995 (at amortized cost) $198,804
--------------------------------------------------------------------- -----------
(b) Repurchase Agreement--7.2%
- ----------------------------------------------------------------------------------------
4,480,000 J.P. Morgan Securities, Inc., 5.90%, dated 10/31/1995, due 11/1/1995
(at amortized cost) 4,480,000
--------------------------------------------------------------------- -----------
Total Investments (identified cost $54,766,099)(c) $60,141,786
--------------------------------------------------------------------- -----------
</TABLE>
* The Fund purchases Index futures contracts to efficiently manage cash
flows resulting from shareholder purchases and redemptions, dividend and
capital gain payments to shareholders and corporate actions while
maintaining exposure to the Index and minimizing trading costs. The total
market value of open Index futures contracts is $4,525,750 at October 31,
1995, which represents 7.2% of net assets. Taking into consideration
these open Index futures contracts, the Fund's effective, total exposure
to the Index is 95.9%.
(a) Non-income producing security.
(b) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
The investments in the repurchase agreements is through participation in
joint accounts with other Federated funds.
(c) The cost of investments for federal tax purposes amounts to $54,769,482.
The unrealized appreciation of investments on a federal tax basis amounts
to $5,372,304 which is comprised of $8,785,117 appreciation and
$3,412,813 depreciation at October 31, 1995.
Note: The categories of investments are shown as a percentage of net assets
($62,579,603) at October 31, 1995.
(See Notes which are an integral part of the Financial Statements)
31
Federated Mid-Cap Fund
(formerly, Mid-Cap Fund)
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
October 31, 1995
- ------------------------------------------------------------------------------
<S> <C> <C>
Assets:
- ----------------------------------------------------------------------------------
Total investments in securities, at value
(identified cost $54,766,099, and tax cost $54,769,482) $60,141,786
- ----------------------------------------------------------------------------------
Income receivable 61,040
- ----------------------------------------------------------------------------------
Receivable for shares sold 2,596,634
- ----------------------------------------------------------------------------------
Receivable for daily variation margin 244,575
- ----------------------------------------------------------------------------------
Deferred expenses 11,117
- ---------------------------------------------------------------------------------- -----------
Total assets 63,055,152
- ----------------------------------------------------------------------------------
Liabilities:
- ----------------------------------------------------------------------------------
Payable for investments purchased $221,962
- -----------------------------------------------------------------------
Payable for shares redeemed 447
- -----------------------------------------------------------------------
Payable to bank 220,316
- -----------------------------------------------------------------------
Accrued expenses 32,824
- ----------------------------------------------------------------------- --------
Total liabilities 475,549
- ---------------------------------------------------------------------------------- -----------
Net Assets for 4,895,491 shares outstanding $62,579,603
- ---------------------------------------------------------------------------------- -----------
Net Assets Consist of:
- ----------------------------------------------------------------------------------
Paid in capital $53,646,360
- ----------------------------------------------------------------------------------
Net unrealized appreciation of investments and futures contracts 5,167,683
- ----------------------------------------------------------------------------------
Accumulated net realized gain on investments and futures contracts 3,618,287
- ----------------------------------------------------------------------------------
Undistributed net investment income 147,273
- ---------------------------------------------------------------------------------- -----------
Total Net Assets $62,579,603
- ---------------------------------------------------------------------------------- -----------
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
$62,579,603 / 4,895,491 shares outstanding $12.78
- ---------------------------------------------------------------------------------- -----------
(See Notes which are an integral part of the Financial Statements)
32
Federated Mid-Cap Fund
(formerly, Mid-Cap Fund)
Statement of Operations
Year Ended October 31, 1995
- ------------------------------------------------------------------------------
Investment Income:
- --------------------------------------------------------------------------------------------
Dividends $ 921,677
- --------------------------------------------------------------------------------------------
Interest 380,122
- -------------------------------------------------------------------------------------------- ----------
Total income 1,301,799
- --------------------------------------------------------------------------------------------
Expenses:
- --------------------------------------------------------------------------------------------
Management fee $ 208,809
- -------------------------------------------------------------------------------
Custodian fees 40,008
- -------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 43,914
- -------------------------------------------------------------------------------
Directors'/Trustees' fees 2,863
- -------------------------------------------------------------------------------
Auditing fees 14,020
- -------------------------------------------------------------------------------
Legal fees 5,198
- -------------------------------------------------------------------------------
Portfolio accounting fees 22,658
- -------------------------------------------------------------------------------
Shareholder services fee 130,516
- -------------------------------------------------------------------------------
Share registration costs 29,598
- -------------------------------------------------------------------------------
Printing and postage 14,419
- -------------------------------------------------------------------------------
Insurance premiums 3,350
- -------------------------------------------------------------------------------
Taxes 1,023
- -------------------------------------------------------------------------------
Miscellaneous 12,525
- ------------------------------------------------------------------------------- ---------
Total expenses 528,901
- -------------------------------------------------------------------------------
Waivers--
- -------------------------------------------------------------------------------
Waiver of management fee $(106,606)
- -------------------------------------------------------------------
Waiver of shareholder services fee (107,993)
- ------------------------------------------------------------------- ---------
Total waivers (214,599)
- ------------------------------------------------------------------------------- ---------
Net expenses 314,302
- -------------------------------------------------------------------------------------------- ----------
Net investment income 987,497
- -------------------------------------------------------------------------------------------- ----------
Realized and Unrealized Gain (Loss) on Investments and Futures Contracts:
- --------------------------------------------------------------------------------------------
Net realized gain on investments and futures contracts 3,630,556
- --------------------------------------------------------------------------------------------
Net change in unrealized appreciation on investments and futures contracts 5,366,839
- -------------------------------------------------------------------------------------------- ----------
Net realized and unrealized gain on investments and futures contracts 8,997,395
- -------------------------------------------------------------------------------------------- ----------
Change in net assets resulting from operations $9,984,892
- -------------------------------------------------------------------------------------------- ----------
(See Notes which are an integral part of the Financial Statements)
33
Federated Mid-Cap Fund
(formerly, Mid-Cap Fund)
Statement of Changes in Net Assets
- ------------------------------------------------------------------------------
Year Ended October 31,
----------------------------
1995 1994
------------ -----------
Increase (Decrease) in Net Assets:
- --------------------------------------------------------------------
Operations--
- --------------------------------------------------------------------
Net investment income $ 987,497 $ 529,031
- --------------------------------------------------------------------
Net realized gain (loss) on investment transactions and futures
contracts ($3,414,170 net gain and $778,310 net gain,
respectively, as computed for federal tax purposes) 3,630,556 804,342
- --------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments
and futures contracts 5,366,839 (248,356)
- -------------------------------------------------------------------- ------------ -----------
Change in net assets resulting from operations 9,984,892 1,085,017
- -------------------------------------------------------------------- ------------ -----------
Distributions to Shareholders--
- --------------------------------------------------------------------
Distributions from net investment income (893,649) (488,588)
- --------------------------------------------------------------------
Distributions from net realized gain on investment transactions and
futures contracts (778,952) (890,225)
- -------------------------------------------------------------------- ------------ -----------
Change in net assets from distributions to shareholders (1,672,601) (1,378,813)
- -------------------------------------------------------------------- ------------ -----------
Share Transactions--
- --------------------------------------------------------------------
Proceeds from sale of shares 48,339,864 36,764,807
- --------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 858,211 531,029
- --------------------------------------------------------------------
Cost of shares redeemed (38,942,349) (9,181,997)
- -------------------------------------------------------------------- ------------ -----------
Change in net assets resulting from share transactions 10,255,726 28,113,839
- -------------------------------------------------------------------- ------------ -----------
Change in net assets 18,568,017 27,820,043
- --------------------------------------------------------------------
Net Assets:
- --------------------------------------------------------------------
Beginning of period 44,011,586 16,191,543
- -------------------------------------------------------------------- ------------ -----------
End of period (including undistributed net investment income of
$147,273 and $53,425, respectively) $ 62,579,603 $44,011,586
- -------------------------------------------------------------------- ------------ -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
34
Federated Mid-Cap Fund
(formerly, Mid-Cap Fund)
Notes to Financial Statements
October 31, 1995
- ------------------------------------------------------------------------------
(1) Organization
Federated Index Trust (the "Trust") is registered under the Investment Company
Act of 1940, as amended (the "Act") as an open-end, management investment
company. The Trust consists of three diversified portfolios. The financial
statements included herein are only those of Federated 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.
Effective December 5, 1994, the Board of Trustees ("Trustees") changed the
name of the Fund from Mid-Cap Fund to Federated Mid-Cap Fund.
(2) Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
Investment Valuations--Short-term securities with remaining maturities of
sixty days or less at the time of purchase may be valued at amortized
cost, which approximates fair market value. All other securities are
valued at prices provided by an independent pricing service.
Repurchase Agreements--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under
repurchase agreement transactions. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of
each repurchase agreement's collateral to ensure that the value of
collateral at least equals the repurchase price to be paid under the
repurchase agreement transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are
deemed by the Fund's adviser to be creditworthy pursuant to the
guidelines and/or standards reviewed or established by the Board of
Trustees (the "Trustees"). Risks may arise from the potential inability
of counterparties to honor the terms of the repurchase agreement.
Accordingly, the Fund could receive less than the repurchase price on the
sale of collateral securities.
Investment Income, Expenses and Distributions--Interest income and
expenses are accrued daily. Bond premium and discount, if applicable, are
amortized as required by the Internal Revenue Code, as amended (the
"Code"). Dividend income and distributions to shareholders are recorded
on the ex-dividend date.
35
Federated Mid-Cap Fund
- ------------------------------------------------------------------------------
Federal Taxes--It is the Fund's policy to comply with the provisions of
the Code applicable to regulated investment companies and to distribute
to shareholders each year substantially all of its income. Accordingly,
no provisions for federal tax are necessary.
When-Issued and Delayed Delivery Transactions--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records
when-issued securities on the trade date and maintains security positions
such that sufficient liquid assets will be available to make payment for
the securities purchased. Securities purchased on a when-issued or
delayed delivery basis are marked to market daily and begin earning
interest on the settlement date.
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 its 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.
Futures Contracts--The Fund purchases stock index futures contracts to
manage cashflows, enhance yield, and to potentially reduce transaction
costs. Upon entering into a stock futures contract with a broker, the
Fund is required to deposit in a segregated account an amount of cash or
U.S. government securities. Futures contracts are valued daily and
unrealized gains or losses are recorded in a "variation margin" account.
Daily the Fund receives from or pays to the broker a specified amount of
cash based upon changes in the variation margin account. When a contract
is closed, the Fund recognizes a realized gain or loss.
Futures contracts have market risks, including the risk that the change
in the value of the contract may not correlate with changes in the value
of the underlying securities. For the period ended October 31, 1995, the
Fund had realized gains of $1,046,222 on future contracts.
At October 31, 1995, the Fund had outstanding futures contracts as set
forth below:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Unrealized
Appreciation
Expiration Date Contracts to Deliver/Receive Position (Depreciation)
----------------- ------------------------------ -------- --------------
December 1995 43 S&P 400 Index Futures Long ($ 208,004)
Other--Investment transactions are accounted for on the trade date.
</TABLE>
36
Federated Mid-Cap Fund
- ------------------------------------------------------------------------------
(3) Shares of Beneficial Interest
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Year Ended October 31,
--------------------------
1995 1994
---------- ---------
- ----------------------------------------------------------------------
Shares sold 4,033,312 3,384,065
- ----------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 78,357 48,638
- ----------------------------------------------------------------------
Shares redeemed (3,208,182) (839,960)
- ---------------------------------------------------------------------- ---------- ---------
Net change resulting from share transactions 903,487 2,592,743
- ---------------------------------------------------------------------- ---------- ---------
</TABLE>
(4) Investment Advisory Fee and Other Transactions with Affiliates
Management Fee--Federated Management, the Fund's manager, (the "Manager"),
receives for its services an annual management fee equal to .40 of 1% of the
Fund's average daily net assets. Under the terms of a sub-advisory agreement
between the Manager and the Trust Division of ANB Investment Management and
Trust Company (the "Sub-Manager"), the Sub-Manager receives an annual fee from
the Manager equal to .035 of 1% of the Fund's average daily net assets. In
addition, the Sub-Manager may voluntarily choose to reduce its compensation.
The Manager may voluntarily choose to waive a portion of its fees. The Manager
can modify or terminate this voluntary waiver at any time at its sole
discretion.
Shareholder Services Fee--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25
of 1% of average daily net assets of the Fund for the period. This fee is to
obtain certain services for shareholders and to maintain shareholder accounts.
FSS may voluntarily choose to waive a portion of its fee. FSS can modify or
terminate this voluntary waiver at any time at its sole discretion.
Transfer and Dividend Disbursing Agent Fees and Expenses--Federated Services
Company ("FServ") serves as transfer and dividend disbursing agent for the
Fund. This fee is based on the size, type, and number of accounts and
transactions made by shareholders.
Portfolio Accounting Fees--FServ also maintains the Fund's accounting records
for which it receives a fee. The fee is based on the level of the Fund's
average daily net assets for the period, plus out-of-pocket expenses.
Organizational Expenses--Organizational expenses of $23,784 were borne
initially by the Manager. The Fund has agreed to reimburse the Manager for the
organizational expenses at an annual rate of .005 of 1% of average daily net
assets until expenses initially borne are fully reimbursed or the expiration
of five years after effective date--whichever occurs earlier. For the period
ended October 31, 1995, the Fund paid $5,285 pursuant to this agreement.
37
Federated Mid-Cap Fund
- ------------------------------------------------------------------------------
General--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
(5) Investment Transactions
Purchases and sales of investments, excluding short-term securities, for the
fiscal year ended October 31, 1995, were as follows:
<TABLE>
<CAPTION>
<S> <C>
- -----------------------------------------------------------------------------------
Purchases $21,360,166
- ----------------------------------------------------------------------------------- -----------
Sales $12,098,430
- ----------------------------------------------------------------------------------- -----------
</TABLE>
38
Report of Ernst & Young LLP,
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 Federated Mid-Cap Fund (a portfolio
of Federated Index Trust) as of October 31, 1995, 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 the financial highlights
(see page 2 of this prospectus) for each of the periods presented therein.
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, 1995, 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
Federated Mid-Cap Fund of Federated Index Trust at October 31, 1995, 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 each of the periods presented therein, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
December 8, 1995
39
<TABLE>
<CAPTION>
Addresses
- ------------------------------------------------------------------------------
<S> <C>
Federated Investors Tower
Federated Mid-Cap Fund 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 8600
Trust Company Boston, Massachusetts 02266-8600
- ------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company P.O. Box 8600
Boston, Massachusetts 02266-8600
- ------------------------------------------------------------------------------------------
Independent Auditors
Ernst & Young LLP One Oxford Centre
Pittsburgh, Pennsylvania 15219
- ------------------------------------------------------------------------------------------
</TABLE>
40
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Federated Mid-Cap Fund
(A Portfolio of Federated Index Trust)
Prospectus
An Open-End, Diversified
Management Investment Company
Prospectus dated December 31, 1995
FEDERATED SECURITIES CORP.
(LOGO)
- ---------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
CUSIP 31420E205
FEDERATED 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). Federated Mini-Cap Fund (the "Fund"), a portfolio of
the Trust, 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, 1995, 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 or a paper copy of this prospectus if you have received your
prospectus electronically, 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, 1995
TABLE OF CONTENTS
Summary of Fund Expenses.......................................................1
Financial Highlights...........................................................2
General Information............................................................3
Investment Information.........................................................3
Investment Objective.........................................................3
Investment Policies..........................................................3
Investment Risks.............................................................6
Investment Limitations.......................................................6
Federated Index Trust Information..............................................7
Management of the Trust......................................................7
Distribution of Fund Shares..................................................9
Fund Administration..........................................................9
Net Asset Value...............................................................10
Investing in the Fund.........................................................10
Share Purchases.............................................................10
Minimum Investment Required.................................................10
What Shares Cost............................................................11
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
Accounts with Low Balances..................................................13
Shareholder Information.......................................................13
Voting Rights...............................................................13
Tax Information...............................................................13
Federal Income Tax..........................................................13
Performance Information.......................................................14
Financial Statements..........................................................15
Report of Ernst & Young LLP
Independent Auditors........................................................97
Addresses.....................................................................98
SUMMARY OF FUND EXPENSES
<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price).................................... None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price)............................................................................ None
Contingent Deferred Sales Charge (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)................................................................................ 0.45%
12b-1 Fee........................................................................................................ None
Total Other Expenses............................................................................................. 0.30%
Shareholder Services Fee (after waiver) (2)....................................................... 0.04%
Total Operating Expenses (3)............................................................................ 0.75%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.50%.
(2) The maximum shareholder services fee is 0.25%.
(3) The total operating expenses in the table above are based on expenses
expected during the fiscal year ending October 31, 1996. The total operating
expenses were 0.75% for the fiscal year ended October 31, 1995 and would
have been 0.80% 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 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....................................................................... $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.
FINANCIAL HIGHLIGHTS
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Ernst & Young LLP, Independent Auditors'
report on page 97.
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
<S> <C> <C> <C> <C>
1995 1994 1993 1992(A)
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.65 $ 12.66 $ 10.39 $ 10.00
- --------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------
Net investment income 0.15 0.11 0.17 0.02
- --------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and futures contracts 1.74 (0.23) 2.27 0.38
- -------------------------------------------------------------------------------- --------- --------- --------- -----------
Total from investment operations 1.89 (0.12) 2.44 0.40
- -------------------------------------------------------------------------------- --------- --------- --------- -----------
LESS DISTRIBUTIONS
- --------------------------------------------------------------------------------
Distributions from net investment income (0.14) (0.11) (0.17) (0.01)
- --------------------------------------------------------------------------------
Distributions from net realized gain on investment transactions and futures
contracts (0.07) (0.78) -- --
- -------------------------------------------------------------------------------- --------- --------- --------- -----------
Total distributions (0.21) (0.89) (0.17) (0.01)
- -------------------------------------------------------------------------------- --------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 13.33 $ 11.65 $ 12.66 $ 10.39
- -------------------------------------------------------------------------------- --------- --------- --------- -----------
TOTAL RETURN (B) 16.44% (0.91%) 23.73% 4.00%
- --------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------------------------------------------
Expenses 0.75% 0.73% 0.37% 0.00%*
- --------------------------------------------------------------------------------
Net investment income 1.23% 0.98% 1.48% 2.04%*
- --------------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.05% 0.11% 0.86% 0.87%*
- --------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $132,399 $98,441 $76,139 $7,751
- --------------------------------------------------------------------------------
Portfolio turnover 42% 32% 48% 1%
- --------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from August 10, 1992 (commencement of
operations) to October 31, 1992.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
Further information about the Fund's performance is contained in the Fund's
annual report for the fiscal year ended October 31, 1995, 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 2000T 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 2000T Index is a
trademark/ service mark of the Frank Russell Company. RussellTM 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.
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 are 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 Farm
Credit System including the National Bank for Cooperatives, Farm Credit
Banks, and Banks for Cooperatives, 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 associations (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. There is the risk that when lending portfolio
securities, the securities may not be available to the Fund on a timely basis
and the Fund may, therefore, lose the opportunity to sell the securities at a
desirable price. In addition, in the event that a borrower of securities would
file for bankruptcy or become insolvent, disposition of the securities may be
delayed pending court action.
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
seller's failure to complete these transactions may cause the Fund to miss a
price or yield considered to be advantageous. 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. Accordingly, the Fund
may pay more/less than the market value of the securities on the settlement
date.
The Fund may dispose of a commitment prior to settlement if the managers deem it
appropriate to do so. In addition, the Fund may enter in transactions to sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Fund may realize short-term profits or losses upon the sale of such
commitments.
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
Composite Stock Price 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 Composite Stock Price 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
TRUSTEES
The Trust is managed by the Trustees. The Trustees are 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
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.
Both the Trust and the Manager have adopted strict codes of ethics governing the
conduct of all employees who manage the Fund and its portfolio securities. These
codes recognize that such persons owe a fiduciary duty to the Fund's
shareholders and must place the interests of shareholders ahead of the
employees' own interest. Among other things, the codes: require preclearance and
periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered for
purchase or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less than sixty
days. Violations of the codes are subject to review by the Trustees, and could
result in severe penalties.
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. With over $72 billion invested
across more than 260 funds under management and/or administration by its
subsidiaries, as of December 31, 1994, Federated Investors is one of the largest
mutual fund investment managers in the United States. With more than 1,750
employees, Federated continues to be led by the management who founded the
company in 1955. Federated funds are presently at work in and through 4,000
financial institutions nationwide. More than 100,000 investment professionals
have selected Federated funds for their clients.
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 First Chicago Investment Management Company 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, 1995, placed
approximately $20.6 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 331 nationwide non-
financial institution clients invest. In total, ANB manages 77 commingled/common
trust funds. Also, since 1990, ANB has served as Sub-Manager for the Federated
Max-Cap Fund (formerly the S&P 500 Fund), which is another portfolio of the
Trust. ANB also serves as Sub-Manager for the Federated Mid-Cap Fund, another
portfolio of the Trust.
SUPPLEMENTAL PAYMENTS
TO FINANCIAL INSTITUTIONS
In addition to periodic payments to financial institutions under the Shareholder
Services Agreement, certain financial institutions may be compensated by the
Manager or its affiliates for the continued investment of customers' assets in
certain funds, including the Fund, advised by those entities. These payments
will be made directly by the distributor or Manager from their assets, and will
not be made from the assets of the Fund or by the assessment of a sales charge
on shares.
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.
FUND ADMINISTRATION
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.
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.
SHAREHOLDER SERVICES
The Fund has entered into a Shareholder Services Agreement with Federated
Shareholder Services, a subsidiary of Federated Investors, under which the Fund
may make payments up to 0.25 of 1% of the average daily net asset value of the
Shares, computed at an annual rate, to
obtain certain personal services for shareholders and for the maintenance of
shareholder accounts ("shareholder services"). From time to time and for such
periods as deemed appropriate, the amount stated above may be reduced
voluntarily. Under the Shareholder Services Agreement, Federated Shareholder
Services will either perform shareholder services directly or will select
financial institutions to perform shareholder services. Financial institutions
will receive fees 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 Fund and Federated Shareholder Services.
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. (Eastern 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. (Eastern
time) on the next business day following the order. Federal funds should be
wired as follows: Federated Services Company, c/o State Street Bank and Trust
Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit to: Federated
Index Trust, Federated Mini-Cap Fund; Group Number or Order Number; Nominee or
Institution Name; ABA Number 011000028. Shares cannot be purchased by wire on
holidays when wire transfers are restricted. Questions on wire purchases should
be directed to your shareholder services representative at the telephone number
listed on your account statement.
BY MAIL
To purchase shares of the Fund by mail, send a check made payable to Federated
Index Trust, Federated Mini-Cap Fund, to the Fund's transfer agent, Federated
Services Company, P.O. Box 8600, Boston, Massachusetts 02266-8600. 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 as of the close of trading (normally 4:00
p.m., Eastern time) on the New York Stock Exchange, 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. State securities laws may require certain financial
institutions such as depository institutions to register as dealers.
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.
(Eastern
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. Proceeds from
redemption requests received on holidays when wire transfers are restricted will
be wired the following business day. Questions about telephone redemptions on
days when wire transfers are restricted should be directed to your shareholder
services representative at the telephone number listed on your account
statement. 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. 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 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 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 their signatures 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 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.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any 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.
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.
STATE AND LOCAL TAXES
In the opinion of Houston, Houston & Donnelly, counsel to the Trust, 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, advertisements for the Fund may refer to ratings, rankings,
and other information in certain financial publications and/or compare the
Fund's performance to certain indices.
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
*COMMON STOCKS--87.1%
- ------------------------------------------------------------------------------------------------
COMMERCIAL SERVICES--3.5%
---------------------------------------------------------------------------------
1,500 ABM Industries, Inc. $ 39,750
---------------------------------------------------------------------------------
1,100 (a)ABR Information Services, Inc. 32,450
---------------------------------------------------------------------------------
4,300 ADVO, Inc. 109,650
---------------------------------------------------------------------------------
3,100 (a)APS Holding Corp., Class A 63,550
---------------------------------------------------------------------------------
600 (a)AccuStaff, Inc. 26,700
---------------------------------------------------------------------------------
2,200 Ackerley Communications, Inc. 29,975
---------------------------------------------------------------------------------
2,250 (a)American Business Information 39,375
---------------------------------------------------------------------------------
2,950 American Business Products, Inc. 64,531
---------------------------------------------------------------------------------
400 American List Corp. 10,350
---------------------------------------------------------------------------------
4,800 Amresco, Inc. 51,000
---------------------------------------------------------------------------------
1,900 Angelica Corp. 42,750
---------------------------------------------------------------------------------
4,500 Banta Corp. 194,625
---------------------------------------------------------------------------------
1,700 Bearings, Inc. 61,625
---------------------------------------------------------------------------------
700 (a)Berlitz International, Inc. 10,237
---------------------------------------------------------------------------------
2,900 (a)Borg Warner Security Corp. 30,087
---------------------------------------------------------------------------------
3,300 Bowne & Co., Inc. 61,462
---------------------------------------------------------------------------------
5,300 CCH, Inc., Class A 123,225
---------------------------------------------------------------------------------
2,500 (a)CDI Corp. 36,875
---------------------------------------------------------------------------------
1,800 (a)CSS Industries, Inc. 40,725
---------------------------------------------------------------------------------
1,200 Cadmus Communications Corp. 29,100
---------------------------------------------------------------------------------
1,100 (a)Career Horizons, Inc. 29,425
---------------------------------------------------------------------------------
2,100 Castle (A.M.) & Co. 51,187
---------------------------------------------------------------------------------
2,300 (a)Catalina Marketing Corp. 116,150
---------------------------------------------------------------------------------
7,800 (a)Century Communications, Corp., Class A 66,300
---------------------------------------------------------------------------------
375 Champion Industries, Inc. W VA 7,875
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
COMMERCIAL SERVICES--CONTINUED
---------------------------------------------------------------------------------
3,100 (a)Checkpoint System, Inc. $ 89,512
---------------------------------------------------------------------------------
3,700 (a)Comdata Holdings Corp. 89,725
---------------------------------------------------------------------------------
5,425 (a)Concord EFS, Inc. 187,162
---------------------------------------------------------------------------------
1,500 (a)Copart, Inc. 34,125
---------------------------------------------------------------------------------
3,400 (a)Corrections Corp. America 185,300
---------------------------------------------------------------------------------
800 (a)Daisytek International Corp. 22,600
---------------------------------------------------------------------------------
900 (a)Day Runner, Inc. 22,725
---------------------------------------------------------------------------------
1,300 (a)Devon Group, Inc. 50,700
---------------------------------------------------------------------------------
1,200 (a)DiMark, Inc. 16,500
---------------------------------------------------------------------------------
3,800 Duff & Phelps Corp. 41,325
---------------------------------------------------------------------------------
3,700 Ennis Business Forms, Inc. 51,800
---------------------------------------------------------------------------------
1,600 Fair Isaac & Co., Inc. 43,200
---------------------------------------------------------------------------------
3,600 Fisher Scientific International, Inc. 112,950
---------------------------------------------------------------------------------
4,100 (a)Franklin Quest Co. 97,887
---------------------------------------------------------------------------------
4,550 G & K Services, Inc., Class A 101,237
---------------------------------------------------------------------------------
1,900 GRC International 42,037
---------------------------------------------------------------------------------
1,501 Graphic Industries, Inc. 14,635
---------------------------------------------------------------------------------
200 Grey Advertising, Inc. 37,400
---------------------------------------------------------------------------------
7,200 Handleman Co. 55,800
---------------------------------------------------------------------------------
6,900 Harland (John H.) Co. 143,175
---------------------------------------------------------------------------------
3,800 (a)Heritage Media Corp., Class A 105,450
---------------------------------------------------------------------------------
900 Hughes Supply, Inc. 21,712
---------------------------------------------------------------------------------
3,600 (a)Identix, Inc. 42,300
---------------------------------------------------------------------------------
2,200 (a)Insurance Automotive Auctions, Inc. 14,850
---------------------------------------------------------------------------------
2,600 (a)Interim Services, Inc. 77,350
---------------------------------------------------------------------------------
2,200 (a)JP Foodservice, Inc. 33,550
---------------------------------------------------------------------------------
1,700 Lawson Products, Inc. 40,800
---------------------------------------------------------------------------------
1,300 Merrill Corp. $ 20,800
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
COMMERCIAL SERVICES--CONTINUED
---------------------------------------------------------------------------------
1,200 (a)NFO Research, Inc. 27,300
---------------------------------------------------------------------------------
2,400 Nash Finch Co. 42,900
---------------------------------------------------------------------------------
1,200 Norrell Corp. 37,050
---------------------------------------------------------------------------------
1,300 (a)PEC Israel Economic Corp. 29,250
---------------------------------------------------------------------------------
900 (a)Performance Food Group Co. 20,925
---------------------------------------------------------------------------------
1,200 (a)Pinkertons, Inc. 23,550
---------------------------------------------------------------------------------
4,200 (a)Primark Corp. 95,550
---------------------------------------------------------------------------------
2,900 (a)Rexel, Inc. 33,350
---------------------------------------------------------------------------------
5,628 Richfood Holdings, Inc. 140,700
---------------------------------------------------------------------------------
4,900 (a)Robert Half International, Inc. 178,850
---------------------------------------------------------------------------------
3,100 Rykoff Sexton, Inc. 69,750
---------------------------------------------------------------------------------
3,000 SEI Corp. 63,750
---------------------------------------------------------------------------------
2,900 Standard Register 65,250
---------------------------------------------------------------------------------
3,800 Storage USA, Inc. 111,150
---------------------------------------------------------------------------------
2,500 Super Food Services, Inc. 33,438
---------------------------------------------------------------------------------
1,600 (a)Sylvan Learning Systems, Inc. 38,400
---------------------------------------------------------------------------------
800 (a)Thompson PBE, Inc. 14,600
---------------------------------------------------------------------------------
4,200 True North Communications, Inc. 85,050
---------------------------------------------------------------------------------
700 (a)US Delivery Systems, Inc. 14,525
---------------------------------------------------------------------------------
4,600 Unifirst Corp. 64,400
---------------------------------------------------------------------------------
2,600 Univar Corp. 34,775
---------------------------------------------------------------------------------
2,500 (a)VWR Scientific Products Corp. 34,375
---------------------------------------------------------------------------------
5,000 (a)Valassis Communication, Inc. 69,375
---------------------------------------------------------------------------------
400 Value Line, Inc. 13,100
---------------------------------------------------------------------------------
1,200 (a)Volt Information Science, Inc. 27,900
---------------------------------------------------------------------------------
1,600 Wackenhut Corp., Class A 24,800
---------------------------------------------------------------------------------
500 Wackenhut Corrections Corp. $ 10,500
---------------------------------------------------------------------------------
3,900 (a)Westcott Communications 53,625
--------------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
COMMERCIAL SERVICES--CONTINUED
---------------------------------------------------------------------------------
Total 4,623,774
--------------------------------------------------------------------------------- --------------
CONSUMER DURABLES--3.8%
---------------------------------------------------------------------------------
3,100 (a)3DO Co. 33,325
---------------------------------------------------------------------------------
900 (a)Ag-Chem Equipment Co., Inc. 25,200
---------------------------------------------------------------------------------
2,317 Anthony Industries, Inc. 43,154
---------------------------------------------------------------------------------
2,300 Apogee Enterprises, Inc. 34,500
---------------------------------------------------------------------------------
6,650 Arctco, Inc. 74,812
---------------------------------------------------------------------------------
2,100 Armor All Products Corp. 34,650
---------------------------------------------------------------------------------
3,600 (a)Atari Corp. 7,425
---------------------------------------------------------------------------------
5,200 (a)Autotote Corp. 15,600
---------------------------------------------------------------------------------
1,500 (a)Avatar Holdings, Inc. 55,875
---------------------------------------------------------------------------------
700 Barnes Group, Inc. 26,250
---------------------------------------------------------------------------------
3,200 Bassett Furniture Industries, Inc. 64,400
---------------------------------------------------------------------------------
1,300 (a)Beazer Homes USA, Inc. 22,750
---------------------------------------------------------------------------------
1,900 (a)Blyth Industries, Inc. 95,950
---------------------------------------------------------------------------------
3,300 CLARCOR, Inc. 75,075
---------------------------------------------------------------------------------
1,000 (a)Cannondale Corp. 16,000
---------------------------------------------------------------------------------
3,100 Carlisle Cos., Inc. 127,487
---------------------------------------------------------------------------------
3,400 (a)Champion Enterprises, Inc. 87,975
---------------------------------------------------------------------------------
1,300 (a)Chromcraft Revington, Inc. 31,200
---------------------------------------------------------------------------------
2,500 (a)Cincinnati Microwave, Inc. 14,375
---------------------------------------------------------------------------------
2,400 (a)Cobra Golf, Inc. 62,400
---------------------------------------------------------------------------------
900 (a)Congoleum Corp. 7,537
---------------------------------------------------------------------------------
1,300 Continental Homes Holding Corp. 26,650
---------------------------------------------------------------------------------
2,800 Cross (A.T.) Co., Class A 39,900
---------------------------------------------------------------------------------
1,500 Crown Crafts, Inc. $ 19,125
---------------------------------------------------------------------------------
2,228 D. R. Horton, Inc. 24,786
---------------------------------------------------------------------------------
900 (a)Duracraft Corp. 19,575
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
CONSUMER DURABLES--CONTINUED
---------------------------------------------------------------------------------
3,600 Ekco Group, Inc. 20,250
---------------------------------------------------------------------------------
3,200 (a)Ethan Allen Interiors, Inc. 63,200
---------------------------------------------------------------------------------
3,800 Exide Corp. 166,725
---------------------------------------------------------------------------------
1,300 Falcon Products, Inc. 18,200
---------------------------------------------------------------------------------
9,000 Fedders Corp. 52,875
---------------------------------------------------------------------------------
350 Fedders Corp., Class A 1,487
---------------------------------------------------------------------------------
5,400 (a)First Alert, Inc. 83,700
---------------------------------------------------------------------------------
1,300 (a)First Team Sports, Inc. 17,875
---------------------------------------------------------------------------------
800 (a)Fossil, Inc. 8,700
---------------------------------------------------------------------------------
3,600 (a)Gibson Greetings, Inc. 49,950
---------------------------------------------------------------------------------
2,920 Harman International Industries, Inc. 134,685
---------------------------------------------------------------------------------
1,500 (a)Harvard Industries, Inc., Class B 41,437
---------------------------------------------------------------------------------
3,600 (a)Hovnanian Enterprises, Inc., Class A 24,750
---------------------------------------------------------------------------------
3,000 Huffy Corp. 31,125
---------------------------------------------------------------------------------
1,900 (a)ITI Technologies, Inc. 47,975
---------------------------------------------------------------------------------
11,300 (a)Interco, Inc. 83,337
---------------------------------------------------------------------------------
1,100 (a)Johnson Worldwide Associates, Inc., Class A 25,575
---------------------------------------------------------------------------------
6,500 Kaufman & Broad Homes Corp. 75,562
---------------------------------------------------------------------------------
1,566 LADD Furniture, Inc. 20,749
---------------------------------------------------------------------------------
2,900 La-Z Boy Chair Co. 86,275
---------------------------------------------------------------------------------
5,200 Lennar Corp. 118,950
---------------------------------------------------------------------------------
2,900 Libbey, Inc. 59,450
---------------------------------------------------------------------------------
1,166 (a)Lifetime Hoan Corp. 11,077
---------------------------------------------------------------------------------
4,100 (a)Lo-Jack Corp. 63,550
---------------------------------------------------------------------------------
3,800 M.D.C. Holdings, Inc. $ 28,025
---------------------------------------------------------------------------------
2,000 Matthews International Corp., Class A 40,500
---------------------------------------------------------------------------------
1,700 (a)Mikasa, Inc. 22,100
---------------------------------------------------------------------------------
4,500 (a)Mohawk Industries, Inc. 67,500
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
CONSUMER DURABLES--CONTINUED
---------------------------------------------------------------------------------
2,847 Myers Industries, Inc. 40,926
---------------------------------------------------------------------------------
3,000 (a)NVR, Inc. 30,000
---------------------------------------------------------------------------------
1,300 National Presto Industries, Inc. 52,650
---------------------------------------------------------------------------------
3,800 (a)O'Sullivan Industries Holdings, Inc. 28,500
---------------------------------------------------------------------------------
5,000 Oakwood Homes Corp. 187,500
---------------------------------------------------------------------------------
2,100 Oneida Ltd. 34,650
---------------------------------------------------------------------------------
4,500 Outboard Marine Corp. 93,375
---------------------------------------------------------------------------------
1,100 (a)Pillowtex Corp. 12,100
---------------------------------------------------------------------------------
10,000 (a)Presley Cos., Class A 18,750
---------------------------------------------------------------------------------
4,300 Pulte Corp. 135,988
---------------------------------------------------------------------------------
2,099 (a)Recoton Corp. 46,703
---------------------------------------------------------------------------------
1,600 (a)Redman Industries, Inc. 41,600
---------------------------------------------------------------------------------
2,000 Rival Co. 39,000
---------------------------------------------------------------------------------
9,200 (a)Roadmaster Industries, Inc. 23,000
---------------------------------------------------------------------------------
2,100 Russ Berrie & Co., Inc. 29,138
---------------------------------------------------------------------------------
3,100 Ryland Group, Inc. 45,338
---------------------------------------------------------------------------------
2,500 SPX Corp. 38,750
---------------------------------------------------------------------------------
800 (a)Safety 1st, Inc. 13,800
---------------------------------------------------------------------------------
2,700 (a)Samsonite Corp. 27,338
---------------------------------------------------------------------------------
1,900 (a)Schuler Homes, Inc. 22,563
---------------------------------------------------------------------------------
4,200 (a)Scotts Co. 83,475
---------------------------------------------------------------------------------
3,500 (a)Sierra On-Line, Inc. 130,375
---------------------------------------------------------------------------------
2,200 Skyline Corp. 38,500
---------------------------------------------------------------------------------
6,000 (a)Sola International, Inc. $ 147,000
---------------------------------------------------------------------------------
3,800 (a)Spectrum Holobyte, Inc. 38,950
---------------------------------------------------------------------------------
1,800 Standard Motor Products, Inc. 29,700
---------------------------------------------------------------------------------
5,800 Standard Pacific Corp. 37,700
---------------------------------------------------------------------------------
4,200 Stanhome, Inc. 128,100
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
CONSUMER DURABLES--CONTINUED
---------------------------------------------------------------------------------
3,600 Stant Corp. 33,750
---------------------------------------------------------------------------------
1,600 Starrett (L.S.) Co., Class A 36,600
---------------------------------------------------------------------------------
2,200 Sturm Ruger & Co., Inc. 59,400
---------------------------------------------------------------------------------
1,300 (a)Syratech Corp. 28,600
---------------------------------------------------------------------------------
5,650 (a)TBC Corp. 39,550
---------------------------------------------------------------------------------
1,200 Thor Industries, Inc. 19,050
---------------------------------------------------------------------------------
4,200 (a)Toll Brothers, Inc. 75,075
---------------------------------------------------------------------------------
9,300 (a)Topps Co. 56,963
---------------------------------------------------------------------------------
2,900 Toro Co. 83,738
---------------------------------------------------------------------------------
3,800 (a)Toy Biz, Inc., Class A 85,025
---------------------------------------------------------------------------------
7,800 (a)Tyco Toys, Inc. 42,900
---------------------------------------------------------------------------------
2,501 (a)U.S. Home Corp. 67,214
---------------------------------------------------------------------------------
1,500 WD 40 Co. 59,063
---------------------------------------------------------------------------------
3,800 Windmere Corp. 23,750
---------------------------------------------------------------------------------
3,100 (a)Winnebago Industries, Inc. 24,800
---------------------------------------------------------------------------------
1,300 Wynns International, Inc. 35,750
---------------------------------------------------------------------------------
3,000 X-Rite, Inc. 46,875
---------------------------------------------------------------------------------
10,600 (a)Zenith Electronics Corp. 88,775
--------------------------------------------------------------------------------- --------------
Total 5,053,907
--------------------------------------------------------------------------------- --------------
CONSUMER NON-DURABLES--3.0%
---------------------------------------------------------------------------------
2,700 (a)American Safety Razor Co. 22,612
---------------------------------------------------------------------------------
3,600 (a)Authentic Fitness Corp. 73,800
---------------------------------------------------------------------------------
2,772 Block Drug, Inc., Class A $ 106,722
---------------------------------------------------------------------------------
800 Bridgford Foods Corp. 7,800
---------------------------------------------------------------------------------
3,800 Brown Group, Inc. 52,250
---------------------------------------------------------------------------------
3,500 (a)Burlington Coat Factory Warehouse 38,937
---------------------------------------------------------------------------------
3,000 (a)Canandaigua Wine Co., Inc., Class B 142,500
---------------------------------------------------------------------------------
1,800 (a)Chic by H.I.S., Inc. 9,900
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
CONSUMER NON-DURABLES--CONTINUED
---------------------------------------------------------------------------------
6,100 Chiquita Brands International 99,125
---------------------------------------------------------------------------------
3,900 Church and Dwight, Inc. 79,462
---------------------------------------------------------------------------------
1,000 Coca-Cola Bottling Co. 34,000
---------------------------------------------------------------------------------
3,800 (a)Converse, Inc. 17,100
---------------------------------------------------------------------------------
8,600 Coors Adolph Co., Class B 153,725
---------------------------------------------------------------------------------
500 (a)Culbro Corp. 22,562
---------------------------------------------------------------------------------
6,950 (a)Dimon, Inc. 101,644
---------------------------------------------------------------------------------
1,200 (a)Donnkenny, Inc. 34,200
---------------------------------------------------------------------------------
2,500 Dreyers Grand Ice Cream, Inc. 86,250
---------------------------------------------------------------------------------
200 Farmer Brothers Co. 25,500
---------------------------------------------------------------------------------
8,900 Flowers Industries, Inc. 192,462
---------------------------------------------------------------------------------
2,800 (a)FoodBrands America, Inc. 32,200
---------------------------------------------------------------------------------
1,000 GoodMark Foods, Inc. 18,500
---------------------------------------------------------------------------------
1,350 (a)Guest Supply, Inc. 25,481
---------------------------------------------------------------------------------
5,600 (a)Gymboree Corp. 126,700
---------------------------------------------------------------------------------
1,500 Haggar Corp. 24,750
---------------------------------------------------------------------------------
5,500 (a)Hartmarx Corp. 27,500
---------------------------------------------------------------------------------
1,500 Helene Curtis Industries, Inc. 44,812
---------------------------------------------------------------------------------
2,800 Herbalife International, Inc. 21,000
---------------------------------------------------------------------------------
5,300 Hudson Foods, Inc., Class A 74,862
---------------------------------------------------------------------------------
4,600 Hydron Technologies, Inc. 12,075
---------------------------------------------------------------------------------
3,700 International Multifoods Corp. $ 75,850
---------------------------------------------------------------------------------
4,400 Interstate Bakeries Corp. 94,050
---------------------------------------------------------------------------------
1,500 (a)J & J Snack Foods Corp. 16,687
---------------------------------------------------------------------------------
1,650 (a)Just For Feet, Inc. 38,981
---------------------------------------------------------------------------------
4,300 Justin Industries, Inc. 43,000
---------------------------------------------------------------------------------
4,700 Kellwood Co. 88,125
---------------------------------------------------------------------------------
700 (a)Kenneth Cole Productions, Inc., Class A 28,612
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
CONSUMER NON-DURABLES--CONTINUED
---------------------------------------------------------------------------------
3,600 Lance, Inc. 60,750
---------------------------------------------------------------------------------
3,092 Maybelline, Inc. 73,049
---------------------------------------------------------------------------------
2,700 Michael Foods, Inc. 32,738
---------------------------------------------------------------------------------
1,000 (a)Mondavi Robert Corp., Class A 28,250
---------------------------------------------------------------------------------
1,700 (a)Morningstar Group, Inc. 13,175
---------------------------------------------------------------------------------
3,400 (a)NBTY, Inc. 17,000
---------------------------------------------------------------------------------
2,116 Natures Sunshine Products, Inc. 52,371
---------------------------------------------------------------------------------
3,900 (a)Nautica Enterprise, Inc. 133,575
---------------------------------------------------------------------------------
1,300 (a)Norton McNaughton, Inc. 25,675
---------------------------------------------------------------------------------
2,600 OshKosh B'Gosh, Inc., Class A 34,450
---------------------------------------------------------------------------------
1,600 Oxford Industries, Inc. 26,000
---------------------------------------------------------------------------------
2,500 (a)Paragon Trade Brands, Inc. 39,688
---------------------------------------------------------------------------------
5,300 Phillips Van Heusen Corp. 53,663
---------------------------------------------------------------------------------
900 Pilgrims Pride Corp. 6,863
---------------------------------------------------------------------------------
5,400 (a)Playtex Products, Inc. 37,800
---------------------------------------------------------------------------------
1,300 (a)Quicksilver, Inc. 40,300
---------------------------------------------------------------------------------
7,000 Ralcorp Holdings, Inc. 161,000
---------------------------------------------------------------------------------
3,600 Riviana Foods, Inc. 46,350
---------------------------------------------------------------------------------
1,600 Sanderson Farms, Inc. 17,200
---------------------------------------------------------------------------------
5,000 Savannah Foods & Industries, Inc. 62,500
---------------------------------------------------------------------------------
100 Seaboard Corp. $ 26,400
---------------------------------------------------------------------------------
2,800 (a)Smithfield Foods, Inc. 70,700
---------------------------------------------------------------------------------
6,600 Smucker (J.M.) Co., Class A 129,525
---------------------------------------------------------------------------------
1,600 St. John Knits, Inc. 76,600
---------------------------------------------------------------------------------
1,341 Standard Commercial Corp. 14,583
---------------------------------------------------------------------------------
2,000 (a)Starter Corp. 15,250
---------------------------------------------------------------------------------
11,100 Stride Rite Corp. 124,875
---------------------------------------------------------------------------------
2,600 (a)Thermolase Corp. 52,975
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
CONSUMER NON-DURABLES--CONTINUED
---------------------------------------------------------------------------------
800 Thorn Apple Valley, Inc. 13,800
---------------------------------------------------------------------------------
1,700 (a)Timberland Co., Class A 32,725
---------------------------------------------------------------------------------
3,908 Tootsie Roll Industries, Inc. 141,177
---------------------------------------------------------------------------------
6,700 (a)Tultex Corp. 31,825
---------------------------------------------------------------------------------
1,800 Unitog Co. 42,300
---------------------------------------------------------------------------------
3,550 WLR Foods, Inc. 48,813
---------------------------------------------------------------------------------
3,625 Wolverine World Wide, Inc. 108,750
--------------------------------------------------------------------------------- --------------
Total 3,986,431
--------------------------------------------------------------------------------- --------------
CONSUMER SERVICES--4.6%
---------------------------------------------------------------------------------
600 (a)AMC Entertainment, Inc. 10,875
---------------------------------------------------------------------------------
2,700 Actava Group, Inc. 46,912
---------------------------------------------------------------------------------
300 (a)Adelphia Communications Corp., Class A 2,625
---------------------------------------------------------------------------------
3,100 (a)Alliance Entertainment Corp. 20,925
---------------------------------------------------------------------------------
9,400 American Media, Inc. 45,825
---------------------------------------------------------------------------------
1,900 (a)American Telecasting, Inc. 25,650
---------------------------------------------------------------------------------
600 (a)Ameristar Casinos, Inc. 3,900
---------------------------------------------------------------------------------
1,200 (a)Anchor Gaming 26,400
---------------------------------------------------------------------------------
1,500 (a)Apollo Group, Inc., Class A 39,375
---------------------------------------------------------------------------------
4,137 Apple South, Inc. 84,808
---------------------------------------------------------------------------------
6,800 Applebee's International, Inc. $ 191,250
---------------------------------------------------------------------------------
2,700 (a)Argosy Gaming Corp. 24,975
---------------------------------------------------------------------------------
1,400 (a)Au Bon Pain Co., Inc., Class A 10,675
---------------------------------------------------------------------------------
8,600 (a)Aztar Corp. 69,875
---------------------------------------------------------------------------------
1,800 (a)BET Holdings, Inc., Class A 37,350
---------------------------------------------------------------------------------
10,600 (a)Bally Entertainment Group 116,600
---------------------------------------------------------------------------------
400 (a)Bally's Grand, Inc. 5,750
---------------------------------------------------------------------------------
3,500 Barefoot, Inc. 42,437
---------------------------------------------------------------------------------
6,100 (a)Buffets, Inc. 76,250
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
CONSUMER SERVICES--CONTINUED
---------------------------------------------------------------------------------
4,765 (a)CAI Wireless Systems, Inc. 39,311
---------------------------------------------------------------------------------
4,200 CKE Restaurants, Inc. 61,950
---------------------------------------------------------------------------------
2,200 (a)Carmike Cinemas, Inc., Class A 45,925
---------------------------------------------------------------------------------
2,250 (a)Casino American, Inc. 15,750
---------------------------------------------------------------------------------
4,400 (a)Casino Magic Corp. 19,800
---------------------------------------------------------------------------------
9,800 (a)Checkers Drive-In Restaurant 15,312
---------------------------------------------------------------------------------
1,900 (a)Cheesecake Factory, Inc. 41,325
---------------------------------------------------------------------------------
1,100 (a)Children's Discovery Centers of America, Inc. 8,525
---------------------------------------------------------------------------------
600 Churchill Downs, Inc. 21,600
---------------------------------------------------------------------------------
2,350 (a)Citicasters, Inc., Class A 72,556
---------------------------------------------------------------------------------
2,300 (a)Consolidated Products, Inc. 38,525
---------------------------------------------------------------------------------
1,000 (a)DF&R Restaurants, Inc. 30,500
---------------------------------------------------------------------------------
3,000 (a)DeVRY, Inc. 66,750
---------------------------------------------------------------------------------
1,000 (a)Dollar Tree Stores, Inc. 27,000
---------------------------------------------------------------------------------
4,400 (a)Doubletree Corp. 96,800
---------------------------------------------------------------------------------
1,500 (a)EZ Communications, Inc., Class A 24,375
---------------------------------------------------------------------------------
1,600 (a)Emmis Broadcasting Corp., Class A 42,400
---------------------------------------------------------------------------------
1,000 (a)Equity Corporation International 21,000
---------------------------------------------------------------------------------
2,200 (a)Evergreen Media Corp., Class A $ 59,950
---------------------------------------------------------------------------------
7,000 (a)Flagstar Companies, Inc. 28,875
---------------------------------------------------------------------------------
8,700 (a)Foodmaker, Inc. 52,200
---------------------------------------------------------------------------------
1,600 (a)Franklin Electronic Publishers, Inc. 66,200
---------------------------------------------------------------------------------
1,300 (a)GC Cos., Inc. 41,925
---------------------------------------------------------------------------------
3,900 (a)Grand Casinos, Inc. 155,025
---------------------------------------------------------------------------------
11,400 (a)Greyhound Lines, Inc. 42,750
---------------------------------------------------------------------------------
1,400 (a)Griffin Gaming & Entertainment, Inc. 17,500
---------------------------------------------------------------------------------
1,700 Harte-Hanks 51,425
---------------------------------------------------------------------------------
1,200 Harveys Casino Resorts 19,350
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
CONSUMER SERVICES--CONTINUED
---------------------------------------------------------------------------------
700 (a)Heartland Wireless Communications, Inc. 18,025
---------------------------------------------------------------------------------
1,700 (a)Heftel Broadcasting Corp. , Class A 31,025
---------------------------------------------------------------------------------
2,600 (a)Hollywood Casino Corp., Class A 15,925
---------------------------------------------------------------------------------
3,300 (a)Hollywood Park, Inc. 32,175
---------------------------------------------------------------------------------
2,200 (a)Hometown Buffet, Inc. 28,875
---------------------------------------------------------------------------------
3,200 Houghton Mifflin Co. 131,200
---------------------------------------------------------------------------------
2,100 (a)IHOP Corp. 45,150
---------------------------------------------------------------------------------
500 (a)ITT Educational Services, Inc. 11,750
---------------------------------------------------------------------------------
6,500 Ideon Group, Inc. 57,687
---------------------------------------------------------------------------------
2,700 (a)International Dairy Queen, Inc., Class A 57,375
---------------------------------------------------------------------------------
4,400 (a)International Family Entertainment, Inc., Class B 81,400
---------------------------------------------------------------------------------
1,400 (a)Jacor Communications, Inc., Class A 21,350
---------------------------------------------------------------------------------
4,182 Jones Intercable, Inc. 56,457
---------------------------------------------------------------------------------
4,500 (a)Kinder-Care Learning Centers, Inc. 60,187
---------------------------------------------------------------------------------
1,600 (a)Landrys Seafood Restaurants, Inc. 21,600
---------------------------------------------------------------------------------
1,400 (a)Learning Co. 82,600
---------------------------------------------------------------------------------
5,200 Luby's Cafeterias, Inc. 107,900
---------------------------------------------------------------------------------
1,500 Marcus Corp. $ 51,938
---------------------------------------------------------------------------------
3,400 McClatchy Newspapers, Inc. , Class A 67,150
---------------------------------------------------------------------------------
5,900 Meredith Corp. 210,925
---------------------------------------------------------------------------------
6,300 Morrison Restaurants, Inc. 98,438
---------------------------------------------------------------------------------
3,800 (a)NPC International, Inc. 24,700
---------------------------------------------------------------------------------
6,600 (a)National Education Corp. 53,625
---------------------------------------------------------------------------------
2,000 (a)Orion Pictures Corp. 20,000
---------------------------------------------------------------------------------
400 (a)Outlet Communications, Inc., Class A 18,600
---------------------------------------------------------------------------------
700 (a)Papa Johns International, Inc. 26,950
---------------------------------------------------------------------------------
5,900 (a)Paxson Communications Corp. 72,275
---------------------------------------------------------------------------------
1,500 (a)Peoples Choice TV Corp. 31,125
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
CONSUMER SERVICES--CONTINUED
---------------------------------------------------------------------------------
5,700 Petroleum Heat & Power, Inc., Class A 44,175
---------------------------------------------------------------------------------
3,400 (a)Playboy Enterprises, Inc., Class B 28,900
---------------------------------------------------------------------------------
6,100 (a)Players International, Inc. 65,575
---------------------------------------------------------------------------------
900 Plenum Publishing Corp. 31,500
---------------------------------------------------------------------------------
4,600 (a)Prepaid Legal Services, Inc. 36,513
---------------------------------------------------------------------------------
4,600 (a)President Casinos, Inc. 14,088
---------------------------------------------------------------------------------
1,500 (a)Primadonna Resorts, Inc. 23,438
---------------------------------------------------------------------------------
6,900 (a)Prime Hospitality Corp. 68,138
---------------------------------------------------------------------------------
1,000 Pulitzer Publishing Co. 45,250
---------------------------------------------------------------------------------
1,550 (a)Regal Cinemas, Inc. 60,838
---------------------------------------------------------------------------------
6,600 (a)Renaissance Communications Corp. 147,675
---------------------------------------------------------------------------------
3,400 (a)Rio Hotel & Casino, Inc. 42,925
---------------------------------------------------------------------------------
900 (a)Rock Bottom Restaurants, Inc. 14,400
---------------------------------------------------------------------------------
500 Roto-Rooter, Inc. 16,500
---------------------------------------------------------------------------------
1,400 (a)Rural / Metro Corp. 33,600
---------------------------------------------------------------------------------
12,000 (a)Ryan's Family Steak Houses, Inc. 93,000
---------------------------------------------------------------------------------
900 (a)SFX Broadcasting, Inc. $ 24,300
---------------------------------------------------------------------------------
6,800 (a)Savoy Pictures Entertainment, Inc. 38,250
---------------------------------------------------------------------------------
2,650 Sbarro, Inc. 55,319
---------------------------------------------------------------------------------
2,900 (a)Scientific Games Holdings Corp. 94,975
---------------------------------------------------------------------------------
1,000 (a)Seattle Filmworks, Inc. 20,250
---------------------------------------------------------------------------------
1,433 (a)ShoLodge, Inc. 12,718
---------------------------------------------------------------------------------
7,600 (a)Shoney's, Inc. 84,550
---------------------------------------------------------------------------------
2,400 (a)ShowBiz Pizza Time, Inc. 29,400
---------------------------------------------------------------------------------
3,500 Showboat, Inc. 84,000
---------------------------------------------------------------------------------
1,800 (a)Shuffle Master, Inc. 22,050
---------------------------------------------------------------------------------
2,600 Shurgard Storage Centers, Inc., Class A 66,300
---------------------------------------------------------------------------------
2,000 (a)Silver King Communications, Inc. 58,500
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
CONSUMER SERVICES--CONTINUED
---------------------------------------------------------------------------------
4,900 Sizzler International, Inc. 17,150
---------------------------------------------------------------------------------
1,000 (a)Sodak Gaming, Inc. 18,250
---------------------------------------------------------------------------------
2,650 (a)Sonic Corp. 58,300
---------------------------------------------------------------------------------
9,700 Sothebys Holdings, Inc., Class A 134,588
---------------------------------------------------------------------------------
1,000 (a)Speedway Motorsports, Inc. 29,500
---------------------------------------------------------------------------------
3,000 (a)Starsight Telecast, Inc. 11,250
---------------------------------------------------------------------------------
4,100 (a)Station Casinos, Inc. 53,300
---------------------------------------------------------------------------------
3,500 TCA Cable TV, Inc. 103,688
---------------------------------------------------------------------------------
3,700 TCBY Enterprises, Inc. 16,188
---------------------------------------------------------------------------------
3,575 Thomas Nelson, Inc. 59,434
---------------------------------------------------------------------------------
1,900 Transmedia Network, Inc. 17,338
---------------------------------------------------------------------------------
7,600 (a)United International Holdings, Inc., Class A 119,700
---------------------------------------------------------------------------------
1,000 (a)United Television, Inc. 85,250
---------------------------------------------------------------------------------
1,100 (a)United Video Satellite Group, Inc., Class A 28,325
---------------------------------------------------------------------------------
1,550 (a)Uno Restaurant Corp. 11,819
---------------------------------------------------------------------------------
2,000 (a)Vicorp Restaurants, Inc. $ 22,000
---------------------------------------------------------------------------------
4,100 (a)WMS Industries, Inc. 80,463
---------------------------------------------------------------------------------
300 Waverly, Inc. 11,925
---------------------------------------------------------------------------------
3,800 (a)Western Publishing Group, Inc. 31,113
---------------------------------------------------------------------------------
4,800 (a)Westwood One, Inc. 75,600
---------------------------------------------------------------------------------
3,000 Wiley (John) & Sons, Inc., Class A 89,250
---------------------------------------------------------------------------------
2,100 (a)Young Broadcasting, Inc., Class A 64,050
--------------------------------------------------------------------------------- --------------
Total 6,139,076
--------------------------------------------------------------------------------- --------------
ELECTRONIC TECHNOLOGY--10.4%
---------------------------------------------------------------------------------
1,400 (a)3D Systems Corp. 23,975
---------------------------------------------------------------------------------
3,600 AAR Corp. 63,900
---------------------------------------------------------------------------------
1,400 (a)ADFlex Solutions, Inc. 37,100
---------------------------------------------------------------------------------
5,922 (a)AST Research, Inc. 52,558
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
ELECTRONIC TECHNOLOGY--CONTINUED
---------------------------------------------------------------------------------
3,400 (a)Actel Corp. 39,950
---------------------------------------------------------------------------------
700 (a)Active Voice Corp. 18,375
---------------------------------------------------------------------------------
2,300 (a)Alantec Corp. 82,225
---------------------------------------------------------------------------------
3,100 Alliant Techsystems, Inc. 144,150
---------------------------------------------------------------------------------
1,400 (a)Alpha Industries, Inc. 21,700
---------------------------------------------------------------------------------
1,800 (a)Altron, Inc. 51,750
---------------------------------------------------------------------------------
1,700 Analogic Corp. 31,875
---------------------------------------------------------------------------------
3,300 (a)Antec Corp. 40,837
---------------------------------------------------------------------------------
3,000 (a)Apertus Technologies, Inc. 31,875
---------------------------------------------------------------------------------
2,700 (a)Applied Digital Access, Inc. 32,400
---------------------------------------------------------------------------------
2,000 (a)Applied Innovation, Inc. 19,250
---------------------------------------------------------------------------------
5,000 (a)Applied Magnetics Corp. 76,875
---------------------------------------------------------------------------------
4,600 (a)Aspect Telecommunications Corp. 158,125
---------------------------------------------------------------------------------
1,100 (a)Asyst Technologies, Inc. 46,200
---------------------------------------------------------------------------------
3,800 Augat, Inc. $ 59,850
---------------------------------------------------------------------------------
5,300 (a)Auspex Systems, Inc. 74,862
---------------------------------------------------------------------------------
4,100 Aviall, Inc. 34,337
---------------------------------------------------------------------------------
4,600 (a)Avid Technology, Inc. 201,250
---------------------------------------------------------------------------------
3,600 BE Aerospace, Inc. 28,350
---------------------------------------------------------------------------------
4,279 (a)BancTec, Inc. 80,231
---------------------------------------------------------------------------------
3,800 (a)Banyan Systems, Inc. 29,687
---------------------------------------------------------------------------------
3,700 (a)Black Box Corp. 60,125
---------------------------------------------------------------------------------
1,100 (a)Boca Research, Inc. 27,775
---------------------------------------------------------------------------------
3,900 (a)Bolt Beranek & Newman, Inc. 120,412
---------------------------------------------------------------------------------
4,300 (a)Boston Technology, Inc. 59,125
---------------------------------------------------------------------------------
1,400 (a)Brite Voice Systems, Inc. 23,275
---------------------------------------------------------------------------------
2,900 (a)Broadband Technologies, Inc. 50,750
---------------------------------------------------------------------------------
3,300 (a)Brooktree Corp. 39,600
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
ELECTRONIC TECHNOLOGY--CONTINUED
---------------------------------------------------------------------------------
3,250 (a)Burr Brown Corp. 105,625
---------------------------------------------------------------------------------
2,100 (a)C-COR Electronics, Inc. 48,300
---------------------------------------------------------------------------------
3,500 (a)C-Cube Microsystems, Inc. 241,937
---------------------------------------------------------------------------------
700 CTS Corp. 23,275
---------------------------------------------------------------------------------
2,900 (a)Caere Corp. 22,837
---------------------------------------------------------------------------------
3,600 (a)California Microwave 79,200
---------------------------------------------------------------------------------
1,795 (a)Cellular Technical Services, Inc. 30,515
---------------------------------------------------------------------------------
3,900 (a)Chips & Technologies, Inc. 34,125
---------------------------------------------------------------------------------
2,300 (a)Cidco, Inc. 68,137
---------------------------------------------------------------------------------
3,400 (a)Cognex Corp. 203,150
---------------------------------------------------------------------------------
1,800 (a)Coherent Communications Systems Corp. 36,928
---------------------------------------------------------------------------------
2,400 Coherent, Inc. 67,800
---------------------------------------------------------------------------------
2,000 Cohu, Inc. 61,500
---------------------------------------------------------------------------------
3,300 (a)Colonial Data Technologies Corp. $ 45,375
---------------------------------------------------------------------------------
1,500 Communications System, Inc. 23,250
---------------------------------------------------------------------------------
3,300 (a)Compression Labs, Inc. 25,987
---------------------------------------------------------------------------------
5,100 (a)Computer Network Technology 33,150
---------------------------------------------------------------------------------
5,400 (a)Computer Products, Inc. 62,775
---------------------------------------------------------------------------------
4,500 (a)Comverse Technology, Inc. 102,375
---------------------------------------------------------------------------------
11,800 Conner Peripherals, Inc. 212,400
---------------------------------------------------------------------------------
4,400 (a)CopyTele, Inc. 36,850
---------------------------------------------------------------------------------
5,600 (a)Cray Research, Inc. 116,200
---------------------------------------------------------------------------------
4,850 (a)Credence Systems Corp. 181,269
---------------------------------------------------------------------------------
2,100 (a)Cree Research, Inc. 51,581
---------------------------------------------------------------------------------
1,700 (a)CrossComm Corp. 19,125
---------------------------------------------------------------------------------
800 Cubic Corp. 18,200
---------------------------------------------------------------------------------
600 Curtiss Wright Corp. 26,475
---------------------------------------------------------------------------------
4,300 (a)Cyrix Corp. 137,600
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
ELECTRONIC TECHNOLOGY--CONTINUED
---------------------------------------------------------------------------------
1,650 (a)D H Technology, Inc. 32,587
---------------------------------------------------------------------------------
1,700 (a)DSP Communications, Inc. 61,625
---------------------------------------------------------------------------------
1,700 (a)DSP Group, Inc. 27,625
---------------------------------------------------------------------------------
4,900 Dallas Semiconductor Corp. 104,125
---------------------------------------------------------------------------------
2,400 Daniel Industries, Inc. 31,800
---------------------------------------------------------------------------------
8,400 (a)Data General Corp. 96,600
---------------------------------------------------------------------------------
1,300 (a)Dialogic Corp. 37,700
---------------------------------------------------------------------------------
2,700 (a)Digi International, Inc. 72,225
---------------------------------------------------------------------------------
1,000 (a)Digital Link Corp. 15,875
---------------------------------------------------------------------------------
3,000 (a)Digtial Microwave Corp. 32,250
---------------------------------------------------------------------------------
1,600 (a)Dionex Corp. 86,400
---------------------------------------------------------------------------------
1,800 (a)Dovatron International, Inc. 55,350
---------------------------------------------------------------------------------
4,000 (a)Dynatech Corp. $ 60,000
---------------------------------------------------------------------------------
1,800 (a)EIS International, Inc. 33,300
---------------------------------------------------------------------------------
1,800 (a)Electro Scientific Industries, Inc. 55,800
---------------------------------------------------------------------------------
2,000 (a)Electroglas, Inc. 140,500
---------------------------------------------------------------------------------
2,600 (a)Electronics for Imaging, Inc. 213,850
---------------------------------------------------------------------------------
700 (a)Eltron International, Inc. 22,750
---------------------------------------------------------------------------------
1,200 (a)Emulex Corp. 19,350
---------------------------------------------------------------------------------
1,200 (a)Encad, Inc. 18,600
---------------------------------------------------------------------------------
1,500 (a)Esterline Technologies Corp. 34,687
---------------------------------------------------------------------------------
1,900 (a)Evans & Sutherland Computer Co. 39,900
---------------------------------------------------------------------------------
4,900 (a)Exabyte Corp. 63,394
---------------------------------------------------------------------------------
2,050 (a)Exar Corp. 48,687
---------------------------------------------------------------------------------
9,600 (a)Executone Information Systems, Inc. 24,600
---------------------------------------------------------------------------------
1,800 (a)FORE Systems, Inc. 95,400
---------------------------------------------------------------------------------
4,000 (a)FSI International, Inc. 95,000
---------------------------------------------------------------------------------
2,900 (a)Filenet Corp. 131,587
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
ELECTRONIC TECHNOLOGY--CONTINUED
---------------------------------------------------------------------------------
1,700 (a)Fusion Systems Corp. 47,600
---------------------------------------------------------------------------------
1,100 (a)GTI Corp. 18,700
---------------------------------------------------------------------------------
900 (a)Gasonics International Corp. 29,700
---------------------------------------------------------------------------------
5,800 GenCorp, Inc. 60,900
---------------------------------------------------------------------------------
4,400 (a)GenRad, Inc. 38,500
---------------------------------------------------------------------------------
4,600 (a)General DataComm Industries, Inc. 70,150
---------------------------------------------------------------------------------
3,700 (a)Genius, Inc. 29,600
---------------------------------------------------------------------------------
8,900 Geotek Industries, Inc. 73,425
---------------------------------------------------------------------------------
4,000 Gerber Scientific, Inc. 67,500
---------------------------------------------------------------------------------
3,200 (a)Global Village Communications 54,400
---------------------------------------------------------------------------------
1,700 (a)HADCO Corp. 47,600
---------------------------------------------------------------------------------
825 Hach Co. $ 12,478
---------------------------------------------------------------------------------
1,500 Harmon Industries, Inc. 22,125
---------------------------------------------------------------------------------
1,600 Helix Technology Corp. 60,000
---------------------------------------------------------------------------------
1,200 (a)Hutchinson Technology, Inc. 75,900
---------------------------------------------------------------------------------
800 (a)IPC Information Systems, Inc. 12,000
---------------------------------------------------------------------------------
1,500 (a)In Focus Systems, Inc. 49,312
---------------------------------------------------------------------------------
2,150 (a)Integrated Circuit System, Inc. 29,159
---------------------------------------------------------------------------------
2,700 (a)Integrated Process Equipment Corp. 100,237
---------------------------------------------------------------------------------
3,200 (a)Integrated Silicon Solution, Inc. 100,200
---------------------------------------------------------------------------------
1,400 (a)Inter-Tel, Inc. 20,825
---------------------------------------------------------------------------------
9,900 (a)Interdigital Communications Corp. 72,394
---------------------------------------------------------------------------------
8,800 (a)Intergraph Corp. 106,700
---------------------------------------------------------------------------------
5,000 (a)International Rectifier Corp. 225,625
---------------------------------------------------------------------------------
3,500 (a)Intervoice, Inc. 63,875
---------------------------------------------------------------------------------
4,200 (a)Iomega Corp. 100,012
---------------------------------------------------------------------------------
3,300 (a)Irvine Sensors Corp. 21,450
---------------------------------------------------------------------------------
2,300 (a)Itron, Inc. 66,700
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
ELECTRONIC TECHNOLOGY--CONTINUED
---------------------------------------------------------------------------------
1,100 John Fluke Manufacturing, Co. 40,562
---------------------------------------------------------------------------------
1,500 (a)Key Tronic Corp. 15,562
---------------------------------------------------------------------------------
1,000 (a)Kronos, Inc. 46,000
---------------------------------------------------------------------------------
4,300 (a)Kulicke & Soffa Industries 150,500
---------------------------------------------------------------------------------
6,400 (a)LTX Corp. 79,200
---------------------------------------------------------------------------------
4,250 (a)Lattice Semiconductor Corp. 166,812
---------------------------------------------------------------------------------
2,800 (a)Level One Communications, Inc. 63,000
---------------------------------------------------------------------------------
2,600 Logicon, Inc. 59,475
---------------------------------------------------------------------------------
1,000 MTS Systems Corp. 28,250
---------------------------------------------------------------------------------
1,600 (a)Manugistics Group, Inc. 27,600
---------------------------------------------------------------------------------
1,800 (a)Mattson Technology, Inc. $ 39,600
---------------------------------------------------------------------------------
11,800 (a)Maxtor Corp. 59,000
---------------------------------------------------------------------------------
2,700 Measurex Corp. 83,025
---------------------------------------------------------------------------------
800 (a)Merix Corp. 29,600
---------------------------------------------------------------------------------
4,600 Methode Electronics, Inc., Class A 105,800
---------------------------------------------------------------------------------
2,600 (a)Metricom, Inc. 43,225
---------------------------------------------------------------------------------
3,900 (a)Michaels Stores, Inc. 53,138
---------------------------------------------------------------------------------
1,200 (a)Micrel, Inc. 27,300
---------------------------------------------------------------------------------
2,700 (a)Micro Linear Corp. 41,513
---------------------------------------------------------------------------------
1,800 (a)MicroTouch Systems, Inc. 26,100
---------------------------------------------------------------------------------
2,900 (a)Microcom, Inc. 63,438
---------------------------------------------------------------------------------
1,000 (a)Microdyne Corp. 27,750
---------------------------------------------------------------------------------
1,800 (a)Micron Electronics, Inc. 37,350
---------------------------------------------------------------------------------
1,000 (a)Microtec Research, Inc. 13,938
---------------------------------------------------------------------------------
900 (a)Microtest, Inc. 13,950
---------------------------------------------------------------------------------
2,900 Mylex Corp. 54,013
---------------------------------------------------------------------------------
3,000 National Computer Systems, Inc. 57,000
---------------------------------------------------------------------------------
2,500 (a)Network Computing Devices 15,625
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
ELECTRONIC TECHNOLOGY--CONTINUED
---------------------------------------------------------------------------------
3,900 (a)Network Equipment Technologies, Inc. 127,238
---------------------------------------------------------------------------------
4,200 (a)Network General Corp. 174,300
---------------------------------------------------------------------------------
2,200 (a)Network Peripherals, Inc. 23,100
---------------------------------------------------------------------------------
1,700 (a)Norand Corp. 28,900
---------------------------------------------------------------------------------
3,700 (a)OEA, Inc. 100,825
---------------------------------------------------------------------------------
9,600 (a)OIS Optical Imaging Systems, Inc. 32,400
---------------------------------------------------------------------------------
1,100 (a)Oak Technology, Inc. 60,225
---------------------------------------------------------------------------------
4,940 (a)Octel Communications Corp. 168,578
---------------------------------------------------------------------------------
1,500 (a)Opti, Inc. 15,000
---------------------------------------------------------------------------------
1,800 (a)Optical Data Systems, Inc. $ 53,775
---------------------------------------------------------------------------------
4,900 (a)Orbital Sciences Corp. 69,825
---------------------------------------------------------------------------------
1,300 (a)Ortel Corp. 13,325
---------------------------------------------------------------------------------
2,400 (a)P-COM, Inc. 41,400
---------------------------------------------------------------------------------
1,200 (a)PRI Automation, Inc. 44,400
---------------------------------------------------------------------------------
2,100 (a)PSC, Inc. 21,525
---------------------------------------------------------------------------------
2,300 (a)Pairgain Technologies, Inc. 98,325
---------------------------------------------------------------------------------
600 (a)Panda Project, Inc. 14,250
---------------------------------------------------------------------------------
2,000 Park Electrochemical Corp. 62,500
---------------------------------------------------------------------------------
3,500 (a)PictureTel Corp. 231,000
---------------------------------------------------------------------------------
1,500 (a)Planar Systems, Inc. 26,063
---------------------------------------------------------------------------------
1,800 (a)Plantronics, Inc. 60,075
---------------------------------------------------------------------------------
1,200 (a)Premisys Communications, Inc. 107,400
---------------------------------------------------------------------------------
700 (a)Printronix, Inc. 13,300
---------------------------------------------------------------------------------
1,400 (a)Proxima Corp. 27,125
---------------------------------------------------------------------------------
2,600 (a)Quickturn Design Systems, Inc. 26,975
---------------------------------------------------------------------------------
3,800 (a)Radius, Inc. 15,675
---------------------------------------------------------------------------------
2,400 (a)Robotic Vision System, Inc. 54,900
---------------------------------------------------------------------------------
4,100 (a)Rohr, Inc. 60,988
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
ELECTRONIC TECHNOLOGY--CONTINUED
---------------------------------------------------------------------------------
10,300 (a)S3, Inc. 176,388
---------------------------------------------------------------------------------
6,100 (a)SCI Systems, Inc. 214,263
---------------------------------------------------------------------------------
600 (a)SDL, Inc. 15,300
---------------------------------------------------------------------------------
1,800 (a)Sanmina Corp. 97,200
---------------------------------------------------------------------------------
1,350 (a)Semitool, Inc. 21,938
---------------------------------------------------------------------------------
1,800 (a)Sequa Corp., Class A 46,350
---------------------------------------------------------------------------------
7,100 (a)Sequent Computer System, Inc. 123,363
---------------------------------------------------------------------------------
2,100 (a)Shiva Corp. 126,000
---------------------------------------------------------------------------------
5,600 (a)Sierra Semiconductor Corp. $ 100,100
---------------------------------------------------------------------------------
2,200 (a)Siliconix, Inc. 64,075
---------------------------------------------------------------------------------
600 (a)Simula, Inc. 13,125
---------------------------------------------------------------------------------
600 (a)Special Devices, Inc. 9,750
---------------------------------------------------------------------------------
1,600 (a)Spectrian Corp. 34,800
---------------------------------------------------------------------------------
4,400 (a)Stac Electronics 55,550
---------------------------------------------------------------------------------
3,000 (a)Standard Microsystems Corp. 58,875
---------------------------------------------------------------------------------
5,300 (a)Stratus Computer, Inc. 164,963
---------------------------------------------------------------------------------
2,000 (a)SubMicron Systems, Inc. 22,000
---------------------------------------------------------------------------------
1,400 (a)Summa Four, Inc. 19,250
---------------------------------------------------------------------------------
2,200 (a)SyQuest Technology, Inc. 22,000
---------------------------------------------------------------------------------
3,300 (a)Symmetricom, Inc. 61,256
---------------------------------------------------------------------------------
1,500 (a)TCSI Corp. 22,500
---------------------------------------------------------------------------------
1,200 (a)TSX Corp. 24,000
---------------------------------------------------------------------------------
1,500 (a)Tech-Sym Corp. 44,438
---------------------------------------------------------------------------------
1,400 (a)Tekelec, Inc. 20,300
---------------------------------------------------------------------------------
3,500 (a)Telular Corp. 48,563
---------------------------------------------------------------------------------
3,500 Telxon Corp. 80,938
---------------------------------------------------------------------------------
3,600 (a)Thermedics, Inc. 66,150
---------------------------------------------------------------------------------
2,150 (a)Thermotrex Corp. 77,131
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
ELECTRONIC TECHNOLOGY--CONTINUED
---------------------------------------------------------------------------------
3,800 Thiokol Corp. 131,575
---------------------------------------------------------------------------------
1,500 (a)Three-Five Systems, Inc. 27,188
---------------------------------------------------------------------------------
2,600 (a)Tracor, Inc. 41,600
---------------------------------------------------------------------------------
2,300 (a)Trident Microsystems, Inc. 69,575
---------------------------------------------------------------------------------
3,800 (a)Trimble Navigation Ltd. 75,050
---------------------------------------------------------------------------------
3,100 (a)Tseng Laboratories, Inc. 25,963
---------------------------------------------------------------------------------
2,200 (a)Ultratech Stepper, Inc. 88,000
---------------------------------------------------------------------------------
2,100 (a)Unitrode Corp. $ 56,438
---------------------------------------------------------------------------------
5,100 (a)Verifone, Inc. 137,700
---------------------------------------------------------------------------------
3,000 (a)Vitesse Semiconductor Corp. 35,250
---------------------------------------------------------------------------------
7,600 (a)Wang Laboratories, Inc. 126,350
---------------------------------------------------------------------------------
1,600 Watkins Johnson Co. 77,000
---------------------------------------------------------------------------------
1,100 (a)WavePhore, Inc. 15,950
---------------------------------------------------------------------------------
1,900 (a)Whittaker Corp. 37,763
---------------------------------------------------------------------------------
1,100 Wireless Telecom Group, Inc. 20,075
---------------------------------------------------------------------------------
6,400 (a)Wyman Gordon Co. 81,600
---------------------------------------------------------------------------------
3,000 Xircom, Inc. 27,375
---------------------------------------------------------------------------------
1,200 (a)Xylogics, Inc. 82,950
---------------------------------------------------------------------------------
4,300 Zilog, Inc. 152,650
--------------------------------------------------------------------------------- --------------
Total 13,789,660
--------------------------------------------------------------------------------- --------------
ENERGY MINERALS--1.5%
---------------------------------------------------------------------------------
1,900 (a)Addington Resources, Inc. 23,750
---------------------------------------------------------------------------------
1,500 Ashland Coal, Inc. 35,625
---------------------------------------------------------------------------------
5,570 (a)Barrett Resources 129,502
---------------------------------------------------------------------------------
2,200 (a)Belden & Blake Corp. 31,934
---------------------------------------------------------------------------------
5,600 (a)Benton Oil & Gas Co. 67,900
---------------------------------------------------------------------------------
3,500 Berry Petroleum Co., Class A 35,875
---------------------------------------------------------------------------------
4,100 (a)Box Energy Corp., Class B 38,950
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
ENERGY MINERALS--CONTINUED
---------------------------------------------------------------------------------
2,900 (a)Brown Tom, Inc. 32,262
---------------------------------------------------------------------------------
5,100 Cabot Oil & Gas Corp., Class A 68,212
---------------------------------------------------------------------------------
1,000 (a)Cairn Energy USA, Inc. 12,000
---------------------------------------------------------------------------------
1,100 (a)Chesapeake Energy Corp. 32,175
---------------------------------------------------------------------------------
5,200 (a)Coda Energy, Inc. 39,000
---------------------------------------------------------------------------------
3,000 Cross Timbers Oil Co. 43,500
---------------------------------------------------------------------------------
1,500 (a)Crown Center Petroleum Corp., Class A $ 22,500
---------------------------------------------------------------------------------
5,000 Devon Energy Corp. 108,750
---------------------------------------------------------------------------------
1,300 (a)Flores & Rucks, Inc. 16,900
---------------------------------------------------------------------------------
1,500 (a)Getty Petroleum Corp. 19,875
---------------------------------------------------------------------------------
6,600 (a)Global Natural Resources, Inc. 66,000
---------------------------------------------------------------------------------
2,400 (a)H.S. Resources, Inc. 33,300
---------------------------------------------------------------------------------
11,500 (a)Harken Energy Corp. 20,125
---------------------------------------------------------------------------------
700 Holly Corp. 15,225
---------------------------------------------------------------------------------
700 (a)Hondo Oil & Gas Co. 10,325
---------------------------------------------------------------------------------
2,200 KCS Energy, Inc. 25,025
---------------------------------------------------------------------------------
1,800 (a)Louis Dreyfus Natural Gas Corp. 25,200
---------------------------------------------------------------------------------
14,400 (a)Mesa, Inc. 61,200
---------------------------------------------------------------------------------
3,800 (a)Newfield Exploration Co. 112,100
---------------------------------------------------------------------------------
1,800 (a)Nuevo Energy Co. 39,825
---------------------------------------------------------------------------------
7,900 Parker & Parsley Petroleum Co. 146,150
---------------------------------------------------------------------------------
3,000 Phoenix Resource Cos., Inc. 53,250
---------------------------------------------------------------------------------
3,400 (a)Plains Resources, Inc. 23,163
---------------------------------------------------------------------------------
7,100 Quaker State Corp. 93,188
---------------------------------------------------------------------------------
5,900 Snyder Oil Corp. 60,475
---------------------------------------------------------------------------------
2,000 St. Mary Land & Exploration Co. 26,750
---------------------------------------------------------------------------------
2,000 (a)Stone Energy Corp. 22,750
---------------------------------------------------------------------------------
1,800 (a)Tatham Offshore, Inc. 2,925
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
ENERGY MINERALS--CONTINUED
---------------------------------------------------------------------------------
5,500 (a)Tesoro Petroleum Corp. 43,313
---------------------------------------------------------------------------------
3,100 (a)Texas Meridian Resources Co. 33,713
---------------------------------------------------------------------------------
2,200 (a)Tide West Oil Co. 25,300
---------------------------------------------------------------------------------
5,909 (a)United Meridian Corp. 99,714
---------------------------------------------------------------------------------
2,600 Vintage Petroleum, Inc. 52,325
---------------------------------------------------------------------------------
6,100 (a)Wainoco Oil Corp. $ 19,825
---------------------------------------------------------------------------------
2,000 Wiser Oil Co. 22,000
---------------------------------------------------------------------------------
3,400 Zeigler Coal Holding Co. 39,950
--------------------------------------------------------------------------------- --------------
Total 1,931,826
--------------------------------------------------------------------------------- --------------
FINANCE--20.6%
---------------------------------------------------------------------------------
1,430 1st Source Corp. 32,890
---------------------------------------------------------------------------------
8,500 (a)20th Century Industries 141,313
---------------------------------------------------------------------------------
300 (a)AMERCO 5,325
---------------------------------------------------------------------------------
1,600 Aaron Rents, Inc. 28,400
---------------------------------------------------------------------------------
2,800 (a)Acceptance Insurance Cos., Inc. 42,000
---------------------------------------------------------------------------------
3,100 Acordia, Inc. 85,250
---------------------------------------------------------------------------------
2,700 Albank Financial Corp. 77,962
---------------------------------------------------------------------------------
2,700 Alex Brown, Inc. 131,962
---------------------------------------------------------------------------------
2,700 Alexander Haagen Properties, Inc. 29,700
---------------------------------------------------------------------------------
800 (a)Alexander's, Inc. 50,000
---------------------------------------------------------------------------------
4,500 Alfa Corp. 46,125
---------------------------------------------------------------------------------
3,000 Allied Capital Commercial 52,875
---------------------------------------------------------------------------------
1,300 Allied Group, Inc. 42,250
---------------------------------------------------------------------------------
2,300 AmVestors Financial Corp. 25,875
---------------------------------------------------------------------------------
1,950 Amcore Financial, Inc. 43,875
---------------------------------------------------------------------------------
1,747 American Annuity Group, Inc. 18,780
---------------------------------------------------------------------------------
4,300 American Bankers Insurance Group, Inc. 154,262
---------------------------------------------------------------------------------
2,400 American Federal Bank, FSB SC 35,400
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
FINANCE--CONTINUED
---------------------------------------------------------------------------------
500 American Financial Enterprises 11,750
---------------------------------------------------------------------------------
4,200 American Health Properties, Inc. 86,625
---------------------------------------------------------------------------------
1,900 American Heritage Life Investments 36,575
---------------------------------------------------------------------------------
1,800 (a)American Travellers Corp. 40,275
---------------------------------------------------------------------------------
6,500 (a)Americredit Corp. $ 79,625
---------------------------------------------------------------------------------
1,100 Amfed Financial, Inc. 32,175
---------------------------------------------------------------------------------
900 Amli Residential Properties Trust 17,325
---------------------------------------------------------------------------------
1,250 Anchor Bancorp Wisconsin, Inc. 41,562
---------------------------------------------------------------------------------
2,300 Apartment Investment & Management Co., Class A 46,287
---------------------------------------------------------------------------------
4,000 Argonaut Group, Inc. 118,000
---------------------------------------------------------------------------------
3,512 Associated Banc Corp. 132,578
---------------------------------------------------------------------------------
2,300 Associated Estates Realty Corp. 47,150
---------------------------------------------------------------------------------
2,400 (a)Astoria Financial Corp. 102,900
---------------------------------------------------------------------------------
6,400 Avalon Properties, Inc. 124,800
---------------------------------------------------------------------------------
1,700 Avemco Corp. 28,687
---------------------------------------------------------------------------------
1,600 BHC Financial, Inc. 29,000
---------------------------------------------------------------------------------
824 (a)BOK Financial Corp. 16,892
---------------------------------------------------------------------------------
2,500 BRE Properties, Inc., Class A 80,000
---------------------------------------------------------------------------------
1,000 BSB Bancorp, Inc. 33,750
---------------------------------------------------------------------------------
861 BT Financial Corp. 30,996
---------------------------------------------------------------------------------
2,800 Baldwin & Lyons, Inc., Class B 41,825
---------------------------------------------------------------------------------
1,980 Bancorpsouth, Inc. 91,575
---------------------------------------------------------------------------------
1,350 Bank Granite Corp. 35,100
---------------------------------------------------------------------------------
800 Bank of New Hampshire Corp. 28,800
---------------------------------------------------------------------------------
2,212 Bankers Corp. 37,327
---------------------------------------------------------------------------------
900 Bankers First Corp. 25,200
---------------------------------------------------------------------------------
1,500 Banknorth Group, Inc. 47,625
---------------------------------------------------------------------------------
2,600 Bay Apartment Communities, Inc. 53,625
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
FINANCE--CONTINUED
---------------------------------------------------------------------------------
1,300 (a)Bay Ridge Bancorp, Inc. 27,787
---------------------------------------------------------------------------------
1,500 Bay View Capital Corp. 39,750
---------------------------------------------------------------------------------
4,300 Beacon Properties Corp. 93,525
---------------------------------------------------------------------------------
2,000 Bell Bancorp, Inc. $ 58,500
---------------------------------------------------------------------------------
2,400 Berkley, W. R. Corp. 103,800
---------------------------------------------------------------------------------
5,700 Berkshire Realty, Inc. 54,150
---------------------------------------------------------------------------------
2,400 Blanch, E. W. Holdings, Inc. 46,200
---------------------------------------------------------------------------------
1,200 Boston Bancorp 44,100
---------------------------------------------------------------------------------
1,900 Bradley Real Estate, Inc. 27,312
---------------------------------------------------------------------------------
1,250 Brenton Bank, Inc. 24,219
---------------------------------------------------------------------------------
2,600 (a)Brooklyn Bancorp, Inc. 102,375
---------------------------------------------------------------------------------
3,800 Burnham Pacific Properties, Inc. 42,750
---------------------------------------------------------------------------------
4,500 CBL & Associates Properties, Inc. 95,625
---------------------------------------------------------------------------------
1,800 CBT Corp., KY 38,250
---------------------------------------------------------------------------------
3,350 CCB Financial Corp. 165,825
---------------------------------------------------------------------------------
2,500 CMAC Investment Corp. 118,750
---------------------------------------------------------------------------------
3,574 CNB Bancshares, Inc. 95,610
---------------------------------------------------------------------------------
1,100 CPB, Inc. 34,375
---------------------------------------------------------------------------------
2,900 CRI Liquidating REIT 10,150
---------------------------------------------------------------------------------
2,600 (a)CSF Holdings, Inc. 101,400
---------------------------------------------------------------------------------
9,100 CWM Mortgage Holdings, Inc. 133,087
---------------------------------------------------------------------------------
2,300 (a)Cali Realty Corp. 44,850
---------------------------------------------------------------------------------
2,200 California Bancshares, Inc. 52,800
---------------------------------------------------------------------------------
11,100 (a)California Federal Bank Los Angeles 163,725
---------------------------------------------------------------------------------
3,300 Camden Property Trust 68,475
---------------------------------------------------------------------------------
2,000 Capital Guaranty Corp. 44,250
---------------------------------------------------------------------------------
2,700 Capital Re Corp. 76,275
---------------------------------------------------------------------------------
900 Capitol American Financial Corp. 17,662
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
FINANCE--CONTINUED
---------------------------------------------------------------------------------
1,100 Capitol Transamerica Corp. 22,000
---------------------------------------------------------------------------------
3,400 Capstead Management Corp. 111,350
---------------------------------------------------------------------------------
2,500 (a)Capsure Holdings Corp. $ 34,062
---------------------------------------------------------------------------------
3,000 Carr Realty Corp. 57,000
---------------------------------------------------------------------------------
16,400 (a)Catellus Development Corp. 90,200
---------------------------------------------------------------------------------
2,900 Center Financial Corp. 52,200
---------------------------------------------------------------------------------
2,000 CenterPoint Properties Corp. 45,250
---------------------------------------------------------------------------------
5,100 Centura Banks, Inc. 172,125
---------------------------------------------------------------------------------
5,050 Charter One Financial, Inc. 143,294
---------------------------------------------------------------------------------
1,300 Chateau Properties, Inc. 27,625
---------------------------------------------------------------------------------
2,000 Chelsea GCA Realty, Inc. 55,500
---------------------------------------------------------------------------------
2,093 Chemical Financial Corp. 80,580
---------------------------------------------------------------------------------
1,600 Chittenden Corp. 43,600
---------------------------------------------------------------------------------
1,100 Citfed Bancorp, Inc. 36,575
---------------------------------------------------------------------------------
2,700 Citizens Bancorp 89,775
---------------------------------------------------------------------------------
700 (a)Citizens Bancshares, Inc. 25,200
---------------------------------------------------------------------------------
2,400 Citizens Banking Corp. 72,600
---------------------------------------------------------------------------------
1,600 Citizens Corp. 29,000
---------------------------------------------------------------------------------
2,200 (a)Citizens, Inc., Class A 20,350
---------------------------------------------------------------------------------
8,600 City National Corp. 113,950
---------------------------------------------------------------------------------
4,200 (a)Coast Savings Financial, Inc. 110,775
---------------------------------------------------------------------------------
1,700 Cole Taylor Financial Group, Inc. 44,200
---------------------------------------------------------------------------------
4,550 Collective Bancorp, Inc. 107,494
---------------------------------------------------------------------------------
2,400 Colonial BancGroup, Inc. 69,300
---------------------------------------------------------------------------------
2,800 Colonial Properties Trust 70,000
---------------------------------------------------------------------------------
800 (a)Columbia First Federal Savings 47,150
---------------------------------------------------------------------------------
2,600 Columbus Realty Trust 46,800
---------------------------------------------------------------------------------
2,360 Commerce Bancorp, Inc. 54,575
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
FINANCE--CONTINUED
---------------------------------------------------------------------------------
8,500 Commerce Group, Inc. 173,187
---------------------------------------------------------------------------------
2,900 (a)Commercial Federal Corp. $ 95,337
---------------------------------------------------------------------------------
2,600 Commercial Net Lease Realty 33,150
---------------------------------------------------------------------------------
900 Commonwealth Savings Bank 21,487
---------------------------------------------------------------------------------
2,300 Community First Bankshares, Inc. 46,575
---------------------------------------------------------------------------------
5,000 Cousins Properties, Inc. 86,875
---------------------------------------------------------------------------------
5,200 Crawford & Co., Class B 80,600
---------------------------------------------------------------------------------
4,500 Crescent Real Estate Equities, Inc. 144,000
---------------------------------------------------------------------------------
6,000 Criimi Mae, Inc. 51,000
---------------------------------------------------------------------------------
1,100 (a)Crop Growers Corp. 14,300
---------------------------------------------------------------------------------
4,800 Crown American Realty Trust 36,600
---------------------------------------------------------------------------------
2,520 Cullen Frost Bankers, Inc. 128,520
---------------------------------------------------------------------------------
3,500 (a)Danielson Holding Corp. 24,937
---------------------------------------------------------------------------------
9,900 DeBartolo Realty Corp. 128,700
---------------------------------------------------------------------------------
1,300 (a)Delphi Financial Group, Inc., Class A 26,162
---------------------------------------------------------------------------------
4,400 Deposit Guaranty Corp. 195,800
---------------------------------------------------------------------------------
3,600 Developers Diversified Realty 102,600
---------------------------------------------------------------------------------
2,100 Downey Financial Corp. 42,787
---------------------------------------------------------------------------------
5,400 Duke Realty Investments, Inc. 165,375
---------------------------------------------------------------------------------
800 EMC Insurance Group, Inc. 10,400
---------------------------------------------------------------------------------
1,700 Eaton Vance Corp. 62,050
---------------------------------------------------------------------------------
1,550 (a)Electro Rent Corp. 29,450
---------------------------------------------------------------------------------
2,700 Enhance Financial Services Group, Inc. 55,012
---------------------------------------------------------------------------------
3,400 Equity Inns, Inc. 39,950
---------------------------------------------------------------------------------
1,400 Essex Property Trust, Inc. 25,550
---------------------------------------------------------------------------------
3,600 Evans Withycombe Residential, Inc. 67,950
---------------------------------------------------------------------------------
2,900 Excel Realty Trust, Inc. 54,737
---------------------------------------------------------------------------------
2,600 Executive Risk, Inc. 57,200
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
FINANCE--CONTINUED
---------------------------------------------------------------------------------
882 F & M Bancorp $ 22,491
---------------------------------------------------------------------------------
1,200 F & M Bancorporation, Inc. 29,100
---------------------------------------------------------------------------------
3,655 F & M National Corp. 65,333
---------------------------------------------------------------------------------
1,300 FFY Financial Corp. 28,275
---------------------------------------------------------------------------------
1,880 FNB Corp. 39,480
---------------------------------------------------------------------------------
2,700 Factory Stores of America, Inc. 51,975
---------------------------------------------------------------------------------
800 Farmers Capital Bank Corp. 29,600
---------------------------------------------------------------------------------
7,100 Federal Realty Investment Trust 143,775
---------------------------------------------------------------------------------
1,700 (a)FelCor Suite Hotels, Inc. 49,087
---------------------------------------------------------------------------------
2,075 Fidelity National Financial, Inc. 32,941
---------------------------------------------------------------------------------
5,800 Financial Security Assurance Holdings Ltd. 150,800
---------------------------------------------------------------------------------
1,480 Financial Trust Corp. 45,140
---------------------------------------------------------------------------------
3,150 FirsTier Financial, Inc. 134,072
---------------------------------------------------------------------------------
2,100 First American Financial Corp. 49,087
---------------------------------------------------------------------------------
2,100 First Citizens Bancshares, Inc., Class A 110,775
---------------------------------------------------------------------------------
2,600 First Commerce Bancshares, Inc., Class A 49,400
---------------------------------------------------------------------------------
5,362 First Commercial Corp. 160,860
---------------------------------------------------------------------------------
5,000 First Commmonwealth Financial Corp. 82,500
---------------------------------------------------------------------------------
1,400 First Federal Savings Bank of Colorado 52,850
---------------------------------------------------------------------------------
2,716 First Financial Bancorp 90,986
---------------------------------------------------------------------------------
1,100 First Financial Bankshares, Inc. 33,550
---------------------------------------------------------------------------------
1,150 First Financial Corp. 35,362
---------------------------------------------------------------------------------
6,600 First Financial Corp. Wisconsin 141,075
---------------------------------------------------------------------------------
1,100 First Financial Holdings, Inc. 20,350
---------------------------------------------------------------------------------
1,166 First Indiana Corp. 29,150
---------------------------------------------------------------------------------
3,700 First Industrial Realty Trust 75,387
---------------------------------------------------------------------------------
1,200 First Merchants Corp. 30,900
---------------------------------------------------------------------------------
3,904 First Michigan Bank Corp. $ 105,408
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
FINANCE--CONTINUED
---------------------------------------------------------------------------------
2,400 First Midwest Bancorp, Inc. 67,200
---------------------------------------------------------------------------------
3,250 First National Bancorp 90,594
---------------------------------------------------------------------------------
49 First Union Corp. 2,432
---------------------------------------------------------------------------------
4,100 First Union Real Estate Equity 29,212
---------------------------------------------------------------------------------
900 First United Bancshares 36,000
---------------------------------------------------------------------------------
1,135 First Western Bancorp, Inc. 37,739
---------------------------------------------------------------------------------
3,400 FirstBank Puerto Rico 65,875
---------------------------------------------------------------------------------
2,100 (a)FirstFed Financial Corp. 32,550
---------------------------------------------------------------------------------
3,350 FirstFed Michigan Corp. 113,062
---------------------------------------------------------------------------------
2,000 Firstbank Illinois Co. 59,000
---------------------------------------------------------------------------------
7,500 Firstmerit Corp. 202,500
---------------------------------------------------------------------------------
2,000 Foremost Corp. 91,000
---------------------------------------------------------------------------------
900 Forest City Enterprises, Inc., Class A 33,300
---------------------------------------------------------------------------------
2,550 Fort Wayne National Corp. 79,687
---------------------------------------------------------------------------------
2,910 Fremont General Corp. 84,390
---------------------------------------------------------------------------------
1,905 Frontier Insurance Group, Inc. 54,531
---------------------------------------------------------------------------------
6,192 Fulton Financial Corp. 134,676
---------------------------------------------------------------------------------
1,700 (a)Fund American Enterprises, Inc. 117,300
---------------------------------------------------------------------------------
2,400 Gables Residential Trust 51,600
---------------------------------------------------------------------------------
4,302 Gainsco, Inc. 37,105
---------------------------------------------------------------------------------
3,100 Gallagher (Arthur J.) & Co. 109,662
---------------------------------------------------------------------------------
300 (a)General Acceptance Corp. 7,950
---------------------------------------------------------------------------------
5,500 General Growth Properties, Inc. 110,687
---------------------------------------------------------------------------------
9,140 (a)Glendale Federal Bank 146,240
---------------------------------------------------------------------------------
4,900 Glimcher Realty Trust 88,200
---------------------------------------------------------------------------------
3,500 Great Financial Corp. 71,750
---------------------------------------------------------------------------------
3,000 (a)Greater New York Savings Bank $ 36,000
---------------------------------------------------------------------------------
1,200 (a)Gryphon Holdings, Inc. 18,750
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
FINANCE--CONTINUED
---------------------------------------------------------------------------------
3,100 Guaranty National Corp. 44,175
---------------------------------------------------------------------------------
1,900 (a)HCC Insurance Holdings, Inc. 66,025
---------------------------------------------------------------------------------
4,072 HGI Realty, Inc. 90,093
---------------------------------------------------------------------------------
1,600 Hancock Holding Co. 57,200
---------------------------------------------------------------------------------
1,400 Harleysville Group, Inc. 38,500
---------------------------------------------------------------------------------
1,355 Harleysville National Corp. 35,569
---------------------------------------------------------------------------------
600 Harris Savings Bank, PA 11,400
---------------------------------------------------------------------------------
3,000 Hawkeye Bancorporation 72,375
---------------------------------------------------------------------------------
2,600 Health Care REIT, Inc. 48,750
---------------------------------------------------------------------------------
2,900 Healthcare Realty Trust, Inc. 58,362
---------------------------------------------------------------------------------
1,100 Heritage Financial Services, Inc. 20,625
---------------------------------------------------------------------------------
4,200 Highwoods Properties, Inc. 111,825
---------------------------------------------------------------------------------
3,300 Hilb Rogal & Hamilton Co. 45,375
---------------------------------------------------------------------------------
2,700 Home Beneficial Corp., Class B 65,475
---------------------------------------------------------------------------------
5,527 Home Financial Corp. 84,287
---------------------------------------------------------------------------------
1,300 Homeland Bankshares Corp. 36,075
---------------------------------------------------------------------------------
5,000 Horace Mann Educators Corp. 133,125
---------------------------------------------------------------------------------
2,915 Hubco, Inc. 58,300
---------------------------------------------------------------------------------
2,600 IBS Financial Corp. 41,600
---------------------------------------------------------------------------------
5,800 IRT Property Co. 55,100
---------------------------------------------------------------------------------
1,700 ISB Financial Corp. 28,475
---------------------------------------------------------------------------------
2,106 (a)Imperial Bancorp 46,858
---------------------------------------------------------------------------------
2,025 (a)Imperial Credit Industries, Inc. 29,362
---------------------------------------------------------------------------------
2,200 Independent Insurance Group, Inc. 56,925
---------------------------------------------------------------------------------
2,300 (a)Insignia Financial Group, Inc., Class A 62,100
---------------------------------------------------------------------------------
3,200 Integon Corp. $ 52,400
---------------------------------------------------------------------------------
1,800 Inter Regional Financial Group, Inc. 63,225
---------------------------------------------------------------------------------
800 Intercontinental Bank 23,500
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
FINANCE--CONTINUED
---------------------------------------------------------------------------------
1,800 (a)Interpool, Inc. 28,800
---------------------------------------------------------------------------------
800 (a)Investment Technology Group, Inc. 7,400
---------------------------------------------------------------------------------
3,200 Irvine Apartment Communities, Inc. 57,200
---------------------------------------------------------------------------------
700 Irwin Financial Corp. 26,600
---------------------------------------------------------------------------------
2,200 JDN Realty Corp. 44,825
---------------------------------------------------------------------------------
2,900 JP Realty, Inc. 59,450
---------------------------------------------------------------------------------
1,900 JSB Financial, Inc. 58,900
---------------------------------------------------------------------------------
1,100 Jefferies Group, Inc. 43,175
---------------------------------------------------------------------------------
3,400 Jefferson Bankshares, Inc. 75,225
---------------------------------------------------------------------------------
5,700 John Alden Financial Corp. 118,275
---------------------------------------------------------------------------------
700 Kansas City Life Insurance Co. 35,700
---------------------------------------------------------------------------------
5,266 Keystone Financial, Inc. 173,778
---------------------------------------------------------------------------------
4,000 (a)Koger Equity, Inc. 38,500
---------------------------------------------------------------------------------
2,300 Kranzco Realty Trust 35,075
---------------------------------------------------------------------------------
4,000 LTC Properties, Inc. 58,000
---------------------------------------------------------------------------------
2,000 Lawyers Title Corp. 32,750
---------------------------------------------------------------------------------
2,200 Leader Financial Corp. 78,375
---------------------------------------------------------------------------------
3,075 Legg Mason, Inc. 88,406
---------------------------------------------------------------------------------
1,200 Liberty Bancorp, Inc.-Oklahoma 43,500
---------------------------------------------------------------------------------
3,400 Liberty Corp. 113,900
---------------------------------------------------------------------------------
600 (a)Liberty Financial Cos., Inc. 16,650
---------------------------------------------------------------------------------
4,800 Liberty Property Trust 97,200
---------------------------------------------------------------------------------
2,500 Life Bancorp, Inc. 38,750
---------------------------------------------------------------------------------
4,100 Life Partners Group, Inc. 74,312
---------------------------------------------------------------------------------
2,000 Life Re Corp. $ 41,500
---------------------------------------------------------------------------------
3,500 (a)Life USA Holdings, Inc. 27,125
---------------------------------------------------------------------------------
6,000 Long Island Bancorp, Inc. 137,250
---------------------------------------------------------------------------------
2,000 Loyola Capital Corp. 71,000
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
FINANCE--CONTINUED
---------------------------------------------------------------------------------
1,145 MAF Bancorp, Inc. 28,339
---------------------------------------------------------------------------------
1,796 (a)MAIC Holdings, Inc. 54,778
---------------------------------------------------------------------------------
2,600 MGI Properties, Inc. 40,300
---------------------------------------------------------------------------------
1,600 MLF Bancorp, Inc. 36,000
---------------------------------------------------------------------------------
1,800 MMI Companies, Inc. 40,275
---------------------------------------------------------------------------------
1,600 Macerich Co. (The) 32,200
---------------------------------------------------------------------------------
1,600 Magna Bancorp 46,600
---------------------------------------------------------------------------------
6,200 Magna Group, Inc. 152,675
---------------------------------------------------------------------------------
5,500 Manufactured Home Communities, Inc. 90,750
---------------------------------------------------------------------------------
1,600 Mark Centers Trust 17,200
---------------------------------------------------------------------------------
2,850 Mark Twain Bancshares, Inc. 100,463
---------------------------------------------------------------------------------
900 (a)Markel Corp. 67,050
---------------------------------------------------------------------------------
700 Maryland Federal Bancorp, Inc. 20,650
---------------------------------------------------------------------------------
2,000 McDonald & Co. Investors, Inc. 35,750
---------------------------------------------------------------------------------
1,500 McGrath Rentcorp. 26,250
---------------------------------------------------------------------------------
4,100 (a)Mego Financial Corp. 43,563
---------------------------------------------------------------------------------
800 Merchants Bank New York 24,400
---------------------------------------------------------------------------------
6,400 Merry Land and Investment Co. 134,400
---------------------------------------------------------------------------------
700 Metrobank 18,463
---------------------------------------------------------------------------------
1,200 Michigan Financial Corp. 30,900
---------------------------------------------------------------------------------
3,825 Mid Am, Inc. 62,634
---------------------------------------------------------------------------------
1,496 Mid American Bancorp 25,619
---------------------------------------------------------------------------------
2,400 Mid-American Apartment Communities, Inc. 55,200
---------------------------------------------------------------------------------
300 Midland Co. $ 14,550
---------------------------------------------------------------------------------
3,200 Mills Corp. 54,800
---------------------------------------------------------------------------------
2,550 Money Stores, Inc. 102,000
---------------------------------------------------------------------------------
3,375 Morgan Keegan, Inc. 36,703
---------------------------------------------------------------------------------
1,400 N.S. Bancorp, Inc. 50,575
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
FINANCE--CONTINUED
---------------------------------------------------------------------------------
3,900 NAC Re Corp. 136,988
---------------------------------------------------------------------------------
1,832 NBT Bancorp, Inc. 29,770
---------------------------------------------------------------------------------
2,600 (a)National Auto Credit, Inc. 42,250
---------------------------------------------------------------------------------
900 National Bancorp Alaska, Inc. 55,800
---------------------------------------------------------------------------------
800 National City Bancshares, Inc. 37,000
---------------------------------------------------------------------------------
4,050 National Community Bancorp 103,275
---------------------------------------------------------------------------------
2,400 National Golf Properties, Inc. 51,900
---------------------------------------------------------------------------------
3,200 National Health Investors, Inc. 96,000
---------------------------------------------------------------------------------
1,499 National Penn Bancshares, Inc. 39,359
---------------------------------------------------------------------------------
3,800 National Re Holdings Corp. 127,775
---------------------------------------------------------------------------------
500 (a)National Western Life Insurance Co., Class A 27,563
---------------------------------------------------------------------------------
4,300 Nationwide Health Properties, Inc. 176,838
---------------------------------------------------------------------------------
1,200 (a)Navigators Group, Inc. 22,500
---------------------------------------------------------------------------------
2,774 New York Bancorp, Inc. 55,827
---------------------------------------------------------------------------------
3,400 North American Mortgage Co. 70,125
---------------------------------------------------------------------------------
5,400 North Fork Bancorp, Inc. 118,125
---------------------------------------------------------------------------------
1,114 North Side Savings Bank 32,585
---------------------------------------------------------------------------------
3,496 Norwest Corp. 103,132
---------------------------------------------------------------------------------
1,200 Nymagic, Inc. 19,200
---------------------------------------------------------------------------------
3,600 Oasis Residential, Inc. 78,300
---------------------------------------------------------------------------------
3,800 (a)Olympic Financial Ltd. 69,350
---------------------------------------------------------------------------------
1,400 Omega Financial Corp. 42,000
---------------------------------------------------------------------------------
3,539 Omega Healthcare Investors $ 89,802
---------------------------------------------------------------------------------
3,195 Onbancorp, Inc. 95,051
---------------------------------------------------------------------------------
3,380 One Valley Bancorp West Virginia, Inc. 112,385
---------------------------------------------------------------------------------
3,156 Orion Capital Corp. 129,396
---------------------------------------------------------------------------------
1,100 (a)Oxford Resources Corp., Class A 28,875
---------------------------------------------------------------------------------
3,800 PHH Corp. 166,250
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
FINANCE--CONTINUED
---------------------------------------------------------------------------------
2,000 PXRE Corp. 51,000
---------------------------------------------------------------------------------
3,300 Paragon Group, Inc. 56,925
---------------------------------------------------------------------------------
1,000 Park National Corp. 45,250
---------------------------------------------------------------------------------
4,600 Penncorp Financial Group, Inc. 109,825
---------------------------------------------------------------------------------
1,700 Pennsylvania Real Estate Investment Trust 34,213
---------------------------------------------------------------------------------
1,565 People First Corp. 34,234
---------------------------------------------------------------------------------
1,900 Peoples Bank Bridgeport 37,525
---------------------------------------------------------------------------------
3,600 Peoples Heritage Financial Group 68,400
---------------------------------------------------------------------------------
1,750 Pikeville National Corp. 34,125
---------------------------------------------------------------------------------
700 Pinnacle Banc Group, Inc. 21,613
---------------------------------------------------------------------------------
4,800 Pioneer Group, Inc. 126,000
---------------------------------------------------------------------------------
3,900 Piper Jaffray Cos., Inc. 46,313
---------------------------------------------------------------------------------
1,100 Poe & Brown, Inc. 26,813
---------------------------------------------------------------------------------
4,000 Post Properties, Inc. 120,000
---------------------------------------------------------------------------------
7,620 (a)Premier Bancorp, Inc. 159,068
---------------------------------------------------------------------------------
5,200 Presidential Life Corp. 49,400
---------------------------------------------------------------------------------
6,100 (a)Price Enterprises, Inc. 88,450
---------------------------------------------------------------------------------
1,900 Price REIT, Inc. 55,575
---------------------------------------------------------------------------------
2,000 Prime Residential, Inc. 35,000
---------------------------------------------------------------------------------
6,500 Protective Life Corp. 185,250
---------------------------------------------------------------------------------
1,900 Provident Bancorp, Inc. 80,275
---------------------------------------------------------------------------------
1,375 Provident Bankshares Corp. $ 41,938
---------------------------------------------------------------------------------
1,150 Queens County Bancorp, Inc. 46,000
---------------------------------------------------------------------------------
3,132 Quick & Reilly Group, Inc. 74,385
---------------------------------------------------------------------------------
2,800 RCSB Financial, Inc. 62,300
---------------------------------------------------------------------------------
5,500 RFS Hotel Investors, Inc. 83,188
---------------------------------------------------------------------------------
1,300 RLI Corp. 30,388
---------------------------------------------------------------------------------
2,800 ROC Communities, Inc. 63,000
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
FINANCE--CONTINUED
---------------------------------------------------------------------------------
6,400 RPS Realty Trust 27,200
---------------------------------------------------------------------------------
700 RS Financial Corp. 27,125
---------------------------------------------------------------------------------
2,950 Raymond James Financial, Inc. 63,425
---------------------------------------------------------------------------------
2,100 Real Estate Investment Trust of California 35,963
---------------------------------------------------------------------------------
4,400 Realty Income Corp. 86,350
---------------------------------------------------------------------------------
1,500 Regency Realty Corp. 25,500
---------------------------------------------------------------------------------
950 (a)Regional Acceptance Corp. 9,738
---------------------------------------------------------------------------------
3,800 Reinsurance Group of America 130,625
---------------------------------------------------------------------------------
2,200 Reliance Bancorp, Inc. 31,900
---------------------------------------------------------------------------------
9,200 Reliance Group Holdings, Inc. 67,850
---------------------------------------------------------------------------------
3,474 Republic Bancorp, Inc. 44,294
---------------------------------------------------------------------------------
1,956 (a)Resource Bancshares Mortgage Group, Inc. 30,318
---------------------------------------------------------------------------------
4,500 Resource Mortgage Capital, Inc. 84,938
---------------------------------------------------------------------------------
4,600 (a)Riggs National Corp. 60,375
---------------------------------------------------------------------------------
1,800 River Forest Bancorp 41,400
---------------------------------------------------------------------------------
8,600 (a)Rockefeller Center Properties, Inc. 66,650
---------------------------------------------------------------------------------
8,850 Rollins Truck Leasing Corp. 85,181
---------------------------------------------------------------------------------
7,913 Roosevelt Financial Group, Inc. 127,597
---------------------------------------------------------------------------------
2,600 S & T Bancorp, Inc. 66,300
---------------------------------------------------------------------------------
1,800 SFFED Corp. 54,900
---------------------------------------------------------------------------------
2,700 Saul Centers, Inc. $ 38,813
---------------------------------------------------------------------------------
800 Scor U.S. Corp. 12,300
---------------------------------------------------------------------------------
2,300 (a)Security Capital Corp. 125,925
---------------------------------------------------------------------------------
1,900 Security Connecticut Corp. 49,400
---------------------------------------------------------------------------------
3,200 Selective Insurance Group, Inc. 119,200
---------------------------------------------------------------------------------
1,900 (a)Silicon Valley Bancshares 36,575
---------------------------------------------------------------------------------
2,000 Smith (Charles E.) Residential Realty, Inc. 46,500
---------------------------------------------------------------------------------
4,200 South West Property Trust, Inc. 50,925
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
FINANCE--CONTINUED
---------------------------------------------------------------------------------
9,532 Sovereign Bancorp, Inc. 94,129
---------------------------------------------------------------------------------
6,400 Spieker Properties, Inc. 155,200
---------------------------------------------------------------------------------
1,400 (a)St. Francis Capital Corp. 32,200
---------------------------------------------------------------------------------
4,144 St. Paul Bancorp, Inc. 99,974
---------------------------------------------------------------------------------
4,200 (a)Standard Financial, Inc. 57,750
---------------------------------------------------------------------------------
900 State Auto Financial Corp. 19,800
---------------------------------------------------------------------------------
1,250 Stewart Information Services Corp. 25,781
---------------------------------------------------------------------------------
7,200 Storage Equities, Inc. 132,300
---------------------------------------------------------------------------------
1,900 (a)Storage Trust Realty 37,288
---------------------------------------------------------------------------------
900 Student Loan Corp. 28,350
---------------------------------------------------------------------------------
900 Suffolk Bancorp 31,500
---------------------------------------------------------------------------------
600 Sumitomo Bank California 13,650
---------------------------------------------------------------------------------
7,520 Summit Bancorporation 213,380
---------------------------------------------------------------------------------
3,700 Summit Properties, Inc. 68,450
---------------------------------------------------------------------------------
2,100 Sun Communities, Inc. 52,238
---------------------------------------------------------------------------------
2,325 Susquehanna Bankshares, Inc. 66,844
---------------------------------------------------------------------------------
2,000 (a)T R Financial Corp. 49,500
---------------------------------------------------------------------------------
1,200 (a)TFC Enterprises, Inc. 12,600
---------------------------------------------------------------------------------
1,200 Tanger Factory Outlet Centers, Inc. 28,200
---------------------------------------------------------------------------------
6,900 Taubman Centers, Inc. $ 66,413
---------------------------------------------------------------------------------
3,600 The Trust Company of New Jersey 47,700
---------------------------------------------------------------------------------
2,700 Thornburg Mortgage Asset Co. 40,163
---------------------------------------------------------------------------------
750 Tompkins County Trust Co. 25,500
---------------------------------------------------------------------------------
3,500 Town & Country Trust 44,625
---------------------------------------------------------------------------------
2,500 Trans Financial Bancorp, Inc. 42,500
---------------------------------------------------------------------------------
1,600 (a)Transnational Re Corp., Class A 35,800
---------------------------------------------------------------------------------
1,400 Trenwick Group, Inc. 70,000
---------------------------------------------------------------------------------
2,400 Trinet Corporate Realty Trust, Inc. 64,200
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
FINANCE--CONTINUED
---------------------------------------------------------------------------------
3,978 Trustco Bank Corp. 85,527
---------------------------------------------------------------------------------
6,000 Trustmark Corp. 117,000
---------------------------------------------------------------------------------
2,400 Tucker Properties Corp. 22,200
---------------------------------------------------------------------------------
2,200 U.S. Trust Corp. 106,700
---------------------------------------------------------------------------------
3,590 UMB Financial Corp. 153,473
---------------------------------------------------------------------------------
3,300 (a)UST Corp. 44,963
---------------------------------------------------------------------------------
2,700 United Bankshares, Inc. 81,000
---------------------------------------------------------------------------------
3,300 United Carolina Bancshares 118,800
---------------------------------------------------------------------------------
5,180 United Companies Financial Corp. 146,335
---------------------------------------------------------------------------------
300 United Countrys Bancorporation 63,300
---------------------------------------------------------------------------------
11,600 United Dominion Realty Trust, Inc. 159,500
---------------------------------------------------------------------------------
1,100 United Fire & Casualty Co. 38,225
---------------------------------------------------------------------------------
6,500 (a)United Insurance Cos., Inc. 110,500
---------------------------------------------------------------------------------
2,000 Universal Health Realty Trust, Inc. 33,250
---------------------------------------------------------------------------------
3,000 Urban Shopping Centers, Inc. 63,750
---------------------------------------------------------------------------------
1,200 Usbancorp, Inc. 38,700
---------------------------------------------------------------------------------
8,000 Valley National Bancorp 195,000
---------------------------------------------------------------------------------
1,900 Vallicorp Holdings, Inc. 24,700
---------------------------------------------------------------------------------
1,100 Vermont Financial Services Corp. $ 34,925
---------------------------------------------------------------------------------
2,500 Vesta Insurance Group, Inc. 100,938
---------------------------------------------------------------------------------
1,200 Victoria Bankshares, Inc. 34,500
---------------------------------------------------------------------------------
3,100 Walden Residential Properties, Inc. 56,963
---------------------------------------------------------------------------------
2,300 Washington National Corp. 52,325
---------------------------------------------------------------------------------
7,100 Washington Real Estate Investment Trust 105,613
---------------------------------------------------------------------------------
1,577 (a)Waterhouse Investment Services, Inc. 31,146
---------------------------------------------------------------------------------
3,900 Webb (Del) Corp. 80,925
---------------------------------------------------------------------------------
1,240 Webster Financial Corp. Waterbury 31,620
---------------------------------------------------------------------------------
1,700 Weeks Corp. 39,100
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
FINANCE--CONTINUED
---------------------------------------------------------------------------------
3,850 Wellsford Residential Properties 76,038
---------------------------------------------------------------------------------
1,600 Wesbanco, Inc. 46,400
---------------------------------------------------------------------------------
2,000 WestAmerica Bancorporation 80,000
---------------------------------------------------------------------------------
2,048 Westcorp, Inc. 34,304
---------------------------------------------------------------------------------
3,800 Western Investment Real Estate Trust 42,275
---------------------------------------------------------------------------------
7,300 Western National Corp. 100,375
---------------------------------------------------------------------------------
1,200 (a)White River Corp. 41,700
---------------------------------------------------------------------------------
3,325 Whitney Holding Corp. 103,075
---------------------------------------------------------------------------------
600 Winthrop Resources Corp. 10,050
---------------------------------------------------------------------------------
4,200 World Acceptance Corp. 54,600
---------------------------------------------------------------------------------
2,400 Zenith National Insurance Corp. 55,800
---------------------------------------------------------------------------------
3,300 Zions Bancorp 228,525
--------------------------------------------------------------------------------- --------------
Total 27,312,457
--------------------------------------------------------------------------------- --------------
HEALTH SERVICES--3.5%
---------------------------------------------------------------------------------
1,500 (a)Access Health, Inc. 46,687
---------------------------------------------------------------------------------
900 (a)Advantage Health Corp. 30,600
---------------------------------------------------------------------------------
4,800 (a)AmeriSource Health Corp., Class A 130,800
---------------------------------------------------------------------------------
300 (a)American HomePatient, Inc. $ 7,275
---------------------------------------------------------------------------------
3,000 (a)American Medical Response 86,625
---------------------------------------------------------------------------------
2,100 (a)Apogee, Inc. 18,375
---------------------------------------------------------------------------------
6,300 (a)Applied Bioscience International, Inc. 40,162
---------------------------------------------------------------------------------
9,921 (a)Apria Healthcare Group, Inc. 214,542
---------------------------------------------------------------------------------
1,200 (a)Arbor Health Care Co. 20,400
---------------------------------------------------------------------------------
1,800 Bindley Western Industries, Inc. 28,125
---------------------------------------------------------------------------------
800 (a)Champion Healthcare Corp. 5,450
---------------------------------------------------------------------------------
6,400 (a)Charter Medical Corp. 115,200
---------------------------------------------------------------------------------
1,100 (a)ClinTrials, Inc. 22,275
---------------------------------------------------------------------------------
3,000 (a)Coastal Physician Group, Inc. 39,375
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
HEALTH SERVICES--CONTINUED
---------------------------------------------------------------------------------
4,300 (a)Community Health Systems, Inc. 136,525
---------------------------------------------------------------------------------
9,800 (a)Community Psychiatric Centers 106,575
---------------------------------------------------------------------------------
8,900 (a)Coram Healthcare Corp. 35,600
---------------------------------------------------------------------------------
7,200 (a)Coventry Corp. 141,300
---------------------------------------------------------------------------------
900 (a)CyCare System, Inc. 27,900
---------------------------------------------------------------------------------
1,400 (a)EmCare Holdings, Inc. 32,200
---------------------------------------------------------------------------------
5,200 (a)Forum Group, Inc. 38,675
---------------------------------------------------------------------------------
3,694 (a)Foxmeyer Health Corp. 84,038
---------------------------------------------------------------------------------
1,800 (a)GMIS, Inc. 20,700
---------------------------------------------------------------------------------
3,300 (a)Genesis Health Ventures, Inc. 95,287
---------------------------------------------------------------------------------
4,762 (a)GranCare, Inc. 69,644
---------------------------------------------------------------------------------
2,400 (a)Gulf South Medical Supplies, Inc. 49,800
---------------------------------------------------------------------------------
500 (a)HCIA, Inc. 13,625
---------------------------------------------------------------------------------
1,750 (a)Health Management Systems, Inc. 56,000
---------------------------------------------------------------------------------
1,800 (a)Health Management, Inc. 20,475
---------------------------------------------------------------------------------
1,100 (a)HealthWise of America, Inc. 32,450
---------------------------------------------------------------------------------
10,908 (a)Horizon/CMS Healthcare Corp. $ 220,887
---------------------------------------------------------------------------------
2,300 (a)Inphynet Medical Management, Inc. 41,400
---------------------------------------------------------------------------------
4,400 Integrated Health Services, Inc. 100,650
---------------------------------------------------------------------------------
500 Labone, Inc. 5,750
---------------------------------------------------------------------------------
6,100 (a)Lincare Holdings, Inc. 151,738
---------------------------------------------------------------------------------
3,700 (a)Living Centers of America, Inc. 95,738
---------------------------------------------------------------------------------
4,600 (a)Mariner Health Group, Inc. 44,850
---------------------------------------------------------------------------------
3,900 (a)Maxicare Health Plans, Inc. 67,763
---------------------------------------------------------------------------------
1,800 (a)Medic Computer Systems, Inc. 95,850
---------------------------------------------------------------------------------
2,000 (a)Multicare Cos., Inc. 37,500
---------------------------------------------------------------------------------
14,700 (a)NovaCare, Inc. 91,875
---------------------------------------------------------------------------------
4,300 Omnicare, Inc. 155,875
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
HEALTH SERVICES--CONTINUED
---------------------------------------------------------------------------------
9,100 (a)Ornda Healthcorp 160,388
---------------------------------------------------------------------------------
900 (a)Orthodontic Centers of America, Inc. 28,800
---------------------------------------------------------------------------------
6,175 Owens & Minor, Inc. 73,328
---------------------------------------------------------------------------------
1,000 (a)PHP Healthcare Corp. 42,375
---------------------------------------------------------------------------------
1,900 (a)Pacific Physician Services, Inc. 30,163
---------------------------------------------------------------------------------
2,500 (a)Patterson Dental Co. 62,500
---------------------------------------------------------------------------------
1,000 (a)Phamis, Inc. 25,250
---------------------------------------------------------------------------------
2,400 (a)Pharmaceutical Marketing Services 27,600
---------------------------------------------------------------------------------
7,575 (a)Phycor, Inc. 278,381
---------------------------------------------------------------------------------
3,000 (a)Physician Computer Network, Inc. 20,625
---------------------------------------------------------------------------------
1,900 (a)Physician Reliance Network, Inc. 63,175
---------------------------------------------------------------------------------
3,500 (a)Physician Sales & Service, Inc. 56,875
---------------------------------------------------------------------------------
1,500 (a)Physicians Health Services, Inc., Class A 49,875
---------------------------------------------------------------------------------
3,500 (a)Quantum Health Research, Inc. 37,188
---------------------------------------------------------------------------------
2,600 (a)Regency Health Services, Inc. 24,375
---------------------------------------------------------------------------------
2,200 (a)Renal Treatment Centers, Inc. $ 79,200
---------------------------------------------------------------------------------
800 (a)Res-Care, Inc. 13,200
---------------------------------------------------------------------------------
1,700 (a)RightCHOICE Managed Care, Inc., Class A 21,675
---------------------------------------------------------------------------------
2,000 (a)Rotech Medical Corp. 45,500
---------------------------------------------------------------------------------
1,000 Seafield Capital Corp. 35,500
---------------------------------------------------------------------------------
2,500 (a)Sierra Health Services, Inc. 71,563
---------------------------------------------------------------------------------
1,200 (a)Sullivan Dental Products, Inc. 11,700
---------------------------------------------------------------------------------
900 (a)Summit Care Corp. 18,675
---------------------------------------------------------------------------------
8,024 (a)Sun Healthcare Group, Inc. 95,285
---------------------------------------------------------------------------------
1,500 (a)Synetic, Inc. 34,875
---------------------------------------------------------------------------------
4,900 (a)Systemed, Inc. 30,013
---------------------------------------------------------------------------------
1,600 (a)TheraTx, Inc. 18,000
---------------------------------------------------------------------------------
7,200 (a)Unilab Corp. 22,500
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
HEALTH SERVICES--CONTINUED
---------------------------------------------------------------------------------
1,300 (a)United American Healthcare Corp. 14,300
---------------------------------------------------------------------------------
550 United Wisconsin Services, Inc. 13,681
---------------------------------------------------------------------------------
3,100 (a)Universal Health Services, Inc., Class B 116,250
---------------------------------------------------------------------------------
600 (a)Vitalink Pharmacy Services, Inc. 10,800
---------------------------------------------------------------------------------
4,850 (a)Vivra, Inc. 160,050
---------------------------------------------------------------------------------
1,200 (a)Wellcare Management Group, Inc. 28,800
--------------------------------------------------------------------------------- --------------
Total 4,699,026
--------------------------------------------------------------------------------- --------------
HEALTH TECHNOLOGY--5.2%
---------------------------------------------------------------------------------
3,000 A. L. Pharma, Inc., Class A 72,000
---------------------------------------------------------------------------------
3,666 ADAC Laboratories 43,534
---------------------------------------------------------------------------------
6,000 (a)AMSCO International, Inc. 96,000
---------------------------------------------------------------------------------
3,600 ATS Medical, Inc. 28,350
---------------------------------------------------------------------------------
4,900 (a)Acuson Corp. 56,962
---------------------------------------------------------------------------------
1,200 (a)Advanced Magnetics, Inc. 32,400
---------------------------------------------------------------------------------
3,000 (a)Advanced Technology Labs, Inc. $ 54,000
---------------------------------------------------------------------------------
7,200 (a)Advanced Tissue Sciences, Inc., Class A 64,800
---------------------------------------------------------------------------------
2,100 (a)Agouron Pharmaceuticals, Inc. 54,600
---------------------------------------------------------------------------------
5,500 (a)Alliance Pharmaceutical Corp. 66,000
---------------------------------------------------------------------------------
4,200 (a)Amylin Pharmaceuticals, Inc. 30,975
---------------------------------------------------------------------------------
1,200 (a)Aphton Corp. 11,400
---------------------------------------------------------------------------------
5,500 (a)Athena Neurosciences, Inc. 51,562
---------------------------------------------------------------------------------
6,000 Ballard Medical Products 103,500
---------------------------------------------------------------------------------
700 (a)Barr Laboratories, Inc. 15,225
---------------------------------------------------------------------------------
1,300 (a)Bio Rad Laboratories, Inc., Class A 49,400
---------------------------------------------------------------------------------
9,700 (a)Bio-Technology General Corp. 31,525
---------------------------------------------------------------------------------
7,200 (a)Biocontrol Technology, Inc. 45,675
---------------------------------------------------------------------------------
1,300 Biocraft Laboratories, Inc. 20,150
---------------------------------------------------------------------------------
2,800 (a)CNS, Inc. 29,400
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
HEALTH TECHNOLOGY--CONTINUED
---------------------------------------------------------------------------------
1,600 (a)CONMED Corp. 56,000
---------------------------------------------------------------------------------
1,600 (a)Carrington Laboratories, Inc. 30,000
---------------------------------------------------------------------------------
5,100 Carter Wallace, Inc. 53,550
---------------------------------------------------------------------------------
3,200 (a)Cellpro, Inc. 37,200
---------------------------------------------------------------------------------
5,100 (a)Cephalon, Inc. 153,000
---------------------------------------------------------------------------------
2,800 (a)Circon Corp. 63,700
---------------------------------------------------------------------------------
2,100 Collagen Corp. 37,800
---------------------------------------------------------------------------------
5,600 (a)Columbia Laboratories, Inc. 38,150
---------------------------------------------------------------------------------
1,751 (a)Copley Pharmaceutical 28,235
---------------------------------------------------------------------------------
4,300 (a)Cor Therapeutics, Inc. 44,612
---------------------------------------------------------------------------------
3,100 (a)Cygnus, Inc. 50,762
---------------------------------------------------------------------------------
4,300 (a)Cytel Corp. 22,037
---------------------------------------------------------------------------------
7,200 (a)Cytogen Corp. 25,650
---------------------------------------------------------------------------------
3,500 (a)Daig Corp. $ 77,875
---------------------------------------------------------------------------------
3,100 (a)Datascope Corp. 73,625
---------------------------------------------------------------------------------
2,400 Diagnostic Products Corp. 88,800
---------------------------------------------------------------------------------
2,900 (a)Dura Pharmaceuticals, Inc. 84,825
---------------------------------------------------------------------------------
2,100 (a)Duramed Pharmaceuticals, Inc. 32,550
---------------------------------------------------------------------------------
2,400 (a)EP Technologies, Inc. 29,700
---------------------------------------------------------------------------------
1,900 (a)Empi, Inc. 42,275
---------------------------------------------------------------------------------
4,070 (a)Enzo Biochem, Inc. 64,611
---------------------------------------------------------------------------------
2,700 (a)Epitope, Inc. 37,125
---------------------------------------------------------------------------------
1,800 (a)Fresenius USA, Inc. 29,475
---------------------------------------------------------------------------------
5,100 (a)Gilead Sciences, Inc. 99,450
---------------------------------------------------------------------------------
5,100 (a)Haemonetics Corp. 96,262
---------------------------------------------------------------------------------
491 (a)Healthdyne Technologies, Inc. 5,278
---------------------------------------------------------------------------------
2,600 (a)Heart Technology, Inc. 74,100
---------------------------------------------------------------------------------
1,900 (a)Human Genome Sciences, Inc. 37,287
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
HEALTH TECHNOLOGY--CONTINUED
---------------------------------------------------------------------------------
1,800 (a)I-Stat Corp. 55,800
---------------------------------------------------------------------------------
6,547 ICN Pharmaceuticals, Inc. 134,213
---------------------------------------------------------------------------------
5,600 (a)ICOS Corp. 32,200
---------------------------------------------------------------------------------
7,100 (a)IDEXX Laboratories, Inc. 289,325
---------------------------------------------------------------------------------
1,600 (a)IGI, Inc. 17,400
---------------------------------------------------------------------------------
3,700 (a)Immulogic Pharmaceutical Corp. 43,475
---------------------------------------------------------------------------------
4,000 (a)Immunex Corp. 51,000
---------------------------------------------------------------------------------
1,900 (a)InControl, Inc. 33,250
---------------------------------------------------------------------------------
1,300 (a)Inbrand Corp. 18,200
---------------------------------------------------------------------------------
1,200 (a)Incyte Pharmaceuticals, Inc. 24,900
---------------------------------------------------------------------------------
5,800 (a)Interneuron Pharmaceuticals 86,275
---------------------------------------------------------------------------------
5,400 Invacare Corp. 136,350
---------------------------------------------------------------------------------
4,300 (a)Isis Pharmaceuticals, Inc. $ 43,537
---------------------------------------------------------------------------------
4,000 (a)Isolyser Co., Inc. 71,500
---------------------------------------------------------------------------------
3,400 Kinetic Concepts, Inc. 37,825
---------------------------------------------------------------------------------
1,500 Life Technologies, Inc. 36,750
---------------------------------------------------------------------------------
2,992 (a)Ligand Pharmaceuticals, Inc., Class B 23,562
---------------------------------------------------------------------------------
6,100 (a)Liposome Co., Inc. 93,788
---------------------------------------------------------------------------------
800 (a)Lunar Corp. 29,800
---------------------------------------------------------------------------------
1,800 (a)Matrix Pharmaceuticals, Inc. 26,100
---------------------------------------------------------------------------------
1,500 (a)Maxxim Medical, Inc. 20,813
---------------------------------------------------------------------------------
2,500 (a)Medco Research, Inc. 29,375
---------------------------------------------------------------------------------
2,300 (a)MediSense, Inc. 49,163
---------------------------------------------------------------------------------
2,200 (a)Medimmune, Inc. 23,925
---------------------------------------------------------------------------------
5,000 Mentor Corp. 110,000
---------------------------------------------------------------------------------
6,076 (a)Nellcor, Inc. 349,370
---------------------------------------------------------------------------------
1,400 (a)NeoPath, Inc. 31,500
---------------------------------------------------------------------------------
1,500 (a)Neurogen Corp. 33,375
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
HEALTH TECHNOLOGY--CONTINUED
---------------------------------------------------------------------------------
4,400 (a)Nexstar Pharmaceuticals, Inc. 49,500
---------------------------------------------------------------------------------
3,700 (a)North American Biologicals, Inc. 29,600
---------------------------------------------------------------------------------
1,400 (a)Northfield Laboratories, Inc. 19,600
---------------------------------------------------------------------------------
3,200 (a)Noven Pharmaceuticals, Inc. 32,800
---------------------------------------------------------------------------------
2,500 (a)Organogenesis, Inc. 46,875
---------------------------------------------------------------------------------
1,800 (a)Ostex International, Inc. 36,000
---------------------------------------------------------------------------------
1,350 (a)PDT, Inc. 51,975
---------------------------------------------------------------------------------
3,800 (a)Pharmaceutical Resources, Inc. 31,350
---------------------------------------------------------------------------------
2,900 (a)Protein Design Laboratories, Inc. 48,575
---------------------------------------------------------------------------------
1,300 (a)Pure Pacific, Inc. 9,913
---------------------------------------------------------------------------------
1,200 (a)Quintiles Transnational Corp. 77,100
---------------------------------------------------------------------------------
3,400 (a)Regeneron Pharmaceuticals, Inc. $ 43,775
---------------------------------------------------------------------------------
2,100 (a)Research Industries Corp. 57,750
---------------------------------------------------------------------------------
3,500 (a)Resound Corp. 27,563
---------------------------------------------------------------------------------
3,100 (a)Respironics, Inc. 67,425
---------------------------------------------------------------------------------
1,400 (a)Rexall Sundown, Inc. 21,000
---------------------------------------------------------------------------------
2,500 (a)Roberts Pharmaceutical Corp. 48,438
---------------------------------------------------------------------------------
1,600 (a)Safeskin Corp. 28,800
---------------------------------------------------------------------------------
3,000 (a)SciClone Pharmaceuticals, Inc. 20,625
---------------------------------------------------------------------------------
8,000 (a)Scios Nova, Inc. 29,000
---------------------------------------------------------------------------------
4,300 (a)Sepracor, Inc. 72,563
---------------------------------------------------------------------------------
3,900 (a)Sequus Pharmaceuticals, Inc. 46,800
---------------------------------------------------------------------------------
3,900 (a)Sofamor Danek Group, Inc. 95,550
---------------------------------------------------------------------------------
3,700 (a)Somatogen, Inc. 57,813
---------------------------------------------------------------------------------
2,400 SpaceLabs Medical, Inc. 61,800
---------------------------------------------------------------------------------
2,900 (a)Staar Surgical Co. 30,813
---------------------------------------------------------------------------------
4,000 (a)Steris Corp. 135,000
---------------------------------------------------------------------------------
3,800 (a)Summit Technology, Inc. 169,100
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
HEALTH TECHNOLOGY--CONTINUED
---------------------------------------------------------------------------------
3,700 (a)Sunrise Medical, Inc. 67,063
---------------------------------------------------------------------------------
700 (a)Systemix, Inc. 9,800
---------------------------------------------------------------------------------
1,100 (a)Target Therapeutics, Inc. 85,250
---------------------------------------------------------------------------------
2,100 (a)Techne Corp. 44,888
---------------------------------------------------------------------------------
3,300 (a)Technological Medical Products, Inc. 62,700
---------------------------------------------------------------------------------
2,000 (a)Theratech, Inc. 37,500
---------------------------------------------------------------------------------
7,800 (a)U.S. Bioscience, Inc. 34,613
---------------------------------------------------------------------------------
3,200 (a)Uromed Corp. 34,000
---------------------------------------------------------------------------------
2,200 (a)Utah Medical Products, Inc. 30,250
---------------------------------------------------------------------------------
1,900 (a)VISX, Inc. 42,750
---------------------------------------------------------------------------------
4,600 (a)Ventritex, Inc. $ 90,275
---------------------------------------------------------------------------------
3,300 (a)Vertex Pharmaceuticals, Inc. 54,450
---------------------------------------------------------------------------------
1,300 Vital Signs, Inc. 23,725
---------------------------------------------------------------------------------
2,700 (a)Vivus, Inc. 54,675
---------------------------------------------------------------------------------
6,826 (a)Watson Pharmaceuticals, Inc. 305,464
---------------------------------------------------------------------------------
2,800 West Co., Inc. 69,300
---------------------------------------------------------------------------------
7,800 (a)Work Recovery, Inc. 10,238
--------------------------------------------------------------------------------- --------------
Total 6,908,207
--------------------------------------------------------------------------------- --------------
INDUSTRIAL SERVICES--2.9%
---------------------------------------------------------------------------------
4,200 (a)Air and Water Technology Corp., Class A 21,000
---------------------------------------------------------------------------------
5,900 (a)Allied Waste Industries, Inc. 49,412
---------------------------------------------------------------------------------
8,800 (a)Allwaste, Inc. 42,900
---------------------------------------------------------------------------------
800 (a)American Buildings Co. 20,200
---------------------------------------------------------------------------------
6,081 (a)BJ Services Co. 142,903
---------------------------------------------------------------------------------
1,400 Butler Manufacturing Co. 41,300
---------------------------------------------------------------------------------
5,400 Camco International, Inc. 123,525
---------------------------------------------------------------------------------
1,700 (a)Corrpro Cos., Inc. 9,562
---------------------------------------------------------------------------------
3,700 Dames & Moore, Inc. 50,412
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
INDUSTRIAL SERVICES--CONTINUED
---------------------------------------------------------------------------------
3,500 (a)Destec Energy, Inc. 49,437
---------------------------------------------------------------------------------
1,400 (a)Dual Drilling Co. 13,650
---------------------------------------------------------------------------------
2,000 (a)Energy Ventures, Inc. 38,000
---------------------------------------------------------------------------------
4,700 (a)EnviroSource, Inc. 12,337
---------------------------------------------------------------------------------
900 (a)Global Industries Ltd. 23,625
---------------------------------------------------------------------------------
1,700 Granite Construction, Inc. 48,237
---------------------------------------------------------------------------------
5,600 Helmerich & Payne, Inc. 144,900
---------------------------------------------------------------------------------
3,000 (a)Hornbeck Offshore Services, Inc. 43,875
---------------------------------------------------------------------------------
800 (a)Horsehead Resource Development, Inc. 4,100
---------------------------------------------------------------------------------
3,800 (a)Input/Output, Inc. $ 142,025
---------------------------------------------------------------------------------
4,701 (a)Insituform Technologies, Inc., Class A 58,761
---------------------------------------------------------------------------------
7,200 (a)International Technology Corp. 19,800
---------------------------------------------------------------------------------
4,700 (a)Jacobs Engineering Group, Inc. 102,812
---------------------------------------------------------------------------------
2,100 (a)Kasler Holding Corp. 12,075
---------------------------------------------------------------------------------
5,200 (a)Kenetech Corp. 16,900
---------------------------------------------------------------------------------
3,740 Laidlaw, Inc., Class B 33,660
---------------------------------------------------------------------------------
1,900 Landauer, Inc. 37,287
---------------------------------------------------------------------------------
3,300 (a)Landmark Graphics Corp. 71,775
---------------------------------------------------------------------------------
1,500 Lufkin Industries, Inc. 27,750
---------------------------------------------------------------------------------
7,400 (a)Marine Drilling Cos., Inc. 27,750
---------------------------------------------------------------------------------
1,500 (a)Mastec, Inc. 17,813
---------------------------------------------------------------------------------
4,900 (a)Mid-American Waste Systems, Inc. 20,825
---------------------------------------------------------------------------------
2,500 (a)Molten Metal Technology 96,250
---------------------------------------------------------------------------------
6,900 (a)Morrison Knudsen Corp. 44,850
---------------------------------------------------------------------------------
18,900 (a)Nabors Industries, Inc. 163,013
---------------------------------------------------------------------------------
2,300 (a)Newpark Resources, Inc. 36,513
---------------------------------------------------------------------------------
15,800 (a)Noble Drilling Corp. 110,600
---------------------------------------------------------------------------------
4,300 (a)OHM Corp. 34,938
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
INDUSTRIAL SERVICES--CONTINUED
---------------------------------------------------------------------------------
5,200 (a)Oceaneering International, Inc. 49,400
---------------------------------------------------------------------------------
4,400 (a)Offshore Logistics, Inc. 54,450
---------------------------------------------------------------------------------
12,500 (a)Parker Drilling Co. 65,625
---------------------------------------------------------------------------------
3,000 (a)Pool Energy Services Co. 27,750
---------------------------------------------------------------------------------
5,300 (a)Pride Petroleum Services, Inc. 46,375
---------------------------------------------------------------------------------
1,000 (a)Prins Recycling Corp. 9,000
---------------------------------------------------------------------------------
1,800 Production Operations Corp. 54,000
---------------------------------------------------------------------------------
1,300 (a)RPC Energy Services, Inc. 10,075
---------------------------------------------------------------------------------
13,400 (a)Reading & Bates Corp. $ 154,100
---------------------------------------------------------------------------------
3,400 (a)Republic Waste Industries, Inc. 73,100
---------------------------------------------------------------------------------
13,600 (a)Rollins Environmental Services, Inc. 45,900
---------------------------------------------------------------------------------
19,000 (a)Rowan Companies, Inc. 125,875
---------------------------------------------------------------------------------
3,700 (a)Sanifill, Inc. 116,550
---------------------------------------------------------------------------------
900 (a)Seacor Holdings, Inc. 21,825
---------------------------------------------------------------------------------
2,100 (a)Seitel, Inc. 54,338
---------------------------------------------------------------------------------
400 Sevenson Environmental Services 7,100
---------------------------------------------------------------------------------
2,700 (a)Sithe Energies, Inc. 19,238
---------------------------------------------------------------------------------
8,200 (a)Smith International, Inc. 131,200
---------------------------------------------------------------------------------
2,100 Stone & Webster, Inc. 70,613
---------------------------------------------------------------------------------
2,025 (a)Tetra Tech, Inc. 44,044
---------------------------------------------------------------------------------
2,800 (a)Tetra Technologies, Inc. 37,100
---------------------------------------------------------------------------------
400 (a)Thermo Ecotek Corp. 5,500
---------------------------------------------------------------------------------
900 (a)Thermo Process Systems, Inc. 9,788
---------------------------------------------------------------------------------
850 Thermo Remediation, Inc. 12,113
---------------------------------------------------------------------------------
800 Trigen Energy Corp. 14,000
---------------------------------------------------------------------------------
4,200 (a)Tuboscope Vetco International Corp. 24,675
---------------------------------------------------------------------------------
9,108 (a)USA Waste Services, Inc. 191,268
---------------------------------------------------------------------------------
3,000 (a)United Waste Systems, Inc. 118,500
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
INDUSTRIAL SERVICES--CONTINUED
---------------------------------------------------------------------------------
3,900 (a)Varco International, Inc. 35,588
---------------------------------------------------------------------------------
11,339 (a)Weatherford International, Inc. 273,553
---------------------------------------------------------------------------------
2,100 (a)Western Waste Industries 41,475
--------------------------------------------------------------------------------- --------------
Total 3,898,890
--------------------------------------------------------------------------------- --------------
MISCELLANEOUS--0.1%
---------------------------------------------------------------------------------
324 Lynx Therapeutic, Inc. 65
---------------------------------------------------------------------------------
1,600 (a)MedPartners, Inc. 44,800
---------------------------------------------------------------------------------
2,000 (a)NumereX Corp., Class A $ 11,500
---------------------------------------------------------------------------------
1,200 (a)UniHolding Corp. 5,400
--------------------------------------------------------------------------------- --------------
Total 61,765
--------------------------------------------------------------------------------- --------------
NON-ENERGY MINERALS--2.3%
---------------------------------------------------------------------------------
4,600 (a)AK Steel Holding Corp. 142,600
---------------------------------------------------------------------------------
3,800 AMCOL International Corp. 64,125
---------------------------------------------------------------------------------
2,600 (a)Acme Metals, Inc. 39,325
---------------------------------------------------------------------------------
11,000 (a)Amax Gold, Inc. 61,875
---------------------------------------------------------------------------------
700 Ameron, Inc. 23,975
---------------------------------------------------------------------------------
18,300 (a)Armco, Inc. 112,087
---------------------------------------------------------------------------------
6,400 Birmingham Steel Corp. 97,600
---------------------------------------------------------------------------------
3,600 Brush Wellman, Inc. 60,300
---------------------------------------------------------------------------------
4,300 CalMat Co. 72,562
---------------------------------------------------------------------------------
3,600 Carpenter Technology Corp. 136,350
---------------------------------------------------------------------------------
2,900 (a)CasTech Aluminum Group, Inc. 40,600
---------------------------------------------------------------------------------
2,800 (a)Centex Construction Products, Inc. 35,350
---------------------------------------------------------------------------------
1,300 Chaparral Steel Co. 12,837
---------------------------------------------------------------------------------
2,700 Cleveland Cliffs, Inc. 100,912
---------------------------------------------------------------------------------
3,500 Coeur d'Alene Mines Corp. 59,062
---------------------------------------------------------------------------------
3,000 (a)Dravo Corp. 37,125
---------------------------------------------------------------------------------
2,000 (a)Elcor Corp. 42,000
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
NON-ENERGY MINERALS--CONTINUED
---------------------------------------------------------------------------------
1,500 FMC Gold Co. 5,812
---------------------------------------------------------------------------------
1,900 (a)Fibreboard Corp. 45,600
---------------------------------------------------------------------------------
4,059 (a)FirstMiss Gold, Inc. 73,062
---------------------------------------------------------------------------------
1,700 Florida Rock Industries, Inc. 45,900
---------------------------------------------------------------------------------
2,800 (a)Geneva Steel Co., Class A 20,300
---------------------------------------------------------------------------------
2,200 (a)Giant Cement Holding, Inc. 20,625
---------------------------------------------------------------------------------
10,800 (a)Hecla Mining Co. $ 79,650
---------------------------------------------------------------------------------
2,300 Imco Recycling, Inc. 49,450
---------------------------------------------------------------------------------
4,000 J&L Specialty Steel, Inc. 65,500
---------------------------------------------------------------------------------
1,800 (a)Kaiser Aluminum Corp. 20,250
---------------------------------------------------------------------------------
2,700 Lone Star Industries, Inc. 61,763
---------------------------------------------------------------------------------
4,000 (a)Lone Star Technologies, Inc. 35,000
---------------------------------------------------------------------------------
3,300 Lukens, Inc. 101,475
---------------------------------------------------------------------------------
10,400 (a)Magma Copper Co. 174,200
---------------------------------------------------------------------------------
1,300 (a)Maxxam, Inc. 48,100
---------------------------------------------------------------------------------
3,600 Medusa Corp. 90,000
---------------------------------------------------------------------------------
5,100 Minerals Technologies, Inc. 203,363
---------------------------------------------------------------------------------
4,800 (a)National Steel Corp., Class B 63,600
---------------------------------------------------------------------------------
4,500 (a)Northwestern Steel & Wire Co. 33,750
---------------------------------------------------------------------------------
3,700 Oregon Steel Mills 52,725
---------------------------------------------------------------------------------
900 Puerto Rican Cement Co., Inc. 29,588
---------------------------------------------------------------------------------
3,000 Quanex Corp. 59,250
---------------------------------------------------------------------------------
1,800 Republic Gypsum Co. 21,150
---------------------------------------------------------------------------------
2,300 Rouge Steel Co., Class A 50,025
---------------------------------------------------------------------------------
2,800 (a)Royal Gold, Inc. 22,400
---------------------------------------------------------------------------------
800 Schnitzer Steel Industries, Inc., Class A 21,200
---------------------------------------------------------------------------------
3,900 (a)Southdown, Inc. 63,375
---------------------------------------------------------------------------------
3,300 (a)Stillwater Mining Co. 55,688
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
NON-ENERGY MINERALS--CONTINUED
---------------------------------------------------------------------------------
43,400 (a)Sunshine Mining Co. 70,525
---------------------------------------------------------------------------------
2,100 Texas Industries, Inc. 110,513
---------------------------------------------------------------------------------
900 (a)Tremont Corp. 17,663
---------------------------------------------------------------------------------
2,400 Universal Forest Products, Inc. 22,800
---------------------------------------------------------------------------------
1,300 (a)WCI Steel, Inc. 6,175
---------------------------------------------------------------------------------
4,900 (a)WHX Corp. $ 50,838
---------------------------------------------------------------------------------
8,400 (a)Weirton Steel Corp. 37,800
--------------------------------------------------------------------------------- --------------
Total 3,067,800
--------------------------------------------------------------------------------- --------------
PROCESS INDUSTRIES--3.8%
---------------------------------------------------------------------------------
903 AEP Industries, Inc. 20,317
---------------------------------------------------------------------------------
5,600 Albany International Corp., Class A 116,200
---------------------------------------------------------------------------------
800 Alico, Inc. 14,000
---------------------------------------------------------------------------------
500 American Filtrona Corp. 15,875
---------------------------------------------------------------------------------
1,200 American Maize Products Co., Class A 47,550
---------------------------------------------------------------------------------
4,000 Aptargroup, Inc. 137,000
---------------------------------------------------------------------------------
2,800 BMC Industries, Inc. 108,150
---------------------------------------------------------------------------------
1,000 Blessings Corp. 11,750
---------------------------------------------------------------------------------
1,200 Brady (W.H.) Co. 87,000
---------------------------------------------------------------------------------
14,600 (a)Burlington Industries, Inc. 162,425
---------------------------------------------------------------------------------
1,400 (a)Bush Boake Allen, Inc. 38,325
---------------------------------------------------------------------------------
6,800 (a)Calgene, Inc. 43,350
---------------------------------------------------------------------------------
6,400 Calgon Carbon Corp. 72,800
---------------------------------------------------------------------------------
1,400 Cambrex Corp. 53,375
---------------------------------------------------------------------------------
4,700 Caraustar Industries, Inc. 88,125
---------------------------------------------------------------------------------
1,900 Chemed Corp. 66,500
---------------------------------------------------------------------------------
5,300 Chesapeake Corp. 162,312
---------------------------------------------------------------------------------
5,500 (a)Cone Mills Corp. 59,812
---------------------------------------------------------------------------------
3,000 (a)Cytec Industries, Inc. 164,250
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
PROCESS INDUSTRIES--CONTINUED
---------------------------------------------------------------------------------
1,300 Dekalb Genetics Corp., Class B 55,575
---------------------------------------------------------------------------------
2,200 Delta & Pine Land Co. 85,250
---------------------------------------------------------------------------------
3,700 Delta Woodside Industries, Inc. 24,050
---------------------------------------------------------------------------------
5,500 Dexter Corp. 131,313
---------------------------------------------------------------------------------
5,200 Donaldson Company, Inc. $ 126,750
---------------------------------------------------------------------------------
2,000 (a)Embrace Systems Corp. 1,000
---------------------------------------------------------------------------------
1,700 (a)Energy Conversion Devices, Inc. 28,900
---------------------------------------------------------------------------------
1,000 Fab Industries, Inc. 29,250
---------------------------------------------------------------------------------
2,000 (a)Fieldcrest Cannon, Inc. 38,500
---------------------------------------------------------------------------------
4,600 First Mississippi Corp. 94,300
---------------------------------------------------------------------------------
3,300 (a)Foamex International, Inc. 24,750
---------------------------------------------------------------------------------
3,100 Fuller (H.B.) Co. 97,650
---------------------------------------------------------------------------------
2,000 Furon Co. 31,000
---------------------------------------------------------------------------------
2,600 (a)Galey & Lord, Inc. 32,500
---------------------------------------------------------------------------------
12,100 (a)Gaylord Container Corp. 92,262
---------------------------------------------------------------------------------
1,500 (a)Gelman Sciences, Inc. 32,062
---------------------------------------------------------------------------------
5,800 Geon Co. 144,275
---------------------------------------------------------------------------------
3,200 Greif Brothers Corp., Class A 80,400
---------------------------------------------------------------------------------
1,700 Guardsman Products, Inc. 19,337
---------------------------------------------------------------------------------
2,500 Guilford Mills, Inc. 55,312
---------------------------------------------------------------------------------
2,463 (a)Intermagnetics General Corp. 44,334
---------------------------------------------------------------------------------
1,700 (a)International Imaging Materials, Inc. 42,925
---------------------------------------------------------------------------------
3,200 (a)Ionics, Inc. 130,400
---------------------------------------------------------------------------------
7,600 Lawter International, Inc. 80,750
---------------------------------------------------------------------------------
1,400 Learonal 31,850
---------------------------------------------------------------------------------
1,350 Lesco, Inc. 18,562
---------------------------------------------------------------------------------
4,250 Lilly Industrial, Inc., Class A 54,188
---------------------------------------------------------------------------------
1,100 Liqui Box Corp. 29,975
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
PROCESS INDUSTRIES--CONTINUED
---------------------------------------------------------------------------------
3,900 (a)Lydall, Inc. 88,725
---------------------------------------------------------------------------------
500 MacDermid, Inc. 25,000
---------------------------------------------------------------------------------
3,400 (a)Material Sciences Corp. 56,525
---------------------------------------------------------------------------------
2,200 (a)McWhorter Technologies, Inc. $ 33,000
---------------------------------------------------------------------------------
2,100 (a)Mercer International, Inc. 48,300
---------------------------------------------------------------------------------
2,000 Midwest Grain Products, Inc. 23,000
---------------------------------------------------------------------------------
1,300 Mine Safety Appliances Co. 65,975
---------------------------------------------------------------------------------
4,600 Mississippi Chemical Corp. 110,975
---------------------------------------------------------------------------------
1,640 Mosinee Paper Corp. 40,180
---------------------------------------------------------------------------------
2,900 (a)Mycogen Corp. 38,788
---------------------------------------------------------------------------------
900 NCH, Corp. 48,938
---------------------------------------------------------------------------------
2,600 O'Sullivan Corp. 28,600
---------------------------------------------------------------------------------
2,800 OM Group, Inc. 81,200
---------------------------------------------------------------------------------
1,300 Oil-Dri Corp. of America 18,363
---------------------------------------------------------------------------------
2,150 (a)Osmonics, Inc. 36,550
---------------------------------------------------------------------------------
3,946 (a)Paxar Corp. 49,818
---------------------------------------------------------------------------------
1,200 Penwest Ltd. 30,600
---------------------------------------------------------------------------------
1,100 Petrolite Corp. 25,850
---------------------------------------------------------------------------------
1,500 (a)Photronic Labs, Inc. 44,250
---------------------------------------------------------------------------------
2,500 Pittway Corp., Class A 149,688
---------------------------------------------------------------------------------
3,000 Pope & Talbot, Inc. 40,500
---------------------------------------------------------------------------------
2,100 Pratt & Lambert, Inc. 44,363
---------------------------------------------------------------------------------
2,000 Quaker Chemical Corp. 32,000
---------------------------------------------------------------------------------
4,200 (a)Rexene Corp. 38,325
---------------------------------------------------------------------------------
6,800 Rock-Tenn Co. 110,500
---------------------------------------------------------------------------------
1,600 (a)Rogers Corp. 36,000
---------------------------------------------------------------------------------
1,600 Sealright Co., Inc. 18,000
---------------------------------------------------------------------------------
3,500 (a)Shorewood Packaging Corp. 58,625
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
PROCESS INDUSTRIES--CONTINUED
---------------------------------------------------------------------------------
5,200 Spartech Corp. 31,850
---------------------------------------------------------------------------------
1,600 Stepen Chemical Co. 25,200
---------------------------------------------------------------------------------
8,700 (a)Sterling Chemicals, Inc. $ 69,600
---------------------------------------------------------------------------------
2,000 (a)Stimsonite Corp. 18,125
---------------------------------------------------------------------------------
2,000 Tejon Ranch Co. 27,500
---------------------------------------------------------------------------------
1,200 Tuscarora, Inc. 30,000
---------------------------------------------------------------------------------
2,500 (a)U.S. Can Corp. 30,625
---------------------------------------------------------------------------------
5,400 (a)Uniroyal Chemical Corp. 41,175
---------------------------------------------------------------------------------
700 (a)Vallen Corp. 14,175
---------------------------------------------------------------------------------
5,100 Wausau Paper Mills Co. 124,950
---------------------------------------------------------------------------------
4,200 (a)WestPoint Stevens, Inc. 88,725
--------------------------------------------------------------------------------- --------------
Total 5,051,099
--------------------------------------------------------------------------------- --------------
PRODUCER MANUFACTURING--6.0%
---------------------------------------------------------------------------------
1,800 (a)ABC Rail Products Corp. 40,050
---------------------------------------------------------------------------------
2,400 (a)ABT Building Products Corp. 30,900
---------------------------------------------------------------------------------
2,600 (a)ACX Technologies, Inc. 40,300
---------------------------------------------------------------------------------
1,400 Acme Cleveland Corp. 30,625
---------------------------------------------------------------------------------
1,100 (a)Acme Electric Co. 9,487
---------------------------------------------------------------------------------
1,800 Alamo Group, Inc. 30,825
---------------------------------------------------------------------------------
5,900 Allen Group, Inc. 144,550
---------------------------------------------------------------------------------
2,000 Allied Products 42,000
---------------------------------------------------------------------------------
1,700 (a)Alltrista Corp. 31,875
---------------------------------------------------------------------------------
1,900 Amcast Industrial Corp. 32,300
---------------------------------------------------------------------------------
1,800 (a)American Superconductor Corp. 18,900
---------------------------------------------------------------------------------
7,500 Ametek, Inc. 132,187
---------------------------------------------------------------------------------
5,400 (a)Ampal-American Israel Corp., Class A 30,375
---------------------------------------------------------------------------------
1,100 Amtrol, Inc. 16,775
---------------------------------------------------------------------------------
2,500 Applied Power, Inc., Class A 75,937
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
PRODUCER MANUFACTURING--CONTINUED
---------------------------------------------------------------------------------
5,000 Arvin Industries, Inc. 88,750
---------------------------------------------------------------------------------
1,700 (a)Astec Industries, Inc. $ 20,187
---------------------------------------------------------------------------------
10,200 (a)Aura System, Inc. 51,000
---------------------------------------------------------------------------------
1,600 (a)Avondale Industries, Inc. 24,000
---------------------------------------------------------------------------------
5,500 BW/IP Holding, Inc. 92,125
---------------------------------------------------------------------------------
4,710 Baldor Electric Co. 113,040
---------------------------------------------------------------------------------
5,300 Belden, Inc. 127,862
---------------------------------------------------------------------------------
1,100 Blount, Inc., Class A 47,712
---------------------------------------------------------------------------------
5,200 Borg-Warner Automotive, Inc. 153,400
---------------------------------------------------------------------------------
2,900 Breed Technologies, Inc. 54,012
---------------------------------------------------------------------------------
1,800 Brenco, Inc. 20,925
---------------------------------------------------------------------------------
3,800 (a)CMI Corp. 18,525
---------------------------------------------------------------------------------
2,200 (a)Cable Design Technologies, Class A 72,050
---------------------------------------------------------------------------------
2,200 Cascade Corp. 30,250
---------------------------------------------------------------------------------
900 (a)Central Sprinkler Corp. 29,700
---------------------------------------------------------------------------------
900 Charter Power Systems, Inc. 22,500
---------------------------------------------------------------------------------
2,300 (a)Chase Brass Industries, Inc. 30,187
---------------------------------------------------------------------------------
1,000 (a)Cherry Corp., Class B 13,125
---------------------------------------------------------------------------------
600 (a)Christiana Companies, Inc. 15,825
---------------------------------------------------------------------------------
1,100 (a)Citation Corp. 20,625
---------------------------------------------------------------------------------
15,900 (a)Collins & Aikman Corp. 127,200
---------------------------------------------------------------------------------
3,500 Commercial Intertech Corp. 59,062
---------------------------------------------------------------------------------
2,700 Commercial Metals Corp. 69,525
---------------------------------------------------------------------------------
2,300 Commonwealth Aluminum Corp. 37,087
---------------------------------------------------------------------------------
1,100 DT Industries, Inc. 14,575
---------------------------------------------------------------------------------
2,100 (a)Detroit Diesel Corp. 37,275
---------------------------------------------------------------------------------
1,000 Donnely Corp. 14,250
---------------------------------------------------------------------------------
1,000 (a)Durakon Industries, Inc. 12,500
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
PRODUCER MANUFACTURING--CONTINUED
---------------------------------------------------------------------------------
4,300 Duriron, Inc. $ 115,025
---------------------------------------------------------------------------------
1,200 (a)Easco, Inc. 9,000
---------------------------------------------------------------------------------
2,000 Excel Industries, Inc. 24,000
---------------------------------------------------------------------------------
1,400 (a)Exide Electronics Group, Inc. 28,700
---------------------------------------------------------------------------------
1,400 (a)Falcon Building Products, Inc. 12,600
---------------------------------------------------------------------------------
7,900 Federal-Mogul Corp. 141,212
---------------------------------------------------------------------------------
4,100 (a)Figgie International Holdings, Inc., Class A 49,200
---------------------------------------------------------------------------------
3,200 Flow International Corp. 35,600
---------------------------------------------------------------------------------
1,100 Franklin Electronics, Inc. 34,650
---------------------------------------------------------------------------------
3,600 (a)Fruehauf Trailer Corp. 6,300
---------------------------------------------------------------------------------
1,400 General Binding Corp. 26,950
---------------------------------------------------------------------------------
3,200 (a)Gentex Corp. 71,200
---------------------------------------------------------------------------------
600 (a)Gibraltar Steel Corp. 7,050
---------------------------------------------------------------------------------
7,700 Giddings & Lewis, Inc. 124,162
---------------------------------------------------------------------------------
800 Gleason Corp. 25,500
---------------------------------------------------------------------------------
1,550 Gorman Rupp Co. 22,281
---------------------------------------------------------------------------------
4,800 Goulds Pumps, Inc. 114,000
---------------------------------------------------------------------------------
1,850 Graco, Inc. 62,206
---------------------------------------------------------------------------------
2,500 (a)Great American Management & Investment, Inc. 91,250
---------------------------------------------------------------------------------
1,200 Greenbrier Cos., Inc. 13,050
---------------------------------------------------------------------------------
3,600 Greenfield Industries, Inc. 108,000
---------------------------------------------------------------------------------
6,900 (a)Griffon Corp. 57,787
---------------------------------------------------------------------------------
3,200 Handy & Harman 45,200
---------------------------------------------------------------------------------
2,100 Hayes Wheels International, Inc. 55,125
---------------------------------------------------------------------------------
1,700 (a)Holophane Corp. 45,900
---------------------------------------------------------------------------------
2,500 Hunt Manufacturers Co. 43,750
---------------------------------------------------------------------------------
1,300 Huntco, Inc., Class A 16,900
---------------------------------------------------------------------------------
2,800 (a)ICC Technologies, Inc. $ 33,250
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
PRODUCER MANUFACTURING--CONTINUED
---------------------------------------------------------------------------------
4,300 IDEX Corp. 162,325
---------------------------------------------------------------------------------
3,800 (a)IMO Industries, Inc. 22,325
---------------------------------------------------------------------------------
5,100 (a)INDRESCO, Inc. 87,337
---------------------------------------------------------------------------------
2,200 (a)Insilco Corp. 73,425
---------------------------------------------------------------------------------
4,100 Interface, Inc. 62,012
---------------------------------------------------------------------------------
4,100 (a)Intermet Corp. 47,662
---------------------------------------------------------------------------------
600 International Aluminum Corp. 18,225
---------------------------------------------------------------------------------
2,800 JLG Industries, Inc. 65,800
---------------------------------------------------------------------------------
2,562 (a)Jason, Inc. 16,653
---------------------------------------------------------------------------------
2,200 (a)Johnstown America Industries, Inc. 10,175
---------------------------------------------------------------------------------
4,200 Juno Lighting, Inc. 60,900
---------------------------------------------------------------------------------
4,100 Kaman Corp., Class A 44,075
---------------------------------------------------------------------------------
3,700 Kaydon Corp. 106,837
---------------------------------------------------------------------------------
3,800 Kimball International, Inc., Class B 96,900
---------------------------------------------------------------------------------
1,000 Kyser Industrial Corp. 23,375
---------------------------------------------------------------------------------
1,000 (a)Lindsay Manufacturing Co. 35,250
---------------------------------------------------------------------------------
2,800 (a)Littlefuse, Inc. 91,000
---------------------------------------------------------------------------------
700 (a)MICROS Systems Corp. 26,075
---------------------------------------------------------------------------------
1,300 MK Rail Corp. 9,263
---------------------------------------------------------------------------------
4,400 Magnetek, Inc. 43,450
---------------------------------------------------------------------------------
1,700 Manitowoc, Inc. 48,238
---------------------------------------------------------------------------------
7,000 Mascotech, Inc. 71,750
---------------------------------------------------------------------------------
3,000 Masland Corp. 42,000
---------------------------------------------------------------------------------
5,600 Miller Herman, Inc. 165,900
---------------------------------------------------------------------------------
600 (a)Miller Industries, Inc. 12,150
---------------------------------------------------------------------------------
3,800 (a)Mueller Industries, Inc. 89,300
---------------------------------------------------------------------------------
1,700 NACCO Industries, Inc., Class A $ 97,325
---------------------------------------------------------------------------------
1,100 (a)NCI Building System, Inc. 25,575
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
PRODUCER MANUFACTURING--CONTINUED
---------------------------------------------------------------------------------
1,500 NN Ball & Roller, Inc. 31,125
---------------------------------------------------------------------------------
1,400 Nashua Corp. 17,675
---------------------------------------------------------------------------------
2,800 (a)Nortek, Inc. 22,400
---------------------------------------------------------------------------------
4,800 (a)Nu-Kote Holdings, Inc., Class A 99,600
---------------------------------------------------------------------------------
3,900 (a)Oak Industries, Inc. 81,413
---------------------------------------------------------------------------------
6,100 (a)Omega Environmental, Inc. 24,400
---------------------------------------------------------------------------------
1,800 OshKosh Truck Corp., Class B 25,650
---------------------------------------------------------------------------------
2,500 Pacific Scientific Co. 52,813
---------------------------------------------------------------------------------
1,900 (a)Park Ohio Industries, Inc. 26,125
---------------------------------------------------------------------------------
200 Penn Engineering & Manufacturing Corp. 16,800
---------------------------------------------------------------------------------
2,700 Ply Gem Industries, Inc. 46,575
---------------------------------------------------------------------------------
4,550 Precision Castparts Corp. 162,663
---------------------------------------------------------------------------------
1,207 (a)Raymond Corp. 24,140
---------------------------------------------------------------------------------
3,900 Regal Beloit Corp. 70,200
---------------------------------------------------------------------------------
1,500 (a)Reliance Steel & Aluminum Co. 24,938
---------------------------------------------------------------------------------
800 Robbins & Myers, Inc. 26,800
---------------------------------------------------------------------------------
3,300 Roper Industries, Inc. 119,625
---------------------------------------------------------------------------------
1,100 (a)SPS Technologies, Inc. 42,900
---------------------------------------------------------------------------------
2,000 Scotsman Industries, Inc. 32,500
---------------------------------------------------------------------------------
1,200 (a)Shiloh Industries, Inc. 13,050
---------------------------------------------------------------------------------
3,600 Simpson Industries, Inc. 30,150
---------------------------------------------------------------------------------
800 (a)Simpson Manufacturing Co., Inc. 11,900
---------------------------------------------------------------------------------
2,000 Smith (A.O.) Corp. 41,500
---------------------------------------------------------------------------------
2,400 (a)Spartan Motors, Inc. 23,100
---------------------------------------------------------------------------------
3,700 (a)Specialty Equipment Cos., Inc. 39,313
---------------------------------------------------------------------------------
3,725 Standard Products Co. $ 57,738
---------------------------------------------------------------------------------
2,800 Standex International Corp. 91,700
---------------------------------------------------------------------------------
1,600 Steel Technologies, Inc. 15,400
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
PRODUCER MANUFACTURING--CONTINUED
---------------------------------------------------------------------------------
1,700 Synalloy Corp. 34,850
---------------------------------------------------------------------------------
3,300 TJ International, Inc. 57,131
---------------------------------------------------------------------------------
3,900 Teleflex, Inc. 165,263
---------------------------------------------------------------------------------
2,000 Tennant Co. 49,500
---------------------------------------------------------------------------------
1,800 (a)Thermo Fibertek, Inc. 28,350
---------------------------------------------------------------------------------
1,200 (a)Thermo Power Corp. 17,250
---------------------------------------------------------------------------------
2,300 Thomas Industries, Inc. 50,888
---------------------------------------------------------------------------------
3,000 Titan Wheel International, Inc. 43,500
---------------------------------------------------------------------------------
6,100 (a)Top Source Technologies, Inc. 44,606
---------------------------------------------------------------------------------
1,475 (a)Transpro, Inc. 16,225
---------------------------------------------------------------------------------
1,200 Tredegar Industries, Inc. 34,950
---------------------------------------------------------------------------------
3,300 (a)Triangle Pacific Corp. 52,388
---------------------------------------------------------------------------------
5,540 Triarc Companies, Inc., Class A 52,630
---------------------------------------------------------------------------------
4,300 (a)U.S. Filter Corp. 99,975
---------------------------------------------------------------------------------
4,900 UNR Industries, Inc. 41,038
---------------------------------------------------------------------------------
1,500 (a)Ultralife Batteries, Inc. 30,375
---------------------------------------------------------------------------------
800 (a)Union Switch & Signal, Inc. 4,800
---------------------------------------------------------------------------------
1,700 Valmont Industries, Inc. 41,650
---------------------------------------------------------------------------------
1,215 Varlen Corp. 32,501
---------------------------------------------------------------------------------
4,250 Wabash National Corp. 107,844
---------------------------------------------------------------------------------
1,900 Walbro Corp. 37,050
---------------------------------------------------------------------------------
4,600 Watts Industries, Inc., Class A 94,875
---------------------------------------------------------------------------------
3,000 (a)Wolverine Tube, Inc. 106,875
---------------------------------------------------------------------------------
2,300 Woodhead Industries, Inc. 32,775
---------------------------------------------------------------------------------
2,000 Zebra Technologies Co., Class A $ 119,000
---------------------------------------------------------------------------------
3,600 Zero Corp. 54,900
---------------------------------------------------------------------------------
2,800 Zurn Industries, Inc. 70,000
--------------------------------------------------------------------------------- --------------
Total 7,992,892
--------------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
RETAIL TRADE--4.4%
---------------------------------------------------------------------------------
700 (a)American Eagle Outfitters, Inc. 6,825
---------------------------------------------------------------------------------
5,200 (a)Ann Taylor Stores Corp. 57,200
---------------------------------------------------------------------------------
3,250 Arbor Drugs, Inc. 59,312
---------------------------------------------------------------------------------
2,050 (a)BMC West Corp. 28,700
---------------------------------------------------------------------------------
1,900 (a)Baby Superstore, Inc. 89,775
---------------------------------------------------------------------------------
2,500 Baker (J.), Inc. 14,375
---------------------------------------------------------------------------------
3,947 (a)Benson Eyecare Corp. 37,003
---------------------------------------------------------------------------------
7,100 (a)Best Products Co., Inc. 35,056
---------------------------------------------------------------------------------
3,000 Big B, Inc. 44,250
---------------------------------------------------------------------------------
1,800 Blair Corp. 53,100
---------------------------------------------------------------------------------
1,100 (a)Boise Cascade Office Products Corp. 39,737
---------------------------------------------------------------------------------
8,300 (a)Bombay Co., Inc. 48,762
---------------------------------------------------------------------------------
1,200 (a)Bon-Ton Stores, Inc. 7,800
---------------------------------------------------------------------------------
2,300 (a)Books-A-Million, Inc. 29,037
---------------------------------------------------------------------------------
8,400 (a)Borders Group, Inc. 143,850
---------------------------------------------------------------------------------
400 (a)Buckle, Inc. 6,500
---------------------------------------------------------------------------------
600 (a)CDW Computer Centers, Inc. 29,100
---------------------------------------------------------------------------------
10,400 CML Group, Inc. 59,800
---------------------------------------------------------------------------------
3,100 CPI Corp. 56,575
---------------------------------------------------------------------------------
3,800 (a)Caldor Corp. 18,525
---------------------------------------------------------------------------------
3,700 (a)Carson Pirie Scott & Co. 62,437
---------------------------------------------------------------------------------
5,100 Casey's General Stores, Inc. 117,300
---------------------------------------------------------------------------------
6,400 Cash America International, Inc. $ 32,800
---------------------------------------------------------------------------------
5,300 Cato Corp., Class A 32,462
---------------------------------------------------------------------------------
800 (a)Central Tractor Farm & Country, Inc. 5,400
---------------------------------------------------------------------------------
21,000 Charming Shoppes, Inc. 60,375
---------------------------------------------------------------------------------
2,900 (a)Chronimed, Inc. 44,225
---------------------------------------------------------------------------------
5,400 (a)Circle K Corp. 111,375
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
RETAIL TRADE--CONTINUED
---------------------------------------------------------------------------------
2,700 Claire's Stores, Inc. 52,987
---------------------------------------------------------------------------------
4,600 (a)CompUSA, Inc. 175,950
---------------------------------------------------------------------------------
2,900 (a)Compucom System, Inc. 19,575
---------------------------------------------------------------------------------
300 Dart Group Corp., Class A 27,375
---------------------------------------------------------------------------------
1,200 Delchamps, Inc. 21,300
---------------------------------------------------------------------------------
3,550 (a)Designs, Inc. 24,462
---------------------------------------------------------------------------------
1,100 (a)Discount Auto Parts, Inc. 29,425
---------------------------------------------------------------------------------
11,000 (a)Discovery Zone, Inc. 38,156
---------------------------------------------------------------------------------
3,600 (a)Dress Barn, Inc. 35,100
---------------------------------------------------------------------------------
4,400 Duty Free International, Inc. 62,700
---------------------------------------------------------------------------------
4,300 (a)Eagle Hardware & Garden, Inc. 32,787
---------------------------------------------------------------------------------
3,800 Edison Brothers Stores, Inc. 13,775
---------------------------------------------------------------------------------
3,900 (a)Egghead, Inc. 26,812
---------------------------------------------------------------------------------
3,300 (a)Express Scripts, Inc., Class A 125,400
---------------------------------------------------------------------------------
3,200 (a)Fabri-Centers of America, Class A 47,600
---------------------------------------------------------------------------------
8,800 Family Dollar Stores, Inc. 134,200
---------------------------------------------------------------------------------
3,300 Fays, Inc. 26,400
---------------------------------------------------------------------------------
10,300 Fingerhut Companies, Inc. 140,337
---------------------------------------------------------------------------------
2,700 (a)Friedmans, Inc., Class A 54,675
---------------------------------------------------------------------------------
4,530 (a)General Host Corp. 22,084
---------------------------------------------------------------------------------
1,648 Genovese Drug Stores, Inc., Class A 16,274
---------------------------------------------------------------------------------
1,400 (a)Goody's Family Clothing, Inc. $ 14,175
---------------------------------------------------------------------------------
4,800 Hancock Fabrics, Inc. 42,000
---------------------------------------------------------------------------------
10,000 (a)Hanover Direct, Inc. 16,875
---------------------------------------------------------------------------------
2,250 Haverty Furniture Cos., Inc. 31,219
---------------------------------------------------------------------------------
7,100 Hechinger Co., Class A 31,062
---------------------------------------------------------------------------------
2,153 (a)Hills Stores Co. 16,147
---------------------------------------------------------------------------------
4,500 (a)Hollywood Entertainment Corp. 120,375
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
RETAIL TRADE--CONTINUED
---------------------------------------------------------------------------------
12,200 (a)Home Shopping Network, Inc. 99,125
---------------------------------------------------------------------------------
2,200 (a)Inacom Corp. 22,000
---------------------------------------------------------------------------------
1,600 Ingles Markets, Inc., Class A 16,200
---------------------------------------------------------------------------------
6,300 Intelligent Electronics, Inc. 48,037
---------------------------------------------------------------------------------
2,200 (a)Jenny Craig, Inc. 20,350
---------------------------------------------------------------------------------
3,700 Lands' End, Inc. 55,500
---------------------------------------------------------------------------------
2,500 (a)Lechters, Inc. 23,125
---------------------------------------------------------------------------------
6,700 (a)Levitz Furniture, Inc. 20,100
---------------------------------------------------------------------------------
1,100 Lillian Vernon Corp. 14,712
---------------------------------------------------------------------------------
3,500 Longs Drug Stores Corp. 140,000
---------------------------------------------------------------------------------
5,700 (a)MacFrugal's Bargains CloseOuts, Inc. 67,688
---------------------------------------------------------------------------------
1,400 Medicine Shoppe International, Inc. 60,200
---------------------------------------------------------------------------------
1,350 (a)Mens Wearhouse, Inc. 52,650
---------------------------------------------------------------------------------
6,000 (a)Meyer (Fred), Inc. 111,750
---------------------------------------------------------------------------------
3,250 (a)Microage, Inc. 27,219
---------------------------------------------------------------------------------
1,102 (a)Monro Muffler Brake, Inc. 16,255
---------------------------------------------------------------------------------
900 (a)Movie Gallery, Inc. 34,650
---------------------------------------------------------------------------------
7,700 (a)Musicland Stores, Inc. 50,050
---------------------------------------------------------------------------------
2,600 (a)National Media Corp. 39,000
---------------------------------------------------------------------------------
3,700 Neiman-Marcus Group, Inc. 63,363
---------------------------------------------------------------------------------
2,600 New Engineers Business Service, Inc. $ 50,050
---------------------------------------------------------------------------------
700 (a)O'Reilly Automotive, Inc. 22,925
---------------------------------------------------------------------------------
9,000 (a)Payless Cashway, Inc., Class A 51,750
---------------------------------------------------------------------------------
2,400 (a)Penn Traffic Co. 26,100
---------------------------------------------------------------------------------
1,900 (a)Petco Animal Supplies, Inc. 53,200
---------------------------------------------------------------------------------
4,700 Petrie Stores Corp. 13,513
---------------------------------------------------------------------------------
8,895 Pier 1 Imports, Inc. 85,614
---------------------------------------------------------------------------------
1,800 (a)Proffitts, Inc. 42,075
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
RETAIL TRADE--CONTINUED
---------------------------------------------------------------------------------
750 Quality Food Centers, Inc. 15,012
---------------------------------------------------------------------------------
1,500 (a)Regis Corp. Minnesota 34,125
---------------------------------------------------------------------------------
1,800 (a)Renters Choice, Inc. 30,150
---------------------------------------------------------------------------------
1,700 (a)Rex Stores Corp. 28,900
---------------------------------------------------------------------------------
5,500 Ross Stores, Inc. 86,281
---------------------------------------------------------------------------------
5,400 Ruddick Corp. 68,850
---------------------------------------------------------------------------------
22,400 (a)Service Merchandise, Inc. 120,400
---------------------------------------------------------------------------------
3,900 Shopko Stores, Inc. 41,925
---------------------------------------------------------------------------------
2,300 Smart & Final, Inc. 43,125
---------------------------------------------------------------------------------
4,100 Smith's Food & Drug Centers, Inc., Class B 93,788
---------------------------------------------------------------------------------
2,100 (a)Sportmart, Inc. 16,013
---------------------------------------------------------------------------------
4,450 (a)Sports & Recreation, Inc. 32,819
---------------------------------------------------------------------------------
3,300 (a)Sports Authority, Inc. 71,775
---------------------------------------------------------------------------------
1,950 (a)Stein Mart, Inc. 21,450
---------------------------------------------------------------------------------
1,736 Strawbridge & Clothier, Inc., Class A 32,984
---------------------------------------------------------------------------------
3,100 Sun Television & Appliances 17,050
---------------------------------------------------------------------------------
11,800 (a)Sunglass Hut International, Inc. 321,550
---------------------------------------------------------------------------------
900 (a)Syms Corp. 6,413
---------------------------------------------------------------------------------
3,000 (a)The Good Guys, Inc. 31,125
---------------------------------------------------------------------------------
3,000 Tiffany & Co. $ 130,875
---------------------------------------------------------------------------------
1,200 (a)Today's Man, Inc. 5,400
---------------------------------------------------------------------------------
1,000 (a)Tractor Supply Co. 15,750
---------------------------------------------------------------------------------
500 (a)Trak Auto Corp. 7,500
---------------------------------------------------------------------------------
900 (a)Urban Outfitters, Inc. 19,575
---------------------------------------------------------------------------------
2,600 (a)Value City Department Stores, Inc. 15,600
---------------------------------------------------------------------------------
6,300 (a)Valuevision International, Inc., Class A 33,075
---------------------------------------------------------------------------------
3,900 (a)Venture Stores, Inc. 14,625
---------------------------------------------------------------------------------
7,500 (a)Waban, Inc. 117,188
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
RETAIL TRADE--CONTINUED
---------------------------------------------------------------------------------
600 (a)West Marine, Inc. 18,300
---------------------------------------------------------------------------------
3,100 Whole Foods Market, Inc. 37,975
---------------------------------------------------------------------------------
4,200 (a)Williams-Sonoma, Inc. 72,975
---------------------------------------------------------------------------------
7,000 (a)Zale Corp. 103,250
--------------------------------------------------------------------------------- --------------
Total 5,763,907
--------------------------------------------------------------------------------- --------------
TECHNOLOGY SERVICES--4.4%
---------------------------------------------------------------------------------
3,800 (a)Acxiom Corp. 114,000
---------------------------------------------------------------------------------
1,456 Adobe System, Inc. 82,992
---------------------------------------------------------------------------------
1,800 (a)Affiliated Computer Services, Inc., Class A 60,300
---------------------------------------------------------------------------------
900 (a)Alternative Resources Corp. 27,900
---------------------------------------------------------------------------------
4,200 (a)AmeriData Technologies, Inc. 45,150
---------------------------------------------------------------------------------
6,000 (a)American Management System, Inc 173,250
---------------------------------------------------------------------------------
1,600 Analysts International Corp. 47,400
---------------------------------------------------------------------------------
1,100 (a)Applix, Inc. 30,525
---------------------------------------------------------------------------------
3,200 (a)Artisoft, Inc. 29,600
---------------------------------------------------------------------------------
1,200 (a)Aspen Technologies, Inc. 33,000
---------------------------------------------------------------------------------
2,600 (a)Atria Software, Inc. 92,950
---------------------------------------------------------------------------------
1,567 (a)Bell Industries, Inc. 32,907
---------------------------------------------------------------------------------
3,700 (a)Bisys Group, Inc. $ 103,600
---------------------------------------------------------------------------------
1,750 (a)Boole & Babbage, Inc. 62,562
---------------------------------------------------------------------------------
6,200 (a)Borland International, Inc. 84,475
---------------------------------------------------------------------------------
1,800 (a)Broadway & Seymour, Inc. 29,250
---------------------------------------------------------------------------------
1,400 (a)Business Records Corporation Holdings Co. 51,800
---------------------------------------------------------------------------------
1,900 (a)Cambridge Technology Partners, Inc. 107,825
---------------------------------------------------------------------------------
1,200 (a)Cellstar Corp. 33,300
---------------------------------------------------------------------------------
8,800 (a)Cheyenne Software, Inc. 183,700
---------------------------------------------------------------------------------
1,800 (a)Computer Horizons Corp. 46,800
---------------------------------------------------------------------------------
800 Computer Language Research, Inc. 9,200
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
TECHNOLOGY SERVICES--CONTINUED
---------------------------------------------------------------------------------
2,000 Computer Task Group, Inc. 34,500
---------------------------------------------------------------------------------
10,900 (a)Computervision Corp. 128,075
---------------------------------------------------------------------------------
4,300 (a)Continuum, Inc. 169,312
---------------------------------------------------------------------------------
2,600 (a)Control Data Systems, Inc. 34,450
---------------------------------------------------------------------------------
2,000 (a)Davidson & Associates, Inc. 71,000
---------------------------------------------------------------------------------
800 (a)EPIC Design Technology, Inc. 36,800
---------------------------------------------------------------------------------
950 (a)Edmark Corp. 40,850
---------------------------------------------------------------------------------
1,400 (a)Excalibur Technologies Corp. 22,050
---------------------------------------------------------------------------------
1,000 (a)Expert Software, Inc. 20,750
---------------------------------------------------------------------------------
4,200 (a)FTP Software, Inc. 113,400
---------------------------------------------------------------------------------
700 (a)Firefox Communications, Inc. 12,075
---------------------------------------------------------------------------------
595 First Data Corp., Class 39,325
---------------------------------------------------------------------------------
2,900 (a)General Magic, Inc. 36,612
---------------------------------------------------------------------------------
1,600 (a)Gupta Corp. 11,600
---------------------------------------------------------------------------------
1,600 Henry Jack & Associates, Inc. 34,800
---------------------------------------------------------------------------------
2,700 (a)Hogan Systems, Inc. 23,962
---------------------------------------------------------------------------------
1,800 (a)Hyperion Software Corp. 88,650
---------------------------------------------------------------------------------
6,000 (a)Information Resources, Inc. $ 65,250
---------------------------------------------------------------------------------
1,600 (a)Inso Corp. 57,200
---------------------------------------------------------------------------------
1,200 (a)Integrated Silicon Systems 35,250
---------------------------------------------------------------------------------
1,300 (a)Integrated Systems, Inc. 45,500
---------------------------------------------------------------------------------
3,300 (a)Intersolv, Inc. 51,975
---------------------------------------------------------------------------------
3,600 (a)Keane, Inc. 97,200
---------------------------------------------------------------------------------
2,600 (a)Kent Electronics Corp. 126,750
---------------------------------------------------------------------------------
3,000 MacNeal Schwendler Corp. 45,750
---------------------------------------------------------------------------------
6,500 (a)Macromedia, Inc. 240,500
---------------------------------------------------------------------------------
800 (a)Mapinfo Corp. 16,100
---------------------------------------------------------------------------------
2,100 (a)Marcam Corp. 31,500
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
TECHNOLOGY SERVICES--CONTINUED
---------------------------------------------------------------------------------
3,900 (a)Marshall Industries 137,475
---------------------------------------------------------------------------------
2,400 (a)McAfee Associates, Inc. 139,800
---------------------------------------------------------------------------------
2,800 (a)Mercury Interactive Corp. 57,400
---------------------------------------------------------------------------------
5,700 (a)Merisel, Inc. 33,488
---------------------------------------------------------------------------------
1,900 (a)Minnesota Educational Computing Corp. 58,900
---------------------------------------------------------------------------------
4,900 National Data Corp. 129,850
---------------------------------------------------------------------------------
800 (a)National Instruments Corp. 15,000
---------------------------------------------------------------------------------
6,500 (a)Netmanage, Inc. 132,438
---------------------------------------------------------------------------------
600 (a)Open Environment Corp. 5,850
---------------------------------------------------------------------------------
1,000 (a)Orbit Semiconductor, Inc. 11,250
---------------------------------------------------------------------------------
1,600 (a)Peak Technologies Group, Inc. 40,400
---------------------------------------------------------------------------------
2,700 (a)Phoenix Technology, Ltd. 31,388
---------------------------------------------------------------------------------
5,025 Pioneer Standard Electronics, Inc. 69,722
---------------------------------------------------------------------------------
2,900 (a)Platinum Software Corp. 19,213
---------------------------------------------------------------------------------
6,798 (a)Platinum Technology, Inc. 124,064
---------------------------------------------------------------------------------
1,200 (a)Progress Software Corp. 78,600
---------------------------------------------------------------------------------
5,000 (a)Quarterdeck Office Systems $ 106,875
---------------------------------------------------------------------------------
1,400 (a)Quickresponse Services, Inc. 35,000
---------------------------------------------------------------------------------
3,200 (a)Racotek, Inc. 19,600
---------------------------------------------------------------------------------
2,700 (a)Rational Software Corp. 42,188
---------------------------------------------------------------------------------
700 (a)Remedy Corp. 30,100
---------------------------------------------------------------------------------
2,850 (a)Safeguard Scientifics, Inc. 128,250
---------------------------------------------------------------------------------
3,500 (a)Santa Cruz Operation, Inc. 20,563
---------------------------------------------------------------------------------
1,800 (a)Security Dynamics Technologies, Inc. 56,700
---------------------------------------------------------------------------------
900 (a)Softdesk, Inc. 20,925
---------------------------------------------------------------------------------
4,100 (a)Softkey International, Inc. 129,150
---------------------------------------------------------------------------------
1,500 (a)Software Artistry, Inc. 24,750
---------------------------------------------------------------------------------
6,700 (a)Structural Dynamics Research Corp. 122,275
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
TECHNOLOGY SERVICES--CONTINUED
---------------------------------------------------------------------------------
4,100 System Software Association 126,588
---------------------------------------------------------------------------------
2,900 (a)Systems & Computer Technology Corp. 51,838
---------------------------------------------------------------------------------
2,000 (a)Systemsoft Corp. 28,750
---------------------------------------------------------------------------------
500 (a)TGV Software, Inc. 4,500
---------------------------------------------------------------------------------
7,600 (a)Tech Data Corp. 92,150
---------------------------------------------------------------------------------
3,300 (a)Tivoli Systems, Inc. 106,013
---------------------------------------------------------------------------------
3,700 (a)Triad Systems Corp. 20,350
---------------------------------------------------------------------------------
1,200 (a)Veritas Software Corp. 38,700
---------------------------------------------------------------------------------
3,600 (a)Viewlogic Systems, Inc. 35,100
---------------------------------------------------------------------------------
1,900 (a)Wall Data, Inc. 30,875
---------------------------------------------------------------------------------
1,100 (a)Wind River Systems, Inc. 29,700
---------------------------------------------------------------------------------
1,800 (a)Wonderware Corp. 57,150
---------------------------------------------------------------------------------
2,800 Wyle Labs 119,350
---------------------------------------------------------------------------------
1,000 (a)XcelleNet, Inc. 17,250
--------------------------------------------------------------------------------- --------------
Total 5,793,200
--------------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
TRANSPORTATION--1.8%
---------------------------------------------------------------------------------
4,700 Airborne Freight Corp. $ 123,375
---------------------------------------------------------------------------------
3,500 Airlines Express International Corp. 72,625
---------------------------------------------------------------------------------
3,000 (a)Alaska Air Group, Inc. 44,625
---------------------------------------------------------------------------------
8,502 (a)America West Airlines, Inc., Class B 115,840
---------------------------------------------------------------------------------
3,100 American Classic Voyages 37,200
---------------------------------------------------------------------------------
4,700 (a)American Freightways Corp. 59,925
---------------------------------------------------------------------------------
6,100 American President Cos., Ltd. 147,925
---------------------------------------------------------------------------------
700 (a)Amtran, Inc. 7,700
---------------------------------------------------------------------------------
4,400 Arnold Industries, Inc. 71,500
---------------------------------------------------------------------------------
800 (a)Celadon Group, Inc. 8,400
---------------------------------------------------------------------------------
5,300 Comair Holdings, Inc. 148,731
---------------------------------------------------------------------------------
3,500 (a)Continental Airlines, Inc., Class B 124,687
---------------------------------------------------------------------------------
700 (a)Covenant Transport, Inc. , Class A 8,925
---------------------------------------------------------------------------------
2,700 Expeditors International Washington, Inc. 70,875
---------------------------------------------------------------------------------
800 Florida East Coast, Inc. 53,500
---------------------------------------------------------------------------------
3,332 (a)Fritz Companies, Inc. 116,620
---------------------------------------------------------------------------------
1,682 Frozen Food Express Industries, Inc. 14,928
---------------------------------------------------------------------------------
2,700 Harper Group 48,600
---------------------------------------------------------------------------------
1,557 (a)Heartland Express, Inc. 42,234
---------------------------------------------------------------------------------
5,200 Hunt (J.B.) Transportation Services, Inc. 80,600
---------------------------------------------------------------------------------
900 International Shipholding Corp. 21,487
---------------------------------------------------------------------------------
6,300 (a)Kirby Corp. 103,950
---------------------------------------------------------------------------------
500 (a)Knight Transportation, Inc. 6,875
---------------------------------------------------------------------------------
2,900 (a)Landstar System, Inc. 76,125
---------------------------------------------------------------------------------
2,000 (a)M.S. Carriers, Inc. 31,000
---------------------------------------------------------------------------------
6,100 (a)Mesa Airlines, Inc. 57,950
---------------------------------------------------------------------------------
6,300 (a)OMI Corp. 36,225
---------------------------------------------------------------------------------
1,000 (a)Old Dominion Freight Lines, Inc. $ 10,000
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
TRANSPORTATION--CONTINUED
---------------------------------------------------------------------------------
6,500 Overseas Shipholding Group, Inc. 110,500
---------------------------------------------------------------------------------
1,500 (a)Railtex, Inc. 31,125
---------------------------------------------------------------------------------
1,700 SkyWest, Inc. 29,113
---------------------------------------------------------------------------------
2,600 (a)Swift Transportation Co. 42,900
---------------------------------------------------------------------------------
4,950 TNT Freightways Corp. 89,100
---------------------------------------------------------------------------------
3,400 Tower Air Corp., Inc. 25,075
---------------------------------------------------------------------------------
600 (a)US Xpress Enterprises, Inc., Class A 5,100
---------------------------------------------------------------------------------
1,000 (a)USA Truck, Inc. 11,750
---------------------------------------------------------------------------------
14,000 (a)USAir Group, Inc. 190,750
---------------------------------------------------------------------------------
3,200 Werner Enterprises, Inc. 60,000
---------------------------------------------------------------------------------
3,600 Worldcorp, Inc. 31,500
---------------------------------------------------------------------------------
4,800 (a)Yellow Corp. 63,000
--------------------------------------------------------------------------------- --------------
Total 2,432,340
--------------------------------------------------------------------------------- --------------
UTILITIES--5.2%
---------------------------------------------------------------------------------
3,400 (a)American Mobile Satellite Corp. 69,700
---------------------------------------------------------------------------------
800 (a)American Paging, Inc. 6,100
---------------------------------------------------------------------------------
1,500 Aquarion Co. 35,250
---------------------------------------------------------------------------------
1,200 Aquila Gas Pipeline Co. 13,200
---------------------------------------------------------------------------------
4,846 (a)Arch Communications Group, Inc. 131,448
---------------------------------------------------------------------------------
3,700 (a)Associated Group, Inc., Class A 68,450
---------------------------------------------------------------------------------
3,450 Atmos Energy Corp. 62,962
---------------------------------------------------------------------------------
3,000 Bay State Gas Co. 75,000
---------------------------------------------------------------------------------
3,200 Black Hills Corp. 80,400
---------------------------------------------------------------------------------
4,500 (a)C-Tec Corp. 94,500
---------------------------------------------------------------------------------
2,800 CFW Communications Co. 50,750
---------------------------------------------------------------------------------
1,400 California Water Service Corp. 46,550
---------------------------------------------------------------------------------
2,000 Cascade Natural Gas Corp. $ 29,750
---------------------------------------------------------------------------------
2,200 (a)Cellular Communications International, Inc. 76,450
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
UTILITIES--CONTINUED
---------------------------------------------------------------------------------
2,200 (a)Cellular Communications of Puerto Rico, Inc. 63,594
---------------------------------------------------------------------------------
2,305 (a)Centennial Cellular Corp., Class A 42,066
---------------------------------------------------------------------------------
3,900 Central Hudson Gas & Electric Service 119,437
---------------------------------------------------------------------------------
5,000 Central LA Electric Co. 134,375
---------------------------------------------------------------------------------
7,300 Central Maine Power Co. 101,287
---------------------------------------------------------------------------------
2,650 Central VT Public Service Corp. 35,775
---------------------------------------------------------------------------------
2,900 Cilcorp, Inc. 113,100
---------------------------------------------------------------------------------
14,630 (a)Citizens Utilities Co., Class B 162,759
---------------------------------------------------------------------------------
1,900 Colonial Gas Co. 38,475
---------------------------------------------------------------------------------
2,000 Commonwealth Energy System 84,750
---------------------------------------------------------------------------------
2,700 (a)Comnet Cellular, Inc. 67,837
---------------------------------------------------------------------------------
2,000 Connecticut Energy Corp. 38,750
---------------------------------------------------------------------------------
2,200 Connecticut Natural Gas Corp. 48,950
---------------------------------------------------------------------------------
1,500 Consumers Water Co. 26,625
---------------------------------------------------------------------------------
3,700 (a)Dial Page, Inc. 54,575
---------------------------------------------------------------------------------
1,500 E Town 41,250
---------------------------------------------------------------------------------
4,500 Eastern Enterprises 134,437
---------------------------------------------------------------------------------
4,600 Eastern Utilities Association 108,100
---------------------------------------------------------------------------------
3,400 Empire Distribution Electric Co. 62,475
---------------------------------------------------------------------------------
2,200 Energen Corp. 49,775
---------------------------------------------------------------------------------
1,100 Green Mountain Power Corp. 29,975
---------------------------------------------------------------------------------
1,200 Hickory Tech Corp. 37,200
---------------------------------------------------------------------------------
6,500 IES Industries, Inc. 173,062
---------------------------------------------------------------------------------
1,500 IWC Resources Corp. 28,500
---------------------------------------------------------------------------------
1,400 (a)Incomnet, Inc. 5,425
---------------------------------------------------------------------------------
4,450 Indiana Energy, Inc. $ 94,006
---------------------------------------------------------------------------------
1,100 (a)Intercel, Inc. 20,075
---------------------------------------------------------------------------------
6,833 (a)International Cabletel, Inc. 181,074
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
UTILITIES--CONTINUED
---------------------------------------------------------------------------------
2,200 Interstate Power Co. 63,800
---------------------------------------------------------------------------------
4,401 K N Energy, Inc. 112,776
---------------------------------------------------------------------------------
7,900 (a)Kelley Oil & Gas Corp. 19,750
---------------------------------------------------------------------------------
3,900 Laclede Gas Co. 79,462
---------------------------------------------------------------------------------
6,800 Lincoln Telecommunications Co. 117,300
---------------------------------------------------------------------------------
6,450 MDU Resources Group, Inc. 136,256
---------------------------------------------------------------------------------
2,400 Madison Gas & Electric Co. 79,200
---------------------------------------------------------------------------------
1,700 (a)MetroCall, Inc. 42,500
---------------------------------------------------------------------------------
1,400 NETCOM On-line Communication Services, Inc. 81,550
---------------------------------------------------------------------------------
1,800 NUI Corp. 29,475
---------------------------------------------------------------------------------
4,000 New Jersey Resources Corp. 100,000
---------------------------------------------------------------------------------
1,400 North Carolina Natural Gas 31,325
---------------------------------------------------------------------------------
3,300 Northwest Natural Gas Co. 105,600
---------------------------------------------------------------------------------
1,700 Northwestern Public Service Co. 45,050
---------------------------------------------------------------------------------
6,100 Oneok, Inc. 148,688
---------------------------------------------------------------------------------
3,100 Orange & Rockland Utilities, Inc. 108,888
---------------------------------------------------------------------------------
2,500 Otter Tail Power Co. 85,625
---------------------------------------------------------------------------------
1,100 (a)Palmer Wireless, Inc. 25,025
---------------------------------------------------------------------------------
1,300 Pennsylvania Enterprises 45,175
---------------------------------------------------------------------------------
2,300 Philadelphia Suburban Corp. 44,275
---------------------------------------------------------------------------------
6,400 Piedmont Natural Gas, Inc. 140,800
---------------------------------------------------------------------------------
2,525 (a)PriceCellular Corp., Class A 32,825
---------------------------------------------------------------------------------
1,200 (a)ProNet, Inc. 30,600
---------------------------------------------------------------------------------
9,400 (a)Public Service Co. New Mexico 157,450
---------------------------------------------------------------------------------
4,200 Public Service Co. North Carolina, Inc. $ 66,150
---------------------------------------------------------------------------------
500 SJW Corp. 17,563
---------------------------------------------------------------------------------
7,500 (a)Seagull Energy Corp. 128,438
---------------------------------------------------------------------------------
6,700 Sierra Pacific Resources 156,613
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
UTILITIES--CONTINUED
---------------------------------------------------------------------------------
2,424 South Jersey Industries, Inc. 49,692
---------------------------------------------------------------------------------
2,496 Southeastern Michigan Gas Energy 41,184
---------------------------------------------------------------------------------
1,800 Southern CA Water Co. 33,975
---------------------------------------------------------------------------------
3,500 Southern Indiana Gas & Electric Co. 118,125
---------------------------------------------------------------------------------
1,311 (a)Southern Union Co. 26,712
---------------------------------------------------------------------------------
5,300 Southwest Gas Corp. 80,163
---------------------------------------------------------------------------------
5,700 Southwestern Energy Co. 71,250
---------------------------------------------------------------------------------
900 St. Joseph Light & Power Co. 28,350
---------------------------------------------------------------------------------
1,000 (a)T-Netix, Inc. 13,000
---------------------------------------------------------------------------------
2,400 TNP Enterprises, Inc. 43,500
---------------------------------------------------------------------------------
2,160 (a)Tejas Gas Corp. 101,250
---------------------------------------------------------------------------------
2,700 (a)Tejas Power Corp., Class A 22,950
---------------------------------------------------------------------------------
900 (a)Transaction Network Services, Inc. 21,150
---------------------------------------------------------------------------------
36,100 (a)Tucson Electric Power Co. 108,300
---------------------------------------------------------------------------------
2,900 (a)U.S. Long Distance Corp. 37,338
---------------------------------------------------------------------------------
7,400 UGI Corp. 155,400
---------------------------------------------------------------------------------
2,100 USX-Delhi Group 18,638
---------------------------------------------------------------------------------
2,800 United Cities Gas Co. 47,600
---------------------------------------------------------------------------------
3,200 United Illuminating Co. 121,600
---------------------------------------------------------------------------------
5,336 United Water Resources, Inc. 67,367
---------------------------------------------------------------------------------
3,800 WICOR, Inc. 112,575
---------------------------------------------------------------------------------
5,400 WPS Resources Corp. 168,075
---------------------------------------------------------------------------------
5,400 Washington Energy Co. 99,225
---------------------------------------------------------------------------------
3,600 Western Gas Resources, Inc. $ 56,250
---------------------------------------------------------------------------------
700 (a)Xpedite Systems, Inc. 9,275
---------------------------------------------------------------------------------
2,300 Yankee Energy Systems, Inc. 49,164
--------------------------------------------------------------------------------- --------------
Total 6,872,486
--------------------------------------------------------------------------------- --------------
TOTAL COMMON STOCKS (IDENTIFIED COST $106,451,661) 115,378,743
--------------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
SHORT-TERM U.S. GOVERNMENT OBLIGATIONS--0.4%
- ------------------------------------------------------------------------------------------------
$ 500,000 United States Treasury Bill, 12/14/1995 (AT AMORTIZED COST) 497,010
--------------------------------------------------------------------------------- --------------
(B) REPURCHASE AGREEMENT--13.4%
- ------------------------------------------------------------------------------------------------
17,780,000 J.P. Morgan & Co., Inc., 5.90%, dated 10/31/1995, due 11/1/1995 (AT AMORTIZED
COST) 17,780,000
--------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (IDENTIFIED COST $124,728,671)(C) $ 133,655,753
--------------------------------------------------------------------------------- --------------
</TABLE>
* The Fund purchases stock futures contracts to efficiently manage cash flows
resulting from shareholder purchases and redemptions, dividend and capital
gain payments to shareholders and corporate actions while maintaining
exposure to the stock market and minimizing trading costs. The total market
value of open futures contracts is $17,102,750 at October 31, 1995, which
represents 12.9% of net assets. Taking into consideration these open futures
contracts, the Fund's effective, total exposure to stocks is 100.1%.
(a) Non-income producing security.
(b) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations. The investments in the repurchase agreement is through
participation in a joint accounts with other Federated funds.
(c) The cost of investments for federal tax purposes amounts to $124,764,786.
The unrealized appreciation of investments on a federal tax basis amounts
to $8,890,967 which is comprised of $19,044,898 appreciation and
$10,153,931 depreciation at October 31, 1995.
Note: The categories of investments are shown as a percentage of net assets
($132,399,160) at October 31, 1995.
The following acronyms are used throughout this portfolio:
BIG--Bond Investors Guaranty
LYNX--Liquid Yield Note Exchangeable
LYONs--Liquid Yield Option Notes
REIT--Real Estate Investment Trust
TRANs--Tax and Revenue Anticipation Notes
(See Notes which are an integral part of the Financial Statements)
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------------------------
Investments in repurchase agreements, at amortized cost $ 17,780,000
- ---------------------------------------------------------------------------------
Investments in securities, at value 115,875,753
- --------------------------------------------------------------------------------- --------------
Total investments, at amortized cost and value
(identified cost $124,728,671 and tax cost $124,764,786) $ 133,655,753
- -------------------------------------------------------------------------------------------------
Income receivable 93,673
- -------------------------------------------------------------------------------------------------
Receivable for investments sold 7,552
- -------------------------------------------------------------------------------------------------
Receivable for shares sold 496,588
- -------------------------------------------------------------------------------------------------
Deferred expenses 1,938
- ------------------------------------------------------------------------------------------------- --------------
Total assets 134,255,504
- -------------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------------------
Payable for investments purchased $ 7,962
- ---------------------------------------------------------------------------------
Payable for shares redeemed 1,032,656
- ---------------------------------------------------------------------------------
Payable to bank 683,247
- ---------------------------------------------------------------------------------
Payable for daily variation margin 75,800
- ---------------------------------------------------------------------------------
Accrued expenses 56,679
- --------------------------------------------------------------------------------- --------------
Total liabilities 1,856,344
- ------------------------------------------------------------------------------------------------- --------------
NET ASSETS for 9,932,028 shares outstanding $ 132,399,160
- ------------------------------------------------------------------------------------------------- --------------
NET ASSETS CONSIST OF:
- -------------------------------------------------------------------------------------------------
Paid in capital $ 116,301,221
- -------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and futures contracts 8,037,689
- -------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and futures contracts 7,953,218
- -------------------------------------------------------------------------------------------------
Undistributed net investment income 107,032
- ------------------------------------------------------------------------------------------------- --------------
Total Net Assets $ 132,399,160
- ------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
$132,399,160 / 9,932,028 shares outstanding $13.33
- ------------------------------------------------------------------------------------------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Dividends $ 1,426,226
- ----------------------------------------------------------------------------------------------------
Interest 685,365
- ---------------------------------------------------------------------------------------------------- ------------
Total income 2,111,591
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------------------------
Management fee $ 540,284
- -----------------------------------------------------------------------------------------
Custodian fees 105,212
- -----------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 72,573
- -----------------------------------------------------------------------------------------
Directors'/Trustees' fees 2,465
- -----------------------------------------------------------------------------------------
Auditing fees 14,000
- -----------------------------------------------------------------------------------------
Legal fees 3,832
- -----------------------------------------------------------------------------------------
Portfolio accounting fees 25,448
- -----------------------------------------------------------------------------------------
Shareholder services fee 22,753
- -----------------------------------------------------------------------------------------
Share registration costs 32,099
- -----------------------------------------------------------------------------------------
Printing and postage 34,544
- -----------------------------------------------------------------------------------------
Insurance premiums 4,680
- -----------------------------------------------------------------------------------------
Taxes 719
- -----------------------------------------------------------------------------------------
Miscellaneous 8,904
- ----------------------------------------------------------------------------------------- ---------
Total expenses 867,513
- -----------------------------------------------------------------------------------------
Waivers--
- -----------------------------------------------------------------------------------------
Waiver of management fee (56,620)
- ----------------------------------------------------------------------------------------- ---------
Net expenses 810,893
- ---------------------------------------------------------------------------------------------------- ------------
Net investment income 1,300,698
- ---------------------------------------------------------------------------------------------------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES CONTRACTS:
- ----------------------------------------------------------------------------------------------------
Net realized gain on investments and futures contracts 8,050,853
- ----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments and futures contracts 6,189,544
- ---------------------------------------------------------------------------------------------------- ------------
Net realized and unrealized gain on investments and futures contracts 14,240,397
- ---------------------------------------------------------------------------------------------------- ------------
Change in net assets resulting from operations $ 15,541,095
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
1995 1994
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C>
- ---------------------------------------------------------------------------------
OPERATIONS--
- ---------------------------------------------------------------------------------
Net investment income $ 1,300,698 $ 862,785
- ---------------------------------------------------------------------------------
Net realized gain (loss) on investments and futures contracts ($7,103,741 net
gain and $588,669 net gain, respectively, as computed for federal tax purposes) 8,050,853 687,062
- ---------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments and futures
contracts 6,189,544 (2,252,508)
- --------------------------------------------------------------------------------- -------------- --------------
Change in net assets resulting from operations 15,541,095 (702,661)
- --------------------------------------------------------------------------------- -------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ---------------------------------------------------------------------------------
Distributions from net investment income (1,244,470) (841,410)
- ---------------------------------------------------------------------------------
Distributions from net realized gain on investment transactions and futures
contracts (588,727) (5,087,293)
- --------------------------------------------------------------------------------- -------------- --------------
Change in net assets resulting from distributions to shareholders (1,833,197) (5,928,703)
- --------------------------------------------------------------------------------- -------------- --------------
SHARE TRANSACTIONS--
- ---------------------------------------------------------------------------------
Proceeds from sale of shares 111,108,338 72,777,271
- ---------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in
payment of distributions declared 639,919 1,600,835
- ---------------------------------------------------------------------------------
Cost of shares redeemed (91,497,761) (45,444,941)
- --------------------------------------------------------------------------------- -------------- --------------
Change in net assets resulting from share transactions 20,250,496 28,933,165
- --------------------------------------------------------------------------------- -------------- --------------
Change in net assets 33,958,394 22,301,801
- ---------------------------------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------------------------------
Beginning of period 98,440,766 76,138,965
- --------------------------------------------------------------------------------- -------------- --------------
End of period (including undistributed net investment income of $107,032 and
$50,804, respectively) $ 132,399,160 $ 98,440,766
- --------------------------------------------------------------------------------- -------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MINI-CAP FUND
(FORMERLY, MINI-CAP FUND)
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Federated Index Trust (the "Trust") is registered under the Investment Company
Act of 1940, as amended (the "Act") as an open-end, management investment
company. The Trust consists of three diversified portfolios. The financial
statements included herein are only those of Federated 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.
Effective December 5, 1994, the Board of Trustees ("Trustees") changed the name
of the Fund from Mini-Cap Fund to Federated Mini-Cap Fund.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Short-term securities with remaining maturities of
sixty days or less at the time of purchase may be valued at amortized cost,
which approximates fair market value. All other securities are valued at
the prices provided by an independent pricing service.
REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral
securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code"). Dividend
income and distributions to shareholders are recorded on the ex-dividend
date.
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
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 its 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.
FUTURES CONTRACTS--The Fund purchases stock index futures contracts to
manage cashflows, enhance yield, and to potentially reduce transaction
costs. Upon entering into a stock futures contract with a broker, the Fund
is required to deposit in a segregated account an amount of cash or U.S.
government securities. Futures contracts are valued daily and unrealized
gains or losses are recorded in a "variation margin" account. Daily the
Fund receives from or pays to the broker a specified amount of cash based
upon changes in the variation margin account. When a contract is closed,
the Fund recognizes a realized gain or loss.
Futures contracts have market risks, including the risk that the change in
the value of the contract may not correlate with changes in the value of
the underlying securities. For the period ended October 31, 1995, the Fund
had realized gains of $2,026,701 on future contracts. At October 31, 1995,
the Fund had outstanding futures contracts as set forth below:
<TABLE>
<CAPTION>
UNREALIZED
EXPIRATION CONTRACTS TO APPRECIATION
DATE DELIVER/RECEIVE POSITION (DEPRECIATION)
<C> <S> <C> <C>
- --------------------------------------------------------------------------------------
December 1995 48 Russell 2000 Index Futures Long $ (516,005)
December 1995 104 S&P 400 Index Futures Long $ (373,388)
-----------------
Net Unrealized Depreciation on Futures Contracts $ (889,393)
</TABLE>
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31,
<S> <C> <C>
1995 1994
Shares sold 8,827,567 6,201,460
- ---------------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 52,957 138,183
- ---------------------------------------------------------------------------------------
Shares redeemed (7,400,092) (3,900,247)
- --------------------------------------------------------------------------------------- ----------- -----------
Net change resulting from share transactions 1,480,432 2,439,396
- --------------------------------------------------------------------------------------- ----------- -----------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEE--Federated Management, the Fund's manager, (the "Manager"),
receives for its services an annual management fee equal to .50 of 1% of the
Fund's average daily net assets. Under the terms of a sub-management contract
between the Manager and the Trust Division of ANB Investment Management and
Trust Company (the "Sub-Manager"), the Sub-Manager receives an annual fee from
the Manager equal to .065 of 1% of the Fund's average daily net assets. The
Manager may voluntarily choose to waive a portion of its fees. The Manager can
modify or terminate this voluntary waiver at any time at its sole discretion.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of
1% of average daily net assets of the Fund for the period. This fee is to obtain
certain services for shareholders and to maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services
Company ("FServ") serves as transfer and dividend disbursing agent for the Fund.
This fee is based on the size, type, and number of accounts and transactions
made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ also maintains the Fund's accounting records
for which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses of $22,217 were borne initially
by the Manager. The Fund has agreed to reimburse the Manager for the
organizational expenses at an annual rate of .005 of 1% of average daily net
assets until expenses initially borne are fully reimbursed or the expiration of
five years after the Fund's effective date, whichever occurs earlier. For the
period ended October 31, 1995, the Fund paid $4,937 pursuant to this agreement.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
fiscal year ended October 31, 1995, were as follows:
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------------
PURCHASES $ 57,513,220
- --------------------------------------------------------------------------------------------------- -------------
SALES $ 40,535,593
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
REPORT OF ERNST & YOUNG LLP,
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 Federated Mini-Cap Fund (a portfolio of
Federated Index Trust) as of October 31, 1995, 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 the financial highlights (see
page of this prospectus) for each of 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, 1995, 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
Federated Mini-Cap Fund of Federated Index Trust at October 31, 1995, 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 each of the periods presented, in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
December 8, 1995
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Federated 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 8600
Trust Company Boston, Massachusetts 02266-8600
- -----------------------------------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company P.O. Box 8600
Boston, Massachusetts 02266-8600
- -----------------------------------------------------------------------------------------------------------------------
Independent Auditors
Ernst & Young LLP One Oxford Centre
Pittsburgh, Pennsylvania 15219
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
(A PORTFOLIO OF FEDERATED INDEX TRUST)
PROSPECTUS
An No-Load, Open-End, Diversified
Management Investment Company
Prospectus dated December 31, 1995
[LOGO] FEDERATED SECURITIES CORP.
---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
[LOGO]
Cusip 31420E304
FEDERATED MAX-CAP FUND
(A PORTFOLIO OF FEDERATED INDEX TRUST)
INSTITUTIONAL SHARES
INSTITUTIONAL SERVICE SHARES
STATEMENT OF ADDITIONAL INFORMATION
The Institutional Shares and Institutional Service Shares of Federated Max-
Cap Fund (the "Fund") (a portfolio of Federated Index Trust) represent
interests in a diversified portfolio of securities. This Statement of
Additional Information should be read with the respective prospectus for
Institutional Shares and Institutional Service Shares dated December 31,
1995. This Statement is not a prospectus itself. You may request a copy of
a prospectus or a paper copy of this Statement of Additional Information,
if you have received it electronically, free of charge by calling 1-800-
235-4669.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Statement dated December 31, 1995
FEDERATED SECURITIES CORP.
DISTRIBUTOR
A SUBSIDIARY OF FEDERATED INVESTORS
GENERAL INFORMATION ABOUT THE FUND1
INVESTMENT OBJECTIVE AND POLICIES1
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
FEDERATED INDEX TRUST MANAGEMENT 6
FUND OWNERSHIP 10
TRUSTEES COMPENSATION 11
TRUSTEE LIABILITY 11
MANAGEMENT SERVICES 12
MANAGERS TO THE FUND 12
MANAGEMENT FEES 12
OTHER RELATED SERVICES 12
BROKERAGE TRANSACTIONS 12
OTHER SERVICES 13
CUSTODIAN AND PORTFOLIO
RECORDKEEPER 13
TRANSFER AGENT 13
INDEPENDENT AUDITORS 13
PURCHASING SHARES 13
DISTRIBUTION PLAN (INSTITUTIONAL
SERVICE SHARES)
AND SHAREHOLDER SERVICES
AGREEMENT 13
CONVERSION TO FEDERAL FUNDS 14
DETERMINING NET ASSET VALUE 14
DETERMINING MARKET VALUE OF
SECURITIES 14
REDEEMING SHARES 14
REDEMPTION IN KIND 14
MASSACHUSETTS PARTNERSHIP LAW 14
TAX STATUS 15
THE FUND'S TAX STATUS 15
SHAREHOLDERS' TAX STATUS 15
CAPITAL GAINS 15
TOTAL RETURN 15
YIELD 16
PERFORMANCE COMPARISONS 16
ABOUT FEDERATED INVESTORS 17
STANDARD & POOR'S RATINGS GROUP 17
GENERAL INFORMATION ABOUT THE FUND
Federated 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. On December 5, 1994, the Trustees changed the
name of the Fund from the Max-Cap Fund to the Federated Max-Cap Fund. 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
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 managers, prevailing
market conditions warrant.
MONEY MARKET INSTRUMENTS
The Fund may invest in the following money market instruments:
oinstruments of domestic and foreign banks and savings associations 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
oprime commercial paper (rated A-1 by Standard and Poor's Ratings Group,
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 managers 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:
othe full faith and credit of the U.S. Treasury;
othe issuer's right to borrow from the U.S. Treasury;
othe discretionary authority of the U.S. government to purchase certain
obligations of agencies or instrumentalities; or
othe 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:
oThe Farm Credit System, including the National Bank for Cooperatives,
Farm Credit Banks, and Banks for Cooperatives;
o Federal Home Loan Banks;
oFarmers Home Administration; and
oFederal 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 or yield for the Fund. 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 on the Fund`s
records at the trade date. These assets are marked to market daily and are
maintained until the transaction has been settled. 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 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, 1995
and October 31, 1994, the portfolio turnover rate for the Fund was 57% and 2%,
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 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.
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.
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.
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 Fund's
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.
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.
For purposes of its policies and limitations, the Fund considers certificates of
deposit and demand and time deposits issued by a U.S. branch of a domestic bank
or savings association having capital, surplus, and undivided profits in excess
of $100,000,000 at the time of investment to be "cash items".
FEDERATED INDEX TRUST MANAGEMENT
Officers and Trustees are listed with their addresses, birthdates, present
positions with Federated Index Trust, and principal occupations.
John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated Research
Corp. and Federated Global Research Corp.; Chairman, Passport Research, Ltd.;
Chief Executive Officer and Director, Trustee, or Managing General Partner of
the Funds. Mr. Donahue is the father of J. Christopher Donahue, Executive Vice
President.
J. Christopher Donahue
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
Executive Vice President and Trustee
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated Research
Corp. and Federated Global Research Corp.; President, Passport Research, Ltd.;
Trustee, Federated Administrative Services, Federated Services Company, and
Federated Shareholder Services; President or Executive 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.
Thomas G. Bigley
28th Floor, One Oxford Centre
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Director, Oberg Manufacturing Co.; Chairman of the Board, Children's Hospital of
Pittsburgh; Director, Trustee, or Managing General Partner of the Funds;
formerly, Senior Partner, Ernst & Young LLP.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Trustee
President, Investment Properties Corporation; Senior Vice-President, John R.
Wood and Associates, Inc., Realtors; President, Northgate Village Development
Corporation; Partner or Trustee in private real estate ventures in Southwest
Florida; Director, Trustee, or Managing General Partner of the Funds; formerly,
President, Naples Property Management, Inc.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Trustee
Director and Member of the Executive Committee, Michael Baker, Inc.; Director,
Trustee, or Managing General Partner of the Funds; formerly, Vice Chairman and
Director, PNC Bank, N.A., and PNC Bank Corp. and Director, Ryan Homes, Inc.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director, Trustee,
or Managing General Partner of the Funds.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine and Member, Board of Trustees, University of Pittsburgh;
Medical Director, University of Pittsburgh Medical Center - Downtown; Member,
Board of Directors, University of Pittsburgh Medical Center; formerly,
Hematologist, Oncologist, and Internist, Presbyterian and Montefiore Hospitals;
Director, Trustee, or Managing General Partner of the Funds.
Edward L. Flaherty, Jr.@
Henny, Kochuba, Meyer and Flaherty
Two Gateway Center - Suite 674
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney-at-law; Shareholder, Henny, Kochuba, Meyer and Flaherty; Director,
Eat'N Park Restaurants, Inc., and Statewide Settlement Agency, Inc.; Director,
Trustee, or Managing General Partner of the Funds; formerly, Counsel, Horizon
Financial, F.A., Western Region.
Peter E. Madden
70 Westcliff Road
Westin, MA
Birthdate: March 16, 1942
Trustee
Consultant; State Representative, Commonwealth of Massachusetts; Director,
Trustee, or Managing General Partner of the Funds; formerly, President, State
Street Bank and Trust Company and State Street Boston Corporation.
Gregor F. Meyer
Henny, Kochuba, Meyer and Flaherty
Two Gateway Center - Suite 674
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee
Attorney-at-law; Shareholder, Henny, Kochuba, Meyer and Flaherty; Chairman,
Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Director, Trustee, or
Managing General Partner of the Funds.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting Partner, Mollica,
Murray and Hogue; Director, Trustee or Managing General Partner of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, International Politics and Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer Library
Center, Inc., and U.S. Space Foundation; Chairman, Czecho Management Center;
Director, Trustee, or Managing General Partner of the Funds; President Emeritus,
University of Pittsburgh; founding Chairman, National Advisory Council for
Environmental Policy and Technology and Federal Emergency Management Advisory
Board.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public relations/marketing consultant; Conference Coordinator, Non-profit
entities; Director, Trustee, or Managing General Partner of the Funds.
Glen R. Johnson
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 2, 1929
President
Trustee, Federated Investors; President and/or Trustee of some of the Funds;
staff member, Federated Securities Corp. and Federated Administrative Services.
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
Executive Vice President
Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice President,
Federated Advisers, Federated Management, Federated Research, Federated Research
Corp., Federated Global Research Corp. and Passport Research, Ltd.; Executive
Vice President and Director, Federated Securities Corp.; Trustee, Federated
Services Company; Chairman, Treasurer, and Trustee, Federated Administrative
Services; Trustee or Director of some of the Funds; Executive Vice President and
Treasurer of the Funds.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Chairman and
Director, Federated Securities Corp.; President or Vice President of some of the
Funds; Director or Trustee of some of the Funds.
David M. Taylor *
Federated Investors Tower
Pittsburgh, PA
Birthdate: January 13, 1947
Treasurer
Senior Vice President, Controller, and Trustee, Federated Investors; Controller,
Federated Advisers, Federated Management, Federated Research, Federated Research
Corp., and Passport Research, Ltd.; Vice President, Federated Shareholder
Services; Senior Vice President, Federated Administrative Services; Treasurer of
some of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President and Secretary
Executive Vice President, Secretary, General Counsel, and Trustee, Federated
Investors; Trustee, Federated Advisers, Federated Management, and Federated
Research; Director, Federated Research Corp. and Federated Global Research
Corp.; Trustee, Federated Services Company; Executive Vice President, Secretary,
and Trustee, Federated Administrative Services; President and Trustee, Federated
Shareholder Services; Director, Federated Securities Corp.; Executive Vice
President and Secretary of the Funds.
* This Trustee is deemed to be an "interested person" as defined in the
Investment Company Act of 1940.
@ Member of the Executive Committee. The Executive Committee of the
Trustees handles the responsibilities of the Trustees between meetings
of the Trustees.
As used in the table above, "The Funds" and "Funds" mean the following
investment companies: American Leaders Fund, Inc.; Annuity Management Series;
Arrow Funds; Automated Government Money Trust; Blanchard Funds; Blanchard
Precious Metals, Inc.; Cash Trust Series II; Cash Trust Series, Inc.; DG
Investor Series; Edward D. Jones & Co. Daily Passport Cash Trust; Federated ARMs
Fund; Federated Equity Funds; Federated Exchange Fund, Ltd.; Federated GNMA
Trust; Federated Government Trust; Federated High Yield Trust; Federated Income
Securities Trust; Federated Income Trust; Federated Index Trust; Federated
Institutional Trust; Federated Master Trust; Federated Municipal Trust;
Federated Short-Term Municipal Trust; Federated Short-Term U.S. Government
Trust; Federated Stock Trust; Federated Tax-Free Trust; Federated Total Return
Series, Inc.; Federated U.S. Government Bond Fund; Federated U.S. Government
Securities Fund: 1-3 Years; Federated U.S. Government Securities Fund: 3-5
Years; 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; Insurance Management Series;
Intermediate Municipal Trust; International Series, Inc.; 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 Term Trust, Inc. - 1999; Liberty
Utility Fund, Inc.; Liquid Cash Trust; Managed Series Trust; Money Market
Management, Inc.; Money Market Obligations Trust; Money Market Trust; Municipal
Securities Income Trust; Newpoint Funds; 111 Corcoran Funds; Peachtree Funds;
The Planters Funds; RIMCO Monument Funds; The Shawmut 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; The
Virtus Funds; World Investment Series, Inc.
FUND OWNERSHIP
Officers and Trustees own less than 1% of the Fund's outstanding shares.
As of December 4, 1995, the following shareholders of record owned 5% or more of
the Institutional Shares of the Fund: Charles Schwab & Co. Inc., San
Francisco, CA, owned approximately 6,818,944 shares (14.19%); University Bank &
Trust Co., Palo Alto, CA, owned approximately 2,805,511 shares (5.84%); and
Mitra & Co., Milwaukee, WI, owned approximately 5,568,028 shares (11.59%).
As of December 4, 1995, the following shareholders of record owned 5% or more of
the Institutional Service Shares of the Fund: Dai-Ichi Kangyo Bank of CA, Los
Angeles, CA, owned approximately 253,789 shares (10.56%); Alltel Corp. Thrift
Plan, San Francisco, CA, owned approximately 640,221 shares (26.63%); Chemical
Bank as Trustee For Defined Contribution Plans, New York, NY, owned
approximately 139,412 shares (5.80%); Univest & Company, Souderton, PA, owned
approximately 148,760 shares (6.19%); and SANBARCO, Santa Barbara, CA, owned
approximately 306,042 shares (12.73%).
TRUSTEES COMPENSATION
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
TRUST TRUST*# FROM FUND COMPLEX +
John F. Donahue $ -0- $-0- for the Trust and
Chairman and Trustee
68 other investment companies in the Fund Complex
J. Christopher Donahue $ -0-
$-0- for the Trust and
Exec. Vice. Pres and Trustee
14 other investment companies in the Fund Complex
Thomas G. Bigley $ -0- $20,688 for the Trust and
Trustee 49 other investment companies in the Fund Complex
John T. Conroy, Jr. $1,717
$117,202 for the Trust and
Trustee 64 other investment companies in the Fund Complex
William J. Copeland $1,717
$117,202 for the Trust and
Trustee 64 other investment companies in the Fund Complex
James E. Dowd $1,717 $117,202 for the Trust and
Trustee 64 other investment companies in the Fund Complex
Lawrence D. Ellis, M.D. $1,573
$106,460 for the Trust and
Trustee 64 other investment companies in the Fund Complex
Edward L. Flaherty, Jr. $1,717
$117,202 for the Trust and
Trustee 64 other investment companies in the Fund Complex
Peter E. Madden $1,340 $90,563 for the Trust and
Trustee 64 other investment companies in the Fund Complex
Gregor F. Meyer $1,573 $106,460 for the Trust and
Trustee 64 other investment companies in the Fund Complex
John E. Murray, Jr. $2,531
$106,460 for the Trust and
Trustee 64 other investment companies in the Fund Complex
Wesley W. Posvar $1,573 $106,460 for the Trust and
Trustee 64 other investment companies in the Fund Complex
Marjorie P. Smuts$1,573 $106,460 for the Trust and
Trustee 64 other investment companies in the Fund Complex
*Information is furnished for the fiscal year ended October 31, 1995.
#The aggregate compensation is provided for the Trust which is comprised of
three portfolios.
+The information is provided for the last calendar year.
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.
The Fund's sub-manager is ANB Investment Management and Trust Company ("ANB").
It is a wholly-owned subsidiary of First Chicago Investment Management Company.
First Chicago Investment Management Company is a wholly-owned subsidiary of
First National Bank of Chicago, which in turn, is a wholly-owned subsidiary of
First Chicago Corporation. The sub-manager's directors are Alan F. Delp, J.
Stephen Baine, Thomas P. Michaels,
David P. Bogler, Stephen P. Manus, Neil R. Wright, Terrall J. Janeway and P.
James Kartalia. The officers of ANB are Alan F. Delp, Chairman, Stephen P.
Manus, President, Neil R. Wright, Chief Investment Officer, and Thomas P.
Michaels, Secretary and Treasurer.
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, 1995, 1994 and 1993, the manager earned
$1,727,669, $1,287,529 and $1,062,278, respectively, of which, $433,282,
$289,795 and $321,440, 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.
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. Research
services provided by brokers and dealers may be used by the managers or their
affiliates in advising the Fund 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.
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. During the fiscal years ended October 31, 1995,
1994 and 1993, the Fund paid total brokerage commissions of $35,334, $20,905 and
$16,910, respectively.
Although investment decisions for the Fund are made independently from those of
the other accounts managed by the managers, investments of the type the Fund may
make may also be made by those other accounts. When the Fund and one or more
other accounts managed by the managers are prepared to invest in, or desire to
dispose of, the same security, available investments or opportunities for sales
will be allocated in a manner believed by the managers to be equitable to each.
In some cases, this procedure may adversely affect the price paid or received by
the Fund or the size of the position obtained or disposed of by the Fund. In
other cases, however, it is believed that coordination and the ability to
participate in volume transactions will be to the benefit of the Fund.
OTHER SERVICES
CUSTODIAN AND PORTFOLIO RECORDKEEPER
State Street Bank and Trust Company, Boston, Massachusetts, is custodian for the
securities and cash of the Fund. Federated Services Company, Boston,
Massachusetts, provides certain accounting and recordkeeping services with
respect to the Funds's portfolio investments.
TRANSFER AGENT
As transfer agent, Federated Services Company maintains all necessary
shareholder records. For its services, the transfer agent receives a fee based
on the size, type and number of accounts and transactions made by shareholders.
INDEPENDENT AUDITORS
The independent auditors for the Fund are Ernst & Young LLP, Pittsburgh,
Pennsylvania.
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) AND SHAREHOLDER SERVICES
AGREEMENT
These arrangements permit the payment of fees to financial institutions, the
distributor, and Federated Shareholder Services, to stimulate distribution
activities and to cause services to be provided to shareholders by a
representative who has knowledge of the shareholder's particular circumstances
and goals. These activities and services may include, but are not limited to,
marketing efforts; 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; and assisting
clients in changing dividend options, account designations, and addresses.
By adopting the Distribution Plan, (Institutional Service Shares) 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 pursuing its investment objectives.
By identifying potential investors whose needs are served by the Fund's
objectives, and properly servicing these accounts, it may be possible to curb
sharp fluctuations in rates of redemptions and sales.
Other benefits, which may be realized under either arrangement, may include: (1)
providing personal services to shareholders; (2) investing shareholder assets
with a minimum of delay and administrative detail; (3) enhancing shareholder
recordkeeping systems; and (4) responding promptly to shareholders' requests and
inquiries concerning their accounts.
For the fiscal year ended October 31, 1995, the Fund paid shareholder services
fees in the amount of $1,383,122, all of which was waived, for Institutional
Shares.
For the fiscal year ended October 31, 1995, payment in the amount of $67,923, of
which $56,603 was waived, was made pursuant to the the Distribution Plan for
Insitutional Service Shares. In addition, the Fund paid shareholder services
fees in the amount of $56,603 for Institutional Service Shares.
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
respective prospectus.
DETERMINING MARKET VALUE OF SECURITIES
Market values of the Fund's portfolio securities are determined as follows:
ofor equity securities, according to the last sale price on a national
securities exchange, if available;
oin the absence of recorded sales for equity securities, according to the mean
between the last closing bid and asked
prices;
ofor 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;
ofor 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 remaining maturities of 60
days or less at the time of purchase, at
amortized cost; or
ofor 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.
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 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:
oderive at least 90% of its gross income from dividends, interest, and gains
from the sale of securities;
oderive less than 30% of its gross income from the sale of securities held less
than three months;
oinvest in securities within certain statutory limits; and
odistribute 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
and five-year periods ended October 31, 1995 was 26% and 16.86%, respectively.
The Fund's average annual total return for Institutional Service Shares for the
one-year period ended October 31, 1995 and for the period from August 30, 1993
(date of initial public investment) to October 31, 1995 was 25.52% and 13.73%,
respectively.
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 SEC yields for Institutional Shares and for Institutional Service Shares of
the Fund for the thirty-day period ended October 31, 1995, were 2.60% and 2.29%,
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 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:
oportfolio quality;
oaverage portfolio maturity;
otype of instruments in which the portfolio is invested;
ochanges in interest rates and market value of portfolio securities;
ochanges in Fund expenses;
othe relative amount of Fund cash flow; and
ovarious 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.
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance, investors
should consider all relevant factors such as the composition of any index used,
prevailing market conditions, portfolio compositions of other funds, and methods
used to value portfolio securities and compute offering price. The financial
publications and/or indices which the Fund uses in advertising may include:
oLIPPER 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.
oDOW 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.
oSTANDARD & 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.
oMORNINGSTAR, 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.
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.
ABOUT FEDERATED INVESTORS
Federated Investors is dedicated to meeting investor needs which is reflected in
its investment decision making-structured, straightforward, and consistent.
This has resulted in a history of competitive performance with a range of
competitive investment products that have gained the confidence of thousands of
clients and their customers.
The company's disciplined security selection process is firmly rooted in sound
methodologies backed by fundamental and technical research. Investment
decisions are made and executed by teams of portfolio managers, analysts, and
traders dedicated to specific market sectors.
In the equity sector, Federated Investors has more than 25 years' experience.
As of December 31, 1994, Federated Investors managed 15 equity funds totaling
approximately $4 billion in assets across growth, value, equity income,
international, index and sector (i.e. utility) styles. Federated Investor's
value-oriented management style combines quantitative and qualitative analysis
and features a structured, computer-assisted composite modeling system that was
developed in the 1970s.
J. Thomas Madden, Executive Vice President, oversees Federated Investors' equity
and high yield corporate bond management while William D. Dawson, Executive Vice
President, oversees Federated Investors' domestic fixed income management.
Henry A. Frantzen, Executive Vice President, oversees the management of
Federated Investors' international portfolios.
MUTUAL FUND MARKET
Twenty-seven percent of American households are pursuing their financial goals
through mutual funds. These investors, as well as businesses and institutions,
have entrusted over $2 trillion to the more than 5,500 funds available.*
Federated Investors, through its subsidiaries, distributes mutual funds for a
variety of investment applications. Specific markets include:
INSTITUTIONAL CLIENTS
Federated Investors meets the needs of more than 4,000 institutional clients
nationwide by managing and servicing separate accounts and mutual funds for a
variety of applications, including defined benefit and defined contribution
programs, cash management, and asset/liability management. Institutional
clients include corporations, pension funds, tax-exempt entities,
foundations/endowments, insurance companies, and investment and financial
advisors. The marketing effort to these institutional clients is headed by
John B. Fisher, President, Institutional Sales Division.
TRUST ORGANIZATIONS
Other institutional clients include close relationships with more than 1,500
banks and trust organizations. Virtually all of the trust divisions of the top
100 bank holding companies use Federated funds in their clients' portfolios.
The marketing effort to trust clients is headed by Mark R. Gensheimer, Executive
Vice President, Bank Marketing & Sales.
BROKER/DEALERS AND BANK BROKER/DEALER SUBSIDIARIES
Federated funds are available to consumers through major brokerage firms
nationwide--including 200 New York Stock Exchange firms--supported by more
wholesalers than any other mutual fund distributor. The marketing effort to
these firms is headed by James F. Getz, President, Broker/Dealer Division.
*source: Investment Company Institute
STANDARD & POOR'S RATINGS GROUP
The Fund is not sponsored, endorsed, sold or promoted by, or affiliated with,
Standard & Poor's Ratings Group ("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.
Cusip 31420E106
Cusip 31420E403
FEDERATED 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, 1995. This Statement is not a prospectus
itself. You may request a copy of a prospectus or a paper copy of this
Statement of Additional Information, if you have received it
electronically, free of charge by calling 1-800-235-4669.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Statement dated December 31, 1995
FEDERATED SECURITIES
CORP.
DISTRIBUTOR
A SUBSIDIARY OF FEDERATED
INVESTORS
GENERAL INFORMATION ABOUT THE FUND1
INVESTMENT OBJECTIVE AND POLICIES1
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
FEDERATED INDEX TRUST MANAGEMENT 6
FUND OWNERSHIP 10
TRUSTEES COMPENSATION 11
TRUSTEE LIABILITY 11
MANAGEMENT SERVICES 12
MANAGERS TO THE FUND 12
MANAGEMENT FEES 12
OTHER RELATED SERVICES 12
BROKERAGE TRANSACTIONS 12
OTHER SERVICES 13
CUSTODIAN AND PORTFOLIO
RECORDKEEPER 13
TRANSFER AGENT 13
INDEPENDENT AUDITORS 13
SHAREHOLDER SERVICES AGREEMENT 13
PURCHASING SHARES 13
CONVERSION TO FEDERAL FUNDS 13
EXCHANGING SECURITIES FOR FUND
SHARES 13
DETERMINING NET ASSET VALUE 14
DETERMINING MARKET VALUE OF
SECURITIES 14
REDEEMING SHARES 14
REDEMPTION IN KIND 14
MASSACHUSETTS PARTNERSHIP LAW 15
TAX STATUS 15
THE FUND'S TAX STATUS 15
SHAREHOLDERS' TAX STATUS 15
TOTAL RETURN 15
YIELD 16
PERFORMANCE COMPARISONS 16
ABOUT FEDERATED INVESTORS 17
STANDARD & POOR'S RATINGS GROUP 17
GENERAL INFORMATION ABOUT THE FUND
Federated 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. On December 5, 1994, the Trustees
changed the name of the Fund from the Mid-Cap Fund to the Federated Mid-Cap
Fund.
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:
oinstruments of domestic banks and savings associations 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
oprime commercial paper (rated A-1 by Standard and Poor's Ratings Group,
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:
othe full faith and credit of the U.S. Treasury;
othe issuer's right to borrow from the U.S. Treasury;
othe discretionary authority of the U.S. government to purchase certain
obligations of agencies or instrumentalities; or
othe 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:
oThe Farm Credit System, including the National Bank for Cooperatives,
Farm Credit Banks, and Banks for Cooperatives;
oFederal Home Loan Banks;
oFarmers Home Administration; and
oFederal 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 or yield for the Fund. 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 on the Fund`s
records at the trade date. These assets are marked to market daily and are
maintained until the transaction has been settled. 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 years ended October 31, 1995 and
October 31, 1994, the portfolio turnover rate for the Fund was 26% and 30%,
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 the 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.
FEDERATED INDEX TRUST MANAGEMENT
Officers and Trustees are listed with their addresses, birthdates, present
positions with Federated Index Trust, and principal occupations.
John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated Research
Corp. and Federated Global Research Corp.; Chairman, Passport Research, Ltd.;
Chief Executive Officer and Director, Trustee, or Managing General Partner of
the Funds. Mr. Donahue is the father of J. Christopher Donahue, Executive Vice
President.
J. Christopher Donahue
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
Executive Vice President and Trustee
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated Research
Corp. and Federated Global Research Corp.; President, Passport Research, Ltd.;
Trustee, Federated Administrative Services, Federated Services Company, and
Federated Shareholder Services; President or Executive 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.
Thomas G. Bigley
28th Floor, One Oxford Centre
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Director, Oberg Manufacturing Co.; Chairman of the Board, Children's Hospital of
Pittsburgh; Director, Trustee, or Managing General Partner of the Funds;
formerly, Senior Partner, Ernst & Young LLP.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Trustee
President, Investment Properties Corporation; Senior Vice-President, John R.
Wood and Associates, Inc., Realtors; President, Northgate Village Development
Corporation; Partner or Trustee in private real estate ventures in Southwest
Florida; Director, Trustee, or Managing General Partner of the Funds; formerly,
President, Naples Property Management, Inc.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Trustee
Director and Member of the Executive Committee, Michael Baker, Inc.; Director,
Trustee, or Managing General Partner of the Funds; formerly, Vice Chairman and
Director, PNC Bank, N.A., and PNC Bank Corp. and Director, Ryan Homes, Inc.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director, Trustee,
or Managing General Partner of the Funds.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine and Member, Board of Trustees, University of Pittsburgh;
Medical Director, University of Pittsburgh Medical Center - Downtown; Member,
Board of Directors, University of Pittsburgh Medical Center; formerly,
Hematologist, Oncologist, and Internist, Presbyterian and Montefiore Hospitals;
Director, Trustee, or Managing General Partner of the Funds.
Edward L. Flaherty, Jr.@
Henny, Kochuba, Meyer and Flaherty
Two Gateway Center - Suite 674
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney-at-law; Shareholder, Henny, Kochuba, Meyer and Flaherty; Director,
Eat'N Park Restaurants, Inc., and Statewide Settlement Agency, Inc.; Director,
Trustee, or Managing General Partner of the Funds; formerly, Counsel, Horizon
Financial, F.A., Western Region.
Peter E. Madden
70 Westcliff Road
Westin, MA
Birthdate: March 16, 1942
Trustee
Consultant; State Representative, Commonwealth of Massachusetts; Director,
Trustee, or Managing General Partner of the Funds; formerly, President, State
Street Bank and Trust Company and State Street Boston Corporation.
Gregor F. Meyer
Henny, Kochuba, Meyer and Flaherty
Two Gateway Center - Suite 674
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee
Attorney-at-law; Shareholder, Henny, Kochuba, Meyer and Flaherty; Chairman,
Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Director, Trustee, or
Managing General Partner of the Funds.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting Partner, Mollica,
Murray and Hogue; Director, Trustee or Managing General Partner of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, International Politics and Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer Library
Center, Inc., and U.S. Space Foundation; Chairman, Czecho Management Center;
Director, Trustee, or Managing General Partner of the Funds; President Emeritus,
University of Pittsburgh; founding Chairman, National Advisory Council for
Environmental Policy and Technology and Federal Emergency Management Advisory
Board.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public relations/marketing consultant; Conference Coordinator, Non-profit
entities; Director, Trustee, or Managing General Partner of the Funds.
Glen R. Johnson
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 2, 1929
President
Trustee, Federated Investors; President and/or Trustee of some of the Funds;
staff member, Federated Securities Corp. and Federated Administrative Services.
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
Executive Vice President
Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice President,
Federated Advisers, Federated Management, Federated Research, Federated Research
Corp., Federated Global Research Corp. and Passport Research, Ltd.; Executive
Vice President and Director, Federated Securities Corp.; Trustee, Federated
Services Company; Chairman, Treasurer, and Trustee, Federated Administrative
Services; Trustee or Director of some of the Funds; Executive Vice President and
Treasurer of the Funds.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Chairman and
Director, Federated Securities Corp.; President or Vice President of some of the
Funds; Director or Trustee of some of the Funds.
David M. Taylor *
Federated Investors Tower
Pittsburgh, PA
Birthdate: January 13, 1947
Treasurer
Senior Vice President, Controller, and Trustee, Federated Investors; Controller,
Federated Advisers, Federated Management, Federated Research, Federated Research
Corp., and Passport Research, Ltd.; Vice President, Federated Shareholder
Services; Senior Vice President, Federated Administrative Services; Treasurer of
some of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President and Secretary
Executive Vice President, Secretary, General Counsel, and Trustee, Federated
Investors; Trustee, Federated Advisers, Federated Management, and Federated
Research; Director, Federated Research Corp. and Federated Global Research
Corp.; Trustee, Federated Services Company; Executive Vice President, Secretary,
and Trustee, Federated Administrative Services; President and Trustee, Federated
Shareholder Services; Director, Federated Securities Corp.; Executive Vice
President and Secretary of the Funds.
* This Trustee is deemed to be an "interested person" as defined in the
Investment Company Act of 1940.
@ Member of the Executive Committee. The Executive Committee of the
Trustees handles the responsibilities of the Trustees between meetings
of the Trustees.
As used in the table above, "The Funds" and "Funds" mean the following
investment companies: American Leaders Fund, Inc.; Annuity Management Series;
Arrow Funds; Automated Government Money Trust; Blanchard Funds; Blanchard
Precious Metals, Inc.; Cash Trust Series II; Cash Trust Series, Inc.; DG
Investor Series; Edward D. Jones & Co. Daily Passport Cash Trust; Federated ARMs
Fund; Federated Equity Funds; Federated Exchange Fund, Ltd.; Federated GNMA
Trust; Federated Government Trust; Federated High Yield Trust; Federated Income
Securities Trust; Federated Income Trust; Federated Index Trust; Federated
Institutional Trust; Federated Master Trust; Federated Municipal Trust;
Federated Short-Term Municipal Trust; Federated Short-Term U.S. Government
Trust; Federated Stock Trust; Federated Tax-Free Trust; Federated Total Return
Series, Inc.; Federated U.S. Government Bond Fund; Federated U.S. Government
Securities Fund: 1-3 Years; Federated U.S. Government Securities Fund: 3-5
Years; 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; Insurance Management Series;
Intermediate Municipal Trust; International Series, Inc.; 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 Term Trust, Inc. - 1999; Liberty
Utility Fund, Inc.; Liquid Cash Trust; Managed Series Trust; Money Market
Management, Inc.; Money Market Obligations Trust; Money Market Trust; Municipal
Securities Income Trust; Newpoint Funds; 111 Corcoran Funds; Peachtree Funds;
The Planters Funds; RIMCO Monument Funds; The Shawmut 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; The
Virtus Funds; World Investment Series, Inc.
FUND OWNERSHIP
Officers and Trustees own less than 1% of the Fund's outstanding shares.
As of December 4, 1995, the following shareholders of record owned 5% or more of
the outstanding shares of the Fund: Dai-Ichi Kangyo Bank of CA, Los Angeles,
CA, owned approximately 380,662 shares (7.61%); Charles Schwab & Co. Inc., San
Francisco, CA, owned approximately 420,108 shares (8.40%); CENTBANK & Co.,
Monroe, LA, owned approximately 354,297 shares (7.08%); Covie & Co., Chicago,
IL, owned approximately 260,161 shares (5.20%); FIRNATICIA, Iowa City, IA, owned
approximately 342,120 shares, (6.84%); SANBARCO, Santa Barbara, CA, owned
approximately 289,351 shares (5.78%); and Mitra & Co., Milwaukee, WI, owned
approximately 335,456 shares (6.70%).
TRUSTEES COMPENSATION
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
TRUST TRUST*# FROM FUND COMPLEX +
John F. Donahue $ -0- $-0- for the Trust and
Chairman and Trustee
68 other investment companies in the Fund Complex
J. Christopher Donahue $ -0-
$-0- for the Trust and
Exec. Vice. Pres and Trustee
14 other investment companies in the Fund Complex
Thomas G. Bigley $ -0- $20,688 for the Trust and
Trustee 49 other investment companies in the Fund Complex
John T. Conroy, Jr. $1,717
$117,202 for the Trust and
Trustee 64 other investment companies in the Fund Complex
William J. Copeland $1,717
$117,202 for the Trust and
Trustee 64 other investment companies in the Fund Complex
James E. Dowd $1,717 $117,202 for the Trust and
Trustee 64 other investment companies in the Fund Complex
Lawrence D. Ellis, M.D. $1,573
$106,460 for the Trust and
Trustee 64 other investment companies in the Fund Complex
Edward L. Flaherty, Jr. $1,717
$117,202 for the Trust and
Trustee 64 other investment companies in the Fund Complex
Peter E. Madden $1,340 $90,563 for the Trust and
Trustee 64 other investment companies in the Fund Complex
Gregor F. Meyer $1,573 $106,460 for the Trust and
Trustee 64 other investment companies in the Fund Complex
John E. Murray, Jr. $2,531
$106,460 for the Trust and
Trustee 64 other investment companies in the Fund Complex
Wesley W. Posvar $1,573 $106,460 for the Trust and
Trustee 64 other investment companies in the Fund Complex
Marjorie P. Smuts$1,573 $106,460 for the Trust and
Trustee 64 other investment companies in the Fund Complex
*Information is furnished for the fiscal year ended October 31, 1995.
#The aggregate compensation is provided for the Trust which is comprised of
three portfolios.
+The information is provided for the last calendar year.
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.
The Fund's sub-manager is ANB Investment Management and Trust Company ("ANB").
It is a wholly-owned subsidiary of First Chicago Investment Management Company.
First Chicago Investment Management Company is a wholly-owned subsidiary of
First National Bank of Chicago, which in turn, is a wholly-owned subsidiary of
First Chicago Corporation. The sub-manager's directors are Alan F. Delp, J.
Stephen Baine, Thomas P. Michaels,
David P. Bogler, Stephen P. Manus, Neil R. Wright, Terrall J. Janeway and P.
James Kartalia. The officers of ANB are Alan F. Delp, Chairman, Stephen P.
Manus, President, Neil R. Wright, Chief Investment Officer, and Thomas P.
Michaels, Secretary and Treasurer.
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 years ended October 31, 1995, 1994 and 1993, the manager earned
$208,809, $115,033 and $34,031, respectively, of which $106,606, $115,033 and
$34,031 was voluntarily waived in 1995, 1994 and 1993, respectively, 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.
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. Research
services provided by brokers and dealers may be used by the managers or their
affiliates in advising the Fund 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.
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. During the fiscal years ended October 31, 1995,
1994 and 1993, the Fund paid total brokerage commissions of $45,385, $54,595 and
$2,222, respectively.
Although investment decisions for the Fund are made independently from those of
the other accounts managed by the managers, investments of the type the Fund may
make may also be made by those other accounts. When the Fund and one or more
other accounts managed by the managers are prepared to invest in, or desire to
dispose of, the same security, available investments or opportunities for sales
will be allocated in a manner believed by the managers to be equitable to each.
In some cases, this procedure may adversely affect the price paid or received by
the Fund or the size of the position obtained or disposed of by the Fund. In
other cases, however, it is believed that coordination and the ability to
participate in volume transactions will be to the benefit of the Fund.
OTHER SERVICES
CUSTODIAN AND PORTFOLIO RECORDKEEPER
State Street Bank and Trust Company, Boston, Massachusetts, is custodian for the
securities and cash of the Fund. Federated Services Company, Boston,
Massachusetts, provides certain accounting and recordkeeping services with
respect to the Funds's portfolio investments.
TRANSFER AGENT
As transfer agent, Federated Services Company maintains all necessary
shareholder records. For its services, the transfer agent receives a fee based
on the size, type and number of accounts and transactions made by shareholders.
INDEPENDENT AUDITORS
The independent auditors for the Fund are Ernst & Young LLP, Pittsburgh,
Pennsylvania.
SHAREHOLDER SERVICES AGREEMENT
This arrangement permits the payment of fees to Federated Shareholder Services
and, indirectly, to financial institutions to cause services to be provided
which are necessary for the maintenance of shareholder accounts and to
encourage personal services to shareholders by a representative who has
knowledge of the shareholder's particular circumstances and goals. These
activities and services may include, but are not limited to, 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; and assisting clients in changing dividend
options, account designations, and addresses. By adopting the Shareholder
Services Agreement, the Trustees expects that the Fund will benefit by: (1)
providing personal services to shareholders; (2) investing shareholder assets
with a minimum of delay and administrative detail; (3) enhancing shareholder
recordkeeping systems; and (4) responding promptly to shareholders' requests and
inquiries concerning their accounts.
For the fiscal year ended October 31, 1995, the Fund incurred shareholder
services fees in the amount of $130,516, of which $107,993 was waived.
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:
ofor equity securities, according to the last sale price on a national
securities exchange, if available;
oin the absence of recorded sales for equity securities, according to the mean
between the last closing bid and asked prices;
ofor 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;
ofor 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 remaining maturities of 60 days or less at the time of purchase, at
amortized cost; or
ofor 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.
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 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:
oderive at least 90% of its gross income from dividends, interest, and gains
from the sale of securities;
oderive less than 30% of its gross income from the sale of securities held less
than three months;
oinvest in securities within certain statutory limits; and
odistribute 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 average annual total return for the one-year period ended October
31, 1995 and for the period from November 5, 1992 (start of performance) to
October 31, 1995, was 20.12% and 12.97% , 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 quarterly reinvestment of all dividends and distributions.
YIELD
The Fund's SEC yield for the thirty-day period ended October 31, 1995 was 1.65%
The yield for the Fund is determined each day 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
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:
oportfolio quality;
oaverage portfolio maturity;
otype of instruments in which the portfolio is invested;
ochanges in interest rates and market value of portfolio securities;
ochanges in Fund expenses;
othe relative amount of Fund cash flow; and
ovarious 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.
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance, investors
should consider all relevant factors such as the composition of any index used,
prevailing market conditions, portfolio compositions of other funds, and methods
used to value portfolio securities and compute offering price. The financial
publications and/or indices which the Fund uses in advertising may include:
oLIPPER 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.
oRUSSELL 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.
oSTANDARD & 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.
oWILSHIRE 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.
oMORNINGSTAR, 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.
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.
ABOUT FEDERATED INVESTORS
Federated Investors is dedicated to meeting investor needs which is reflected in
its investment decision making-structured, straightforward, and consistent.
This has resulted in a history of competitive performance with a range of
competitive investment products that have gained the confidence of thousands of
clients and their customers.
The company's disciplined security selection process is firmly rooted in sound
methodologies backed by fundamental and technical research. Investment
decisions are made and executed by teams of portfolio managers, analysts, and
traders dedicated to specific market sectors.
In the equity sector, Federated Investors has more than 25 years' experience.
As of December 31, 1994, Federated Investors managed 15 equity funds totaling
approximately $4 billion in assets across growth, value, equity income,
international, index and sector (i.e. utility) styles. Federated Investor's
value-oriented management style combines quantitative and qualitative analysis
and features a structured, computer-assisted composite modeling system that was
developed in the 1970s.
J. Thomas Madden, Executive Vice President, oversees Federated Investors' equity
and high yield corporate bond management while William D. Dawson, Executive Vice
President, oversees Federated Investors' domestic fixed income management.
Henry A. Frantzen, Executive Vice President, oversees the management of
Federated Investors' international portfolios.
MUTUAL FUND MARKET
Twenty-seven percent of American households are pursuing their financial goals
through mutual funds. These investors, as well as businesses and institutions,
have entrusted over $2 trillion to the more than 5,500 funds available.*
Federated Investors, through its subsidiaries, distributes mutual funds for a
variety of investment applications. Specific markets include:
INSTITUTIONAL CLIENTS
Federated Investors meets the needs of more than 4,000 institutional clients
nationwide by managing and servicing separate accounts and mutual funds for a
variety of applications, including defined benefit and defined contribution
programs, cash management, and asset/liability management. Institutional
clients include corporations, pension funds, tax-exempt entities,
foundations/endowments, insurance companies, and investment and financial
advisors. The marketing effort to these institutional clients is headed by
John B. Fisher, President, Institutional Sales Division.
TRUST ORGANIZATIONS
Other institutional clients include close relationships with more than 1,500
banks and trust organizations. Virtually all of the trust divisions of the top
100 bank holding companies use Federated funds in their clients' portfolios.
The marketing effort to trust clients is headed by Mark R. Gensheimer, Executive
Vice President, Bank Marketing & Sales.
BROKER/DEALERS AND BANK BROKER/DEALER SUBSIDIARIES
Federated funds are available to consumers through major brokerage firms
nationwide--including 200 New York Stock Exchange firms--supported by more
wholesalers than any other mutual fund distributor. The marketing effort to
these firms is headed by James F. Getz, President, Broker/Dealer Division.
*source: Investment Company Institute
STANDARD & POOR'S RATINGS GROUP
"Standard and Poor's," "S&P ," "S&P MidCap 400 Index," and "Standard & Poor's
MidCap 400 Index" are trademarks of Standard & Poor's Ratings Group ("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.
Cusip 31420E205
FEDERATED 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, 1995. This Statement is not a prospectus
itself. You may request a copy of a prospectus or a paper copy of this
Statement of Additional Information, if you have received it
electronically, free of charge by calling 1-800-235-4669.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Statement dated December 31, 1995
FEDERATED SECURITIES CORP.
DISTRIBUTOR
A SUBSIDIARY OF FEDERATED INVESTORS
GENERAL INFORMATION ABOUT THE FUND1
INVESTMENT OBJECTIVE AND POLICIES1
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
FEDERATED INDEX TRUST MANAGEMENT 6
FUND OWNERSHIP 10
TRUSTEES COMPENSATION 11
TRUSTEE LIABILITY 11
MANAGEMENT SERVICES 12
MANAGERS TO THE FUND 12
MANAGEMENT FEES 12
OTHER RELATED SERVICES 12
BROKERAGE TRANSACTIONS 12
OTHER SERVICES 13
CUSTODIAN AND PORTFOLIO
RECORDKEEPER 13
TRANSFER AGENT 13
INDEPENDENT AUDITORS 13
SHAREHOLDER SERVICES AGREEMENT 13
PURCHASING SHARES 13
CONVERSION TO FEDERAL FUNDS 13
EXCHANGING SECURITIES FOR FUND
SHARES 13
DETERMINING NET ASSET VALUE 14
DETERMINING MARKET VALUE OF
SECURITIES 14
REDEEMING SHARES 14
REDEMPTION IN KIND 14
MASSACHUSETTS PARTNERSHIP LAW 15
TAX STATUS 15
THE FUND'S TAX STATUS 15
SHAREHOLDERS' TAX STATUS 15
TOTAL RETURN 15
YIELD 15
PERFORMANCE COMPARISONS 16
ABOUT FEDERATED INVESTORS 16
FRANK RUSSELL COMPANY 17
GENERAL INFORMATION ABOUT THE FUND
Federated 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. On December 5, 1994, the Trustees
changed the name of the Fund from the Mini-Cap Fund to the Federated Mini-Cap
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 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:
oinstruments of domestic banks and savings associations 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
oprime commercial paper (rated A-1 by Standard and Poor's Ratings Group,
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:
othe full faith and credit of the U.S. Treasury;
othe issuer's right to borrow from the U.S. Treasury;
othe discretionary authority of the U.S. government to purchase certain
obligations of agencies or instrumentalities; or
othe 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:
oThe Farm Credit System, including the National Bank for Cooperatives,
Farm Credit Banks, and Banks for Cooperatives;
oFederal Home Loan Banks;
oFarmers Home Administration; and
oFederal 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 or yield for the Fund. 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 on the Fund`s
records at the trade date. These assets are marked to market daily and are
maintained until the transaction has been settled. 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 years ended October 31, 1995 and
October 31, 1994, the portfolio turnover rate for the Fund was 42% and 32%,
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 the 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.
FEDERATED INDEX TRUST MANAGEMENT
Officers and Trustees are listed with their addresses, birthdates, present
positions with Federated Index Trust, and principal occupations.
John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated Research
Corp. and Federated Global Research Corp.; Chairman, Passport Research, Ltd.;
Chief Executive Officer and Director, Trustee, or Managing General Partner of
the Funds. Mr. Donahue is the father of J. Christopher Donahue, Executive Vice
President.
J. Christopher Donahue
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
Executive Vice President and Trustee
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated Research
Corp. and Federated Global Research Corp.; President, Passport Research, Ltd.;
Trustee, Federated Administrative Services, Federated Services Company, and
Federated Shareholder Services; President or Executive 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.
Thomas G. Bigley
28th Floor, One Oxford Centre
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Director, Oberg Manufacturing Co.; Chairman of the Board, Children's Hospital of
Pittsburgh; Director, Trustee, or Managing General Partner of the Funds;
formerly, Senior Partner, Ernst & Young LLP.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Trustee
President, Investment Properties Corporation; Senior Vice-President, John R.
Wood and Associates, Inc., Realtors; President, Northgate Village Development
Corporation; Partner or Trustee in private real estate ventures in Southwest
Florida; Director, Trustee, or Managing General Partner of the Funds; formerly,
President, Naples Property Management, Inc.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Trustee
Director and Member of the Executive Committee, Michael Baker, Inc.; Director,
Trustee, or Managing General Partner of the Funds; formerly, Vice Chairman and
Director, PNC Bank, N.A., and PNC Bank Corp. and Director, Ryan Homes, Inc.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director, Trustee,
or Managing General Partner of the Funds.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine and Member, Board of Trustees, University of Pittsburgh;
Medical Director, University of Pittsburgh Medical Center - Downtown; Member,
Board of Directors, University of Pittsburgh Medical Center; formerly,
Hematologist, Oncologist, and Internist, Presbyterian and Montefiore Hospitals;
Director, Trustee, or Managing General Partner of the Funds.
Edward L. Flaherty, Jr.@
Henny, Kochuba, Meyer and Flaherty
Two Gateway Center - Suite 674
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney-at-law; Shareholder, Henny, Kochuba, Meyer and Flaherty; Director,
Eat'N Park Restaurants, Inc., and Statewide Settlement Agency, Inc.; Director,
Trustee, or Managing General Partner of the Funds; formerly, Counsel, Horizon
Financial, F.A., Western Region.
Peter E. Madden
70 Westcliff Road
Westin, MA
Birthdate: March 16, 1942
Trustee
Consultant; State Representative, Commonwealth of Massachusetts; Director,
Trustee, or Managing General Partner of the Funds; formerly, President, State
Street Bank and Trust Company and State Street Boston Corporation.
Gregor F. Meyer
Henny, Kochuba, Meyer and Flaherty
Two Gateway Center - Suite 674
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee
Attorney-at-law; Shareholder, Henny, Kochuba, Meyer and Flaherty; Chairman,
Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Director, Trustee, or
Managing General Partner of the Funds.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting Partner, Mollica,
Murray and Hogue; Director, Trustee or Managing General Partner of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, International Politics and Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer Library
Center, Inc., and U.S. Space Foundation; Chairman, Czecho Management Center;
Director, Trustee, or Managing General Partner of the Funds; President Emeritus,
University of Pittsburgh; founding Chairman, National Advisory Council for
Environmental Policy and Technology and Federal Emergency Management Advisory
Board.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public relations/marketing consultant; Conference Coordinator, Non-profit
entities; Director, Trustee, or Managing General Partner of the Funds.
Glen R. Johnson
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 2, 1929
President
Trustee, Federated Investors; President and/or Trustee of some of the Funds;
staff member, Federated Securities Corp. and Federated Administrative Services.
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
Executive Vice President
Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice President,
Federated Advisers, Federated Management, Federated Research, Federated Research
Corp., Federated Global Research Corp. and Passport Research, Ltd.; Executive
Vice President and Director, Federated Securities Corp.; Trustee, Federated
Services Company; Chairman, Treasurer, and Trustee, Federated Administrative
Services; Trustee or Director of some of the Funds; Executive Vice President and
Treasurer of the Funds.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Chairman and
Director, Federated Securities Corp.; President or Vice President of some of the
Funds; Director or Trustee of some of the Funds.
David M. Taylor *
Federated Investors Tower
Pittsburgh, PA
Birthdate: January 13, 1947
Treasurer
Senior Vice President, Controller, and Trustee, Federated Investors; Controller,
Federated Advisers, Federated Management, Federated Research, Federated Research
Corp., and Passport Research, Ltd.; Vice President, Federated Shareholder
Services; Senior Vice President, Federated Administrative Services; Treasurer of
some of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President and Secretary
Executive Vice President, Secretary, General Counsel, and Trustee, Federated
Investors; Trustee, Federated Advisers, Federated Management, and Federated
Research; Director, Federated Research Corp. and Federated Global Research
Corp.; Trustee, Federated Services Company; Executive Vice President, Secretary,
and Trustee, Federated Administrative Services; President and Trustee, Federated
Shareholder Services; Director, Federated Securities Corp.; Executive Vice
President and Secretary of the Funds.
* This Trustee is deemed to be an "interested person" as defined in the
Investment Company Act of 1940.
@ Member of the Executive Committee. The Executive Committee of the
Trustees handles the responsibilities of the Trustees between meetings
of the Trustees.
As used in the table above, "The Funds" and "Funds" mean the following
investment companies: American Leaders Fund, Inc.; Annuity Management Series;
Arrow Funds; Automated Government Money Trust; Blanchard Funds; Blanchard
Precious Metals, Inc.; Cash Trust Series II; Cash Trust Series, Inc.; DG
Investor Series; Edward D. Jones & Co. Daily Passport Cash Trust; Federated ARMs
Fund; Federated Equity Funds; Federated Exchange Fund, Ltd.; Federated GNMA
Trust; Federated Government Trust; Federated High Yield Trust; Federated Income
Securities Trust; Federated Income Trust; Federated Index Trust; Federated
Institutional Trust; Federated Master Trust; Federated Municipal Trust;
Federated Short-Term Municipal Trust; Federated Short-Term U.S. Government
Trust; Federated Stock Trust; Federated Tax-Free Trust; Federated Total Return
Series, Inc.; Federated U.S. Government Bond Fund; Federated U.S. Government
Securities Fund: 1-3 Years; Federated U.S. Government Securities Fund: 3-5
Years; 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; Insurance Management Series;
Intermediate Municipal Trust; International Series, Inc.; 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 Term Trust, Inc. - 1999; Liberty
Utility Fund, Inc.; Liquid Cash Trust; Managed Series Trust; Money Market
Management, Inc.; Money Market Obligations Trust; Money Market Trust; Municipal
Securities Income Trust; Newpoint Funds; 111 Corcoran Funds; Peachtree Funds;
The Planters Funds; RIMCO Monument Funds; The Shawmut 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; The
Virtus Funds; World Investment Series, Inc.
FUND OWNERSHIP
Officers and Trustees own less than 1% of the Fund's outstanding shares.
As of December 4, 1995, the following shareholders of record owned 5% or more of
the outstanding shares of the Fund: Charles Schwab & Co. Inc. , San Francisco,
CA, owned approximately 550,210 shares (5.37%); and Mitra & Co., Milwaukee, WI,
owned approximately 715,381 shares (6.98%).
TRUSTEES COMPENSATION
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
TRUST TRUST*# FROM FUND COMPLEX +
John F. Donahue $ -0- $-0- for the Trust and
Chairman and Trustee
68 other investment companies in the Fund Complex
J. Christopher Donahue $ -0-
$-0- for the Trust and
Exec. Vice. Pres and Trustee
14 other investment companies in the Fund Complex
Thomas G. Bigley $ -0- $20,688 for the Trust and
Trustee 49 other investment companies in the Fund Complex
John T. Conroy, Jr. $1,717
$117,202 for the Trust and
Trustee 64 other investment companies in the Fund Complex
William J. Copeland $1,717
$117,202 for the Trust and
Trustee 64 other investment companies in the Fund Complex
James E. Dowd $1,717 $117,202 for the Trust and
Trustee 64 other investment companies in the Fund Complex
Lawrence D. Ellis, M.D. $1,573
$106,460 for the Trust and
Trustee 64 other investment companies in the Fund Complex
Edward L. Flaherty, Jr. $1,717
$117,202 for the Trust and
Trustee 64 other investment companies in the Fund Complex
Peter E. Madden $1,340 $90,563 for the Trust and
Trustee 64 other investment companies in the Fund Complex
Gregor F. Meyer $1,573 $106,460 for the Trust and
Trustee 64 other investment companies in the Fund Complex
John E. Murray, Jr. $2,531
$106,460 for the Trust and
Trustee 64 other investment companies in the Fund Complex
Wesley W. Posvar $1,573 $106,460 for the Trust and
Trustee 64 other investment companies in the Fund Complex
Marjorie P. Smuts$1,573 $106,460 for the Trust and
Trustee 64 other investment companies in the Fund Complex
*Information is furnished for the fiscal year ended October 31, 1995.
#The aggregate compensation is provided for the Trust which is comprised of
three portfolios.
+The information is provided for the last calendar year.
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.
The Fund's sub-manager is ANB Investment Management and Trust Company ("ANB").
It is a wholly-owned subsidiary of First Chicago Investment Management Company.
First Chicago Investment Management Company is a wholly-owned subsidiary of
First National Bank of Chicago, which in turn, is a wholly-owned subsidiary of
First Chicago Corporation. The sub-manager's directors are Alan F. Delp, J.
Stephen Baine, Thomas P. Michaels,
David P. Bogler, Stephen P. Manus, Neil R. Wright, Terrall J. Janeway and P.
James Kartalia. The officers of ANB are Alan F. Delp, Chairman, Stephen P.
Manus, President, Neil R. Wright, Chief Investment Officer, and Thomas P.
Michaels, Secretary and Treasurer.
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 years ended October 31, 1995, 1994 and 1993, the manager earned
$540,284, $439,054 and $230,734, respectively, of which $56,620, $96,021 and
$230,734, respectively, was voluntarily waived.
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.
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. Research
services provided by brokers and dealers may be used by the managers or their
affiliates in advising the Fund 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.
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. During the fiscal years ended October 31, 1995,
1994 and 1993, the Fund paid total brokerage commissions of $165,266, $144,520
and $165,152, respectively.
Although investment decisions for the Fund are made independently from those of
the other accounts managed by the managers, investments of the type the Fund may
make may also be made by those other accounts. When the Fund and one or more
other accounts managed by the managers are prepared to invest in, or desire to
dispose of, the same security, available investments or opportunities for sales
will be allocated in a manner believed by the managers to be equitable to each.
In some cases, this procedure may adversely affect the price paid or received by
the Fund or the size of the position obtained or disposed of by the Fund. In
other cases, however, it is believed that coordination and the ability to
participate in volume transactions will be to the benefit of the Fund.
OTHER SERVICES
CUSTODIAN AND PORTFOLIO RECORDKEEPER
State Street Bank and Trust Company, Boston, Massachusetts, is custodian for the
securities and cash of the Fund. Federated Services Company, Boston,
Massachusetts, provides certain accounting and recordkeeping services with
respect to the Funds's portfolio investments.
TRANSFER AGENT
As transfer agent, Federated Services Company maintains all necessary
shareholder records. For its services, the transfer agent receives a fee based
on the size, type and number of accounts and transactions made by shareholders.
INDEPENDENT AUDITORS
The independent auditors for the Fund are Ernst & Young LLP, Pittsburgh,
Pennsylvania.
SHAREHOLDER SERVICES AGREEMENT
This arrangement permits the payment of fees to Federated Shareholder Services
and, indirectly, to financial institutions to cause services to be provided
which are necessary for the maintenance of shareholder accounts and to encourage
personal services to shareholders by a representative who has knowledge of the
shareholder's particular circumstances and goals. These activities and services
may include, but are not limited to, 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; and assisting clients in changing dividend options, account
designations, and addresses. By adopting the Shareholder Services Agreement,
the Trustees expect that the Fund will benefit by: (1) providing personal
services to shareholders; (2) investing shareholder assets with a minimum of
delay and administrative detail; (3) enhancing shareholder recordkeeping
systems; and (4) responding promptly to shareholders' requests and inquiries
concerning their accounts.
For the fiscal year ended October 31, 1995, the Fund paid shareholder services
fees in the amount of $22,753, none of which was waived.
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:
ofor equity securities, according to the last sale price on a national
securities exchange, if available;
oin the absence of recorded sales for equity securities, according to the mean
between the last closing bid and asked prices;
ofor 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;
ofor 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 remaining maturities of 60 days or less at the time of purchase, at
amortized cost; or
ofor 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.
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 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:
oderive at least 90% of its gross income from dividends, interest, and gains
from the sale of securities;
oderive less than 30% of its gross income from the sale of securities held less
than three months;
oinvest in securities within certain statutory limits; and
odistribute 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 average annual total return for the one-year period ended October
31, 1995 and for the period from August 11, 1992 (Start of Performance) to
October 31, 1995 was 16.44% and 13.06%, 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 quarterly reinvestment of all dividends and distributions.
YIELD
The Fund's SEC yield for the thirty-day period ended October 31, 1995 was 1.70%.
The yield for the Fund is determined each day 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:
oportfolio quality;
oaverage portfolio maturity;
otype of instruments in which the portfolio is invested;
ochanges in interest rates and market value of portfolio securities;
ochanges in Fund expenses;
othe relative amount of Fund cash flow; and
ovarious other factors.
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance, investors
should consider all relevant factors such as the composition of any index used,
prevailing market conditions, portfolio compositions of other funds, and methods
used to value portfolio securities and compute offering price. The financial
publications and/or indices which the Fund uses in advertising may include:
oLIPPER 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.
oRUSSELL 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.
oSTANDARD & 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.
oWILSHIRE 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.
oMORNINGSTAR, 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.
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.
ABOUT FEDERATED INVESTORS
Federated Investors is dedicated to meeting investor needs which is reflected in
its investment decision making-structured, straightforward, and consistent.
This has resulted in a history of competitive performance with a range of
competitive investment products that have gained the confidence of thousands of
clients and their customers.
The company's disciplined security selection process is firmly rooted in sound
methodologies backed by fundamental and technical research. Investment
decisions are made and executed by teams of portfolio managers, analysts, and
traders dedicated to specific market sectors.
In the equity sector, Federated Investors has more than 25 years' experience.
As of December 31, 1994, Federated Investors managed 15 equity funds totaling
approximately $4 billion in assets across growth, value, equity income,
international, index and sector (i.e. utility) styles. Federated Investor's
value-oriented management style combines quantitative and qualitative analysis
and features a structured, computer-assisted composite modeling system that was
developed in the 1970s.
J. Thomas Madden, Executive Vice President, oversees Federated Investors' equity
and high yield corporate bond management while William D. Dawson, Executive Vice
President, oversees Federated Investors' domestic fixed income management.
Henry A. Frantzen, Executive Vice President, oversees the management of
Federated Investors' international portfolios.
MUTUAL FUND MARKET
Twenty-seven percent of American households are pursuing their financial goals
through mutual funds. These investors, as well as businesses and institutions,
have entrusted over $2 trillion to the more than 5,500 funds available.*
Federated Investors, through its subsidiaries, distributes mutual funds for a
variety of investment applications. Specific markets include:
INSTITUTIONAL CLIENTS
Federated Investors meets the needs of more than 4,000 institutional clients
nationwide by managing and servicing separate accounts and mutual funds for a
variety of applications, including defined benefit and defined contribution
programs, cash management, and asset/liability management. Institutional
clients include corporations, pension funds, tax-exempt entities,
foundations/endowments, insurance companies, and investment and financial
advisors. The marketing effort to these institutional clients is headed by
John B. Fisher, President, Institutional Sales Division.
TRUST ORGANIZATIONS
Other institutional clients include close relationships with more than 1,500
banks and trust organizations. Virtually all of the trust divisions of the top
100 bank holding companies use Federated funds in their clients' portfolios.
The marketing effort to trust clients is headed by Mark R. Gensheimer, Executive
Vice President, Bank Marketing & Sales.
BROKER/DEALERS AND BANK BROKER/DEALER SUBSIDIARIES
Federated funds are available to consumers through major brokerage firms
nationwide--including 200 New York Stock Exchange firms--supported by more
wholesalers than any other mutual fund distributor. The marketing effort to
these firms is headed by James F. Getz, President, Broker/Dealer Division.
*source: Investment Company Institute
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.
Cusip 31420E304
