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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 Statement of Additional Information for Institutional Shares and
Institutional Service Shares dated December 31, 1996, with the Securities and
Exchange Commission ("SEC"). 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 1-800-341-7400. To obtain other information or to make
inquiries about the Fund, contact the Fund at the address listed in the back of
this prospectus. The Statement of Additional Information, material incorporated
by reference into this document, and other information regarding the Fund is
maintained electronically with the SEC at Internet Web site
(http://www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
Prospectus dated December 31, 1996
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.......................................................6
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.................................................10
What Shares Cost............................................................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.......................................................12
Voting Rights...............................................................12
Tax Information...............................................................13
Federal Income Tax..........................................................13
State and Local Taxes.......................................................13
Performance Information.......................................................13
Other Classes of Shares.......................................................13
Financial Statements..........................................................36
Report of Ernst & Young LLP,
Independent Auditors........................................................43
Addresses.....................................................................44
SUMMARY OF FUND EXPENSES
FEDERATED MAX-CAP FUND
INSTITUTIONAL 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)........................................................ 0.24%
12b-1 Fee................................................................................ None
Total Other Expenses..................................................................... 0.07%
Shareholder Services Fee (after waiver) (2)................................ 0.00%
Total Operating Expenses (3)................................................... 0.31%
</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 shareholder services fee has been reduced to reflect the voluntary
waiver of the shareholder services fee. The shareholder service provider can
terminate this voluntary waiver at any time at its sole discretion. The
maximum shareholder services fee is 0.25%.
(3) The total operating expenses would have been 0.62% 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 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......................................... $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.
FEDERATED 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 43.
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
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1996 1995 1994 1993 1992 1991 1990(A)
------ ------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $14.74 $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 0.34 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 2.80 2.70 0.10 1.29 0.71 2.46 (1.43)
- ------------------------------------------- ----- ----- ----- ----- ----- ----- ------
Total from investment operations 3.14 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 (0.36) (0.34) (0.30) (0.30) (0.34) (0.36) (0.09)
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Distributions from net realized gain on
investments and futures contracts (2.03) (0.02) (0.34) (0.69) (0.12) -- --
- ------------------------------------------- ----- ----- ----- ----- ----- ----- ------
Total distributions (2.39) (0.36) (0.64) (0.99) (0.46) (0.36) (0.09)
- ------------------------------------------- ----- ----- ----- ----- ----- ----- ------
NET ASSET VALUE, END OF PERIOD $15.49 $14.74 $12.02 $12.24 $11.64 $11.07 $ 8.60
- ------------------------------------------- ----- ----- ----- ----- ----- ----- ------
TOTAL RETURN (B) 23.71% 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% 0.31% 0.32% 0.31% 0.30% 0.24% 0.00%
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Net investment income 2.29% 2.91% 2.70% 2.60% 2.92% 3.74% 5.19%*
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Expense waiver/reimbursement (c) 0.31% 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) $900,131 $679,237 $443,815 $407,246 $309,614 $144,528 $25,129
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Average commission rate paid $0.0153 -- -- -- -- -- --
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Portfolio turnover 3% 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 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)
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.
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;
- - notes, bonds, and discount notes issued or guaranteed by U.S. government
agencies and instrumentalities supported by the full faith and credit of the
United States;
- - notes, bonds, and discount notes of U.S. government agencies or
instrumentalities which receive or have access to federal funding; and
- - notes, bonds, and discount notes of other U.S. government instrumentalities
supported only by the credit of the instrumentalities.
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 arrange-
ments 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 Com-
modity 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.
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 limitations cannot be changed without shareholder approval.
The following investment limitation, however, may be changed by the Trustees
without shareholder approval. Shareholders will be notified before any material
change in this policy becomes effective.
The Fund will not invest more than 15% of its net assets in securities that are
illiquid.
FEDERATED INDEX
TRUST INFORMATION
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES
The Trust is managed by 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 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 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 errors; monitoring and analyzing the appropriate futures
contracts to purchase and the futures holdings of the Fund as a percentage of
Fund assets; monitoring market timing in the Fund; discussing with the Sub-
Manager which method of indexing to use; and ultimately recommending to the
Trustees whether the Sub-Management Contract should be renewed, modified or
terminated. The Manager provides written reports to the Trustees regarding the
results of its evaluation and monitoring functions. In addition, the Manager is
responsible for providing the Fund with administrative services, including, but
not limited to, shareholder servicing and certain legal and accounting services.
The Manager is also responsible for conducting all operations of the Fund,
except those operations contracted to the Sub-Manager, custodian, transfer agent
and dividend disbursing agent. As described below, the Manager receives an
annual fee
from the Fund for performing its responsibilities under the Management Contract.
MANAGEMENT FEES. The Fund's Manager receives an annual management fee equal to
.30% of 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.
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 $80 billion invested across more than 250 funds under management and/or
administration by its subsidiaries, as of December 31, 1995, Federated Investors
is one of the largest mutual fund investment managers in the United States. With
more than 1,800 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.
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 interests. 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.
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 the first $100 million
of net assets under management, .02% over $100 million but less than $200
million, and .01% 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 Manage-
ment Company which, in turn, is an indirect wholly-owned subsidiary of First
Chicago NBD Corporation. It serves as investment adviser principally to
corporate defined benefit and defined contribution plans which have, as of June
30, 1996, placed approximately $22.2 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 340 nationwide non-financial institution
clients invest. In total, ANB manages 79 commingled/common trust funds. Also,
since 1992, 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.
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.
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 .25% of the average daily net asset value of its shares,
computed at an annual rate, to obtain certain personal services for shareholders
and to maintain shareholder accounts. 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.
SUPPLEMENTAL PAYMENTS TO
FINANCIAL INSTITUTIONS
In addition to payments made pursuant to the Shareholder Services Agreement,
Federated Securities Corp. and Federated Shareholder Services, from their own
assets, may pay financial institutions supplemental fees for the performance of
substantial sales services, distribution-related support services, or
shareholder services. The support may include sponsoring sales, educational and
training seminars for their employees, providing sales literature, and
engineering computer software programs that emphasize the attributes of the
Fund. Such assistance will be predicated upon the amount of shares the financial
institution sells or may sell, and/or upon the type and nature of sales or
marketing support furnished by the financial institution. Any payments made by
the distributor may be reimbursed by the Fund's Manager or its affiliates.
FUND ADMINISTRATION
ADMINISTRATIVE SERVICES
Federated Services Company, 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.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the Managers look for prompt execution of the order at a favorable
price. In working with dealers, the Managers will generally utilize those who
are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. In selecting among firms
believed to meet these criteria, the Managers may give consideration to those
firms which have sold or are selling shares of the Fund and other funds
distributed by Federated Securities Corp. The Managers make decisions on
portfolio transactions and select brokers and dealers subject to review by the
Trustees.
NET ASSET VALUE
The Fund's net asset value per Share fluctuates. It is determined by 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 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 Shareholder 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; and 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 Shareholder Services Company, P.O. Box 8600, Boston,
Massachusetts 02266-8600.
Orders by mail are considered received when payment by check is converted into
federal funds. This is normally the next business day after the check is
received.
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 com-
bining 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.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Shareholder 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 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 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. All owners of the account must sign
the request exactly as the shares are registered. If share certificates have
been issued, they should be sent unendorsed with the written request by
registered or certified mail.
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.
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, Donnelly & Meck, 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 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 to retail or private
banking customers of financial institutions 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.
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 1-800-341-7400.
FEDERATED 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 43.
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-------------------------------------------
1996 1995 1994 1993(A)
- ---------------------------------------------------------------- ------ ------ ------ -------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $14.72 $12.02 $12.24 $12.12
- ----------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------
Net investment income 0.30 0.33 0.28(b) 0.07
- ----------------------------------------------------------------
Net realized and unrealized gain (loss) on investments
and futures contracts 2.79 2.69 0.11 0.12
- ---------------------------------------------------------------- ------ ------ ------ -------
Total from investment operations 3.09 3.02 0.39 0.19
- ----------------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------
Distributions from net investment income (0.31) (0.30) (0.27) (0.07)
- ----------------------------------------------------------------
Distributions from net realized gain on investments
and futures contracts (2.03) (0.02) (0.34) --
- ---------------------------------------------------------------- ------ ------ ------ -------
Total distributions (2.34) (0.32) (0.61) (0.07)
- ---------------------------------------------------------------- ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $15.47 $14.72 $12.02 $12.24
- ---------------------------------------------------------------- ------ ------ ------ ------
TOTAL RETURN (C) 23.39% 25.52% 3.30% 1.70%
- ----------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------
Expenses 0.61% 0.61% 0.62% 0.61%*
- ----------------------------------------------------------------
Net investment income 1.97% 2.55% 2.35% 1.52%*
- ----------------------------------------------------------------
Expense waiver/reimbursement (d) 0.31% 0.33% 0.26% 0.09%*
- ----------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------
Net assets, end of period (000 omitted) $58,741 $35,195 $8,617 $2,493
- ----------------------------------------------------------------
Average commission rate paid $0.0153 -- -- --
- ----------------------------------------------------------------
Portfolio turnover 3% 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)
FEDERATED MAX-CAP FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ------------------------------------------------------------------- ------------
<C> <C> <S> <C>
(A)COMMON STOCKS--94.2%
- --------------------------------------------------------------------------------------
BASIC INDUSTRY--6.3%
-------------------------------------------------------------------
7,200 ASARCO, Inc. $ 189,000
-------------------------------------------------------------------
18,900 Air Products & Chemicals, Inc. 1,134,000
-------------------------------------------------------------------
38,300 Alcan Aluminum Ltd. 1,259,112
-------------------------------------------------------------------
29,392 (b) Allegheny Teledyne, Inc. 628,254
-------------------------------------------------------------------
29,500 Aluminum Co. of America 1,729,437
-------------------------------------------------------------------
92,427 Archer-Daniels-Midland Co. 2,010,287
-------------------------------------------------------------------
18,000 (b) Armco, Inc. 67,500
-------------------------------------------------------------------
8,900 Avery Dennison Corp. 586,287
-------------------------------------------------------------------
5,100 Ball Corp. 123,037
-------------------------------------------------------------------
60,500 Barrick Gold Corp. 1,580,562
-------------------------------------------------------------------
38,000 Battle Mountain Gold Co. 289,750
-------------------------------------------------------------------
8,900 Bemis Co., Inc. 311,500
-------------------------------------------------------------------
18,800 (b) Bethlehem Steel Corp. 152,750
-------------------------------------------------------------------
8,200 Boise Cascade Corp. 254,200
-------------------------------------------------------------------
16,200 Champion International Corp. 704,700
-------------------------------------------------------------------
39,000 Corning, Inc. 1,511,250
-------------------------------------------------------------------
21,700 Crown Cork & Seal Co., Inc. 1,041,600
-------------------------------------------------------------------
15,750 Cyprus Amax Minerals 356,344
-------------------------------------------------------------------
41,500 Dow Chemical Co. 3,226,625
-------------------------------------------------------------------
95,000 Du Pont (E.I.) de Nemours & Co. 8,811,250
-------------------------------------------------------------------
13,225 Eastman Chemical Co. 697,619
-------------------------------------------------------------------
23,600 Echo Bay Mines Ltd. 184,375
-------------------------------------------------------------------
10,840 Ecolab, Inc. 395,660
-------------------------------------------------------------------
24,362 Engelhard Corp. 444,606
-------------------------------------------------------------------
33,100 Freeport-McMoRan Copper & Gold, Inc., Class B 1,005,412
-------------------------------------------------------------------
15,500 Georgia-Pacific Corp. 1,162,500
-------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ------------------------------------------------------------------- ------------
<C> <C> <S> <C>
(A)COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
BASIC INDUSTRY--CONTINUED
-------------------------------------------------------------------
9,100 Goodrich (B.F.) Co. $ 385,612
-------------------------------------------------------------------
16,600 (b) Grace (W.R.) & Co. 879,800
-------------------------------------------------------------------
10,800 Great Lakes Chemical Corp. 562,950
-------------------------------------------------------------------
18,100 Hercules, Inc. 862,012
-------------------------------------------------------------------
24,800 Homestake Mining Co. 353,400
-------------------------------------------------------------------
28,500 Inco Ltd. 904,875
-------------------------------------------------------------------
8,200 Inland Steel Industries, Inc. 132,225
-------------------------------------------------------------------
50,776 International Paper Co. 2,170,674
-------------------------------------------------------------------
14,400 James River Corp. of Virginia 453,600
-------------------------------------------------------------------
18,400 Louisiana-Pacific Corp. 384,100
-------------------------------------------------------------------
8,900 Mead Corp. 505,075
-------------------------------------------------------------------
7,300 Millipore Corp. 255,500
-------------------------------------------------------------------
99,200 Monsanto Co. 3,930,800
-------------------------------------------------------------------
24,100 Morton International, Inc. 948,938
-------------------------------------------------------------------
11,400 Nalco Chemical Co. 414,675
-------------------------------------------------------------------
16,811 Newmont Mining Corp. 777,509
-------------------------------------------------------------------
14,800 Nucor Corp. 701,150
-------------------------------------------------------------------
8,700 (b) Owens Corning 337,125
-------------------------------------------------------------------
31,600 PPG Industries, Inc. 1,801,200
-------------------------------------------------------------------
19,533 Pall Corp. 500,533
-------------------------------------------------------------------
11,100 Phelps Dodge Corp. 697,913
-------------------------------------------------------------------
14,000 Pioneer Hi-Bred International 939,750
-------------------------------------------------------------------
40,500 Placer Dome, Inc. 972,000
-------------------------------------------------------------------
4,900 Potlatch Corp. 209,475
-------------------------------------------------------------------
26,400 Praxair, Inc. 1,168,200
-------------------------------------------------------------------
10,800 Reynolds Metals Co. 607,500
-------------------------------------------------------------------
11,000 Rohm & Haas Co. 785,125
-------------------------------------------------------------------
22,235 Santa Fe Pacific Gold 264,041
-------------------------------------------------------------------
14,500 Sherwin-Williams Co. 726,813
-------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ------------------------------------------------------------------- ------------
<C> <C> <S> <C>
(A)COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
BASIC INDUSTRY--CONTINUED
-------------------------------------------------------------------
8,500 Sigma-Aldrich Corp. $ 499,375
-------------------------------------------------------------------
3,400 Springs Industries, Inc., Class A 153,425
-------------------------------------------------------------------
16,808 Stone Container Corp. 256,322
-------------------------------------------------------------------
9,400 Temple-Inland, Inc. 481,750
-------------------------------------------------------------------
10,500 (b) Tupperware Corp. 539,438
-------------------------------------------------------------------
14,320 USX-U.S. Steel Group, Inc. 390,220
-------------------------------------------------------------------
11,600 Union Camp Corp. 565,500
-------------------------------------------------------------------
21,900 Union Carbide Corp. 933,488
-------------------------------------------------------------------
17,250 Westvaco Corp. 491,625
-------------------------------------------------------------------
33,600 Weyerhaeuser Co. 1,541,400
-------------------------------------------------------------------
9,400 Willamette Industries, Inc. 634,500
-------------------------------------------------------------------
15,350 Worthington Industries, Inc. 318,513
------------------------------------------------------------------- ------------
Total 60,295,743
------------------------------------------------------------------- ------------
CONSUMER DURABLES--3.5%
-------------------------------------------------------------------
14,800 Black & Decker Corp. 553,150
-------------------------------------------------------------------
4,900 Briggs & Stratton Corp. 196,000
-------------------------------------------------------------------
16,600 Brunswick Corp. 390,100
-------------------------------------------------------------------
4,800 Centex Corp. 144,600
-------------------------------------------------------------------
123,368 Chrysler Corp. 4,148,249
-------------------------------------------------------------------
14,200 Cooper Tire & Rubber Co. 278,675
-------------------------------------------------------------------
17,200 Dana Corp. 509,550
-------------------------------------------------------------------
57,000 Eastman Kodak Co. 4,545,750
-------------------------------------------------------------------
13,100 Eaton Corp. 782,725
-------------------------------------------------------------------
10,400 Echlin, Inc. 339,300
-------------------------------------------------------------------
6,000 Fleetwood Enterprises, Inc. 202,500
-------------------------------------------------------------------
200,200 Ford Motor Co. 6,256,250
-------------------------------------------------------------------
128,000 General Motors Corp. 6,896,000
-------------------------------------------------------------------
20,500 Genuine Parts Co. 896,875
-------------------------------------------------------------------
26,300 Goodyear Tire & Rubber Co. 1,206,512
-------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ------------------------------------------------------------------- ------------
<S> <C> <S> <C>
(A)COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
CONSUMER DURABLES--CONTINUED
-------------------------------------------------------------------
14,600 Hasbro, Inc. $ 567,575
-------------------------------------------------------------------
6,553 Jostens, Inc. 140,890
-------------------------------------------------------------------
6,600 Kaufman & Broad Homes Corp. 79,200
-------------------------------------------------------------------
46,225 Mattel, Inc. 1,334,747
-------------------------------------------------------------------
17,200 Maytag Corp. 341,850
-------------------------------------------------------------------
26,900 Newell Co. 763,288
-------------------------------------------------------------------
7,700 Polaroid Corp. 312,813
-------------------------------------------------------------------
4,000 Pulte Corp. 106,000
-------------------------------------------------------------------
25,400 Rubbermaid, Inc. 590,550
-------------------------------------------------------------------
10,300 Snap-On Tools Corp. 330,888
-------------------------------------------------------------------
15,000 Stanley Works 423,750
-------------------------------------------------------------------
10,900 TRW, Inc. 986,450
-------------------------------------------------------------------
12,600 Whirlpool Corp. 595,350
------------------------------------------------------------------- ------------
Total 33,919,587
------------------------------------------------------------------- ------------
CONSUMER NON-DURABLES--11.2%
-------------------------------------------------------------------
4,700 Alberto-Culver Co., Class B 215,025
-------------------------------------------------------------------
28,900 American Brands, Inc. 1,379,975
-------------------------------------------------------------------
12,700 American Greetings Corp., Class A 372,269
-------------------------------------------------------------------
83,900 Anheuser-Busch Cos., Inc. 3,230,150
-------------------------------------------------------------------
22,500 Avon Products, Inc. 1,220,625
-------------------------------------------------------------------
11,700 Brown-Forman Corp., Class B 506,025
-------------------------------------------------------------------
24,500 CPC International, Inc. 1,932,437
-------------------------------------------------------------------
38,900 Campbell Soup Co. 3,112,000
-------------------------------------------------------------------
8,700 Clorox Co. 949,387
-------------------------------------------------------------------
422,000 Coca-Cola Co. 21,311,000
-------------------------------------------------------------------
24,900 Colgate-Palmolive Co. 2,290,800
-------------------------------------------------------------------
41,200 ConAgra, Inc. 2,054,850
-------------------------------------------------------------------
6,400 Coors Adolph Co., Class B 124,800
-------------------------------------------------------------------
12,900 (b) Fruit of the Loom, Inc., Class A 469,237
-------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ------------------------------------------------------------------- ------------
<C> <C> <S> <C>
(A)COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
CONSUMER NON-DURABLES--CONTINUED
-------------------------------------------------------------------
26,900 General Mills, Inc. $ 1,536,662
-------------------------------------------------------------------
75,400 Gillette Co. 5,636,150
-------------------------------------------------------------------
62,600 Heinz (H.J.) Co. 2,222,300
-------------------------------------------------------------------
26,000 Hershey Foods Corp. 1,257,750
-------------------------------------------------------------------
18,700 International Flavors & Fragrances, Inc. 773,713
-------------------------------------------------------------------
35,900 Kellogg Co. 2,279,650
-------------------------------------------------------------------
47,724 Kimberly-Clark Corp. 4,450,263
-------------------------------------------------------------------
12,400 Liz Claiborne, Inc. 523,900
-------------------------------------------------------------------
48,600 Nike, Inc., Class B 2,861,325
-------------------------------------------------------------------
265,200 PepsiCo, Inc. 7,856,550
-------------------------------------------------------------------
138,600 Philip Morris Cos., Inc. 12,837,825
-------------------------------------------------------------------
116,100 Procter & Gamble Co. 11,493,900
-------------------------------------------------------------------
22,900 Quaker Oats Co. 812,950
-------------------------------------------------------------------
17,900 Ralston Purina Co. 1,183,638
-------------------------------------------------------------------
9,500 Reebok International Ltd. 339,625
-------------------------------------------------------------------
6,500 Russell Corp. 184,438
-------------------------------------------------------------------
82,200 Sara Lee Corp. 2,918,100
-------------------------------------------------------------------
63,400 Seagram Co. Ltd. 2,401,275
-------------------------------------------------------------------
8,400 Stride Rite Corp. 69,300
-------------------------------------------------------------------
31,800 UST, Inc. 918,225
-------------------------------------------------------------------
27,100 Unilever N.V., ADR 4,142,913
-------------------------------------------------------------------
10,800 V.F. Corp. 706,050
-------------------------------------------------------------------
19,700 Wrigley (Wm.), Jr. Co. 1,186,925
------------------------------------------------------------------- ------------
Total 107,762,007
------------------------------------------------------------------- ------------
ENERGY MINERALS--8.5%
-------------------------------------------------------------------
15,800 Amerada-Hess Corp. 874,925
-------------------------------------------------------------------
84,200 Amoco Corp. 6,378,150
-------------------------------------------------------------------
10,900 Ashland, Inc. 463,250
-------------------------------------------------------------------
27,200 Atlantic Richfield Co. 3,604,000
-------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ------------------------------------------------------------------- ------------
<C> <C> <S> <C>
(A)COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
ENERGY MINERALS--CONTINUED
-------------------------------------------------------------------
24,500 Baker Hughes, Inc. $ 872,812
-------------------------------------------------------------------
21,200 Burlington Resources, Inc. 1,067,950
-------------------------------------------------------------------
110,500 Chevron Corp. 7,265,375
-------------------------------------------------------------------
210,200 Exxon Corp. 18,628,975
-------------------------------------------------------------------
19,400 Halliburton Co. 1,098,525
-------------------------------------------------------------------
4,200 Helmerich & Payne, Inc. 227,325
-------------------------------------------------------------------
8,300 Kerr-McGee Corp. 520,825
-------------------------------------------------------------------
5,800 Louisiana Land & Exploration Co. 329,875
-------------------------------------------------------------------
66,700 Mobil Corp. 7,787,225
-------------------------------------------------------------------
54,700 Occidental Petroleum Corp. 1,340,150
-------------------------------------------------------------------
17,700 (b) Oryx Energy Co. 340,725
-------------------------------------------------------------------
7,900 Pennzoil Co. 402,900
-------------------------------------------------------------------
44,500 Phillips Petroleum Co. 1,824,500
-------------------------------------------------------------------
14,400 (b) Rowan Companies, Inc. 322,200
-------------------------------------------------------------------
90,700 Royal Dutch Petroleum Co., ADR 14,999,513
-------------------------------------------------------------------
15,312 (b) Santa Fe Energy Resource, Inc. 218,196
-------------------------------------------------------------------
41,500 Schlumberger Ltd. 4,113,688
-------------------------------------------------------------------
15,137 Sun Co., Inc. 338,690
-------------------------------------------------------------------
44,700 Texaco, Inc. 4,542,638
-------------------------------------------------------------------
48,700 USX Corp. 1,065,313
-------------------------------------------------------------------
42,394 Union Pacific Resources Group, Inc. 1,165,840
-------------------------------------------------------------------
42,000 Unocal Corp. 1,538,250
-------------------------------------------------------------------
9,000 (b) Western Atlas, Inc. 624,375
------------------------------------------------------------------- ------------
Total 81,956,190
------------------------------------------------------------------- ------------
FINANCE--13.5%
-------------------------------------------------------------------
18,300 AON Corp. 1,056,825
-------------------------------------------------------------------
18,100 Ahmanson (H.F.) & Co. 567,887
-------------------------------------------------------------------
7,600 Alexander & Alexander Services, Inc. 115,900
-------------------------------------------------------------------
75,305 Allstate Corp. 4,226,493
-------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ------------------------------------------------------------------- ------------
<C> <C> <S> <C>
(A)COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
FINANCE--CONTINUED
-------------------------------------------------------------------
80,300 American Express Co. $ 3,774,100
-------------------------------------------------------------------
34,600 American General Corp. 1,288,850
-------------------------------------------------------------------
79,493 American International Group, Inc. 8,634,927
-------------------------------------------------------------------
73,727 Banc One Corp. 3,124,182
-------------------------------------------------------------------
25,800 Bank of Boston Corp. 1,651,200
-------------------------------------------------------------------
65,300 Bank of New York Co., Inc. 2,163,062
-------------------------------------------------------------------
60,876 BankAmerica Corp. 5,570,154
-------------------------------------------------------------------
13,600 Bankers Trust New York Corp. 1,149,200
-------------------------------------------------------------------
32,600 Barnett Banks, Inc. 1,242,875
-------------------------------------------------------------------
9,100 Beneficial Corp. 532,350
-------------------------------------------------------------------
26,500 Boatmen's Bancshares, Inc. 1,609,875
-------------------------------------------------------------------
12,900 CIGNA Corp. 1,683,450
-------------------------------------------------------------------
73,870 Chase Manhattan Corp. 6,334,352
-------------------------------------------------------------------
29,500 Chubb Corp. 1,475,000
-------------------------------------------------------------------
81,400 Citicorp 8,058,600
-------------------------------------------------------------------
19,500 Comerica, Inc. 1,035,937
-------------------------------------------------------------------
37,700 Corestates Financial Corp. 1,833,162
-------------------------------------------------------------------
27,821 Dean Witter, Discover & Co. 1,637,961
-------------------------------------------------------------------
30,300 Federal Home Loan Mortgage Corp. 3,060,300
-------------------------------------------------------------------
184,900 Federal National Mortgage Association 7,234,212
-------------------------------------------------------------------
17,900 Fifth Third Bancorp 1,120,987
-------------------------------------------------------------------
23,900 First Bank System, Inc. 1,577,400
-------------------------------------------------------------------
46,655 First Union Corp. 3,394,151
-------------------------------------------------------------------
44,410 Fleet Financial Group, Inc. 2,214,949
-------------------------------------------------------------------
13,300 General RE Corp. 1,958,425
-------------------------------------------------------------------
9,800 Golden West Financial Corp. 635,775
-------------------------------------------------------------------
23,200 Great Western Financial Corp. 649,600
-------------------------------------------------------------------
23,200 Green Tree Financial Corp. 919,300
-------------------------------------------------------------------
16,400 Household International, Inc. 1,451,400
-------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ------------------------------------------------------------------- ------------
<C> <C> <S> <C>
(A)COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
FINANCE--CONTINUED
-------------------------------------------------------------------
19,900 ITT Hartford Group, Inc. $ 1,253,700
-------------------------------------------------------------------
31,600 J.P. Morgan & Co., Inc. 2,729,450
-------------------------------------------------------------------
12,025 Jefferson-Pilot Corp. 683,922
-------------------------------------------------------------------
39,000 KeyCorp 1,818,375
-------------------------------------------------------------------
17,700 Lincoln National Corp. 858,450
-------------------------------------------------------------------
37,675 MBNA Corp. 1,422,231
-------------------------------------------------------------------
10,000 MGIC Investment Corp. 686,250
-------------------------------------------------------------------
12,200 Marsh & McLennan Cos., Inc. 1,270,325
-------------------------------------------------------------------
22,000 Mellon Bank Corp. 1,432,750
-------------------------------------------------------------------
28,600 Merrill Lynch & Co., Inc. 2,009,150
-------------------------------------------------------------------
25,700 Morgan Stanley Group, Inc. 1,291,425
-------------------------------------------------------------------
37,600 National City Corp. 1,630,900
-------------------------------------------------------------------
49,246 NationsBank Corp. 4,641,436
-------------------------------------------------------------------
62,700 Norwest Corp. 2,750,963
-------------------------------------------------------------------
57,700 PNC Financial Corp. 2,091,625
-------------------------------------------------------------------
15,800 Providian Corp. 742,600
-------------------------------------------------------------------
9,400 Republic New York Corp. 716,750
-------------------------------------------------------------------
13,700 Ryder Systems, Inc. 407,575
-------------------------------------------------------------------
21,300 SAFECO Corp. 804,075
-------------------------------------------------------------------
17,800 Salomon, Inc. 803,225
-------------------------------------------------------------------
14,200 St. Paul Cos., Inc. 772,125
-------------------------------------------------------------------
37,800 SunTrust Banks, Inc. 1,762,425
-------------------------------------------------------------------
12,150 Torchmark Corp. 587,756
-------------------------------------------------------------------
11,200 Transamerica Corp. 849,800
-------------------------------------------------------------------
81,367 Travelers Group, Inc. 4,414,160
-------------------------------------------------------------------
26,150 U.S. Bancorp. 1,046,000
-------------------------------------------------------------------
12,400 UNUM Corp. 779,650
-------------------------------------------------------------------
19,900 USF&G Corp. 378,100
-------------------------------------------------------------------
5,800 USLIFE Corp. 181,250
-------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ------------------------------------------------------------------- ------------
<C> <C> <S> <C>
(A)COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
FINANCE--CONTINUED
-------------------------------------------------------------------
28,200 Wachovia Corp. $ 1,515,750
-------------------------------------------------------------------
15,966 Wells Fargo & Co. 4,264,918
------------------------------------------------------------------- ------------
Total 129,579,952
------------------------------------------------------------------- ------------
HEALTH CARE--10.0%
-------------------------------------------------------------------
132,100 Abbott Laboratories 6,687,562
-------------------------------------------------------------------
25,455 Aetna Services Inc. 1,702,303
-------------------------------------------------------------------
268 (b) Allergan Ligand Retinoid Therapeutics, Inc. 7,537
-------------------------------------------------------------------
11,000 Allergan, Inc. 335,500
-------------------------------------------------------------------
14,300 (b) Alza Corp. 370,012
-------------------------------------------------------------------
107,700 American Home Products Corp. 6,596,625
-------------------------------------------------------------------
44,800 (b) Amgen, Inc. 2,746,800
-------------------------------------------------------------------
9,600 Bard (C.R.), Inc. 271,200
-------------------------------------------------------------------
9,600 Bausch & Lomb, Inc. 324,000
-------------------------------------------------------------------
46,100 Baxter International, Inc. 1,918,912
-------------------------------------------------------------------
21,100 Becton, Dickinson & Co. 917,850
-------------------------------------------------------------------
16,800 (b) Beverly Enterprises, Inc. 207,900
-------------------------------------------------------------------
19,600 (b) Biomet, Inc. 316,050
-------------------------------------------------------------------
30,000 (b) Boston Scientific Corp. 1,631,250
-------------------------------------------------------------------
84,900 Bristol-Myers Squibb Co. 8,978,175
-------------------------------------------------------------------
113,607 Columbia/HCA Healthcare Corp. 4,061,450
-------------------------------------------------------------------
27,500 (b) Humana, Inc. 501,875
-------------------------------------------------------------------
225,600 Johnson & Johnson 11,110,800
-------------------------------------------------------------------
92,600 Lilly (Eli) & Co. 6,528,300
-------------------------------------------------------------------
10,650 Manor Care, Inc. 418,013
-------------------------------------------------------------------
40,500 Medtronic, Inc. 2,607,188
-------------------------------------------------------------------
205,900 Merck & Co., Inc. 15,262,338
-------------------------------------------------------------------
108,700 Pfizer, Inc. 8,994,925
-------------------------------------------------------------------
86,055 Pharmacia & Upjohn, Inc. 3,097,980
-------------------------------------------------------------------
62,600 Schering Plough Corp. 4,006,400
-------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ------------------------------------------------------------------- ------------
<C> <C> <S> <C>
(A)COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
HEALTH CARE--CONTINUED
-------------------------------------------------------------------
4,000 Shared Medical Systems Corp. $ 193,000
-------------------------------------------------------------------
13,650 (b) St. Jude Medical, Inc. 539,175
-------------------------------------------------------------------
36,600 (b) Tenet Healthcare Corp. 764,025
-------------------------------------------------------------------
10,600 U.S. Surgical Corp. 443,875
-------------------------------------------------------------------
31,100 United Healthcare Corp. 1,177,913
-------------------------------------------------------------------
45,900 Warner-Lambert Co. 2,920,388
------------------------------------------------------------------- ------------
Total 95,639,321
------------------------------------------------------------------- ------------
PRODUCER MANUFACTURING--7.1%
-------------------------------------------------------------------
47,900 Allied-Signal, Inc. 3,137,450
-------------------------------------------------------------------
6,200 Armstrong World Industries, Inc. 413,850
-------------------------------------------------------------------
12,300 Case Corp. 571,950
-------------------------------------------------------------------
32,600 Caterpillar, Inc. 2,237,175
-------------------------------------------------------------------
6,700 Cincinnati Milacron, Inc. 128,137
-------------------------------------------------------------------
18,300 Cooper Industries, Inc. 736,575
-------------------------------------------------------------------
5,100 Crane Co. 237,150
-------------------------------------------------------------------
6,700 Cummins Engine Co., Inc. 278,887
-------------------------------------------------------------------
43,700 Deere & Co. 1,824,475
-------------------------------------------------------------------
19,300 Dover Corp. 991,537
-------------------------------------------------------------------
30,300 Dresser Industries, Inc. 996,112
-------------------------------------------------------------------
38,000 Emerson Electric Co. 3,382,000
-------------------------------------------------------------------
6,300 (b) FMC Corp. 463,837
-------------------------------------------------------------------
279,500 General Electric Co. 27,041,625
-------------------------------------------------------------------
8,400 General Signal Corp. 342,300
-------------------------------------------------------------------
5,900 Giddings & Lewis, Inc. 69,325
-------------------------------------------------------------------
7,978 Harnischfeger Industries, Inc. 319,120
-------------------------------------------------------------------
21,400 Honeywell, Inc. 1,329,475
-------------------------------------------------------------------
19,900 (b) ITT Industries, Inc. 462,675
-------------------------------------------------------------------
20,700 Illinois Tool Works, Inc. 1,454,175
-------------------------------------------------------------------
18,500 Ingersoll-Rand Co. 770,063
-------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ------------------------------------------------------------------- ------------
<C> <C> <S> <C>
(A)COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
PRODUCER MANUFACTURING--CONTINUED
-------------------------------------------------------------------
7,000 Johnson Controls, Inc. $ 511,000
-------------------------------------------------------------------
19,500 Loews Corp. 1,611,188
-------------------------------------------------------------------
27,200 Masco Corp. 853,400
-------------------------------------------------------------------
9,300 McDermott International, Inc. 165,075
-------------------------------------------------------------------
71,000 Minnesota Mining & Manufacturing Co. 5,440,375
-------------------------------------------------------------------
1,500 NACCO Industries, Inc., Class A 69,375
-------------------------------------------------------------------
8,000 National Service Industries, Inc. 276,000
-------------------------------------------------------------------
12,770 (b) Navistar International Corp. 118,123
-------------------------------------------------------------------
6,540 PACCAR, Inc. 364,605
-------------------------------------------------------------------
12,600 Parker-Hannifin Corp. 477,225
-------------------------------------------------------------------
25,200 Pitney Bowes, Inc. 1,408,050
-------------------------------------------------------------------
7,600 Raychem Corp. 593,750
-------------------------------------------------------------------
28,900 Tenneco, Inc. 1,430,550
-------------------------------------------------------------------
13,700 Textron, Inc. 1,215,875
-------------------------------------------------------------------
6,800 Thomas & Betts Corp. 288,150
-------------------------------------------------------------------
5,300 Timken Co. 236,513
-------------------------------------------------------------------
4,800 Trinova Corp. 157,800
-------------------------------------------------------------------
25,800 Tyco International, Ltd. 1,280,325
-------------------------------------------------------------------
71,200 Westinghouse Electric Corp. 1,219,300
-------------------------------------------------------------------
17,800 Whitman Corp. 431,650
-------------------------------------------------------------------
55,000 Xerox Corp. 2,550,625
------------------------------------------------------------------- ------------
Total 67,886,847
------------------------------------------------------------------- ------------
RETAIL TRADE--4.5%
-------------------------------------------------------------------
42,700 Albertsons, Inc. 1,467,812
-------------------------------------------------------------------
24,700 American Stores Co. 1,021,962
-------------------------------------------------------------------
17,600 Charming Shoppes, Inc. 81,400
-------------------------------------------------------------------
16,600 Circuit City Store, Inc. 543,650
-------------------------------------------------------------------
36,600 Dayton-Hudson Corp. 1,267,275
-------------------------------------------------------------------
19,200 Dillard Department Stores, Inc., Class A 609,600
-------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ------------------------------------------------------------------- ------------
<C> <C> <S> <C>
(A)COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
RETAIL TRADE--CONTINUED
-------------------------------------------------------------------
35,200 (b) Federated Department Stores, Inc. $ 1,161,600
-------------------------------------------------------------------
5,153 (b) Footstar, Inc. 113,375
-------------------------------------------------------------------
48,600 Gap (The), Inc. 1,409,400
-------------------------------------------------------------------
10,100 Giant Foods, Inc., Class A 340,875
-------------------------------------------------------------------
6,500 Great Atlantic & Pacific Tea Co., Inc. 195,000
-------------------------------------------------------------------
12,300 Harcourt General, Inc. 611,925
-------------------------------------------------------------------
81,100 Home Depot, Inc. 4,440,225
-------------------------------------------------------------------
82,300 K Mart Corp. 802,425
-------------------------------------------------------------------
21,300 (b) Kroger Co., Inc. 950,513
-------------------------------------------------------------------
46,264 Limited, Inc. 850,101
-------------------------------------------------------------------
3,400 Longs Drug Stores Corp. 152,575
-------------------------------------------------------------------
29,100 Lowe's Cos., Inc. 1,174,913
-------------------------------------------------------------------
42,300 May Department Stores Co. 2,003,963
-------------------------------------------------------------------
17,900 Melville Corp. 666,775
-------------------------------------------------------------------
6,200 Mercantile Stores Co., Inc. 307,675
-------------------------------------------------------------------
13,800 Nordstrom, Inc. 497,663
-------------------------------------------------------------------
38,100 Penney (J.C.) Co., Inc. 2,000,250
-------------------------------------------------------------------
10,500 Pep Boys-Manny Moe & Jack 367,500
-------------------------------------------------------------------
33,150 (b) Price/Costco, Inc. 658,856
-------------------------------------------------------------------
14,200 Rite Aid Corp. 482,800
-------------------------------------------------------------------
66,300 Sears, Roebuck & Co. 3,207,263
-------------------------------------------------------------------
12,300 TJX Cos., Inc. 492,000
-------------------------------------------------------------------
10,565 Tandy Corp. 397,508
-------------------------------------------------------------------
46,300 (b) Toys "R" Us, Inc. 1,568,413
-------------------------------------------------------------------
388,300 Wal-Mart Stores, Inc. 10,338,488
-------------------------------------------------------------------
41,700 Walgreen Co. 1,574,175
-------------------------------------------------------------------
25,700 Winn-Dixie Stores, Inc. 857,738
-------------------------------------------------------------------
22,500 (b) Woolworth (F.W.) Co. 472,500
------------------------------------------------------------------- ------------
Total 43,088,193
------------------------------------------------------------------- ------------
</TABLE>
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ------------------------------------------------------------------- ------------
<C> <C> <S> <C>
(A)COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
RETAIL TRADE--CONTINUED
-------------------------------------------------------------------
SERVICES--5.0%
-------------------------------------------------------------------
22,100 Alco Standard Corp. $ 1,024,887
-------------------------------------------------------------------
8,600 (b) Bally Entertainment Group 259,075
-------------------------------------------------------------------
17,500 Block (H&R), Inc. 433,125
-------------------------------------------------------------------
36,000 Browning-Ferris Industries, Inc. 945,000
-------------------------------------------------------------------
62,475 (b) CUC International, Inc. 1,530,637
-------------------------------------------------------------------
26,700 (b) Darden Restaurants, Inc. 223,612
-------------------------------------------------------------------
14,000 Deluxe Corp. 456,750
-------------------------------------------------------------------
114,800 Disney (Walt) Co. 7,562,450
-------------------------------------------------------------------
25,900 Donnelley (R.R.) & Sons Co. 786,712
-------------------------------------------------------------------
16,400 Dow Jones & Co. 541,200
-------------------------------------------------------------------
28,800 Dun & Bradstreet Corp. 1,666,800
-------------------------------------------------------------------
6,400 Fleming Cos., Inc. 111,200
-------------------------------------------------------------------
14,100 Fluor Corp. 923,550
-------------------------------------------------------------------
6,900 Foster Wheeler Corp. 282,900
-------------------------------------------------------------------
23,900 Gannett Co., Inc. 1,813,412
-------------------------------------------------------------------
8,600 Grainger (W.W.), Inc. 637,475
-------------------------------------------------------------------
20,900 (b) HFS, Inc. 1,530,925
-------------------------------------------------------------------
5,200 Harland (John H.) Co. 161,850
-------------------------------------------------------------------
17,450 (b) Harrah's Entertainment, Inc. 292,287
-------------------------------------------------------------------
33,100 Hilton Hotels Corp. 1,005,412
-------------------------------------------------------------------
19,800 (b) ITT Corp. 831,600
-------------------------------------------------------------------
13,800 Interpublic Group Cos., Inc. 669,300
-------------------------------------------------------------------
6,350 (b) King World Productions, Inc. 228,600
-------------------------------------------------------------------
16,200 Knight-Ridder, Inc. 605,475
-------------------------------------------------------------------
53,000 Laidlaw, Inc., Class B 622,750
-------------------------------------------------------------------
4,050 Luby's Cafeterias, Inc. 85,050
-------------------------------------------------------------------
21,700 Marriott Corp. 1,234,188
-------------------------------------------------------------------
118,400 McDonald's Corp. 5,254,000
-------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ------------------------------------------------------------------- ------------
<C> <C> <S> <C>
(A)COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
SERVICES--CONTINUED
-------------------------------------------------------------------
16,800 McGraw-Hill Cos., Inc. $ 787,500
-------------------------------------------------------------------
4,600 Meredith Corp. 231,150
-------------------------------------------------------------------
16,900 Moore Corp. Ltd. 342,225
-------------------------------------------------------------------
16,500 New York Times Co., Class A 596,063
-------------------------------------------------------------------
8,600 (b) Ryan's Family Steak Houses, Inc. 63,425
-------------------------------------------------------------------
9,850 Safety-Kleen Corp. 153,906
-------------------------------------------------------------------
39,900 Service Corp. International 1,137,150
-------------------------------------------------------------------
8,200 (b) Shoney's, Inc. 60,475
-------------------------------------------------------------------
11,400 Super Valu Stores, Inc. 339,150
-------------------------------------------------------------------
30,800 Sysco Corp. 1,047,200
-------------------------------------------------------------------
96,740 Time Warner, Inc. 3,603,565
-------------------------------------------------------------------
17,500 Times Mirror Co., Class A 809,375
-------------------------------------------------------------------
10,400 Tribune Co. 850,200
-------------------------------------------------------------------
80,200 (b) U.S. West Media Group 1,253,125
-------------------------------------------------------------------
60,368 (b) Viacom, Inc., Class B 1,969,506
-------------------------------------------------------------------
83,100 WMX Technologies, Inc. 2,856,563
-------------------------------------------------------------------
21,800 Wendy's International, Inc. 449,625
------------------------------------------------------------------- ------------
Total 48,270,425
------------------------------------------------------------------- ------------
TECHNOLOGY--13.3%
-------------------------------------------------------------------
28,600 (b) 3Com Corp. 1,934,075
-------------------------------------------------------------------
37,180 AMP, Inc. 1,259,472
-------------------------------------------------------------------
22,900 (b) Advanced Micro Devices, Inc. 406,475
-------------------------------------------------------------------
20,500 (b) Amdahl Corp. 210,125
-------------------------------------------------------------------
10,175 (b) Andrew Corp. 496,031
-------------------------------------------------------------------
21,100 Apple Computer, Inc. 485,300
-------------------------------------------------------------------
30,400 (b) Applied Materials, Inc. 803,700
-------------------------------------------------------------------
7,800 Autodesk, Inc. 178,425
-------------------------------------------------------------------
49,000 Automatic Data Processing, Inc. 2,039,625
-------------------------------------------------------------------
31,900 (b) Bay Networks, Inc. 645,975
-------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ------------------------------------------------------------------- ------------
<C> <C> <S> <C>
(A)COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
-------------------------------------------------------------------
59,000 Boeing Co. $ 5,627,125
-------------------------------------------------------------------
12,800 (b) Cabletron Systems, Inc. 798,400
-------------------------------------------------------------------
11,600 (b) Ceridian Corp. 575,650
-------------------------------------------------------------------
109,600 (b) Cisco Systems, Inc. 6,781,500
-------------------------------------------------------------------
45,600 (b) Compaq Computer Corp. 3,174,900
-------------------------------------------------------------------
61,675 Computer Associates International, Inc. 3,646,534
-------------------------------------------------------------------
12,700 (b) Computer Sciences Corp. 942,975
-------------------------------------------------------------------
19,700 (b) DSC Communications Corp. 273,337
-------------------------------------------------------------------
6,600 (b) Data General Corp. 98,175
-------------------------------------------------------------------
15,200 (b) Dell Computer Corp. 1,236,900
-------------------------------------------------------------------
26,300 (b) Digital Equipment Corp. 775,850
-------------------------------------------------------------------
8,000 EG & G, Inc. 141,000
-------------------------------------------------------------------
39,200 (b) EMC Corp. Mass 1,029,000
-------------------------------------------------------------------
37,900 First Data Corp., Class 3,022,525
-------------------------------------------------------------------
10,620 General Dynamics Corp. 728,797
-------------------------------------------------------------------
23,200 General Instrument Corp. 466,900
-------------------------------------------------------------------
6,600 Harris Corp. 413,325
-------------------------------------------------------------------
173,100 Hewlett-Packard Co. 7,638,037
-------------------------------------------------------------------
139,200 Intel Corp. 15,294,600
-------------------------------------------------------------------
8,000 (b) Intergraph Corp. 75,000
-------------------------------------------------------------------
89,300 International Business Machines Corp. 11,519,700
-------------------------------------------------------------------
23,100 (b) LSI Logic Corp. 612,150
-------------------------------------------------------------------
33,888 Lockheed Martin Corp. 3,037,212
-------------------------------------------------------------------
108,267 Lucent Technologies, Inc. 5,088,549
-------------------------------------------------------------------
12,600 Mallinckrodt, Inc. 548,100
-------------------------------------------------------------------
36,400 McDonnell-Douglas Corp. 1,983,800
-------------------------------------------------------------------
35,300 Micron Technology, Inc. 895,738
-------------------------------------------------------------------
101,300 (b) Microsoft Corp. 13,903,425
-------------------------------------------------------------------
100,300 Motorola, Inc. 4,613,800
-------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ------------------------------------------------------------------- ------------
<C> <C> <S> <C>
(A)COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
-------------------------------------------------------------------
23,400 (b) National Semiconductor Corp. $ 450,450
-------------------------------------------------------------------
43,700 Northern Telecom Ltd. 2,845,963
-------------------------------------------------------------------
9,800 Northrop Corp. 791,350
-------------------------------------------------------------------
59,800 (b) Novell, Inc. 553,150
-------------------------------------------------------------------
110,750 Oracle Corp. 4,686,109
-------------------------------------------------------------------
7,400 Perkin-Elmer Corp. 396,825
-------------------------------------------------------------------
40,000 Raytheon Co. 1,970,000
-------------------------------------------------------------------
37,000 Rockwell International Corp. 2,035,000
-------------------------------------------------------------------
13,000 Scientific-Atlanta, Inc. 188,500
-------------------------------------------------------------------
17,800 (b) Seagate Technology, Inc. 1,188,150
-------------------------------------------------------------------
29,200 (b) Silicon Graphics, Inc. 540,200
-------------------------------------------------------------------
31,200 (b) Sun Microsystems, Inc. 1,903,200
-------------------------------------------------------------------
19,900 (b) Tandem Computers, Inc. 251,238
-------------------------------------------------------------------
5,600 Tektronix, Inc. 219,100
-------------------------------------------------------------------
15,100 (b) Tellabs, Inc. 1,285,388
-------------------------------------------------------------------
32,100 Texas Instruments, Inc. 1,544,813
-------------------------------------------------------------------
29,400 (b) Unisys Corp. 183,750
-------------------------------------------------------------------
20,600 United Technologies Corp. 2,652,250
------------------------------------------------------------------- ------------
Total 127,087,643
------------------------------------------------------------------- ------------
TRANSPORTATION--1.4%
-------------------------------------------------------------------
15,400 (b) AMR Corp. 1,293,600
-------------------------------------------------------------------
25,911 Burlington Northern Santa Fe 2,134,419
-------------------------------------------------------------------
35,800 CSX Corp. 1,543,875
-------------------------------------------------------------------
6,600 (b) Caliber System, Inc. 111,375
-------------------------------------------------------------------
7,500 Consolidated Freightways, Inc. 180,000
-------------------------------------------------------------------
13,700 Consolidated Rail Corp. 1,303,212
-------------------------------------------------------------------
13,400 Delta Air Lines, Inc. 949,725
-------------------------------------------------------------------
9,600 (b) Federal Express Corp. 772,800
-------------------------------------------------------------------
21,300 Norfolk Southern Corp. 1,898,363
-------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ------------------------------------------------------------------- ------------
<C> <C> <S> <C>
(A)COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
TRANSPORTATION--CONTINUED
-------------------------------------------------------------------
24,500 Southwest Airlines Co. $ 551,250
-------------------------------------------------------------------
10,800 (b) USAir Group, Inc. 187,650
-------------------------------------------------------------------
41,200 Union Pacific Corp. 2,312,350
-------------------------------------------------------------------
4,800 Yellow Corp. 62,700
------------------------------------------------------------------- ------------
Total 13,301,319
------------------------------------------------------------------- ------------
UTILITIES--9.9%
-------------------------------------------------------------------
272,978 AT&T Corp. 9,520,108
-------------------------------------------------------------------
84,500 Airtouch Communications, Inc. 2,207,562
-------------------------------------------------------------------
32,100 Alltel Corp. 979,050
-------------------------------------------------------------------
31,700 American Electric Power Co., Inc. 1,315,550
-------------------------------------------------------------------
93,000 Ameritech Corp. 5,091,750
-------------------------------------------------------------------
24,950 Baltimore Gas & Electric Co. 679,887
-------------------------------------------------------------------
74,100 Bell Atlantic Corp. 4,464,525
-------------------------------------------------------------------
168,300 BellSouth Corp. 6,858,225
-------------------------------------------------------------------
25,700 Carolina Power & Light Co. 928,412
-------------------------------------------------------------------
35,600 Central & SouthWest Corp. 943,400
-------------------------------------------------------------------
26,740 Cinergy Corp. 885,762
-------------------------------------------------------------------
17,900 Coastal Corp. 769,700
-------------------------------------------------------------------
9,300 (b) Columbia Gas System, Inc. 564,975
-------------------------------------------------------------------
39,550 Comcast Corp., Class A 583,362
-------------------------------------------------------------------
39,800 Consolidated Edison Co. 1,164,150
-------------------------------------------------------------------
16,000 Consolidated Natural Gas Co. 850,000
-------------------------------------------------------------------
24,600 DTE Energy Co. 741,075
-------------------------------------------------------------------
30,150 Dominion Resources, Inc. 1,138,162
-------------------------------------------------------------------
34,300 Duke Power Co. 1,676,412
-------------------------------------------------------------------
3,400 Eastern Enterprises 130,900
-------------------------------------------------------------------
74,200 Edison International 1,465,450
-------------------------------------------------------------------
42,900 Enron Corp. 1,994,850
-------------------------------------------------------------------
11,700 Enserch Corp. 251,550
-------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ------------------------------------------------------------------- ------------
<C> <C> <S> <C>
(A)COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
UTILITIES--CONTINUED
-------------------------------------------------------------------
38,600 Entergy Corp. $ 1,080,800
-------------------------------------------------------------------
31,000 FPL Group, Inc. 1,426,000
-------------------------------------------------------------------
20,400 GPU, Inc. 670,650
-------------------------------------------------------------------
163,800 GTE Corp. 6,900,075
-------------------------------------------------------------------
44,500 Houston Industries, Inc. 1,017,938
-------------------------------------------------------------------
116,400 MCI Communications Corp. 2,924,550
-------------------------------------------------------------------
8,500 NICOR, Inc. 296,438
-------------------------------------------------------------------
74,200 NYNEX Corp. 3,301,900
-------------------------------------------------------------------
24,400 Niagara Mohawk Power Corp. 207,400
-------------------------------------------------------------------
23,200 Noram Energy Corp. 356,700
-------------------------------------------------------------------
11,600 Northern States Power Co. 545,200
-------------------------------------------------------------------
25,800 Ohio Edison Co. 538,575
-------------------------------------------------------------------
4,600 Oneok, Inc. 123,625
-------------------------------------------------------------------
27,300 P P & L Resources, Inc. 638,138
-------------------------------------------------------------------
14,400 Pacific Enterprises 442,800
-------------------------------------------------------------------
70,400 Pacific Gas & Electric Co. 1,654,400
-------------------------------------------------------------------
72,500 Pacific Telesis Group 2,465,000
-------------------------------------------------------------------
49,800 Pacificorp 1,052,025
-------------------------------------------------------------------
25,600 Panenergy Corp. 985,600
-------------------------------------------------------------------
37,700 Peco Energy Co. 951,925
-------------------------------------------------------------------
5,900 Peoples Energy Corp. 207,975
-------------------------------------------------------------------
41,400 Public Service Enterprises Group, Inc. 1,112,625
-------------------------------------------------------------------
103,100 SBC Communications, Inc. 5,013,238
-------------------------------------------------------------------
14,600 Sonat, Inc. 719,050
-------------------------------------------------------------------
114,000 Southern Co. 2,522,250
-------------------------------------------------------------------
72,900 Sprint Corp. 2,861,325
-------------------------------------------------------------------
110,500 (b) Tele-Communications, Inc., Class A 1,374,344
-------------------------------------------------------------------
38,000 Texas Utilities Co. 1,539,000
-------------------------------------------------------------------
80,900 U.S. West, Inc. 2,457,338
-------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ------------------------------------------------------------------- ------------
<C> <C> <S> <C>
(A)COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
UTILITIES--CONTINUED
-------------------------------------------------------------------
36,500 Unicom Corp. $ 949,000
-------------------------------------------------------------------
17,300 Union Electric Co. 668,213
-------------------------------------------------------------------
17,800 Williams Cos., Inc. (The) 930,050
-------------------------------------------------------------------
65,700 (b) WorldCom, Inc. 1,601,438
------------------------------------------------------------------- ------------
Total 94,740,402
------------------------------------------------------------------- ------------
TOTAL COMMON STOCKS (IDENTIFIED COST $716,745,029) 903,527,629
------------------------------------------------------------------- ------------
</TABLE>
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ----------- ------------------------------------------------------------------- ------------
<C> <C> <S> <C>
PREFERRED STOCKS--0.0%
- --------------------------------------------------------------------------------------
HEALTH CARE--0.0%
-------------------------------------------------------------------
16,600 Fresenius Medical Care, Pfd. (identified cost $2,158) $ 2,158
------------------------------------------------------------------- ------------
(C) SHORT-TERM U.S. GOVERNMENT OBLIGATIONS--0.3%
- --------------------------------------------------------------------------------------
$ 3,000,000 United States Treasury Bill, 12/12/1996 (at amortized cost) 2,983,710
------------------------------------------------------------------- ------------
(D) REPURCHASE AGREEMENT--4.9%
- --------------------------------------------------------------------------------------
47,060,000 BT Securities Corporation, 5.55%, dated 10/31/1996, due 11/1/1996
(at amortized cost) 47,060,000
------------------------------------------------------------------- ------------
TOTAL INVESTMENTS (IDENTIFIED COST $766,790,897)(E) $953,573,497
------------------------------------------------------------------- ------------
</TABLE>
(a) 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 $54,288,225 at October 31, 1996, which
represents 5.7% of net assets. Taking into consideration these open Index
futures contracts, the Fund's effective total exposure to the Index is
99.9%.
(b) Non-income producing security.
(c) Represents a security held as collateral which is used to ensure the Fund is
able to satisfy the obligations of its outstanding long future contracts.
(d) 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.
(e) The cost of investments for federal tax purposes amounts to $770,852,500.
The net unrealized appreciation of investments on a federal tax basis
amounts to $182,720,997 which is comprised of $200,408,679 appreciation and
$17,687,682 depreciation at October 31, 1996.
Note: The categories of investments are shown as a percentage of net assets
($958,871,268) at October 31, 1996.
The following acronym is used throughout this portfolio:
ADR -- American Depositary Receipt
(See Notes which are an integral part of the Financial Statements)
FEDERATED MAX-CAP FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -----------------------------------------------------------------------------------
Total investments in securities, at value
(identified cost $766,790,897 and tax cost $770,852,500) $953,573,497
- -----------------------------------------------------------------------------------
Income receivable 1,288,713
- -----------------------------------------------------------------------------------
Receivable for shares sold 6,581,722
- -----------------------------------------------------------------------------------
Receivable for daily variation margin 506,325
- -----------------------------------------------------------------------------------
Deferred expenses 250
- ----------------------------------------------------------------------------------- ------------
Total assets 961,950,507
- -----------------------------------------------------------------------------------
LIABILITIES:
- ----------------------------------------------------------------------
Payable for shares redeemed $2,194,180
- ----------------------------------------------------------------------
Payable to Bank 732,363
- ----------------------------------------------------------------------
Accrued expenses 155,996
- ---------------------------------------------------------------------- ----------
Total liabilities 3,082,539
- ----------------------------------------------------------------------------------- ------------
Net Assets for 61,910,559 shares outstanding $958,867,968
- ----------------------------------------------------------------------------------- ------------
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------
Paid in capital $758,324,717
- -----------------------------------------------------------------------------------
Net unrealized appreciation of investments and futures contracts 187,890,281
- -----------------------------------------------------------------------------------
Accumulated net realized gain on investments and futures contracts 10,050,910
- -----------------------------------------------------------------------------------
Undistributed net investment income 2,602,060
- ----------------------------------------------------------------------------------- ------------
Total Net Assets $958,867,968
- ----------------------------------------------------------------------------------- ------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- -----------------------------------------------------------------------------------
INSTITUTIONAL SHARES:
- -----------------------------------------------------------------------------------
$900,127,417 / 58,112,325 shares outstanding $15.49
- ----------------------------------------------------------------------------------- ------------
INSTITUTIONAL SERVICE SHARES:
- -----------------------------------------------------------------------------------
$58,740,551 / 3,798,234 shares outstanding $15.47
- ----------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MAX-CAP FUND
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Dividends $ 16,176,146
- ---------------------------------------------------------------------------------------------------
Interest 3,870,897
- --------------------------------------------------------------------------------------------------- -----------
Total income 20,047,043
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- ------------------------------------------------------------------------------------
Management fee $ 2,312,405
- ------------------------------------------------------------------------------------
Custodian fees 115,427
- ------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 110,497
- ------------------------------------------------------------------------------------
Directors'/Trustees' fees 11,183
- ------------------------------------------------------------------------------------
Auditing fees 14,061
- ------------------------------------------------------------------------------------
Legal fees 7,471
- ------------------------------------------------------------------------------------
Portfolio accounting fees 129,749
- ------------------------------------------------------------------------------------
Distribution services fee--Institutional Service Shares 128,016
- ------------------------------------------------------------------------------------
Shareholder services fee--Institutional Shares 1,820,325
- ------------------------------------------------------------------------------------
Shareholder services fee--Institutional Service Shares 106,680
- ------------------------------------------------------------------------------------
Share registration costs 103,533
- ------------------------------------------------------------------------------------
Printing and postage 51,744
- ------------------------------------------------------------------------------------
Insurance premiums 10,215
- ------------------------------------------------------------------------------------
Taxes 43,743
- ------------------------------------------------------------------------------------
Miscellaneous 3,788
- ------------------------------------------------------------------------------------ ----------
Total expenses 4,968,837
- ------------------------------------------------------------------------------------
Waivers--
- ------------------------------------------------------------------------------------
Waiver of Management fee $ (490,571)
- ----------------------------------------------------------------------
Waiver of distribution services fee--Institutional Service Shares (99,098)
- ----------------------------------------------------------------------
Waiver of shareholder services fee--Institutional Shares (1,820,325)
- ----------------------------------------------------------------------
Waiver of shareholder services fee--Institutional Service Shares (7,582)
- ---------------------------------------------------------------------- ----------
Total waivers (2,417,576)
- ------------------------------------------------------------------------------------ ----------
Net expenses 2,551,261
- --------------------------------------------------------------------------------------------------- -----------
Net investment income 17,495,782
- --------------------------------------------------------------------------------------------------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES CONTRACTS:
- ---------------------------------------------------------------------------------------------------
Net realized gain on investments and future contracts 13,947,611
- ---------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments and futures contracts 134,550,523
- --------------------------------------------------------------------------------------------------- -----------
Net realized and unrealized gain on investments and futures contracts 148,498,134
- --------------------------------------------------------------------------------------------------- -----------
Change in net assets resulting from operations $165,993,916
- --------------------------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MAX-CAP FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
------------------------------
1996 1995
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------------------------------------
OPERATIONS--
- ------------------------------------------------------------------
Net investment income $ 17,495,782 $ 16,679,223
- ------------------------------------------------------------------
Net realized gain (loss) on investments and futures contracts
($14,649,222 and $103,347,377 net gains, respectively, as computed
for federal tax purposes) 13,947,611 99,787,657
- ------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 134,550,523 21,104,700
- ------------------------------------------------------------------ ------------- -------------
Change in net assets resulting from operations 165,993,916 137,571,580
- ------------------------------------------------------------------ ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ------------------------------------------------------------------
Distributions from net investment income
- ------------------------------------------------------------------
Institutional Shares (17,109,255) (14,071,338)
- ------------------------------------------------------------------
Institutional Service Shares (847,955) (505,602)
- ------------------------------------------------------------------
Distributions from net realized gains on investments and futures
contracts
- ------------------------------------------------------------------
Institutional Shares (98,597,371) (729,209)
- ------------------------------------------------------------------
Institutional Service Shares (4,696,377) (14,188)
- ------------------------------------------------------------------ ------------- -------------
Change in net assets resulting from distributions to
shareholders (121,250,958) (15,320,337)
- ------------------------------------------------------------------ ------------- -------------
SHARE TRANSACTIONS--
- ------------------------------------------------------------------
Proceeds from sale of shares 680,420,450 374,533,702
- ------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 65,168,316 6,003,498
- ------------------------------------------------------------------
Cost of shares redeemed (545,896,207) (240,788,349)
- ------------------------------------------------------------------ ------------- -------------
Change in net assets resulting from share transactions 199,692,559 139,748,851
- ------------------------------------------------------------------ ------------- -------------
Change in net assets 244,435,517 262,000,094
- ------------------------------------------------------------------
NET ASSETS:
- ------------------------------------------------------------------
Beginning of period 714,432,451 452,432,357
- ------------------------------------------------------------------ ------------- -------------
End of period (including undistributed net investment income of
$2,602,060 and $3,063,488, respectively) $ 958,867,968 $ 714,432,451
- ------------------------------------------------------------------ ------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MAX-CAP FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
(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 portfolios. The financial statements
included herein are only those of Federated Max-Cap Fund (the "Fund"), a
diversified portfolio. The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held. The
Fund offers two classes of shares: Institutional Shares and Institutional
Service Shares. (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.)
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--Listed equity securities are valued at the last sale
price reported on a national securities exchange. Short-term securities are
valued at the prices provided by an independent pricing service. However,
short-term securities with remaining maturities of sixty days or less at
the time of purchase may be valued at amortized cost, which approximates
fair market value.
REPURCHASE AND REVERSE REPURCHASE AGREEMENTS--It is the policy of the Fund
to require the custodian bank or broker 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 guidelines and/or
standards reviewed or established by the Trustees. Risks may arise from the
potential inability of counterparties to honor the terms of these
agreements. 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
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
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 over a period not to exceed 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 index futures contract with a broker, the
Fund is required to deposit in a segregated account a specified 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. For the period ended
October 31, 1996, the Fund had realized gains of $12,785,868 on futures
contracts.
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. At October 31, 1996, 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 1996 153 S&P 500 Index Futures Long $1,107,681
</TABLE>
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
FEDERATED MAX-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) for each
class of shares.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
1996 1995
---------------------------- ----------------------------
INSTITUTIONAL SHARES SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold 42,819,916 $ 622,123,488 26,132,335 $ 343,592,917
- ---------------------------------------------
Shares issued to shareholders in payment of
distributions declared 4,444,520 60,563,340 420,935 5,512,947
- ---------------------------------------------
Shares redeemed (35,228,936) (503,599,044) (17,407,051) (230,818,438)
- --------------------------------------------- ----------- ------------- ----------- -------------
Net change resulting from Institutional
Share transactions 12,035,500 $ 179,087,784 9,146,219 $ 118,287,426
- --------------------------------------------- ----------- ------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
1996 1995
---------------------------- ----------------------------
INSTITUTIONAL SERVICE SHARES SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold 4,027,604 $ 58,296,962 2,368,216 $ 30,940,785
- ---------------------------------------------
Shares issued to shareholders in payment
of distributions declared 337,876 4,604,976 36,486 490,551
- ---------------------------------------------
Shares redeemed (2,957,950) (42,297,163) (730,897) (9,969,911)
- --------------------------------------------- ----------- ------------- ----------- -------------
Net change resulting from Institutional
Service Share transactions 1,407,530 $ 20,604,775 1,673,805 $ 21,461,425
- --------------------------------------------- ----------- ------------- ----------- -------------
Net change resulting from fund share
transactions 13,443,030 $ 199,692,559 10,820,024 $ 139,748,851
- --------------------------------------------- ----------- ------------- ----------- -------------
</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 0.30% 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 a management advisory fee based on the average daily
net assets of the Fund as follows: 0.05% on the first $100 million, 0.02% on the
next $100 million, and 0.01% thereafter. The Manager may voluntarily choose to
waive any portion of its fee. 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 0.25%
of average daily net assets of the Fund for
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
the period. The fee paid to FSS is used to finance certain services for
shareholders and to maintain shareholder accounts. FSS may voluntarily choose to
waive any portion of its fee. Federated Shareholder Services can modify or
terminate this voluntary waiver at any time at its sole discretion. For the
fiscal year ended October 31, 1996 Institutional Shares fully waived its
shareholder service 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 0.30% of the average daily net assets of the
Institutional Service Shares, annually, to compensate FSC. FSC may voluntarily
choose to waive a portion of its fee. FSC can modify or terminate this voluntary
waiver at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services
Company ("FServ"), through its subsidiary, Federated Shareholder Services
Company ("FSSC") serves as transfer and dividend disbursing agent for the Fund.
The fee paid to FSSC is based on the size, type, and number of accounts and
transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Trust's accounting records for
which it receives a fee. The fee is based on the level of the Trust's average
daily net assets for the period, plus out-of-pocket expenses.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended October 31, 1996, were as follows:
<TABLE>
<S> <C>
- ----------------------------------------------------------------------------------
PURCHASES $203,364,802
- ---------------------------------------------------------------------------------- ------------
SALES $ 19,949,485
- ---------------------------------------------------------------------------------- ------------
</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, 1996, 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. 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, 1996, 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, 1996, 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 16, 1996
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<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 Shareholder Services P.O. Box 8600
Company 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, 1996
LOGO
Cusip 31420E106
0032104A-IS (12/96)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 Statement of Additional Information for Institutional
Service Shares and Institutional Shares dated December 31, 1996, with the
Securities and Exchange Commission ("SEC"). 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 1-800-341-7400. To obtain other
information or to make inquiries about the Fund, contact the Fund at the address
listed in the back of this prospectus. The Statement of Additional Information,
material incorporated by reference into this document, and other information
regarding the Fund is maintained electronically with the SEC at Internet Web
site (http://www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
Prospectus dated December 31, 1996
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
Certificates and Confirmations..............................................11
Dividends...................................................................11
Capital Gains...............................................................11
Redeeming Institutional Service Shares........................................11
Telephone Redemption........................................................11
Written Requests............................................................12
Accounts with low Balances..................................................13
Shareholder Information.......................................................13
Voting Rights...............................................................13
Tax Information...............................................................13
Federal Income Tax..........................................................13
State and Local Taxes.......................................................13
Performance Information.......................................................13
Other Classes of Shares.......................................................14
Financial Statements..........................................................15
Report of Ernst & Young LLP,
Independent Auditors........................................................43
Addresses.....................................................................44
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)........................................................ 0.24%
12b-1 Fee (after waiver) (2)............................................................. 0.07%
Total Other Expenses..................................................................... 0.30%
Shareholder Services Fee (after waiver) (3)................................ 0.23%
Total Operating Expenses (4)................................................... 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 12b-1 fee has been reduced to reflect the voluntary waiver of a portion
of the 12b-1 fee. The distributor can terminate the voluntary waiver at any
time at its sole discretion. The maximum 12b-1 fee is 0.30%.
(3) The shareholder services fee has been reduced to reflect the voluntary
waiver of a portion of the shareholder services fee. The shareholder service
provider can terminate this voluntary waiver at any time at its sole
discretion. The maximum shareholder services fee is 0.25%.
(4) The total operating expenses were 0.92% absent the voluntary waiver of
portions of the management fee, shareholder services fee and 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 "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
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 43.
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-------------------------------------------
1996 1995 1994 1993(A)
- ---------------------------------------------------------------- ------ ------ ------ -------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $14.72 $12.02 $12.24 $12.12
- ----------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------
Net investment income 0.30 0.33 0.28(b) 0.07
- ----------------------------------------------------------------
Net realized and unrealized gain (loss) on investments
and futures contracts 2.79 2.69 0.11 0.12
- ---------------------------------------------------------------- ------ ------ ------ -------
Total from investment operations 3.09 3.02 0.39 0.19
- ----------------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------
Distributions from net investment income (0.31) (0.30) (0.27) (0.07 )
- ----------------------------------------------------------------
Distributions from net realized gain on investments
and futures contracts (2.03) (0.02) (0.34) --
- ---------------------------------------------------------------- ------ ------ ------ -------
Total distributions (2.34) (0.32) (0.61) (0.07 )
- ---------------------------------------------------------------- ------ ------ ------ -------
NET ASSET VALUE, END OF PERIOD $15.47 $14.72 $12.02 $12.24
- ---------------------------------------------------------------- ------ ------ ------ -------
TOTAL RETURN (C) 23.39% 25.52% 3.30% 1.70%
- ----------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------
Expenses 0.61% 0.61% 0.62% 0.61%*
- ----------------------------------------------------------------
Net investment income 1.97% 2.55% 2.35% 1.52%*
- ----------------------------------------------------------------
Expense waiver/reimbursement (d) 0.31% 0.33% 0.26% 0.09%*
- ----------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------
Net assets, end of period (000 omitted) $58,741 $35,195 $8,617 $2,493
- ----------------------------------------------------------------
Average commission rate paid $0.0153 -- -- --
- ----------------------------------------------------------------
Portfolio turnover 3% 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)
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 lease 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;
- - notes, bonds, and discount notes issued or guaranteed by U.S. government
agencies and instrumentalities supported by the full faith and credit of the
United States;
- - notes, bonds, and discount notes of U.S. government agencies or
instrumentalities which receive or have access to federal funding; and
- - notes, bonds, and discount notes of other U.S. government instrumentalities
supported only by the credit of the instrumentalities.
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 arrange-
ments 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 Com-
modity 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.
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 limitations cannot be changed without shareholder approval.
The following investment limitation, 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 15% of its net assets in securities that are
illiquid.
FEDERATED INDEX TRUST
INFORMATION
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES
The Trust is managed by 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 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 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 errors; monitoring and analyzing the appropriate futures
contracts to purchase and the futures holdings of the Fund as a percentage of
Fund assets; monitoring market timing in the Fund; discussing with the Sub-
Manager which method of indexing to use; and ultimately recommending to the
Trustees whether the Sub-Management Contract should be renewed, modified or
terminated. The Manager provides written reports to the Trustees regarding the
results of its evaluation and monitoring functions. In addition, the Manager is
responsible for providing the Fund with administrative services, including, but
not limited to, shareholder servicing and certain legal and accounting services.
The
Manager is also responsible for conducting all operations of the Fund, except
those operations contracted to the Sub-Manager, custodian, transfer agent and
dividend disbursing agent. As described below, the Manager receives an annual
fee from the Fund for performing its responsibilities under the Management
Contract.
MANAGEMENT FEES. The Fund's Manager receives an annual management fee equal to
.30% of 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.
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 $80 billion invested across more than 250 funds under management and/or
administration by its subsidiaries, as of December 31, 1995, Federated Investors
is one of the largest mutual fund investment managers in the United States. With
more than 1,800 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.
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 interests. 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.
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 the first $100 million
of net assets under management, .02% over $100 million but less than $200
million, and .01% 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
NBD Corporation. It serves as investment adviser principally to corporate
defined benefit and defined contribution plans which have, as of June 30, 1996,
placed approximately $22.2 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 340 nationwide non-financial institution clients
invest. In total, ANB manages 79 commingled/common trust funds. Also, since
1992, 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.
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 Rule 12b-1 under the
Investment Company Act of 1940 (the "Plan"), the distributor may be paid by the
Fund in an amount computed at an annual rate of 0.30% of the average daily net
asset value of Shares. 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 Plan is a compensation-type plan. As such, the Fund makes no payments to the
distributor except as described above. Therefore, the Fund does not pay for
unreimbursed expenses of the distributor, including amounts expended by the
distributor in excess of amounts received by it from the Fund, interest,
carrying or other financing charges in connection with excess amounts expended,
or the distributor's overhead expenses. However, the distributor may be able to
recover such amounts or may earn a profit from future payments made by the Fund
under the Plan.
In addition, 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 the average daily net asset value of
Shares to obtain certain personal services for shareholders and to maintain
shareholder accounts. 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.
SUPPLEMENTAL PAYMENTS TO FINANCIAL
INSTITUTIONS
In addition to payments made pursuant to the Distribution Plan and Shareholder
Services Agreement, Federated Securities Corp. and Federated Shareholder
Services, from their own assets, may pay financial institutions supplemental
fees for the performance of substantial sales services, distribution-related
support services, or share-
holder services. The support may include sponsoring sales, educational and
training seminars for their employees, providing sales literature, and
engineering computer software programs that emphasize the attributes of the
Fund. Such assistance will be predicated upon the amount of shares the financial
institution sells or may sell, and/or upon the type and nature of sales or
marketing support furnished by the financial institution. Any payments made by
the distributor may be reimbursed by the Fund's Manager or its affiliates.
FUND ADMINISTRATION
ADMINISTRATIVE SERVICES
Federated Services Company, 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.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the Managers look for prompt execution of the order at a favorable
price. In working with dealers, the Managers will generally utilize those who
are recognized dealers in specific portfolio instruments, except when a better
price and execution of the order can be obtained elsewhere. In selecting among
firms believed to meet these criteria, the Managers may give consideration to
those firms which have sold or are selling Shares of the Fund and other funds
distributed by Federated Securities Corp. The Managers make decisions on
portfolio transactions and select brokers and dealers subject to review by the
Trustees.
NET ASSET VALUE
The Fund's net asset value per Share fluctuates. It is determined by 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 Shareholder 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 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; and ABA Number 011000028.
Shares cannot be pur-
chased 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 Shareholder Services Company, P.O. Box 8600, Boston,
Massachusetts 02266-8600.
Orders by mail are considered received when payment by check is converted into
federal funds. This is normally the next business day after the check is
received.
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.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Shareholder 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 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. All owners of the account must sign
the request exactly as the shares are registered. If share certificates have
been issued, they should be sent unendorsed with the written request by
registered or certified mail.
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.
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, Donnelly & Meck, 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 management fee is the same for both classes of shares.
To obtain more information and a prospectus for Institutional Shares, investors
may call 1-800-341-7400.
FEDERATED 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 43.
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990(A)
------ ------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $14.74 $12.02 $12.24 $11.64 $11.07 $ 8.60 $10.00
- -------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------------
Net investment income 0.34 0.38 0.32 0.30 0.32 0.37 0.12
- -------------------------------------------
Net realized and unrealized gain (loss) on
investments and futures contracts 2.80 2.70 0.10 1.29 0.71 2.46 (1.43 )
- ------------------------------------------- ----- ----- ----- ----- ----- ----- ------
Total from investment operations 3.14 3.08 0.42 1.59 1.03 2.83 (1.31 )
- -------------------------------------------
LESS DISTRIBUTIONS
- -------------------------------------------
Distributions from net investment income (0.36) (0.34) (0.30) (0.30) (0.34) (0.36) (0.09 )
- -------------------------------------------
Distributions from net realized gain on
investments and futures contracts (2.03) (0.02) (0.34) (0.69) (0.12) -- --
- ------------------------------------------- ----- ----- ----- ----- ----- ----- ------
Total distributions (2.39) (0.36) (0.64) (0.99) (0.46) (0.36) (0.09 )
- ------------------------------------------- ----- ----- ----- ----- ----- ----- ------
NET ASSET VALUE, END OF PERIOD $15.49 $14.74 $12.02 $12.24 $11.64 $11.07 $ 8.60
- ------------------------------------------- ----- ----- ----- ----- ----- ----- ------
TOTAL RETURN (B) 23.71% 26% 3.59% 14.35% 9.51% 33.31% (14.46 )%
- -------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------
Expenses 0.31% 0.31% 0.32% 0.31% 0.30% 0.24% 0.00 %
- -------------------------------------------
Net investment income 2.29% 2.91% 2.70% 2.60% 2.92% 3.74% 5.19 %*
- -------------------------------------------
Expense waiver/reimbursement (c) 0.31% 0.33% 0.07% 0.09% 0.18% 0.45% 0.94 %*
- -------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------
Net assets, end of period (000 omitted) $900,131 $679,237 $443,815 $407,246 $309,614 $144,528 $25,129
- -------------------------------------------
Average commission rate paid $0.0153 -- -- -- -- -- --
- -------------------------------------------
Portfolio turnover 3% 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 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)
FEDERATED MAX-CAP FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
(A) COMMON STOCKS--94.2%
- --------------------------------------------------------------------------------------
BASIC INDUSTRY--6.3%
------------------------------------------------------------------
7,200 ASARCO, Inc. $ 189,000
------------------------------------------------------------------
</TABLE>
<TABLE>
<C> <C> <S> <C>
18,900 Air Products & Chemicals, Inc. 1,134,000
------------------------------------------------------------------
38,300 Alcan Aluminum Ltd. 1,259,112
------------------------------------------------------------------
29,392 (b) Allegheny Teledyne, Inc. 628,254
------------------------------------------------------------------
29,500 Aluminum Co. of America 1,729,437
------------------------------------------------------------------
92,427 Archer-Daniels-Midland Co. 2,010,287
------------------------------------------------------------------
18,000 (b) Armco, Inc. 67,500
------------------------------------------------------------------
8,900 Avery Dennison Corp. 586,287
------------------------------------------------------------------
5,100 Ball Corp. 123,037
------------------------------------------------------------------
60,500 Barrick Gold Corp. 1,580,562
------------------------------------------------------------------
38,000 Battle Mountain Gold Co. 289,750
------------------------------------------------------------------
8,900 Bemis Co., Inc. 311,500
------------------------------------------------------------------
18,800 (b) Bethlehem Steel Corp. 152,750
------------------------------------------------------------------
8,200 Boise Cascade Corp. 254,200
------------------------------------------------------------------
16,200 Champion International Corp. 704,700
------------------------------------------------------------------
39,000 Corning, Inc. 1,511,250
------------------------------------------------------------------
21,700 Crown Cork & Seal Co., Inc. 1,041,600
------------------------------------------------------------------
15,750 Cyprus Amax Minerals 356,344
------------------------------------------------------------------
41,500 Dow Chemical Co. 3,226,625
------------------------------------------------------------------
95,000 Du Pont (E.I.) de Nemours & Co. 8,811,250
------------------------------------------------------------------
13,225 Eastman Chemical Co. 697,619
------------------------------------------------------------------
23,600 Echo Bay Mines Ltd. 184,375
------------------------------------------------------------------
10,840 Ecolab, Inc. 395,660
------------------------------------------------------------------
24,362 Engelhard Corp. 444,606
------------------------------------------------------------------
33,100 Freeport-McMoRan Copper & Gold, Inc., Class B 1,005,412
------------------------------------------------------------------
15,500 Georgia-Pacific Corp. 1,162,500
------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------ ------------
(A) COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
<C> <C><S> <C>
BASIC INDUSTRY--CONTINUED
------------------------------------------------------------------
9,100 Goodrich (B.F.) Co. $ 385,612
------------------------------------------------------------------
16,600 (b) Grace (W.R.) & Co. 879,800
------------------------------------------------------------------
10,800 Great Lakes Chemical Corp. 562,950
------------------------------------------------------------------
18,100 Hercules, Inc. 862,012
------------------------------------------------------------------
24,800 Homestake Mining Co. 353,400
------------------------------------------------------------------
28,500 Inco Ltd. 904,875
------------------------------------------------------------------
8,200 Inland Steel Industries, Inc. 132,225
------------------------------------------------------------------
50,776 International Paper Co. 2,170,674
------------------------------------------------------------------
14,400 James River Corp. of Virginia 453,600
------------------------------------------------------------------
18,400 Louisiana-Pacific Corp. 384,100
------------------------------------------------------------------
8,900 Mead Corp. 505,075
------------------------------------------------------------------
7,300 Millipore Corp. 255,500
------------------------------------------------------------------
99,200 Monsanto Co. 3,930,800
------------------------------------------------------------------
24,100 Morton International, Inc. 948,938
------------------------------------------------------------------
11,400 Nalco Chemical Co. 414,675
------------------------------------------------------------------
16,811 Newmont Mining Corp. 777,509
------------------------------------------------------------------
14,800 Nucor Corp. 701,150
------------------------------------------------------------------
8,700 (b) Owens Corning 337,125
------------------------------------------------------------------
31,600 PPG Industries, Inc. 1,801,200
------------------------------------------------------------------
19,533 Pall Corp. 500,533
------------------------------------------------------------------
11,100 Phelps Dodge Corp. 697,913
------------------------------------------------------------------
14,000 Pioneer Hi-Bred International 939,750
------------------------------------------------------------------
40,500 Placer Dome, Inc. 972,000
------------------------------------------------------------------
4,900 Potlatch Corp. 209,475
------------------------------------------------------------------
26,400 Praxair, Inc. 1,168,200
------------------------------------------------------------------
10,800 Reynolds Metals Co. 607,500
------------------------------------------------------------------
11,000 Rohm & Haas Co. 785,125
------------------------------------------------------------------
22,235 Santa Fe Pacific Gold 264,041
------------------------------------------------------------------
14,500 Sherwin-Williams Co. 726,813
------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
(A) COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
BASIC INDUSTRY--CONTINUED
------------------------------------------------------------------
8,500 Sigma-Aldrich Corp. $ 499,375
------------------------------------------------------------------
3,400 Springs Industries, Inc., Class A 153,425
------------------------------------------------------------------
16,808 Stone Container Corp. 256,322
------------------------------------------------------------------
9,400 Temple-Inland, Inc. 481,750
------------------------------------------------------------------
10,500 (b) Tupperware Corp. 539,438
------------------------------------------------------------------
14,320 USX-U.S. Steel Group, Inc. 390,220
------------------------------------------------------------------
11,600 Union Camp Corp. 565,500
------------------------------------------------------------------
21,900 Union Carbide Corp. 933,488
------------------------------------------------------------------
17,250 Westvaco Corp. 491,625
------------------------------------------------------------------
33,600 Weyerhaeuser Co. 1,541,400
------------------------------------------------------------------
9,400 Willamette Industries, Inc. 634,500
------------------------------------------------------------------
15,350 Worthington Industries, Inc. 318,513
------------------------------------------------------------------ ------------
Total 60,295,743
------------------------------------------------------------------ ------------
CONSUMER DURABLES--3.5%
------------------------------------------------------------------
14,800 Black & Decker Corp. 553,150
------------------------------------------------------------------
4,900 Briggs & Stratton Corp. 196,000
------------------------------------------------------------------
16,600 Brunswick Corp. 390,100
------------------------------------------------------------------
4,800 Centex Corp. 144,600
------------------------------------------------------------------
123,368 Chrysler Corp. 4,148,249
------------------------------------------------------------------
14,200 Cooper Tire & Rubber Co. 278,675
------------------------------------------------------------------
17,200 Dana Corp. 509,550
------------------------------------------------------------------
57,000 Eastman Kodak Co. 4,545,750
------------------------------------------------------------------
13,100 Eaton Corp. 782,725
------------------------------------------------------------------
10,400 Echlin, Inc. 339,300
------------------------------------------------------------------
6,000 Fleetwood Enterprises, Inc. 202,500
------------------------------------------------------------------
200,200 Ford Motor Co. 6,256,250
------------------------------------------------------------------
128,000 General Motors Corp. 6,896,000
------------------------------------------------------------------
20,500 Genuine Parts Co. 896,875
------------------------------------------------------------------
26,300 Goodyear Tire & Rubber Co. 1,206,512
------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------ ------------
<S> <C> <S> <C>
(A) COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
CONSUMER DURABLES--CONTINUED
------------------------------------------------------------------
14,600 Hasbro, Inc. $ 567,575
------------------------------------------------------------------
6,553 Jostens, Inc. 140,890
------------------------------------------------------------------
6,600 Kaufman & Broad Homes Corp. 79,200
------------------------------------------------------------------
46,225 Mattel, Inc. 1,334,747
------------------------------------------------------------------
17,200 Maytag Corp. 341,850
------------------------------------------------------------------
26,900 Newell Co. 763,288
------------------------------------------------------------------
7,700 Polaroid Corp. 312,813
------------------------------------------------------------------
4,000 Pulte Corp. 106,000
------------------------------------------------------------------
25,400 Rubbermaid, Inc. 590,550
------------------------------------------------------------------
10,300 Snap-On Tools Corp. 330,888
------------------------------------------------------------------
15,000 Stanley Works 423,750
------------------------------------------------------------------
10,900 TRW, Inc. 986,450
------------------------------------------------------------------
12,600 Whirlpool Corp. 595,350
------------------------------------------------------------------ ------------
Total 33,919,587
------------------------------------------------------------------ ------------
CONSUMER NON-DURABLES--11.2%
------------------------------------------------------------------
4,700 Alberto-Culver Co., Class B 215,025
------------------------------------------------------------------
28,900 American Brands, Inc. 1,379,975
------------------------------------------------------------------
12,700 American Greetings Corp., Class A 372,269
------------------------------------------------------------------
83,900 Anheuser-Busch Cos., Inc. 3,230,150
------------------------------------------------------------------
22,500 Avon Products, Inc. 1,220,625
------------------------------------------------------------------
11,700 Brown-Forman Corp., Class B 506,025
------------------------------------------------------------------
24,500 CPC International, Inc. 1,932,437
------------------------------------------------------------------
38,900 Campbell Soup Co. 3,112,000
------------------------------------------------------------------
8,700 Clorox Co. 949,387
------------------------------------------------------------------
422,000 Coca-Cola Co. 21,311,000
------------------------------------------------------------------
24,900 Colgate-Palmolive Co. 2,290,800
------------------------------------------------------------------
41,200 ConAgra, Inc. 2,054,850
------------------------------------------------------------------
6,400 Coors Adolph Co., Class B 124,800
------------------------------------------------------------------
12,900 (b) Fruit of the Loom, Inc., Class A 469,237
------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------ ------------
<S> <C> <S> <C>
(A) COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
CONSUMER NON-DURABLES--CONTINUED
------------------------------------------------------------------
26,900 General Mills, Inc. $ 1,536,662
------------------------------------------------------------------
75,400 Gillette Co. 5,636,150
------------------------------------------------------------------
62,600 Heinz (H.J.) Co. 2,222,300
------------------------------------------------------------------
26,000 Hershey Foods Corp. 1,257,750
------------------------------------------------------------------
18,700 International Flavors & Fragrances, Inc. 773,713
------------------------------------------------------------------
35,900 Kellogg Co. 2,279,650
------------------------------------------------------------------
47,724 Kimberly-Clark Corp. 4,450,263
------------------------------------------------------------------
12,400 Liz Claiborne, Inc. 523,900
------------------------------------------------------------------
48,600 Nike, Inc., Class B 2,861,325
------------------------------------------------------------------
265,200 PepsiCo, Inc. 7,856,550
------------------------------------------------------------------
138,600 Philip Morris Cos., Inc. 12,837,825
------------------------------------------------------------------
116,100 Procter & Gamble Co. 11,493,900
------------------------------------------------------------------
22,900 Quaker Oats Co. 812,950
------------------------------------------------------------------
17,900 Ralston Purina Co. 1,183,638
------------------------------------------------------------------
9,500 Reebok International Ltd. 339,625
------------------------------------------------------------------
6,500 Russell Corp. 184,438
------------------------------------------------------------------
82,200 Sara Lee Corp. 2,918,100
------------------------------------------------------------------
63,400 Seagram Co. Ltd. 2,401,275
------------------------------------------------------------------
8,400 Stride Rite Corp. 69,300
------------------------------------------------------------------
31,800 UST, Inc. 918,225
------------------------------------------------------------------
27,100 Unilever N.V., ADR 4,142,913
------------------------------------------------------------------
10,800 V.F. Corp. 706,050
------------------------------------------------------------------
19,700 Wrigley (Wm.), Jr. Co. 1,186,925
------------------------------------------------------------------ ------------
Total 107,762,007
------------------------------------------------------------------ ------------
ENERGY MINERALS--8.5%
------------------------------------------------------------------
15,800 Amerada-Hess Corp. 874,925
------------------------------------------------------------------
84,200 Amoco Corp. 6,378,150
------------------------------------------------------------------
10,900 Ashland, Inc. 463,250
------------------------------------------------------------------
27,200 Atlantic Richfield Co. 3,604,000
------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------ ------------
<S> <C> <S> <C>
(A) COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
ENERGY MINERALS--CONTINUED
------------------------------------------------------------------
24,500 Baker Hughes, Inc. $ 872,812
------------------------------------------------------------------
21,200 Burlington Resources, Inc. 1,067,950
------------------------------------------------------------------
110,500 Chevron Corp. 7,265,375
------------------------------------------------------------------
210,200 Exxon Corp. 18,628,975
------------------------------------------------------------------
19,400 Halliburton Co. 1,098,525
------------------------------------------------------------------
4,200 Helmerich & Payne, Inc. 227,325
------------------------------------------------------------------
8,300 Kerr-McGee Corp. 520,825
------------------------------------------------------------------
5,800 Louisiana Land & Exploration Co. 329,875
------------------------------------------------------------------
66,700 Mobil Corp. 7,787,225
------------------------------------------------------------------
54,700 Occidental Petroleum Corp. 1,340,150
------------------------------------------------------------------
17,700 (b) Oryx Energy Co. 340,725
------------------------------------------------------------------
7,900 Pennzoil Co. 402,900
------------------------------------------------------------------
44,500 Phillips Petroleum Co. 1,824,500
------------------------------------------------------------------
14,400 (b) Rowan Companies, Inc. 322,200
------------------------------------------------------------------
90,700 Royal Dutch Petroleum Co., ADR 14,999,513
------------------------------------------------------------------
15,312 (b) Santa Fe Energy Resource, Inc. 218,196
------------------------------------------------------------------
41,500 Schlumberger Ltd. 4,113,688
------------------------------------------------------------------
15,137 Sun Co., Inc. 338,690
------------------------------------------------------------------
44,700 Texaco, Inc. 4,542,638
------------------------------------------------------------------
48,700 USX Corp. 1,065,313
------------------------------------------------------------------
42,394 Union Pacific Resources Group, Inc. 1,165,840
------------------------------------------------------------------
42,000 Unocal Corp. 1,538,250
------------------------------------------------------------------
9,000 (b) Western Atlas, Inc. 624,375
------------------------------------------------------------------ ------------
Total 81,956,190
------------------------------------------------------------------ ------------
FINANCE--13.5%
------------------------------------------------------------------
18,300 AON Corp. 1,056,825
------------------------------------------------------------------
18,100 Ahmanson (H.F.) & Co. 567,887
------------------------------------------------------------------
7,600 Alexander & Alexander Services, Inc. 115,900
------------------------------------------------------------------
75,305 Allstate Corp. 4,226,493
------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------ ------------
(A) COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
<C> <S> <C>
FINANCE--CONTINUED
------------------------------------------------------------------
80,300 American Express Co. $ 3,774,100
------------------------------------------------------------------
34,600 American General Corp. 1,288,850
------------------------------------------------------------------
79,493 American International Group, Inc. 8,634,927
------------------------------------------------------------------
73,727 Banc One Corp. 3,124,182
------------------------------------------------------------------
25,800 Bank of Boston Corp. 1,651,200
------------------------------------------------------------------
65,300 Bank of New York Co., Inc. 2,163,062
------------------------------------------------------------------
60,876 BankAmerica Corp. 5,570,154
------------------------------------------------------------------
13,600 Bankers Trust New York Corp. 1,149,200
------------------------------------------------------------------
32,600 Barnett Banks, Inc. 1,242,875
------------------------------------------------------------------
9,100 Beneficial Corp. 532,350
------------------------------------------------------------------
26,500 Boatmen's Bancshares, Inc. 1,609,875
------------------------------------------------------------------
12,900 CIGNA Corp. 1,683,450
------------------------------------------------------------------
73,870 Chase Manhattan Corp. 6,334,352
------------------------------------------------------------------
29,500 Chubb Corp. 1,475,000
------------------------------------------------------------------
81,400 Citicorp 8,058,600
------------------------------------------------------------------
19,500 Comerica, Inc. 1,035,937
------------------------------------------------------------------
37,700 Corestates Financial Corp. 1,833,162
------------------------------------------------------------------
27,821 Dean Witter, Discover & Co. 1,637,961
------------------------------------------------------------------
30,300 Federal Home Loan Mortgage Corp. 3,060,300
------------------------------------------------------------------
184,900 Federal National Mortgage Association 7,234,212
------------------------------------------------------------------
17,900 Fifth Third Bancorp 1,120,987
------------------------------------------------------------------
23,900 First Bank System, Inc. 1,577,400
------------------------------------------------------------------
46,655 First Union Corp. 3,394,151
------------------------------------------------------------------
44,410 Fleet Financial Group, Inc. 2,214,949
------------------------------------------------------------------
13,300 General RE Corp. 1,958,425
------------------------------------------------------------------
9,800 Golden West Financial Corp. 635,775
------------------------------------------------------------------
23,200 Great Western Financial Corp. 649,600
------------------------------------------------------------------
23,200 Green Tree Financial Corp. 919,300
------------------------------------------------------------------
16,400 Household International, Inc. 1,451,400
------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------ ------------
(A) COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
<C> <S> <C>
FINANCE--CONTINUED
------------------------------------------------------------------
19,900 ITT Hartford Group, Inc. $ 1,253,700
------------------------------------------------------------------
31,600 J.P. Morgan & Co., Inc. 2,729,450
------------------------------------------------------------------
12,025 Jefferson-Pilot Corp. 683,922
------------------------------------------------------------------
39,000 KeyCorp 1,818,375
------------------------------------------------------------------
17,700 Lincoln National Corp. 858,450
------------------------------------------------------------------
37,675 MBNA Corp. 1,422,231
------------------------------------------------------------------
10,000 MGIC Investment Corp. 686,250
------------------------------------------------------------------
12,200 Marsh & McLennan Cos., Inc. 1,270,325
------------------------------------------------------------------
22,000 Mellon Bank Corp. 1,432,750
------------------------------------------------------------------
28,600 Merrill Lynch & Co., Inc. 2,009,150
------------------------------------------------------------------
25,700 Morgan Stanley Group, Inc. 1,291,425
------------------------------------------------------------------
37,600 National City Corp. 1,630,900
------------------------------------------------------------------
49,246 NationsBank Corp. 4,641,436
------------------------------------------------------------------
62,700 Norwest Corp. 2,750,963
------------------------------------------------------------------
57,700 PNC Financial Corp. 2,091,625
------------------------------------------------------------------
15,800 Providian Corp. 742,600
------------------------------------------------------------------
9,400 Republic New York Corp. 716,750
------------------------------------------------------------------
13,700 Ryder Systems, Inc. 407,575
------------------------------------------------------------------
21,300 SAFECO Corp. 804,075
------------------------------------------------------------------
17,800 Salomon, Inc. 803,225
------------------------------------------------------------------
14,200 St. Paul Cos., Inc. 772,125
------------------------------------------------------------------
37,800 SunTrust Banks, Inc. 1,762,425
------------------------------------------------------------------
12,150 Torchmark Corp. 587,756
------------------------------------------------------------------
11,200 Transamerica Corp. 849,800
------------------------------------------------------------------
81,367 Travelers Group, Inc. 4,414,160
------------------------------------------------------------------
26,150 U.S. Bancorp. 1,046,000
------------------------------------------------------------------
12,400 UNUM Corp. 779,650
------------------------------------------------------------------
19,900 USF&G Corp. 378,100
------------------------------------------------------------------
5,800 USLIFE Corp. 181,250
------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------ ------------
(A) COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
<C> <S> <C>
FINANCE--CONTINUED
------------------------------------------------------------------
28,200 Wachovia Corp. $ 1,515,750
------------------------------------------------------------------
15,966 Wells Fargo & Co. 4,264,918
------------------------------------------------------------------ ------------
Total 129,579,952
------------------------------------------------------------------ ------------
HEALTH CARE--10.0%
------------------------------------------------------------------
132,100 Abbott Laboratories 6,687,562
------------------------------------------------------------------
25,455 Aetna Services Inc. 1,702,303
------------------------------------------------------------------
268 (b) Allergan Ligand Retinoid Therapeutics, Inc. 7,537
------------------------------------------------------------------
11,000 Allergan, Inc. 335,500
------------------------------------------------------------------
14,300 (b) Alza Corp. 370,012
------------------------------------------------------------------
107,700 American Home Products Corp. 6,596,625
------------------------------------------------------------------
44,800 (b) Amgen, Inc. 2,746,800
------------------------------------------------------------------
9,600 Bard (C.R.), Inc. 271,200
------------------------------------------------------------------
9,600 Bausch & Lomb, Inc. 324,000
------------------------------------------------------------------
46,100 Baxter International, Inc. 1,918,912
------------------------------------------------------------------
21,100 Becton, Dickinson & Co. 917,850
------------------------------------------------------------------
16,800 (b) Beverly Enterprises, Inc. 207,900
------------------------------------------------------------------
19,600 (b) Biomet, Inc. 316,050
------------------------------------------------------------------
30,000 (b) Boston Scientific Corp. 1,631,250
------------------------------------------------------------------
84,900 Bristol-Myers Squibb Co. 8,978,175
------------------------------------------------------------------
113,607 Columbia/HCA Healthcare Corp. 4,061,450
------------------------------------------------------------------
27,500 (b) Humana, Inc. 501,875
------------------------------------------------------------------
225,600 Johnson & Johnson 11,110,800
------------------------------------------------------------------
92,600 Lilly (Eli) & Co. 6,528,300
------------------------------------------------------------------
10,650 Manor Care, Inc. 418,013
------------------------------------------------------------------
40,500 Medtronic, Inc. 2,607,188
------------------------------------------------------------------
205,900 Merck & Co., Inc. 15,262,338
------------------------------------------------------------------
108,700 Pfizer, Inc. 8,994,925
------------------------------------------------------------------
86,055 Pharmacia & Upjohn, Inc. 3,097,980
------------------------------------------------------------------
62,600 Schering Plough Corp. 4,006,400
------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------ ------------
(A) COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
<C> <C> <S> <C>
HEALTH CARE--CONTINUED
------------------------------------------------------------------
4,000 Shared Medical Systems Corp. $ 193,000
------------------------------------------------------------------
13,650 (b) St. Jude Medical, Inc. 539,175
------------------------------------------------------------------
36,600 (b) Tenet Healthcare Corp. 764,025
------------------------------------------------------------------
10,600 U.S. Surgical Corp. 443,875
------------------------------------------------------------------
31,100 United Healthcare Corp. 1,177,913
------------------------------------------------------------------
45,900 Warner-Lambert Co. 2,920,388
------------------------------------------------------------------ ------------
Total 95,639,321
------------------------------------------------------------------ ------------
PRODUCER MANUFACTURING--7.1%
------------------------------------------------------------------
47,900 Allied-Signal, Inc. 3,137,450
------------------------------------------------------------------
6,200 Armstrong World Industries, Inc. 413,850
------------------------------------------------------------------
12,300 Case Corp. 571,950
------------------------------------------------------------------
32,600 Caterpillar, Inc. 2,237,175
------------------------------------------------------------------
6,700 Cincinnati Milacron, Inc. 128,137
------------------------------------------------------------------
18,300 Cooper Industries, Inc. 736,575
------------------------------------------------------------------
5,100 Crane Co. 237,150
------------------------------------------------------------------
6,700 Cummins Engine Co., Inc. 278,887
------------------------------------------------------------------
43,700 Deere & Co. 1,824,475
------------------------------------------------------------------
19,300 Dover Corp. 991,537
------------------------------------------------------------------
30,300 Dresser Industries, Inc. 996,112
------------------------------------------------------------------
38,000 Emerson Electric Co. 3,382,000
------------------------------------------------------------------
6,300 (b) FMC Corp. 463,837
------------------------------------------------------------------
279,500 General Electric Co. 27,041,625
------------------------------------------------------------------
8,400 General Signal Corp. 342,300
------------------------------------------------------------------
5,900 Giddings & Lewis, Inc. 69,325
------------------------------------------------------------------
7,978 Harnischfeger Industries, Inc. 319,120
------------------------------------------------------------------
21,400 Honeywell, Inc. 1,329,475
------------------------------------------------------------------
19,900 (b) ITT Industries, Inc. 462,675
------------------------------------------------------------------
20,700 Illinois Tool Works, Inc. 1,454,175
------------------------------------------------------------------
18,500 Ingersoll-Rand Co. 770,063
------------------------------------------------------------------
</TABLE>
25
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------ ------------
(A) COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
<C> <S> <C>
PRODUCER MANUFACTURING--CONTINUED
------------------------------------------------------------------
7,000 Johnson Controls, Inc. $ 511,000
------------------------------------------------------------------
19,500 Loews Corp. 1,611,188
------------------------------------------------------------------
27,200 Masco Corp. 853,400
------------------------------------------------------------------
9,300 McDermott International, Inc. 165,075
------------------------------------------------------------------
71,000 Minnesota Mining & Manufacturing Co. 5,440,375
------------------------------------------------------------------
1,500 NACCO Industries, Inc., Class A 69,375
------------------------------------------------------------------
8,000 National Service Industries, Inc. 276,000
------------------------------------------------------------------
12,770 (b) Navistar International Corp. 118,123
------------------------------------------------------------------
6,540 PACCAR, Inc. 364,605
------------------------------------------------------------------
12,600 Parker-Hannifin Corp. 477,225
------------------------------------------------------------------
25,200 Pitney Bowes, Inc. 1,408,050
------------------------------------------------------------------
7,600 Raychem Corp. 593,750
------------------------------------------------------------------
28,900 Tenneco, Inc. 1,430,550
------------------------------------------------------------------
13,700 Textron, Inc. 1,215,875
------------------------------------------------------------------
6,800 Thomas & Betts Corp. 288,150
------------------------------------------------------------------
5,300 Timken Co. 236,513
------------------------------------------------------------------
4,800 Trinova Corp. 157,800
------------------------------------------------------------------
25,800 Tyco International, Ltd. 1,280,325
------------------------------------------------------------------
71,200 Westinghouse Electric Corp. 1,219,300
------------------------------------------------------------------
17,800 Whitman Corp. 431,650
------------------------------------------------------------------
55,000 Xerox Corp. 2,550,625
------------------------------------------------------------------ ------------
Total 67,886,847
------------------------------------------------------------------ ------------
RETAIL TRADE--4.5%
------------------------------------------------------------------
42,700 Albertsons, Inc. 1,467,812
------------------------------------------------------------------
24,700 American Stores Co. 1,021,962
------------------------------------------------------------------
17,600 Charming Shoppes, Inc. 81,400
------------------------------------------------------------------
16,600 Circuit City Store, Inc. 543,650
------------------------------------------------------------------
36,600 Dayton-Hudson Corp. 1,267,275
------------------------------------------------------------------
19,200 Dillard Department Stores, Inc., Class A 609,600
------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------ ------------
(A) COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
<C> <C> <S> <C>
RETAIL TRADE--CONTINUED
------------------------------------------------------------------
35,200 (b) Federated Department Stores, Inc. $ 1,161,600
------------------------------------------------------------------
5,153 (b) Footstar, Inc. 113,375
------------------------------------------------------------------
48,600 Gap (The), Inc. 1,409,400
------------------------------------------------------------------
10,100 Giant Foods, Inc., Class A 340,875
------------------------------------------------------------------
6,500 Great Atlantic & Pacific Tea Co., Inc. 195,000
------------------------------------------------------------------
12,300 Harcourt General, Inc. 611,925
------------------------------------------------------------------
81,100 Home Depot, Inc. 4,440,225
------------------------------------------------------------------
82,300 K Mart Corp. 802,425
------------------------------------------------------------------
21,300 (b) Kroger Co., Inc. 950,513
------------------------------------------------------------------
46,264 Limited, Inc. 850,101
------------------------------------------------------------------
3,400 Longs Drug Stores Corp. 152,575
------------------------------------------------------------------
29,100 Lowe's Cos., Inc. 1,174,913
------------------------------------------------------------------
42,300 May Department Stores Co. 2,003,963
------------------------------------------------------------------
17,900 Melville Corp. 666,775
------------------------------------------------------------------
6,200 Mercantile Stores Co., Inc. 307,675
------------------------------------------------------------------
13,800 Nordstrom, Inc. 497,663
------------------------------------------------------------------
38,100 Penney (J.C.) Co., Inc. 2,000,250
------------------------------------------------------------------
10,500 Pep Boys-Manny Moe & Jack 367,500
------------------------------------------------------------------
33,150 (b) Price/Costco, Inc. 658,856
------------------------------------------------------------------
14,200 Rite Aid Corp. 482,800
------------------------------------------------------------------
66,300 Sears, Roebuck & Co. 3,207,263
------------------------------------------------------------------
12,300 TJX Cos., Inc. 492,000
------------------------------------------------------------------
10,565 Tandy Corp. 397,508
------------------------------------------------------------------
46,300 (b) Toys "R" Us, Inc. 1,568,413
------------------------------------------------------------------
388,300 Wal-Mart Stores, Inc. 10,338,488
------------------------------------------------------------------
41,700 Walgreen Co. 1,574,175
------------------------------------------------------------------
25,700 Winn-Dixie Stores, Inc. 857,738
------------------------------------------------------------------
22,500 (b) Woolworth (F.W.) Co. 472,500
------------------------------------------------------------------ ------------
Total 43,088,193
------------------------------------------------------------------ ------------
</TABLE>
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------ ------------
(A) COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
<C> <C> <S> <C>
SERVICES--5.0%
------------------------------------------------------------------
22,100 Alco Standard Corp. $ 1,024,887
------------------------------------------------------------------
8,600 (b) Bally Entertainment Group 259,075
------------------------------------------------------------------
17,500 Block (H&R), Inc. 433,125
------------------------------------------------------------------
36,000 Browning-Ferris Industries, Inc. 945,000
------------------------------------------------------------------
62,475 (b) CUC International, Inc. 1,530,637
------------------------------------------------------------------
26,700 (b) Darden Restaurants, Inc. 223,612
------------------------------------------------------------------
14,000 Deluxe Corp. 456,750
------------------------------------------------------------------
114,800 Disney (Walt) Co. 7,562,450
------------------------------------------------------------------
25,900 Donnelley (R.R.) & Sons Co. 786,712
------------------------------------------------------------------
16,400 Dow Jones & Co. 541,200
------------------------------------------------------------------
28,800 Dun & Bradstreet Corp. 1,666,800
------------------------------------------------------------------
6,400 Fleming Cos., Inc. 111,200
------------------------------------------------------------------
14,100 Fluor Corp. 923,550
------------------------------------------------------------------
6,900 Foster Wheeler Corp. 282,900
------------------------------------------------------------------
23,900 Gannett Co., Inc. 1,813,412
------------------------------------------------------------------
8,600 Grainger (W.W.), Inc. 637,475
------------------------------------------------------------------
20,900 (b) HFS, Inc. 1,530,925
------------------------------------------------------------------
5,200 Harland (John H.) Co. 161,850
------------------------------------------------------------------
17,450 (b) Harrah's Entertainment, Inc. 292,287
------------------------------------------------------------------
33,100 Hilton Hotels Corp. 1,005,412
------------------------------------------------------------------
19,800 (b) ITT Corp. 831,600
------------------------------------------------------------------
13,800 Interpublic Group Cos., Inc. 669,300
------------------------------------------------------------------
6,350 (b) King World Productions, Inc. 228,600
------------------------------------------------------------------
16,200 Knight-Ridder, Inc. 605,475
------------------------------------------------------------------
53,000 Laidlaw, Inc., Class B 622,750
------------------------------------------------------------------
4,050 Luby's Cafeterias, Inc. 85,050
------------------------------------------------------------------
21,700 Marriott Corp. 1,234,188
------------------------------------------------------------------
118,400 McDonald's Corp. 5,254,000
------------------------------------------------------------------
16,800 McGraw-Hill Cos., Inc. 787,500
------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------ ------------
(A) COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
<C> <C> <S> <C>
SERVICES--CONTINUED
------------------------------------------------------------------
4,600 Meredith Corp. $ 231,150
------------------------------------------------------------------
16,900 Moore Corp. Ltd. 342,225
------------------------------------------------------------------
16,500 New York Times Co., Class A 596,063
------------------------------------------------------------------
8,600 (b) Ryan's Family Steak Houses, Inc. 63,425
------------------------------------------------------------------
9,850 Safety-Kleen Corp. 153,906
------------------------------------------------------------------
39,900 Service Corp. International 1,137,150
------------------------------------------------------------------
8,200 (b) Shoney's, Inc. 60,475
------------------------------------------------------------------
11,400 Super Valu Stores, Inc. 339,150
------------------------------------------------------------------
30,800 Sysco Corp. 1,047,200
------------------------------------------------------------------
96,740 Time Warner, Inc. 3,603,565
------------------------------------------------------------------
17,500 Times Mirror Co., Class A 809,375
------------------------------------------------------------------
10,400 Tribune Co. 850,200
------------------------------------------------------------------
80,200 (b) U.S. West Media Group 1,253,125
------------------------------------------------------------------
60,368 (b) Viacom, Inc., Class B 1,969,506
------------------------------------------------------------------
83,100 WMX Technologies, Inc. 2,856,563
------------------------------------------------------------------
21,800 Wendy's International, Inc. 449,625
------------------------------------------------------------------ ------------
Total 48,270,425
------------------------------------------------------------------ ------------
TECHNOLOGY--13.3%
------------------------------------------------------------------
28,600 (b) 3Com Corp. 1,934,075
------------------------------------------------------------------
37,180 AMP, Inc. 1,259,472
------------------------------------------------------------------
22,900 (b) Advanced Micro Devices, Inc. 406,475
------------------------------------------------------------------
20,500 (b) Amdahl Corp. 210,125
------------------------------------------------------------------
10,175 (b) Andrew Corp. 496,031
------------------------------------------------------------------
21,100 Apple Computer, Inc. 485,300
------------------------------------------------------------------
30,400 (b) Applied Materials, Inc. 803,700
------------------------------------------------------------------
7,800 Autodesk, Inc. 178,425
------------------------------------------------------------------
49,000 Automatic Data Processing, Inc. 2,039,625
------------------------------------------------------------------
31,900 (b) Bay Networks, Inc. 645,975
------------------------------------------------------------------
59,000 Boeing Co. 5,627,125
------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------ ------------
(A) COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
<C> <C> <S> <C>
TECHNOLOGY--CONTINUED
------------------------------------------------------------------
12,800 (b) Cabletron Systems, Inc. $ 798,400
------------------------------------------------------------------
11,600 (b) Ceridian Corp. 575,650
------------------------------------------------------------------
109,600 (b) Cisco Systems, Inc. 6,781,500
------------------------------------------------------------------
45,600 (b) Compaq Computer Corp. 3,174,900
------------------------------------------------------------------
61,675 Computer Associates International, Inc. 3,646,534
------------------------------------------------------------------
12,700 (b) Computer Sciences Corp. 942,975
------------------------------------------------------------------
19,700 (b) DSC Communications Corp. 273,337
------------------------------------------------------------------
6,600 (b) Data General Corp. 98,175
------------------------------------------------------------------
15,200 (b) Dell Computer Corp. 1,236,900
------------------------------------------------------------------
26,300 (b) Digital Equipment Corp. 775,850
------------------------------------------------------------------
8,000 EG & G, Inc. 141,000
------------------------------------------------------------------
39,200 (b) EMC Corp. Mass 1,029,000
------------------------------------------------------------------
37,900 First Data Corp., Class 3,022,525
------------------------------------------------------------------
10,620 General Dynamics Corp. 728,797
------------------------------------------------------------------
23,200 General Instrument Corp. 466,900
------------------------------------------------------------------
6,600 Harris Corp. 413,325
------------------------------------------------------------------
173,100 Hewlett-Packard Co. 7,638,037
------------------------------------------------------------------
139,200 Intel Corp. 15,294,600
------------------------------------------------------------------
8,000 (b) Intergraph Corp. 75,000
------------------------------------------------------------------
89,300 International Business Machines Corp. 11,519,700
------------------------------------------------------------------
23,100 (b) LSI Logic Corp. 612,150
------------------------------------------------------------------
33,888 Lockheed Martin Corp. 3,037,212
------------------------------------------------------------------
108,267 Lucent Technologies, Inc. 5,088,549
------------------------------------------------------------------
12,600 Mallinckrodt, Inc. 548,100
------------------------------------------------------------------
36,400 McDonnell-Douglas Corp. 1,983,800
------------------------------------------------------------------
35,300 Micron Technology, Inc. 895,738
------------------------------------------------------------------
101,300 (b) Microsoft Corp. 13,903,425
------------------------------------------------------------------
100,300 Motorola, Inc. 4,613,800
------------------------------------------------------------------
23,400 (b) National Semiconductor Corp. 450,450
------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------ ------------
(A) COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
<C> <C> <S> <C>
TECHNOLOGY--CONTINUED
------------------------------------------------------------------
43,700 Northern Telecom Ltd. $ 2,845,963
------------------------------------------------------------------
9,800 Northrop Corp. 791,350
------------------------------------------------------------------
59,800 (b) Novell, Inc. 553,150
------------------------------------------------------------------
110,750 Oracle Corp. 4,686,109
------------------------------------------------------------------
7,400 Perkin-Elmer Corp. 396,825
------------------------------------------------------------------
40,000 Raytheon Co. 1,970,000
------------------------------------------------------------------
37,000 Rockwell International Corp. 2,035,000
------------------------------------------------------------------
13,000 Scientific-Atlanta, Inc. 188,500
------------------------------------------------------------------
17,800 (b) Seagate Technology, Inc. 1,188,150
------------------------------------------------------------------
29,200 (b) Silicon Graphics, Inc. 540,200
------------------------------------------------------------------
31,200 (b) Sun Microsystems, Inc. 1,903,200
------------------------------------------------------------------
19,900 (b) Tandem Computers, Inc. 251,238
------------------------------------------------------------------
5,600 Tektronix, Inc. 219,100
------------------------------------------------------------------
15,100 (b) Tellabs, Inc. 1,285,388
------------------------------------------------------------------
32,100 Texas Instruments, Inc. 1,544,813
------------------------------------------------------------------
29,400 (b) Unisys Corp. 183,750
------------------------------------------------------------------
20,600 United Technologies Corp. 2,652,250
------------------------------------------------------------------ ------------
Total 127,087,643
------------------------------------------------------------------ ------------
TRANSPORTATION--1.4%
------------------------------------------------------------------
15,400 (b) AMR Corp. 1,293,600
------------------------------------------------------------------
25,911 Burlington Northern Santa Fe 2,134,419
------------------------------------------------------------------
35,800 CSX Corp. 1,543,875
------------------------------------------------------------------
6,600 (b) Caliber System, Inc. 111,375
------------------------------------------------------------------
7,500 Consolidated Freightways, Inc. 180,000
------------------------------------------------------------------
13,700 Consolidated Rail Corp. 1,303,212
------------------------------------------------------------------
13,400 Delta Air Lines, Inc. 949,725
------------------------------------------------------------------
9,600 (b) Federal Express Corp. 772,800
------------------------------------------------------------------
21,300 Norfolk Southern Corp. 1,898,363
------------------------------------------------------------------
24,500 Southwest Airlines Co. 551,250
------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------ ------------
(A) COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
<C> <C> <S> <C>
TRANSPORTATION--CONTINUED
------------------------------------------------------------------
10,800 (b) USAir Group, Inc. $ 187,650
------------------------------------------------------------------
41,200 Union Pacific Corp. 2,312,350
------------------------------------------------------------------
4,800 Yellow Corp. 62,700
------------------------------------------------------------------ ------------
Total 13,301,319
------------------------------------------------------------------ ------------
UTILITIES--9.9%
------------------------------------------------------------------
272,978 AT&T Corp. 9,520,108
------------------------------------------------------------------
84,500 Airtouch Communications, Inc. 2,207,562
------------------------------------------------------------------
32,100 Alltel Corp. 979,050
------------------------------------------------------------------
31,700 American Electric Power Co., Inc. 1,315,550
------------------------------------------------------------------
93,000 Ameritech Corp. 5,091,750
------------------------------------------------------------------
24,950 Baltimore Gas & Electric Co. 679,887
------------------------------------------------------------------
74,100 Bell Atlantic Corp. 4,464,525
------------------------------------------------------------------
168,300 BellSouth Corp. 6,858,225
------------------------------------------------------------------
25,700 Carolina Power & Light Co. 928,412
------------------------------------------------------------------
35,600 Central & SouthWest Corp. 943,400
------------------------------------------------------------------
26,740 Cinergy Corp. 885,762
------------------------------------------------------------------
17,900 Coastal Corp. 769,700
------------------------------------------------------------------
9,300 (b) Columbia Gas System, Inc. 564,975
------------------------------------------------------------------
39,550 Comcast Corp., Class A 583,362
------------------------------------------------------------------
39,800 Consolidated Edison Co. 1,164,150
------------------------------------------------------------------
16,000 Consolidated Natural Gas Co. 850,000
------------------------------------------------------------------
24,600 DTE Energy Co. 741,075
------------------------------------------------------------------
30,150 Dominion Resources, Inc. 1,138,162
------------------------------------------------------------------
34,300 Duke Power Co. 1,676,412
------------------------------------------------------------------
3,400 Eastern Enterprises 130,900
------------------------------------------------------------------
74,200 Edison International 1,465,450
------------------------------------------------------------------
42,900 Enron Corp. 1,994,850
------------------------------------------------------------------
11,700 Enserch Corp. 251,550
------------------------------------------------------------------
38,600 Entergy Corp. 1,080,800
------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ------------------------------------------------------------------ ------------
(A) COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
<C> <S> <C>
UTILITIES--CONTINUED
------------------------------------------------------------------
31,000 FPL Group, Inc. $ 1,426,000
------------------------------------------------------------------
20,400 GPU, Inc. 670,650
------------------------------------------------------------------
163,800 GTE Corp. 6,900,075
------------------------------------------------------------------
44,500 Houston Industries, Inc. 1,017,938
------------------------------------------------------------------
116,400 MCI Communications Corp. 2,924,550
------------------------------------------------------------------
8,500 NICOR, Inc. 296,438
------------------------------------------------------------------
74,200 NYNEX Corp. 3,301,900
------------------------------------------------------------------
24,400 Niagara Mohawk Power Corp. 207,400
------------------------------------------------------------------
23,200 Noram Energy Corp. 356,700
------------------------------------------------------------------
11,600 Northern States Power Co. 545,200
------------------------------------------------------------------
25,800 Ohio Edison Co. 538,575
------------------------------------------------------------------
4,600 Oneok, Inc. 123,625
------------------------------------------------------------------
27,300 P P & L Resources, Inc. 638,138
------------------------------------------------------------------
14,400 Pacific Enterprises 442,800
------------------------------------------------------------------
70,400 Pacific Gas & Electric Co. 1,654,400
------------------------------------------------------------------
72,500 Pacific Telesis Group 2,465,000
------------------------------------------------------------------
49,800 Pacificorp 1,052,025
------------------------------------------------------------------
25,600 Panenergy Corp. 985,600
------------------------------------------------------------------
37,700 Peco Energy Co. 951,925
------------------------------------------------------------------
5,900 Peoples Energy Corp. 207,975
------------------------------------------------------------------
41,400 Public Service Enterprises Group, Inc. 1,112,625
------------------------------------------------------------------
103,100 SBC Communications, Inc. 5,013,238
------------------------------------------------------------------
14,600 Sonat, Inc. 719,050
------------------------------------------------------------------
114,000 Southern Co. 2,522,250
------------------------------------------------------------------
72,900 Sprint Corp. 2,861,325
------------------------------------------------------------------
110,500 (b) Tele-Communications, Inc., Class A 1,374,344
------------------------------------------------------------------
38,000 Texas Utilities Co. 1,539,000
------------------------------------------------------------------
80,900 U.S. West, Inc. 2,457,338
------------------------------------------------------------------
36,500 Unicom Corp. 949,000
------------------------------------------------------------------
</TABLE>
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ------------------------------------------------------------------- ------------
<C> <C> <S> <C>
(A) COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
UTILITIES--CONTINUED
-------------------------------------------------------------------
17,300 Union Electric Co. $ 668,213
-------------------------------------------------------------------
17,800 Williams Cos., Inc. (The) 930,050
-------------------------------------------------------------------
65,700 (b) WorldCom, Inc. 1,601,438
------------------------------------------------------------------- ------------
Total 94,740,402
------------------------------------------------------------------- ------------
</TABLE>
<TABLE>
<C> <C> <S> <C>
TOTAL COMMON STOCKS (IDENTIFIED COST $716,745,029) 903,527,629
------------------------------------------------------------------- ------------
</TABLE>
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ----------- ------------------------------------------------------------------- ------------
<C> <C> <S> <C>
PREFERRED STOCKS--0.0%
- --------------------------------------------------------------------------------------
HEALTH CARE--0.0%
-------------------------------------------------------------------
16,600 Fresenius Medical Care, Pfd. (identified cost $2,158) $ 2,158
------------------------------------------------------------------- ------------
(C) SHORT-TERM U.S. GOVERNMENT OBLIGATIONS--0.3%
- --------------------------------------------------------------------------------------
$ 3,000,000 United States Treasury Bill, 12/12/1996 (at amortized cost) 2,983,710
------------------------------------------------------------------- ------------
(D) REPURCHASE AGREEMENT--4.9%
- --------------------------------------------------------------------------------------
47,060,000 BT Securities Corporation, 5.55%, dated 10/31/1996, due 11/1/1996
(at amortized cost) 47,060,000
------------------------------------------------------------------- ------------
TOTAL INVESTMENTS (IDENTIFIED COST $766,790,897)(E) $953,573,497
------------------------------------------------------------------- ------------
</TABLE>
(a) 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 $54,288,225 at October 31, 1996, which
represents 5.7% of net assets. Taking into consideration these open Index
futures contracts, the Fund's effective total exposure to the Index is
99.9%.
(b) Non-income producing security.
(c) Represents a security held as collateral which is used to ensure the Fund is
able to satisfy the obligations of its outstanding long future contracts.
(d) 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.
(e) The cost of investments for federal tax purposes amounts to $770,852,500.
The net unrealized appreciation of investments on a federal tax basis
amounts to $182,720,997 which is comprised of $200,408,679 appreciation and
$17,687,682 depreciation at October 31, 1996.
Note: The categories of investments are shown as a percentage of net assets
($958,871,268) at October 31, 1996.
The following acronym is used throughout this portfolio:
ADR--American Depositary Receipt
(See Notes which are an integral part of the Financial Statements)
FEDERATED MAX-CAP FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -----------------------------------------------------------------------------------
Total investments in securities, at value
(identified cost $766,790,897 and tax cost, $770,852,500) $953,573,497
- -----------------------------------------------------------------------------------
Income receivable 1,288,713
- -----------------------------------------------------------------------------------
Receivable for shares sold 6,581,722
- -----------------------------------------------------------------------------------
Receivable for daily variation margin 506,325
- -----------------------------------------------------------------------------------
Deferred expenses 250
- ----------------------------------------------------------------------------------- ------------
Total assets 961,950,507
- -----------------------------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------------------------
Payable for shares redeemed $2,194,180
- ----------------------------------------------------------------------
Payable to Bank 732,363
- ----------------------------------------------------------------------
Accrued expenses 155,996
- ---------------------------------------------------------------------- ----------
Total liabilities 3,082,539
- ----------------------------------------------------------------------------------- ------------
Net Assets for 61,910,559 shares outstanding $958,867,968
- ----------------------------------------------------------------------------------- ------------
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------
Paid in capital $758,324,717
- -----------------------------------------------------------------------------------
Net unrealized appreciation of investments and futures contracts 187,890,281
- -----------------------------------------------------------------------------------
Accumulated net realized gain on investments and futures contracts 10,050,910
- -----------------------------------------------------------------------------------
Undistributed net investment income 2,602,060
- ----------------------------------------------------------------------------------- ------------
Total Net Assets $958,867,968
- ----------------------------------------------------------------------------------- ------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- -----------------------------------------------------------------------------------
INSTITUTIONAL SHARES:
- -----------------------------------------------------------------------------------
$900,127,417 / 58,112,325 shares outstanding $15.49
- ----------------------------------------------------------------------------------- ------------
INSTITUTIONAL SERVICE SHARES:
- -----------------------------------------------------------------------------------
$58,740,551 / 3,798,234 shares outstanding $15.47
- ----------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
36
FEDERATED MAX-CAP FUND
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Dividends $ 16,176,146
- ---------------------------------------------------------------------------------------------------
Interest 3,870,897
- --------------------------------------------------------------------------------------------------- -----------
Total income 20,047,043
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------------------------
Management fee $ 2,312,405
- ------------------------------------------------------------------------------------
Custodian fees 115,427
- ------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 110,497
- ------------------------------------------------------------------------------------
Directors'/Trustees' fees 11,183
- ------------------------------------------------------------------------------------
Auditing fees 14,061
- ------------------------------------------------------------------------------------
Legal fees 7,471
- ------------------------------------------------------------------------------------
Portfolio accounting fees 129,749
- ------------------------------------------------------------------------------------
Distribution services fee--Institutional Service Shares 128,016
- ------------------------------------------------------------------------------------
Shareholder services fee--Institutional Shares 1,820,325
- ------------------------------------------------------------------------------------
Shareholder services fee--Institutional Service Shares 106,680
- ------------------------------------------------------------------------------------
Share registration costs 103,533
- ------------------------------------------------------------------------------------
Printing and postage 51,744
- ------------------------------------------------------------------------------------
Insurance premiums 10,215
- ------------------------------------------------------------------------------------
Taxes 43,743
- ------------------------------------------------------------------------------------
Miscellaneous 3,788
- ------------------------------------------------------------------------------------ ----------
Total expenses 4,968,837
- ------------------------------------------------------------------------------------
Waivers--
- ------------------------------------------------------------------------------------
Waiver of Management fee $ (490,571)
- ----------------------------------------------------------------------
Waiver of distribution services fee--Institutional Service Shares (99,098)
- ----------------------------------------------------------------------
Waiver of shareholder services fee--Institutional Shares (1,820,325)
- ----------------------------------------------------------------------
Waiver of shareholder services fee--Institutional Service Shares (7,582)
- ---------------------------------------------------------------------- ----------
Total waivers (2,417,576)
- ------------------------------------------------------------------------------------ ----------
Net expenses 2,551,261
- --------------------------------------------------------------------------------------------------- -----------
Net investment income 17,495,782
- --------------------------------------------------------------------------------------------------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES CONTRACTS:
- ---------------------------------------------------------------------------------------------------
Net realized gain on investments and future contracts 13,947,611
- ---------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments and futures contracts 134,550,523
- --------------------------------------------------------------------------------------------------- -----------
Net realized and unrealized gain on investments and futures contracts 148,498,134
- --------------------------------------------------------------------------------------------------- -----------
Change in net assets resulting from operations $165,993,916
- --------------------------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MAX-CAP FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
------------------------------
1996 1995
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------------------------------------
OPERATIONS--
- ------------------------------------------------------------------
Net investment income $ 17,495,782 $ 16,679,223
- ------------------------------------------------------------------
Net realized gain (loss) on investments and futures contracts
($14,649,222 and $103,347,377 net gains, respectively, as computed
for federal tax purposes) 13,947,611 99,787,657
- ------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 134,550,523 21,104,700
- ------------------------------------------------------------------ ------------- -------------
Change in net assets resulting from operations 165,993,916 137,571,580
- ------------------------------------------------------------------ ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ------------------------------------------------------------------
Distributions from net investment income
- ------------------------------------------------------------------
Institutional Shares (17,109,255) (14,071,338)
- ------------------------------------------------------------------
Institutional Service Shares (847,955) (505,602)
- ------------------------------------------------------------------
Distributions from net realized gains on investments and futures
contracts
- ------------------------------------------------------------------
Institutional Shares (98,597,371) (729,209)
- ------------------------------------------------------------------
Institutional Service Shares (4,696,377) (14,188)
- ------------------------------------------------------------------ ------------- -------------
Change in net assets resulting from distributions to
shareholders (121,250,958) (15,320,337)
- ------------------------------------------------------------------ ------------- -------------
SHARE TRANSACTIONS--
- ------------------------------------------------------------------
Proceeds from sale of shares 680,420,450 374,533,702
- ------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 65,168,316 6,003,498
- ------------------------------------------------------------------
Cost of shares redeemed (545,896,207) (240,788,349)
- ------------------------------------------------------------------ ------------- -------------
Change in net assets resulting from share transactions 199,692,559 139,748,851
- ------------------------------------------------------------------ ------------- -------------
Change in net assets 244,435,517 262,000,094
- ------------------------------------------------------------------
NET ASSETS:
- ------------------------------------------------------------------
Beginning of period 714,432,451 452,432,357
- ------------------------------------------------------------------ ------------- -------------
End of period (including undistributed net investment income of
$2,602,060 and $3,063,488, respectively) $ 958,867,968 $ 714,432,451
- ------------------------------------------------------------------ ------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MAX-CAP FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
(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 portfolios. The financial statements
included herein are only those of Federated Max-Cap Fund (the "Fund"), a
diversified portfolio. The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held. The
Fund offers two classes of shares: Institutional Shares and Institutional
Service Shares. (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.)
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--Listed equity securities are valued at the last sale
price reported on a national securities exchange. Short-term securities are
valued at the prices provided by an independent pricing service. However,
short-term securities with remaining maturities of sixty days or less at
the time of purchase may be valued at amortized cost, which approximates
fair market value.
REPURCHASE AND REVERSE REPURCHASE AGREEMENTS--It is the policy of the Fund
to require the custodian bank or broker 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 guidelines and/or
standards reviewed or established by the Trustees. Risks may arise from the
potential inability of counterparties to honor the terms of these
agreements. 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
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
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 over a period not to exceed 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 index futures contract with a broker, the
Fund is required to deposit in a segregated account a specified 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. For the period ended
October 31, 1996, the Fund had realized gains of $12,785,868 on futures
contracts.
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. At October 31, 1996, 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 1996 153 S&P 500 Index Futures Long $1,107,681
</TABLE>
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
FEDERATED MAX-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) for each
class of shares.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
1996 1995
---------------------------- ----------------------------
INSTITUTIONAL SHARES SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold 42,819,916 $ 622,123,488 26,132,335 $ 343,592,917
- ---------------------------------------------
Shares issued to shareholders in
payment of distributions declared 4,444,520 60,563,340 420,935 5,512,947
- ---------------------------------------------
Shares redeemed (35,228,936) (503,599,044) (17,407,051) (230,818,438)
- --------------------------------------------- ----------- ------------- ----------- -------------
Net change resulting from Institutional
Share transactions 12,035,500 $ 179,087,784 9,146,219 $ 118,287,426
- --------------------------------------------- ----------- ------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
1996 1995
---------------------------- ----------------------------
INSTITUTIONAL SERVICE SHARES SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold 4,027,604 $ 58,296,962 2,368,216 $ 30,940,785
- ---------------------------------------------
Shares issued to shareholders in
payment of distributions declared 337,876 4,604,976 36,486 490,551
- ---------------------------------------------
Shares redeemed (2,957,950) (42,297,163) (730,897) (9,969,911)
- --------------------------------------------- ----------- ------------- ----------- -------------
Net change resulting from Institutional
Service Shares transactions 1,407,530 $ 20,604,775 1,673,805 $ 21,461,425
- --------------------------------------------- ----------- ------------- ----------- -------------
Net change resulting from fund share
transactions 13,443,030 $ 199,692,559 10,820,024 $ 139,748,851
- --------------------------------------------- ----------- ------------- ----------- -------------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEE--Federated Management, the Fund's manger (the "Manager"),
receives for its services an annual management fee equal to 0.30% 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 a management fee based on the average daily net assets
of the Fund as follows: 0.05% on the first $100 million, 0.02% on the next $100
million, and 0.01% thereafter. The Manager may voluntarily choose to waive any
portion of its fee. 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 0.25%
of average daily net assets of the Fund for
FEDERATED MAX-CAP FUND
- --------------------------------------------------------------------------------
the period. The fee paid to FSS is used to finance certain services for
shareholders and to maintain shareholder accounts. FSS may voluntarily choose to
waive any portion of its fee. Federated Shareholder Services can modify or
terminate this voluntary waiver at any time at its sole discretion. For the
fiscal year ended October 31, 1996 Institutional Shares fully waived its
shareholder service 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 0.30% of the average daily net assets of the
Institutional Service Shares, annually, to compensate FSC. FSC may voluntarily
choose to waive a portion of its fee. FSC can modify or terminate this voluntary
waiver at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services
Company ("FServ"), through its subsidiary, Federated Shareholder Services
Company ("FSSC") serves as transfer and dividend disbursing agent for the Fund.
The fee paid to FSSC is based on the size, type, and number of accounts and
transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Trust's accounting records for
which it receives a fee. The fee is based on the level of the Trust's average
daily net assets for the period, plus out-of-pocket expenses.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended October 31, 1996, were as follows:
<TABLE>
<S> <C>
- ----------------------------------------------------------------------------------
PURCHASES $203,364,802
- ---------------------------------------------------------------------------------- ------------
SALES $ 19,949,485
- ---------------------------------------------------------------------------------- ------------
</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, 1996, 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. 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, 1996, 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, 1996, 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 16, 1996
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 Shareholder Services P.O. Box 8600
Company 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, 1996
LOGO
Cusip 31420E403
0032104A-SS (12/96)
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, 1996. 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 1-800-341-7400.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Statement dated December 31, 1996
[LOGO]
Federated Securities Corp. is the distributor of the Funds
and is a subsidiary of Federated Investors.
Cusip 31420E106
Cusip 31420E403
0032104B (12/96)
GENERAL INFORMATION ABOUT THE FUND 1
INVESTMENT OBJECTIVE AND POLICIES 1
Types of Investments 1
When-Issued and Delayed Delivery Transactions 3
Lending of Portfolio Securities 3
Reverse Repurchase Agreements 3
Portfolio Turnover 3
INVESTMENT LIMITATIONS 3
FEDERATED INDEX TRUST MANAGEMENT 6
Fund Ownership 10
Trustees' Compensation 11
Trustee Liability 12
MANAGEMENT SERVICES 12
Managers to the Fund 12
Management Fees 12
Other Related Services 12
BROKERAGE TRANSACTIONS 13
OTHER SERVICES 13
Custodian and Portfolio Accountant 13
Transfer Agent 13
Independent Auditors 13
PURCHASING SHARES 13
Distribution Plan (Institutional Service Shares)
and Shareholder Services 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 15
TAX STATUS 15
The Fund's Tax Status 15
Shareholders' Tax Status 15
Capital Gains 15
TOTAL RETURN 15
YIELD 16
PERFORMANCE COMPARISONS 16
Economic and Market Information 17
ABOUT FEDERATED INVESTORS 17
STANDARD & POOR'S RATINGS GROUP 18
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 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;
oFederal 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, 1996 and October 31, 1995, the portfolio turnover rates for the
Fund were 3% and 57%, 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.
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 not determined
by the Trustees to be liquid and repurchase agreements providing for
settlement more than seven days after notice.
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 or Trustee of the
Funds.
Thomas G. Bigley
28th Floor, One Oxford Centre
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Chairman of the Board, Children's Hospital of Pittsburgh; formerly, Senior
Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc.; Trustee,
University of Pittsburgh; Director or Trustee of the Funds.
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; Partner or Trustee in private real
estate ventures in Southwest Florida; formerly, President, Naples Property
Management, Inc. and Northgate Village Development Corporation; Director or
Trustee of the Funds.
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.;
formerly, Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp.;
Director, Ryan Homes, Inc.; Director or Trustee of the Funds.
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 Shareholder Services Company, and
Federated Shareholder Services; Director, Federated Services Company;
President or Executive Vice President of the Funds; Director or Trustee of
some of the Funds. Mr. Donahue is the son of John F. Donahue, Chairman and
Trustee of the Company.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Trustee of the
Funds.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine, 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
or Trustee of the Funds.
Edward L. Flaherty, Jr.@
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney of Counsel, Miller, Ament, Henny & Kochuba; Director, Eat'N Park
Restaurants, Inc.; formerly, Counsel, Horizon Financial, F.A., Western
Region; Director or Trustee of the Funds.
Peter E. Madden
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL
Birthdate: March 16, 1942
Trustee
Consultant; Former State Representative, Commonwealth of Massachusetts;
formerly, President, State Street Bank and Trust Company and State Street
Boston Corporation; Director or Trustee of the Funds.
Gregor F. Meyer
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee
Attorney, Member of Miller, Ament, Henny & Kochuba; Chairman, Meritcare,
Inc.; Director, Eat'N Park Restaurants, Inc.; Director or Trustee 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 or Trustee of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, International Politics; Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer
Library Center, Inc., National Defense University, U.S. Space Foundation
and Czech Management Center; President Emeritus, University of Pittsburgh;
Founding Chairman, National Advisory Council for Environmental Policy and
Technology, Federal Emergency Management Advisory Board and Czech
Management Center; Director or Trustee of the Funds.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public relations/Marketing/Conference Planning, Manchester Craftsmen's
Guild; Restaurant Consultant, Frick Art & History Center; Conference
Coordinator, University of Pittsburgh Art History Department; Director or
Trustee 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.
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 Shareholder Services Company; Trustee or Director of
some of the Funds; President, Executive Vice President and Treasurer of
some of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President , Secretary and Treasurer
Executive Vice President, Secretary, and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management, and Federated Research;
Director, Federated Research Corp. and Federated Global Research Corp.;
Trustee, Federated Shareholder Services Company; Director, Federated
Services Company; President and Trustee, Federated Shareholder Services;
Director, Federated Securities Corp.; Executive Vice President and
Secretary of the Funds; Treasurer of some 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.
*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
Board of Trustees handles the responsibilities of the Board between
meetings of the Board.
As used in the table above, "The Funds" and "Funds" mean the following
investment companies: 111 Corcoran Funds; Annuity Management Series; Arrow
Funds; Automated Government Money Trust; Blanchard Funds; Blanchard
Precious Metals Fund, Inc.; Cash Trust Series II; Cash Trust Series, Inc. ;
DG Investor Series; Edward D. Jones & Co. Daily Passport Cash Trust;
Federated Adjustable Rate U.S. Government Fund, Inc.; Federated American
Leaders Fund, Inc.; Federated ARMs Fund; Federated Equity Funds; Federated
Equity Income Fund, Inc.; Federated Fund for U.S. Government Securities,
Inc.; Federated GNMA Trust; Federated Government Income Securities, Inc.;
Federated Government Trust; Federated High Income Bond Fund, Inc.;
Federated High Yield Trust; Federated Income Securities Trust; Federated
Income Trust; Federated Index Trust; Federated Institutional Trust;
Federated Insurance Series; Federated Investment Portfolios; Federated
Investment Trust; Federated Master Trust; Federated Municipal Opportunities
Fund, Inc.; Federated Municipal Securities Fund, Inc.; Federated Municipal
Trust; Federated Short-Term Municipal Trust; Federated Short-Term U.S.
Government Trust; Federated Stock and Bond Fund, Inc.; 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: 2-5 Years;
Federated U.S. Government Securities Fund: 5-10 Years; Federated Utility
Fund, Inc.; First Priority Funds; Fixed Income Securities, Inc.; High Yield
Cash Trust; Intermediate Municipal Trust; International Series, Inc.;
Investment Series Funds, Inc.; Investment Series Trust; Liberty Term
Trust, Inc. - 1999; Liberty U.S. Government Money Market Trust; Liquid Cash
Trust; Managed Series Trust; Money Market Management, Inc.; Money Market
Obligations Trust; Money Market Trust; Municipal Securities Income Trust;
Newpoint Funds; Peachtree Funds; RIMCO Monument Funds; Targeted Duration
Trust; Tax-Free Instruments Trust; The Planters Funds; The Starburst Funds;
The Starburst Funds II; The Virtus Funds; Trust for Financial Institutions;
Trust for Government Cash Reserves; Trust for Short-Term U.S. Government
Securities; Trust for U.S. Treasury Obligations; and World Investment
Series, Inc.
FUND OWNERSHIP
Officers and Trustees own less than 1% of the Fund's outstanding shares.
As of December 4, 1996, the following shareholders of record owned 5% or
more of the Institutional Shares of the Fund: Mitra & Co., Milwaukee, WI,
owned approximately 7,051,213 shares (12.23%); and Union Planters National
Bank, Memphis, TN, owned approximately 6,714,086 shares (11.65%).
As of December 4, 1996, the following shareholders of record owned 5% or
more of the Institutional Service Shares of the Fund: Texas Commerce Bank
as Trustee for Defined Contribution Plans, Houston, TX, owned approximately
513,717 shares (11.61%); Dubuque Bank & Trust Company, Dubuque, IA, owned
approximately 262,937 shares (5.94%); Community First National Bank RPO
Community First Bankshares, Fargo, ND, owned approximately 352,791 shares
(7.97%); and Federated Bank & Trust Trustee RPO Beneficial Life Insurance
Co., Pittsburgh, PA, owned approximately 245,168 shares (5.54%).
TRUSTEES' COMPENSATION
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
TRUST TRUST*# FROM FUND COMPLEX +
John F. Donahue $ -0- $-0- for the Trust and
Chairman and Trustee 54 other investment companies in
the Fund Complex
J. Christopher Donahue$ -0- $-0- for the Trust and
Executive Vice President 16 other investment companies
in the Fund andTrustee Complex
Thomas G. Bigley++ $1,853.85 $86,331 for the Trust and
Trustee 54 other investment companies in
the Fund Complex
John T. Conroy, Jr. $2,025.23 $115,760 for the Trust and
Trustee 54 other investment companies in
the Fund Complex
William J. Copeland $2,025.23 $115,760 for the Trust and
Trustee 54 other investment companies in
the Fund Complex
James E. Dowd $2,025.23 $115,760 for the Trust and
Trustee 54 other investment companies in
the Fund Complex
Lawrence D. Ellis, M.D. $1,853.85 $104,898 for the Trust
and
Trustee 54 other investment companies in
the Fund Complex
Edward L. Flaherty, Jr. $2,025.23 $115,760 for the Trust
and
Trustee 54 other investment companies in
the Fund Complex
Peter E. Madden $1,853.85 $104,898 for the Trust and
Trustee 54 other investment companies in
the Fund Complex
Gregor F. Meyer $1,853.85 $104,898 for the Trust and
Trustee 54 other investment companies in
the Fund Complex
John E. Murray, Jr. $1,853.85 $104,898 for the Trust and
Trustee 54 other investment companies in
the Fund Complex
TRUSTEES' COMPENSATION (CONT'D.)
Wesley W. Posvar $1,853.85 $104,898 for the Trust and
Trustee 54 other investment companies in
the Fund Complex
Marjorie P. Smuts $1,853.85 $104,898 for the Trust and
Trustee 54 other investment companies in
the Fund Complex
*Information is furnished for the fiscal year ended October 31, 1996.
#The aggregate compensation is provided for the Trust which is comprised of
three portfolios.
+The information is provided for the last calendar year.
++Mr. Bigley served on 39 investment companies in the Federated Funds
Complex from January 1 through September 30, 1995. On October 1, 1995, he
was appointed a Trustee on 15 additional Federated Funds.
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 NBD 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, 1996, 1995 and 1994, the manager
earned $2,312,405, $1,727,669 and $1,287,529, respectively, of which
$490,571, $433,282 and $289,795, respectively, was voluntarily waived due
to undertakings to limit the Fund's expenses.
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, 1996, 1995 and 1994, the Fund
paid total brokerage commissions of $48,476, $35,334 and $20,905,
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 ACCOUNTANT
State Street Bank and Trust Company, Boston, Massachusetts, is custodian
for the securities and cash of the Fund. Federated Services Company,
Pittsburgh, Pennsylvania, provides certain accounting and recordkeeping
services with respect to the Funds's portfolio investments.
TRANSFER AGENT
Federated Services Company, through its registered transfer agent Federated
Shareholder 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
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 Plan (Institutional Service Shares only), 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, the
Fund may be able 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, 1996, the Fund paid shareholder
services fees in the amount of $1,820,325, all of which was waived, for
Institutional Shares.
For the fiscal year ended October 31, 1996, payment in the amount of
$128,016, of which $99,098 was waived, was made pursuant to the Plan for
Institutional Service Shares. In addition, the Fund paid shareholder
services fees in the amount of $106,680, of which $7,582 was waived 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, five-year periods ended October 31, 1996 and for the period from
July 2, 1990 (date of initial public investment) to October 31, 1996 was
23.71%, 15.12% and 14.40%, respectively.
The Fund's average annual total return for Institutional Service Shares for
the one-year period ended October 31, 1996 and for the period from
September 6, 1993 (date of initial public investment) to October 31, 1996
was 23.39% and 16.72%, 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, 1996, were
1.95% and 1.66%, 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.
Advertising and other promotional literature may include charts, graphs or
other illustrations using the Fund's returns, or returns in general, that
demonstrate basic investment concepts such as tax-deferred compounding,
dollar-cost averaging and systematic investment. In addition, the Fund can
compare its performance, or performance for the types of securities in
which it invests, to a variety of other investments, such as bank savings
accounts, certificates of deposit, and Treasury bills.
ECONOMIC AND MARKET INFORMATION
Advertising and sales literature for the Fund may include discussions of
economic, financial and political developments and their effect on the
securities market. Such discussions may take the form of commentary on
these developments by Fund portfolio managers and their views and analysis
on how such developments could affect the Funds. In addition, advertising
and sales literature may quote statistics and give general information
about the mutual fund industry, including the growth of the industry, from
sources such as the Investment Company Institute.
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. The traders
handle trillions of dollars in annual trading volume.
In the equity sector, Federated Investors has more than 25 years'
experience. As of December 31, 1995, Federated Investors managed 22 equity
funds totaling approximately $5.4 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 $3 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. Federated's service to
financial professionals and institutions has earned it high ratings in
several surveys performed by DALBAR, Inc. DALBAR is recognized as the
industry benchmark for service quality measurement. 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.
FEDERATED MAX-CAP FUND
(INSTITUTIONAL SHARES)
- --------------------------------------------------------------------------------
ANNUAL REPORT FOR FISCAL YEAR ENDED OCTOBER 31, 1996
MANAGEMENT DISCUSSION AND ANALYSIS
---------------------------------------------------------------------------
The fund's total return for the 12 months ended October 31, 1996 was
23.71%.* The target index, the Standard & Poor's 500 Index (the "Index"),
had a total return of 24.10% during the period.** The fund's performance
lagged that of the Index due to transaction costs, administrative expenses,
and slight differences between the composition of the fund versus that of
the Index.
The stock market reached new highs during the last 12 months, despite
predictions by some analysts that the stock market has become overbought
and should decline. Investor confidence has apparently remained high due to
relatively stable interest rates and inflation, and strong corporate
earnings. Additional factors supporting the market have been stock
buybacks, purchases by foreign investors, strong cash flows into equity
mutual funds and expectations of stable government policy after the recent
elections.
During the fund's fiscal year the strongest performing sectors in the
Index were energy, finance and technology, while trucking,
telecommunications and steel were among the worst performing sectors in the
Index.
* Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
** Standard and Poor's 500 Index is an unmanaged index consisting of 500
common stocks of the nation's largest corporations. Actual investments
cannot be made in an index. The Max-Cap Fund seeks investment results
that correspond to the aggregate price and total return performance of
the Standard & Poor's Composite Stock Index, "Standard & Poor's(R),"
"S&P(R)," "S&P 500 (R)," "Standard & Poor's 500" and "500" are
trademarks of Standard & Poor's Ratings Group ("S&P") and have been
licensed for use by Federated Securities Corp. The Fund is neither
affiliated with nor promoted, sponsored, sold, or endorsed by Standard &
Poor's Ratings Group. Its only relationship to the Fund is the licensing
of the use of the Index.
FEDERATED MAX-CAP FUND
(INSTITUTIONAL SHARES)
- --------------------------------------------------------------------------------
GROWTH OF $25,000 INVESTED IN FEDERATED MAX-CAP FUND
(INSTITUTIONAL SHARES)
The graph below illustrates the hypothetical investment of $25,000 in the
Federated Max-Cap Fund (Institutional Shares) (the "Fund") from July 11, 1990
(start of performance) to October 31, 1996, compared to the Standard and Poor's
500 Index (S&P 500).+
[`Graphic representation ``A1'' omitted. See Appendix.'']
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED OCTOBER 31, 1996
<TABLE>
<S> <C>
1 Year...................................................... 23.71%
5 Year...................................................... 15.12%
Start of Performance (7/11/90).............................. 14.40%
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
THIS REPORT MUST BE PRECEDED OR ACCOMPANIED BY THE FUND'S PROSPECTUS DATED
DECEMBER 31, 1996, AND, TOGETHER WITH FINANCIAL STATEMENTS CONTAINED THEREIN,
CONSTITUTES THE FUND'S ANNUAL REPORT.
* The Fund's performance assumes the reinvestment of all dividends and
distributions. The S&P 500 has been adjusted to reflect reinvestment of
dividends on securities in the index.
+ The S&P 500 is not adjusted to reflect sales charges, expenses, or other fees
that the SEC requires to be reflected in the Fund's performance. This index is
unmanaged.
FEDERATED INVESTORS
LOGO
Since 1955
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.
Cusip 31420E106
006685-IS (12/96)
FEDERATED MAX-CAP FUND
(INSTITUTIONAL SERVICE SHARES)
- --------------------------------------------------------------------------------
ANNUAL REPORT FOR FISCAL YEAR ENDED OCTOBER 31, 1996
MANAGEMENT DISCUSSION AND ANALYSIS
---------------------------------------------------------------------------
The fund's total return for the 12 months ended October 31, 1996 was
23.39%.* The target index, the Standard & Poor's 500 Index (the "Index"),
had a total return of 24.10% during the period.** The fund's performance
lagged that of the Index due to transaction costs, administrative expenses,
and slight differences between the composition of the fund versus that of
the Index.
The stock market reached new highs during the last 12 months, despite
predictions by some analysts that the stock market has become overbought
and should decline. Investor confidence has apparently remained high due to
relatively stable interest rates and inflation, and strong corporate
earnings. Additional factors supporting the market have been stock
buybacks, purchases by foreign investors, strong cash flows into equity
mutual funds and expectations of stable government policy after the recent
elections.
During the fund's fiscal year the strongest performing sectors in the
Index were energy, finance and technology, while trucking,
telecommunications and steel were among the worst performing sectors in the
Index.
* Performance quoted represents past performance and is not indicative of
future results. Investment return and principal value will fluctuate, so
that an investor's shares, when redeemed, may be worth more or less than
their original cost.
** Standard and Poor's 500 Index is an unmanaged index consisting of 500
common stocks of the nation's largest corporations. Actual investments
cannot be made in an index. The Max-Cap Fund seeks investment results
that correspond to the aggregate price and total return performance of
the Standard & Poor's Composite Stock Index. "Standard & Poor's(R),"
"S&P(R)," "S&P 500(R)," "Standard & Poor's 500" and "500" are trademarks
of Standard & Poor's Ratings Group ("S&P") and have been licensed for
use by Federated Securities Corp. The Fund is neither affiliated with
nor promoted, sponsored, sold, or endorsed by Standard & Poor's Ratings
Group. Its only relationship to the Fund is the licensing of the use of
the Index.
FEDERATED MAX-CAP FUND
(INSTITUTIONAL SERVICE SHARES)
- --------------------------------------------------------------------------------
GROWTH OF $25,000 INVESTED IN FEDERATED MAX-CAP FUND
(INSTITUTIONAL SERVICE SHARES)
The graph below illustrates the hypothetical investment of $25,000 in the
Federated Max-Cap Fund (Institutional Service Shares) (the "Fund") from
September 7, 1993 (start of performance) to October 31, 1996, compared to the
Standard and Poor's 500 Index (S&P 500).+
[`Graphic representation ``A2'' omitted. See Appendix.'']
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED OCTOBER 31, 1996
<TABLE>
<S> <C>
1 Year.......................................................... 23.39%
Start of Performance (9/7/93)................................... 16.72%
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
THIS REPORT MUST BE PRECEDED OR ACCOMPANIED BY THE FUND'S PROSPECTUS DATED
DECEMBER 31, 1996, AND, TOGETHER WITH FINANCIAL STATEMENTS CONTAINED THEREIN,
CONSTITUTES THE FUND'S ANNUAL REPORT.
* The Fund's performance assumes the reinvestment of all dividends and
distributions. The S&P 500 has been adjusted to reflect reinvestment of
dividends on securities in the index.
+ The S&P 500 is not adjusted to reflect sales charges, expenses, or other fees
that the SEC requires to be reflected in the Fund's performance. This index is
unmanaged.
FEDERATED INVESTORS
LOGO
Since 1955
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.
Cusip 31420E403
006685-SS (12/96)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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, 1996, with the Securities and Exchange Commission ("SEC"). 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 1-800-341-7400. To
obtain other information or to make inquiries about the Fund, contact the Fund
at the address listed in the back of this prospectus. The Statement of
Additional Information, material incorporated by reference into this document,
and other information regarding the Fund is maintained electronically with the
SEC at Internet Web site (http://www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
Prospectus dated December 31, 1996
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
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.......................................................12
Voting Rights...............................................................12
Tax Information...............................................................13
Federal Income Tax..........................................................13
State and Local Taxes.......................................................13
Performance Information.......................................................13
Financial Statements..........................................................14
Report of Ernst & Young LLP,
Independent Auditors........................................................38
Addresses.....................................................................39
SUMMARY OF FUND EXPENSES
FEDERATED MID-CAP FUND
<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)........................................................ 0.26%
12b-1 Fee................................................................................ None
Total Other Expenses..................................................................... 0.34%
Shareholder Services Fee (after waiver) (2)........................... 0.05%
Total Operating Expenses (3)........................................................ 0.60%
</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
0.40%.
(2) The shareholder services fee has been reduced to reflect the voluntary
waiver of a portion of the shareholder services fee. The shareholder service
provider can terminate this voluntary waiver at any time at its sole
discretion. The maximum shareholder services fee is 0.25%.
(3) The total operating expenses would have been 0.94% absent the voluntary
waivers of portions 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 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......................................... $6 $19 $33 $75
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
FEDERATED 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 38.
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
---------------------------------------------------
1996 1995 1994 1993 1992(A)
- -------------------------------------------- ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $12.78 $11.02 $11.57 $ 9.99 $10.00
- --------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------
Net investment income 0.18 0.22 0.21 0.25 0.080
- --------------------------------------------
Net realized and unrealized gain (loss)
on investments and futures contracts 1.73 1.93 (0.07) 1.56 (0.086)
- -------------------------------------------- ------ ------ ------ ------ ------
Total from investment operations 1.91 2.15 0.14 1.81 (0.006)
- -------------------------------------------- ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
- --------------------------------------------
Distributions from net investment income (0.20) (0.20) (0.19) (0.23) (0.004)
- --------------------------------------------
Distributions from net realized gain on
investments and futures contracts (0.74) (0.19) (0.50) -- --
- -------------------------------------------- ------ ------ ------ ------ ------
Total distributions (0.94) (0.39) (0.69) (0.23) (0.004)
- -------------------------------------------- ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $13.75 $12.78 $11.02 $11.57 $ 9.99
-----
- -------------------------------------------- ------ ------ ------ ------
TOTAL RETURN (B) 15.80% 20.12% 1.25% 17.33% 0.00%
- --------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------
Expenses 0.60% 0.60% 0.54% 0.00% 0.00%
- --------------------------------------------
Net investment income 1.31% 1.89% 1.84% 2.33% 0.93%*
- --------------------------------------------
Expense waiver/reimbursement (c) 0.34% 0.41% 0.59% 1.75% 0.40%*
- --------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------
Net assets, end of period (000 omitted) $59,948 $62,580 $44,012 $16,192 $3
- --------------------------------------------
Average commission rate paid $0.0432 -- -- -- --
- --------------------------------------------
Portfolio turnover 17% 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)
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-
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;
- - notes, bonds, and discount notes issued or guaranteed by U.S. government
agencies and instrumentalities supported by the full faith and credit of the
United States;
- - notes, bonds, and discount notes of U.S. government agencies or
instrumentalities which receive or have access to federal funding; and
- - notes, bonds, and discount notes of other U.S. government instrumentalities
supported only by the credit of the instrumentalities.
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 stock index futures contracts, subject to the
limitation that the value of these futures contracts and options will not exceed
20% of the Fund's total assets. Also, the Fund will not purchase options to the
extent that more than 5% of the value of the Fund's total assets would be
invested in premiums on open put option positions. These futures contracts and
options will be used to handle cash flows into and out of the Fund and to
potentially reduce transactional costs, since transactional costs associated
with futures and options contracts can be lower than costs stemming from direct
investments in stocks.
There are several risks accompanying the utilization of futures contracts to
effectively anticipate market transactions. First, positions in futures
contracts may be closed only on an exchange or board of trade that furnishes a
secondary market for such contracts. While the Fund plans to utilize futures
contracts only if there exists an active market for such contracts, there is no
guarantee that a liquid market will exist for the contracts at a specified time.
Furthermore, because, by definition, futures contracts look to projected price
levels in the future and not to current levels of valuation, market
circumstances may result in there being a discrepancy between the price of the
stock index future and the movement in the stock index. The absence of a perfect
price correlation between the futures contract and its underlying stock index
could stem from investors choosing to close futures contracts by offsetting
transactions, rather than satisfying additional margin requirements. This could
result in a distortion of the relationship between the index and futures market.
In addition, because the futures market imposes less burdensome margin
requirements than the securities market, an increased amount of participation by
speculators in the futures market could result in price fluctuations.
In view of these considerations, the Fund will comply with the following
restrictions when purchasing and selling futures contracts. First, the Fund will
not participate in futures transactions if the sum of its initial margin
deposits on open contracts will exceed 5% of the market value of the Fund's
total assets, after taking into account the unrealized profits and losses on
those contracts into which it has entered. Second, the Fund will not enter into
these contracts for speculative purposes. Third, since the Fund does not
constitute a commodity pool, it will not market itself as such, nor serve as a
vehicle for trading in the commodities futures or commodity options markets. In
this regard, the Fund will disclose to all prospective investors the limitations
on its futures and options transactions, and will make clear that these
transactions are entered into only for bona fide hedging purposes or such other
purposes permitted under regulations promulgated by the Commodity Futures
Trading Commission ("CFTC"). Also, the Fund intends to claim an exclusion from
registration as a commodity pool operator under the regulations promulgated by
the CFTC.
LENDING OF PORTFOLIO SECURITIES
The Fund may lend its portfolio securities on a short-term basis or long-term
basis up to one-
third of the value of its total assets to broker/dealers, banks, or other
institutional borrowers of securities. The Fund will only enter into loan
arrangements with broker/dealers, banks or other institutions which the managers
have determined are creditworthy under guidelines established by the Trustees.
The Fund will receive collateral in the form of cash or U.S. government
securities equal to at least 100% of the value of the securities loaned. 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.
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-
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 limitations cannot be changed without shareholder approval.
The following investment limitation, however, may be changed by the Trustees
without shareholder approval. Shareholders will be notified before any material
change in this policy becomes effective.
The Fund will not invest more than 15% of its net assets in securities that are
illiquid.
FEDERATED INDEX
TRUST INFORMATION
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES
The Trust is managed by 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 SubManager,
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 errors; 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 SubManager, custodian, transfer agent
and dividend disbursing agent. As described below, the Manager receives an
annual fee from the Fund for performing its responsibilities under the
Management Contract.
MANAGEMENT FEES. The Fund's Manager receives an annual management fee equal to
0.40% of 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.
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 $80 billion invested across more than 250 funds under management and/or
administration by its subsidiaries, as of December 31, 1995, Federated Investors
is one of the largest mutual fund investment managers in the United States. With
more than 1,800 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.
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 interests. 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.
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 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
NBD Corporation. It serves as investment adviser principally to corporate
defined benefit and defined contribution plans which have, as of June 30, 1996,
placed approximately $22.2 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 340 nationwide
non-financial institution clients invest. In total, ANB manages 79
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.
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.
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 .25% of the average daily net asset value of its shares,
computed at an annual rate, to obtain certain personal services for shareholders
and to maintain shareholder accounts. 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.
SUPPLEMENTAL PAYMENTS TO FINANCIAL
INSTITUTIONS
In addition to payments made pursuant to the Shareholder Services Agreement,
Federated Securities Corp. and Federated Shareholder Services, from their own
assets, may pay financial institutions supplemental fees for the performance of
substantial sales services, distribution-related support services, or
shareholder services. The support may include sponsoring sales, educational and
training seminars for their employees, providing sales literature, and
engineering computer software programs that emphasize the attributes of the
Fund. Such assistance will be predicated upon the amount of shares the financial
institution sells or may sell, and/or upon the type and nature of sales or
marketing support furnished by the financial institution. Any payments made by
the distributor may be reimbursed by the Fund's Manager or its affiliates.
FUND ADMINISTRATION
ADMINISTRATIVE SERVICES
Federated Services Company, 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.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the Managers look for prompt execution of the order at a favorable
price. In working with dealers, the Managers will generally utilize those who
are recognized dealers in specific portfolio instruments, except when a better
price and execution
of the order can be obtained elsewhere. In selecting among firms believed to
meet these criteria, the Managers may give consideration to those firms which
have sold or are selling shares of the Fund and other funds distributed by
Federated Securities Corp. The Managers make decisions on portfolio transactions
and select brokers and dealers, subject to review by the Trustees.
NET ASSET VALUE
The Fund's net asset value per share fluctuates. It is determined by dividing
the sum of the market value of all securities and other assets, less
liabilities, by the number of shares outstanding.
INVESTING IN THE FUND
SHARE PURCHASES
Fund shares are sold on days on which the New York Stock Exchange is open.
Shares of the Fund may be purchased either by wire or mail. To purchase shares
of the Fund, open an account by calling Federated Securities Corp. Information
needed to establish the account will be taken over the telephone. The Fund
reserves the right to reject any purchase request.
BY WIRE
To purchase shares of the Fund by Federal Reserve wire, call the Fund to place
an order. Shareholders have until 4:00 p.m. (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 Shareholder Services Company, c/o State Street Bank
and Trust Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit to:
Federated Index Trust, Federated Mid-Cap Fund; 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; and 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
Shareholder Services Company, P.O. Box 8600, Boston, Massachusetts 02266-8600.
Orders by mail are considered received when payment by check is converted into
federal funds. This is generally the next business day after the check is
received.
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. Investors who purchase
Fund shares through a financial intermediary may be charged a service fee by
that financial intermediary.
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 certain securities
and cash for shares of the Fund. The securities and any cash must have a market
value of at least $25,000. The Trust reserves the right to determine the
acceptability of securities to be exchanged. On the day securities are accepted
by the Trust, they are valued in the same manner as the Trust values its assets.
Investors wishing to exchange securities should first contact Federated
Securities Corp.
Shares purchased by exchange of securities cannot be redeemed by telephone for
five business days to allow time for the transfer to settle.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Shareholder 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. Investors who redeem shares through a financial
intermediary may be charged a service fee by that financial intermediary.
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. All owners of the
account must sign the request exactly as the shares are registered. If share
certificates have been issued, they should be sent unendorsed with the written
request by registered or certified mail.
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.
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 meet-
ing 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, Donnelly & Meck, 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 MID-CAP FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- --------------------------------------------------------------------- -----------
<C> <C> <S> <C>
*COMMON STOCKS--89.5%
- ----------------------------------------------------------------------------------------
BASIC INDUSTRY--6.9%
---------------------------------------------------------------------
5,500 (a) Airgas, Inc. $ 124,437
---------------------------------------------------------------------
2,600 Albany International Corp., Class A 58,500
---------------------------------------------------------------------
4,800 Albemarle Corp. 77,400
---------------------------------------------------------------------
3,800 (a) Alumax, Inc. 122,074
---------------------------------------------------------------------
2,300 Betz Laboratories, Inc. 120,750
---------------------------------------------------------------------
3,300 Bowater, Inc. 116,737
---------------------------------------------------------------------
1,400 Brush Wellman, Inc. 26,424
---------------------------------------------------------------------
5,200 (a) Burlington Industries, Inc. 59,150
---------------------------------------------------------------------
6,000 Cabot Corp. 144,750
---------------------------------------------------------------------
2,000 CalMat Co. 37,250
---------------------------------------------------------------------
3,400 Calgon Carbon Corp. 34,000
---------------------------------------------------------------------
1,400 Carpenter Technology Corp. 45,674
---------------------------------------------------------------------
2,000 Chesapeake Corp. 56,500
---------------------------------------------------------------------
1,000 Cleveland Cliffs, Inc. 41,000
---------------------------------------------------------------------
3,800 Consolidated Papers, Inc. 190,474
---------------------------------------------------------------------
6,100 Crompton and Knowles Corp. 109,800
---------------------------------------------------------------------
2,100 Dexter Corp. 65,100
---------------------------------------------------------------------
2,200 Donaldson Company, Inc. 64,350
---------------------------------------------------------------------
10,000 Ethyl Corp. 82,500
---------------------------------------------------------------------
2,400 Ferro Corp. 64,800
---------------------------------------------------------------------
1,200 Fuller (H.B.) Co. 50,100
---------------------------------------------------------------------
3,200 Georgia Gulf Corp. 86,400
---------------------------------------------------------------------
3,700 Glatfelter (P.H.) Co. 70,300
---------------------------------------------------------------------
4,500 Hanna (M.A.) Co. 95,624
---------------------------------------------------------------------
7,800 IMC Global, Inc. 292,500
---------------------------------------------------------------------
</TABLE>
FEDERATED MID-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- --------------------------------------------------------------------- -----------
*COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------
<C> <C> <S> <C>
BASIC INDUSTRY--CONTINUED
---------------------------------------------------------------------
3,800 Lawter International, Inc. $ 44,650
---------------------------------------------------------------------
2,700 Loctite Corp. 158,287
---------------------------------------------------------------------
4,400 Longview Fibre Co. 76,450
---------------------------------------------------------------------
5,300 Lubrizol Corp. 157,674
---------------------------------------------------------------------
1,200 Lukens, Inc. 16,500
---------------------------------------------------------------------
700 (a) Maxxam, Inc. 29,400
---------------------------------------------------------------------
1,900 Minerals Technologies, Inc. 74,574
---------------------------------------------------------------------
700 NCH, Corp. 39,025
---------------------------------------------------------------------
1,600 Oregon Steel Mills 25,400
---------------------------------------------------------------------
6,400 RPM, Inc. 107,200
---------------------------------------------------------------------
2,500 Rayonier, Inc. 99,063
---------------------------------------------------------------------
3,225 Schulman (A.), Inc. 68,128
---------------------------------------------------------------------
3,600 (a) Sealed Air Corp. 139,950
---------------------------------------------------------------------
7,685 Sonoco Products Co. 204,613
---------------------------------------------------------------------
1,500 Southdown, Inc. 41,063
---------------------------------------------------------------------
5,600 Unifi, Inc. 174,300
---------------------------------------------------------------------
3,000 Vulcan Materials Co. 182,250
---------------------------------------------------------------------
3,068 Wausau Paper Mills Co. 59,049
---------------------------------------------------------------------
2,800 Wellman, Inc. 49,700
---------------------------------------------------------------------
4,800 Witco Corp. 148,800
--------------------------------------------------------------------- -----------
Total 4,132,670
--------------------------------------------------------------------- -----------
CONSUMER DURABLES--2.8%
---------------------------------------------------------------------
1,900 Arvin Industries, Inc. 43,462
---------------------------------------------------------------------
5,800 Callaway Golf Co. 177,624
---------------------------------------------------------------------
1,300 Carlisle Cos., Inc. 73,937
---------------------------------------------------------------------
7,981 Clayton Homes, Inc. 134,678
---------------------------------------------------------------------
1,400 Cross (A.T.) Co., Class A 15,924
---------------------------------------------------------------------
</TABLE>
FEDERATED MID-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- --------------------------------------------------------------------- -----------
*COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------
<C> <C> <S> <C>
CONSUMER DURABLES--CONTINUED
---------------------------------------------------------------------
4,400 (a) Electronic Arts, Inc. $ 165,000
---------------------------------------------------------------------
3,000 Federal-Mogul Corp. 67,124
---------------------------------------------------------------------
6,500 Harley Davidson, Inc. 293,312
---------------------------------------------------------------------
10,900 International Game Technology 230,262
---------------------------------------------------------------------
7,100 Leggett and Platt, Inc. 212,112
---------------------------------------------------------------------
600 National Presto Industries, Inc. 22,500
---------------------------------------------------------------------
11,500 Shaw Industries, Inc. 135,124
---------------------------------------------------------------------
1,600 Stanhome, Inc. 42,400
---------------------------------------------------------------------
2,500 Superior Industries International, Inc. 60,938
---------------------------------------------------------------------
4,000 (a) Topps Co. 15,250
--------------------------------------------------------------------- -----------
Total 1,689,647
--------------------------------------------------------------------- -----------
CONSUMER NON-DURABLES--4.1%
---------------------------------------------------------------------
1,700 Church and Dwight, Inc. 36,550
---------------------------------------------------------------------
10,300 Coca Cola Enterprises, Inc. 439,037
---------------------------------------------------------------------
3,400 Dean Foods Co. 98,600
---------------------------------------------------------------------
5,100 Dole Food, Inc. 198,900
---------------------------------------------------------------------
1,100 Dreyers Grand Ice Cream, Inc. 28,324
---------------------------------------------------------------------
3,600 First Brands Corp. 102,150
---------------------------------------------------------------------
4,850 Flowers Industries, Inc. 113,368
---------------------------------------------------------------------
1,400 (a) Gibson Greetings, Inc. 21,874
---------------------------------------------------------------------
8,000 IBP, Inc. 200,000
---------------------------------------------------------------------
1,500 International Multifoods Corp. 22,874
---------------------------------------------------------------------
4,400 (a) Jones Apparel Group, Inc. 137,500
---------------------------------------------------------------------
2,600 Lance, Inc. 45,500
---------------------------------------------------------------------
6,900 McCormick & Co., Inc. 166,462
---------------------------------------------------------------------
1,600 Michael Foods, Inc. 20,000
---------------------------------------------------------------------
2,200 Savannah Foods & Industries, Inc. 35,200
---------------------------------------------------------------------
</TABLE>
FEDERATED MID-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- --------------------------------------------------------------------- -----------
*COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------
<C> <C> <S> <C>
CONSUMER NON-DURABLES--CONTINUED
---------------------------------------------------------------------
2,500 Smucker (J.M.) Co., Class A $ 41,250
---------------------------------------------------------------------
3,100 Tambrands, Inc. 132,137
---------------------------------------------------------------------
12,200 Tyson Foods, Inc., Class A 359,900
---------------------------------------------------------------------
3,000 Universal Corp. 81,750
---------------------------------------------------------------------
2,200 Universal Foods Corp. 77,824
---------------------------------------------------------------------
4,400 Warnaco Group, Inc., Class A 109,450
--------------------------------------------------------------------- -----------
Total 2,468,650
--------------------------------------------------------------------- -----------
ENERGY MINERALS--4.9%
---------------------------------------------------------------------
5,000 Anadarko Petroleum Corp. 318,124
---------------------------------------------------------------------
7,500 Apache Corp. 266,250
---------------------------------------------------------------------
3,100 (a) BJ Services Co. 139,112
---------------------------------------------------------------------
2,500 Diamond Shamrock, Inc. 73,437
---------------------------------------------------------------------
5,900 (a) ENSCO International, Inc. 255,174
---------------------------------------------------------------------
14,000 (a) Global Marine, Inc. 257,250
---------------------------------------------------------------------
6,800 Lyondell Petrochemical Co. 144,500
---------------------------------------------------------------------
5,000 Mapco, Inc. 155,624
---------------------------------------------------------------------
3,800 Murphy Oil Corp. 187,624
---------------------------------------------------------------------
7,100 (a) Nabors Industries, Inc. 118,037
---------------------------------------------------------------------
4,200 Noble Affiliates, Inc. 182,700
---------------------------------------------------------------------
3,000 Parker & Parsley Petroleum Co. 86,250
---------------------------------------------------------------------
4,700 (a) Parker Drilling Co. 39,950
---------------------------------------------------------------------
2,800 Quaker State Corp. 46,900
---------------------------------------------------------------------
8,300 Ranger Oil Ltd. 62,250
---------------------------------------------------------------------
3,300 (a) Smith International, Inc. 125,400
---------------------------------------------------------------------
3,700 Tosco Corp. 207,662
---------------------------------------------------------------------
3,700 Valero Energy Corp. 87,875
---------------------------------------------------------------------
2,600 (a) Varco International, Inc. 51,350
---------------------------------------------------------------------
</TABLE>
FEDERATED MID-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- --------------------------------------------------------------------- -----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------
ENERGY MINERALS--CONTINUED
---------------------------------------------------------------------
4,281 (a) Weatherford Enterra, Inc. $ 124,149
--------------------------------------------------------------------- -----------
Total 2,929,618
--------------------------------------------------------------------- -----------
FINANCE--13.2%
---------------------------------------------------------------------
11,675 Aflac, Inc. 468,459
---------------------------------------------------------------------
3,550 Bancorp Hawaii, Inc. 140,669
---------------------------------------------------------------------
10,411 Bear Stearns Cos., Inc. 245,954
---------------------------------------------------------------------
5,025 Central Fidelity Banks, Inc. 127,509
---------------------------------------------------------------------
3,900 City National Corp. 68,250
---------------------------------------------------------------------
4,450 Comdisco, Inc. 132,944
---------------------------------------------------------------------
3,600 Crestar Financial Corp. 221,400
---------------------------------------------------------------------
2,600 Dauphin Deposit Corp. 85,150
---------------------------------------------------------------------
5,325 Edwards(AG), Inc. 159,084
---------------------------------------------------------------------
6,300 First Security Corp. 185,063
---------------------------------------------------------------------
5,600 First Tennessee National Corp. 203,700
---------------------------------------------------------------------
2,900 First Virginia Bank, Inc. 129,775
---------------------------------------------------------------------
5,300 First of America Bank Corp. 288,188
---------------------------------------------------------------------
6,100 Firstar Corp. 298,900
---------------------------------------------------------------------
6,800 Franklin Resources, Inc. 479,400
---------------------------------------------------------------------
1,700 GATX Corp. 81,175
---------------------------------------------------------------------
1,700 Hartford Steam Boiler Insurance 73,313
---------------------------------------------------------------------
10,100 Hibernia Corp., Class A 112,363
---------------------------------------------------------------------
8,000 Marshall & Ilsley Corp. 257,000
---------------------------------------------------------------------
5,050 Mercantile Bancorporation, Inc. 250,606
---------------------------------------------------------------------
4,000 Mercantile Bankshares Corp. 120,500
---------------------------------------------------------------------
4,700 Northern Trust Corp. 325,475
---------------------------------------------------------------------
2,800 PHH Corp. 83,300
---------------------------------------------------------------------
3,000 PMI Group 171,375
---------------------------------------------------------------------
</TABLE>
FEDERATED MID-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- --------------------------------------------------------------------- -----------
*COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------
<C> <C> <S> <C>
FINANCE--CONTINUED
---------------------------------------------------------------------
7,800 PaineWebber Group, Inc. $ 183,300
---------------------------------------------------------------------
1,600 (a) Policy Management System Corp. 57,600
---------------------------------------------------------------------
6,100 Progressive Corp. Ohio 419,375
---------------------------------------------------------------------
3,800 Provident Cos., Inc. 141,075
---------------------------------------------------------------------
5,230 Regions Financial Corp. 261,500
---------------------------------------------------------------------
14,750 Schwab (Charles) Corp. 368,750
---------------------------------------------------------------------
7,900 SouthTrust Corp. 261,688
---------------------------------------------------------------------
6,700 State Street Boston Corp. 424,613
---------------------------------------------------------------------
7,700 (a) Summit Bancorp 314,738
---------------------------------------------------------------------
10,100 SunAmerica, Inc. 378,750
---------------------------------------------------------------------
4,800 T. Rowe Price Associates 163,800
---------------------------------------------------------------------
1,900 Transatlantic Holdings, Inc. 136,800
---------------------------------------------------------------------
3,000 Wilmington Trust Corp. 113,250
--------------------------------------------------------------------- -----------
Total 7,934,791
--------------------------------------------------------------------- -----------
HEALTH CARE--7.8%
---------------------------------------------------------------------
2,400 (a) Acuson Corp. 50,700
---------------------------------------------------------------------
1,100 (a) Advanced Technology Labs, Inc. 33,550
---------------------------------------------------------------------
4,000 (a) Apria Healthcare Group, Inc. 76,500
---------------------------------------------------------------------
3,365 Bergen Brunswig Corp., Class A 105,577
---------------------------------------------------------------------
3,000 (a) Biogen, Inc. 223,500
---------------------------------------------------------------------
5,375 Cardinal Health, Inc. 421,938
---------------------------------------------------------------------
3,900 Carter Wallace, Inc. 60,450
---------------------------------------------------------------------
5,700 (a) Centocor, Inc. 167,438
---------------------------------------------------------------------
14,224 (a) Chiron Corp. 325,374
---------------------------------------------------------------------
1,400 (a) Datascope Corp. 23,800
---------------------------------------------------------------------
2,300 Dentsply International, Inc. 96,888
---------------------------------------------------------------------
1,100 Diagnostic Products Corp. 32,725
---------------------------------------------------------------------
</TABLE>
FEDERATED MID-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- --------------------------------------------------------------------- -----------
*COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------
<C> <C> <S> <C>
HEALTH CARE--CONTINUED
---------------------------------------------------------------------
3,400 (a) FHP International Corp. $ 116,025
---------------------------------------------------------------------
3,800 (a) Forest Labratories, Inc., Class A 146,300
---------------------------------------------------------------------
4,800 (a) Foundation Health Corp. 143,400
---------------------------------------------------------------------
5,800 (a) Genzyme Corp. 133,400
---------------------------------------------------------------------
12,886 (a) HEALTHSOUTH Rehabilitation 483,225
---------------------------------------------------------------------
2,900 (a) HealthCare COMPARE Corp. 127,600
---------------------------------------------------------------------
3,900 (a) Healthcare & Retirement Corp. 96,038
---------------------------------------------------------------------
5,300 (a) Healthsource, Inc. 64,925
---------------------------------------------------------------------
4,334 (a) Horizon/CMS Healthcare Corp. 44,965
---------------------------------------------------------------------
10,000 Ivax Corp. 165,000
---------------------------------------------------------------------
10,400 (a) Laboratory Corporation of America Holdings 35,100
---------------------------------------------------------------------
3,700 McKesson Corp. 184,075
---------------------------------------------------------------------
6,000 (a) Medaphis Corp. 53,250
---------------------------------------------------------------------
10,200 Mylan Laboratories, Inc. 154,275
---------------------------------------------------------------------
4,800 (a) Nellcor, Inc. 93,600
---------------------------------------------------------------------
5,500 (a) NovaCare, Inc. 45,375
---------------------------------------------------------------------
2,600 (a) PacifiCare Health Systems, Inc., Class B 182,650
---------------------------------------------------------------------
6,400 (a) Perrigo Co. 60,800
---------------------------------------------------------------------
2,000 (a) Scherer (R.P.) Corp. 92,750
---------------------------------------------------------------------
8,200 (a) Stryker Corp. 243,950
---------------------------------------------------------------------
4,494 (a) Value Health, Inc. 78,083
---------------------------------------------------------------------
6,100 (a) Vencor, Inc. 180,713
---------------------------------------------------------------------
3,000 (a) Watson Pharmaceuticals, Inc. 100,125
--------------------------------------------------------------------- -----------
Total 4,644,064
--------------------------------------------------------------------- -----------
PRODUCER MANUFACTURING--6.4%
---------------------------------------------------------------------
5,000 American Financial Group, Inc. 179,375
---------------------------------------------------------------------
7,900 (a) American Power Conversion Corp. 168,863
---------------------------------------------------------------------
</TABLE>
FEDERATED MID-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- --------------------------------------------------------------------- -----------
*COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------
<C> <C> <S> <C>
PRODUCER MANUFACTURING--CONTINUED
---------------------------------------------------------------------
2,800 Ametek, Inc. $ 55,650
---------------------------------------------------------------------
4,900 Danaher Corp. 200,288
---------------------------------------------------------------------
8,100 (a) Dial Corp. Del. 111,375
---------------------------------------------------------------------
3,863 Diebold, Inc. 222,094
---------------------------------------------------------------------
1,900 Duriron, Inc. 50,825
---------------------------------------------------------------------
3,800 Federal Signal Corp. 97,850
---------------------------------------------------------------------
1,800 Goulds Pumps, Inc. 41,625
---------------------------------------------------------------------
2,600 HON Industries, Inc. 91,000
---------------------------------------------------------------------
2,100 Harsco Corp. 134,138
---------------------------------------------------------------------
5,480 Hubbell, Inc., Class B 223,995
---------------------------------------------------------------------
1,400 Kaydon Corp. 57,050
---------------------------------------------------------------------
2,200 Kennametal, Inc. 74,800
---------------------------------------------------------------------
3,000 Keystone International, Inc. 54,000
---------------------------------------------------------------------
2,533 Lancaster Colony Corp. 94,988
---------------------------------------------------------------------
2,100 Magnetek, Inc. 23,363
---------------------------------------------------------------------
5,315 Mark IV Industries, Inc. 114,939
---------------------------------------------------------------------
2,100 Miller Herman, Inc. 90,563
---------------------------------------------------------------------
2,500 Modine Manufacturing Co. 61,875
---------------------------------------------------------------------
1,500 Nordson Corp. 82,500
---------------------------------------------------------------------
4,200 Olin Corp. 178,500
---------------------------------------------------------------------
3,200 Pentair, Inc. 80,800
---------------------------------------------------------------------
3,500 (a) Pittston Brink's Group 99,750
---------------------------------------------------------------------
1,750 Precision Castparts Corp. 81,813
---------------------------------------------------------------------
2,800 Stewart & Stevenson Services 59,500
---------------------------------------------------------------------
1,900 Tecumseh Products Co., Class A 106,875
---------------------------------------------------------------------
1,500 Teleflex, Inc. 72,188
---------------------------------------------------------------------
11,750 (a) Thermo Electron Corp. 428,875
---------------------------------------------------------------------
</TABLE>
FEDERATED MID-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- --------------------------------------------------------------------- -----------
*COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------
<C> <C> <S> <C>
PRODUCER MANUFACTURING--CONTINUED
---------------------------------------------------------------------
3,550 Trinity Industries, Inc. $ 122,919
---------------------------------------------------------------------
8,100 Viad Corp. 117,450
---------------------------------------------------------------------
2,500 Watts Industries, Inc., Class A 52,188
---------------------------------------------------------------------
3,500 York International Corp. 169,313
--------------------------------------------------------------------- -----------
Total 3,801,327
--------------------------------------------------------------------- -----------
RETAIL TRADE--5.8%
---------------------------------------------------------------------
2,000 (a) Ann Taylor Stores Corp. 36,250
---------------------------------------------------------------------
5,800 (a) Bed Bath & Beyond, Inc. 146,450
---------------------------------------------------------------------
3,600 (a) Best Buy Co., Inc. 58,950
---------------------------------------------------------------------
1,200 CPI Corp. 22,800
---------------------------------------------------------------------
4,050 Claire's Stores, Inc. 68,850
---------------------------------------------------------------------
4,500 (a) Consolidated Stores Corp. 173,813
---------------------------------------------------------------------
6,097 Dollar General Corp. 169,192
---------------------------------------------------------------------
2,300 Duty Free International, Inc. 36,800
---------------------------------------------------------------------
4,800 Family Dollar Stores, Inc. 81,600
---------------------------------------------------------------------
3,200 Fastenal Co. 148,000
---------------------------------------------------------------------
3,900 Fingerhut Companies, Inc. 58,013
---------------------------------------------------------------------
1,800 Hancock Fabrics, Inc. 15,300
---------------------------------------------------------------------
3,600 Hannaford Brothers Co. 108,450
---------------------------------------------------------------------
4,150 Heilig-Meyers Co. 53,950
---------------------------------------------------------------------
7,679 (a) Home Shopping Network, Inc. 77,750
---------------------------------------------------------------------
6,200 (a) Kohl's Corp. 223,200
---------------------------------------------------------------------
2,900 Lands' End, Inc. 62,350
---------------------------------------------------------------------
2,200 (a) MacFrugal's Bargains CloseOuts, Inc. 53,625
---------------------------------------------------------------------
2,300 (a) Meyer (Fred), Inc. 80,788
---------------------------------------------------------------------
2,900 (a) Micro Warehouse, Inc. 66,700
---------------------------------------------------------------------
3,000 (a) Nine West Group, Inc. 149,625
---------------------------------------------------------------------
</TABLE>
FEDERATED MID-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- --------------------------------------------------------------------- -----------
*COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------
<C> <C> <S> <C>
RETAIL TRADE--CONTINUED
---------------------------------------------------------------------
13,125 (a) Office Depot, Inc. $ 257,578
---------------------------------------------------------------------
10,350 (a) Officemax Inc. 139,725
---------------------------------------------------------------------
3,300 (a) Payless ShoeSource, Inc. 111,788
---------------------------------------------------------------------
5,700 (a) Revco D. S., Inc. 171,713
---------------------------------------------------------------------
3,900 Ruddick Corp. 50,700
---------------------------------------------------------------------
8,400 (a) Service Merchandise, Inc. 49,350
---------------------------------------------------------------------
13,275 (a) Staples, Inc. 247,247
---------------------------------------------------------------------
2,600 Tiffany & Co. 96,200
---------------------------------------------------------------------
7,000 (a) Viking Office Products, Inc. 203,875
---------------------------------------------------------------------
3,700 (a) Vons Companies, Inc. 204,888
---------------------------------------------------------------------
2,800 (a) Waban, Inc. 73,150
--------------------------------------------------------------------- -----------
Total 3,498,670
--------------------------------------------------------------------- -----------
SERVICES--10.0%
---------------------------------------------------------------------
6,359 (a) AES Corp. 279,001
---------------------------------------------------------------------
2,550 Banta Corp. 53,869
---------------------------------------------------------------------
3,700 Belo (A.H.) Corp., Series A 144,300
---------------------------------------------------------------------
3,600 Bob Evans Farms, Inc. 45,000
---------------------------------------------------------------------
6,475 (a) Brinker International, Inc. 110,075
---------------------------------------------------------------------
2,600 (a) Buffets, Inc. 28,925
---------------------------------------------------------------------
4,200 (a) CalEnergy Co., Inc. 121,800
---------------------------------------------------------------------
2,494 (a) Chris Craft Industries, Inc. 98,187
---------------------------------------------------------------------
4,000 Cintas Corp. 233,000
---------------------------------------------------------------------
8,700 (a) Circus Circus Enterprises, Inc. 300,150
---------------------------------------------------------------------
5,050 Cracker Barrel Old Country Store 102,894
---------------------------------------------------------------------
1,400 Ennis Business Forms, Inc. 15,400
---------------------------------------------------------------------
12,700 Equifax, Inc. 377,825
---------------------------------------------------------------------
2,600 Flightsafety International, Inc. 128,375
---------------------------------------------------------------------
</TABLE>
FEDERATED MID-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- --------------------------------------------------------------------- -----------
*COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------
<C> <C> <S> <C>
SERVICES--CONTINUED
---------------------------------------------------------------------
1,800 (a) Golden Books Family Entertainment, Inc. $ 20,025
---------------------------------------------------------------------
1,500 Granite Construction, Inc. 28,875
---------------------------------------------------------------------
3,600 Gtech Holdings Corp. 106,200
---------------------------------------------------------------------
1,200 Houghton Mifflin Co. 59,550
---------------------------------------------------------------------
1,900 (a) International Dairy Queen, Inc., Class A 36,575
---------------------------------------------------------------------
2,100 (a) Jacobs Engineering Group, Inc. 46,463
---------------------------------------------------------------------
3,175 Kelly Services, Inc., Class A 88,900
---------------------------------------------------------------------
1,000 Lawson Products, Inc. 21,250
---------------------------------------------------------------------
4,000 Lee Enterprises, Inc. 91,500
---------------------------------------------------------------------
3,000 (a) Lone Star Steakhouse & Saloon 76,875
---------------------------------------------------------------------
6,900 Manpower, Inc. 195,788
---------------------------------------------------------------------
2,200 Media General, Inc., Class A 65,450
---------------------------------------------------------------------
15,400 Mirage Resorts, Inc. 338,800
---------------------------------------------------------------------
4,200 Ogden Corp. 76,125
---------------------------------------------------------------------
6,600 Olsten Corp. 132,000
---------------------------------------------------------------------
6,700 Omnicom Group, Inc. 333,325
---------------------------------------------------------------------
3,700 (a) Outback Steakhouse, Inc. 85,794
---------------------------------------------------------------------
5,775 Paychex, Inc. 329,175
---------------------------------------------------------------------
4,300 (a) Promus Hotel Corp. 136,525
---------------------------------------------------------------------
7,000 Reynolds & Reynolds Co., Class A 184,625
---------------------------------------------------------------------
3,000 Rollins, Inc. 57,375
---------------------------------------------------------------------
1,700 Sbarro, Inc. 44,838
---------------------------------------------------------------------
1,300 (a) Scholastic Corp. 95,225
---------------------------------------------------------------------
6,200 Sensormatic Electronics Corp. 101,525
---------------------------------------------------------------------
4,700 Sothebys Holdings, Inc., Class A 79,900
---------------------------------------------------------------------
2,400 Standard Register 62,400
---------------------------------------------------------------------
4,100 Transocean Offshore, Inc. 259,325
---------------------------------------------------------------------
</TABLE>
FEDERATED MID-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- --------------------------------------------------------------------- -----------
*COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------
<C> <C> <S> <C>
SERVICES--CONTINUED
---------------------------------------------------------------------
11,000 (a) USA Waste Services, Inc. $ 352,000
---------------------------------------------------------------------
3,800 Wallace Computer, Inc. 111,625
---------------------------------------------------------------------
900 Washington Post Co., Class B 296,100
--------------------------------------------------------------------- -----------
Total 5,952,934
--------------------------------------------------------------------- -----------
TECHNOLOGY--12.8%
---------------------------------------------------------------------
5,300 (a) ADC Telecommunications, Inc. 362,388
---------------------------------------------------------------------
3,821 (a) AST Research, Inc. 17,672
---------------------------------------------------------------------
6,100 Adobe System, Inc. 211,213
---------------------------------------------------------------------
3,700 (a) Altera Corp. 229,400
---------------------------------------------------------------------
7,400 (a) America Online, Inc. 200,725
---------------------------------------------------------------------
9,650 (a) Analog Devices, Inc. 250,900
---------------------------------------------------------------------
4,275 (a) Arrow Electronics, Inc. 203,597
---------------------------------------------------------------------
8,200 (a) Atmel Corp. 208,075
---------------------------------------------------------------------
3,700 Avnet, Inc. 186,388
---------------------------------------------------------------------
4,300 (a) BMC Software, Inc. 356,900
---------------------------------------------------------------------
2,400 Beckman Instruments, Inc. 88,200
---------------------------------------------------------------------
2,400 (a) Borland International, Inc. 12,150
---------------------------------------------------------------------
6,500 (a) Cadence Design Systems, Inc. 237,250
---------------------------------------------------------------------
5,300 (a) Cirrus Logic, Inc. 100,700
---------------------------------------------------------------------
3,600 (a) Compuware Corp. 189,900
---------------------------------------------------------------------
7,100 (a) Cypress Semiconductor Corp. 76,325
---------------------------------------------------------------------
1,800 (a) Exabyte Corp. 23,850
---------------------------------------------------------------------
3,800 (a) FIserv, Inc. 145,825
---------------------------------------------------------------------
2,800 GenCorp, Inc. 46,200
---------------------------------------------------------------------
3,500 (a) Imation Corp. 95,813
---------------------------------------------------------------------
2,300 (a) Information Resources, Inc. 29,038
---------------------------------------------------------------------
12,500 (a) Informix Corp. 277,344
---------------------------------------------------------------------
</TABLE>
FEDERATED MID-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- --------------------------------------------------------------------- -----------
*COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------
<C> <C> <S> <C>
TECHNOLOGY--CONTINUED
---------------------------------------------------------------------
6,500 (a) Integrated Device Technology, Inc. $ 53,625
---------------------------------------------------------------------
2,900 Intelligent Electronics, Inc. 25,738
---------------------------------------------------------------------
6,200 Linear Technology Corp. 207,700
---------------------------------------------------------------------
3,900 (a) Litton Industries, Inc. 175,013
---------------------------------------------------------------------
5,100 (a) Maxim Integrated Products, Inc. 178,500
---------------------------------------------------------------------
1,300 Measurex Corp. 33,475
---------------------------------------------------------------------
5,200 (a) Mentor Graphics Corp. 44,200
---------------------------------------------------------------------
8,500 Molex, Inc. 306,000
---------------------------------------------------------------------
1,700 OEA, Inc. 64,175
---------------------------------------------------------------------
4,000 (a) Octel Communications Corp. 63,500
---------------------------------------------------------------------
10,400 (a) Parametric Technology Corp. 508,300
---------------------------------------------------------------------
4,500 (a) Quantum Corp. 91,125
---------------------------------------------------------------------
1,500 (a) Rohr, Inc. 27,750
---------------------------------------------------------------------
800 (a) Sequa Corp., Class A 33,400
---------------------------------------------------------------------
2,700 (a) Sequent Computer System, Inc. 39,994
---------------------------------------------------------------------
4,200 (a) Solectron Corp. 224,700
---------------------------------------------------------------------
11,237 (a) Sterling Commerce, Inc. 316,042
---------------------------------------------------------------------
5,080 (a) Storage Technology Corp. 216,535
---------------------------------------------------------------------
1,900 (a) Stratus Computer, Inc. 42,513
---------------------------------------------------------------------
2,600 (a) Structural Dynamics Research Corp. 46,150
---------------------------------------------------------------------
5,200 Sundstrand Corp. 209,300
---------------------------------------------------------------------
4,400 (a) Symantec Corp. 47,850
---------------------------------------------------------------------
2,200 (a) Symbol Technologies, Inc. 98,725
---------------------------------------------------------------------
7,000 (a) Teradyne, Inc. 111,125
---------------------------------------------------------------------
1,500 Thiokol Corp. 62,813
---------------------------------------------------------------------
7,182 (a) U.S. Robotics Corp. 451,568
---------------------------------------------------------------------
2,600 Varian Association, Inc. 117,325
---------------------------------------------------------------------
</TABLE>
FEDERATED MID-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- --------------------------------------------------------------------- -----------
*COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------
<C> <C> <S> <C>
TECHNOLOGY--CONTINUED
---------------------------------------------------------------------
1,900 (a) Verifone, Inc. $ 63,888
---------------------------------------------------------------------
5,145 (a) Vishay Intertechnology, Inc. 92,610
---------------------------------------------------------------------
6,000 (a) Xilinx, Inc. 196,500
--------------------------------------------------------------------- -----------
Total 7,699,992
--------------------------------------------------------------------- -----------
TRANSPORTATION--1.6%
---------------------------------------------------------------------
2,200 (a) APL, Ltd. 48,400
---------------------------------------------------------------------
1,800 Airborne Freight Corp. 35,775
---------------------------------------------------------------------
1,100 (a) Alaska Air Group, Inc. 24,200
---------------------------------------------------------------------
3,900 Alexander and Baldwin, Inc. 96,038
---------------------------------------------------------------------
2,300 Arnold Industries, Inc. 36,513
---------------------------------------------------------------------
2,800 Atlantic Southeast Airlines, Inc. 58,800
---------------------------------------------------------------------
3,300 Hunt (J.B.) Transportation Services, Inc. 48,263
---------------------------------------------------------------------
5,250 Illinois Central Corp. 169,969
---------------------------------------------------------------------
3,200 Kansas City Southern Industries, Inc. 150,400
---------------------------------------------------------------------
3,100 Overseas Shipholding Group, Inc. 52,700
---------------------------------------------------------------------
5,300 Tidewater, Inc. 231,875
--------------------------------------------------------------------- -----------
Total 952,933
--------------------------------------------------------------------- -----------
UTILITIES--13.2%
---------------------------------------------------------------------
9,900 (a) 360 Communications Co. 223,988
---------------------------------------------------------------------
4,600 AGL Resources, Inc. 96,600
---------------------------------------------------------------------
3,100 Aliant Communications, Inc. 50,375
---------------------------------------------------------------------
10,200 Allegheny Power Systems, Inc. 304,725
---------------------------------------------------------------------
6,600 American Water Works Co., Inc. 134,475
---------------------------------------------------------------------
4,400 Atlantic Energy, Inc. NJ 77,550
---------------------------------------------------------------------
1,200 Black Hills Corp. 30,600
---------------------------------------------------------------------
4,100 Brooklyn Union Gas Co. 118,900
---------------------------------------------------------------------
7,700 CMS Energy Corp. 243,513
---------------------------------------------------------------------
</TABLE>
FEDERATED MID-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- --------------------------------------------------------------------- -----------
*COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------
<C> <C> <S> <C>
UTILITIES--CONTINUED
---------------------------------------------------------------------
1,900 Central LA Electric Co. $ 51,538
---------------------------------------------------------------------
2,700 Central Maine Power Co. 31,725
---------------------------------------------------------------------
5,000 Century Telephone Enterprises, Inc. 160,625
---------------------------------------------------------------------
4,000 Comsat Corp. 94,000
---------------------------------------------------------------------
5,100 Delmarva Power and Light Co. 101,363
---------------------------------------------------------------------
2,900 El Paso Natural Gas 140,650
---------------------------------------------------------------------
8,100 Florida Progress Corp. 270,338
---------------------------------------------------------------------
13,300 Frontier Corp. 385,700
---------------------------------------------------------------------
2,500 Hawaiian Electric Industries, Inc. 89,063
---------------------------------------------------------------------
3,200 Idaho Power Co. 99,600
---------------------------------------------------------------------
6,400 Illinova Corp. 174,400
---------------------------------------------------------------------
1,950 Indiana Energy, Inc. 47,775
---------------------------------------------------------------------
4,800 Ipalco Enterprises, Inc. 129,000
---------------------------------------------------------------------
5,200 Kansas City Power And Light Co. 143,000
---------------------------------------------------------------------
5,600 LG&E Energy Corp. 129,500
---------------------------------------------------------------------
5,600 MCN Corp. 154,000
---------------------------------------------------------------------
8,522 MidAmerican Energy Co. 132,091
---------------------------------------------------------------------
2,600 Minnesota Power And Light Co. 73,450
---------------------------------------------------------------------
4,600 Montana Power Co. 97,750
---------------------------------------------------------------------
18,100 (a) NEXTEL Communications, Inc. 289,600
---------------------------------------------------------------------
5,300 NIPSCO Industries, Inc. 200,738
---------------------------------------------------------------------
3,200 National Fuel Gas Co. 119,200
---------------------------------------------------------------------
4,000 Nevada Power Co. 81,500
---------------------------------------------------------------------
5,500 New England Electric System 185,625
---------------------------------------------------------------------
6,000 New York State Electric and Gas Corp. 125,250
---------------------------------------------------------------------
10,700 Northeast Utilities Co. 115,025
---------------------------------------------------------------------
3,400 Oklahoma Gas and Electric Co. 133,025
---------------------------------------------------------------------
</TABLE>
FEDERATED MID-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- --------------------------------------------------------------------- -----------
*COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------
<C> <C> <S> <C>
UTILITIES--CONTINUED
---------------------------------------------------------------------
7,400 Pinnacle West Capital Corp. $ 228,475
---------------------------------------------------------------------
4,300 Portland General Corp. 188,125
---------------------------------------------------------------------
10,000 Potomac Electric Power Co. 256,250
---------------------------------------------------------------------
5,400 Public Service Co. Colo 199,800
---------------------------------------------------------------------
3,500 Public Service Co. New Mexico 65,625
---------------------------------------------------------------------
5,400 Puget Sound Power & Light Co. 119,475
---------------------------------------------------------------------
3,400 Questar Corp. 122,400
---------------------------------------------------------------------
8,700 SCANA Corp. 232,725
---------------------------------------------------------------------
5,200 (a) Seagull Energy Corp. 112,450
---------------------------------------------------------------------
5,500 Southern New England Telecommunications 204,875
---------------------------------------------------------------------
3,500 Southwestern Public Service Co. 119,000
---------------------------------------------------------------------
2,100 TCA Cable TV, Inc. 56,175
---------------------------------------------------------------------
9,900 TECO Energy, Inc. 243,788
---------------------------------------------------------------------
4,900 Telephone and Data System, Inc. 171,500
---------------------------------------------------------------------
3,900 Utilicorp United, Inc. 105,788
---------------------------------------------------------------------
3,500 (a) Vanguard Cellular Systems, Inc., Class A 57,969
---------------------------------------------------------------------
2,600 WPL Holdings, Inc. 73,125
---------------------------------------------------------------------
3,600 Washington Gas Light Co. 80,550
---------------------------------------------------------------------
9,300 Wisconsin Energy Corp. 252,263
--------------------------------------------------------------------- -----------
Total 7,926,615
--------------------------------------------------------------------- -----------
TOTAL COMMON STOCKS (IDENTIFIED COST $43,245,074) 53,631,911
--------------------------------------------------------------------- -----------
</TABLE>
FEDERATED MID-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- --------------------------------------------------------------------- -----------
<C> <C> <S> <C>
(B) U.S. GOVERNMENT OBLIGATION--0.3%
- ----------------------------------------------------------------------------------------
$200,000 United States Treasury Bill, 12/19/1996 (identified cost $198,627) $198,706
--------------------------------------------------------------------- -----------
(C) REPURCHASE AGREEMENT--9.2%
- ----------------------------------------------------------------------------------------
5,535,000 BT Securities, Inc., 5.55%, dated 10/31/1996, due 11/1/1996
(at amortized cost) 5,535,000
--------------------------------------------------------------------- -----------
TOTAL INVESTMENTS (IDENTIFIED COST $48,978,701)(D) $59,365,617
--------------------------------------------------------------------- -----------
</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 $5,857,200 at October 31, 1996, which
represents 9.8% of net assets. Taking into consideration these open Index
futures contracts, the Fund's effective total exposure to the Index is
99.3% of net assets.
(a) Non-income producing security.
(b) Represents a security held as collateral which is used to ensure the Fund is
able to satisfy the obligations of its outstanding long futures contracts.
(c) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investment in the repurchase agreement is through participation in a joint
account with other Federated funds.
(d) The cost of investments for federal tax purposes amounts to $48,989,468. The
net unrealized appreciation of investments on a federal tax basis amounts
to $10,376,149 which is comprised of $13,417,978 appreciation and
$3,041,829 depreciation at October 31, 1996.
Note: The categories of investments are shown as a percentage of net assets
($59,947,998) at October 31, 1996.
(See Notes which are an integral part of the Financial Statements)
FEDERATED MID-CAP FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ----------------------------------------------------------------------------------
Total investments in securities, at value
(identified cost $48,978,701, and tax cost $48,989,468) $59,365,617
- ----------------------------------------------------------------------------------
Cash 217
- ----------------------------------------------------------------------------------
Income receivable 53,853
- ----------------------------------------------------------------------------------
Receivable for shares sold 840,322
- ----------------------------------------------------------------------------------
Receivable for daily variation margin 37,500
- ----------------------------------------------------------------------------------
Deferred expenses 11,117
- ---------------------------------------------------------------------------------- -----------
Total assets 60,308,626
- ----------------------------------------------------------------------------------
LIABILITIES:
- ----------------------------------------------------------------------------------
Payable for shares redeemed $345,410
- -----------------------------------------------------------------------
Accrued expenses 15,218
- ----------------------------------------------------------------------- --------
Total liabilities 360,628
- ---------------------------------------------------------------------------------- -----------
NET ASSETS for 4,358,350 shares outstanding $59,947,998
- ---------------------------------------------------------------------------------- -----------
NET ASSETS CONSIST OF:
- ----------------------------------------------------------------------------------
Paid in capital $46,972,122
- ----------------------------------------------------------------------------------
Net unrealized appreciation of investments and futures contracts 10,519,926
- ----------------------------------------------------------------------------------
Accumulated net realized gain on investments and futures contracts 2,415,428
- ----------------------------------------------------------------------------------
Undistributed net investment income 40,522
- ---------------------------------------------------------------------------------- -----------
Total Net Assets $59,947,998
- ---------------------------------------------------------------------------------- -----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
$59,947,998 / 4,358,350 shares outstanding $13.75
- ---------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MID-CAP FUND
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- --------------------------------------------------------------------------------------------
Dividends $ 880,834
- --------------------------------------------------------------------------------------------
Interest 200,265
- -------------------------------------------------------------------------------------------- ----------
Total income 1,081,099
- --------------------------------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------------------------------------------
Management fee $ 225,754
- -------------------------------------------------------------------------------
Custodian fees 34,726
- -------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 19,496
- -------------------------------------------------------------------------------
Directors'/Trustees' fees 3,056
- -------------------------------------------------------------------------------
Auditing fees 14,061
- -------------------------------------------------------------------------------
Legal fees 3,636
- -------------------------------------------------------------------------------
Portfolio accounting fees 48,128
- -------------------------------------------------------------------------------
Shareholder services fee 141,096
- -------------------------------------------------------------------------------
Share registration costs 15,995
- -------------------------------------------------------------------------------
Printing and postage 16,727
- -------------------------------------------------------------------------------
Taxes 2,999
- -------------------------------------------------------------------------------
Miscellaneous 7,504
- ------------------------------------------------------------------------------- ---------
Total expenses 533,178
- -------------------------------------------------------------------------------
Waivers--
- -------------------------------------------------------------------------------
Waiver of management fee $ (79,194)
- -------------------------------------------------------------------
Waiver of shareholder services fee (112,978)
- ------------------------------------------------------------------- ---------
Total waivers (192,172)
- ------------------------------------------------------------------------------- ---------
Net expenses 341,006
- -------------------------------------------------------------------------------------------- ----------
Net investment income 740,093
- -------------------------------------------------------------------------------------------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES CONTRACTS:
- --------------------------------------------------------------------------------------------
Net realized gain on investments and futures contracts 2,211,765
- --------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments and futures contracts 5,352,243
- -------------------------------------------------------------------------------------------- ----------
Net realized and unrealized gain on investments and futures contracts 7,564,008
- -------------------------------------------------------------------------------------------- ----------
Change in net assets resulting from operations $8,304,101
- -------------------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MID-CAP FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-----------------------------
1996 1995
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------------------
Net investment income $ 740,093 $ 987,497
- -------------------------------------------------------------------
Net realized gain on investments and futures contracts ($2,561,538
and $3,414,170 net gain, respectively, as computed for federal tax
purposes) 2,211,765 3,630,556
- -------------------------------------------------------------------
Net change in unrealized appreciation of investments and
futures contracts 5,352,243 5,366,839
- ------------------------------------------------------------------- ------------ ------------
Change in net assets resulting from operations 8,304,101 9,984,892
- ------------------------------------------------------------------- ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -------------------------------------------------------------------
Distributions from net investment income (846,844) (893,649)
- -------------------------------------------------------------------
Distributions from net realized gains and futures contracts (3,414,624) (778,952)
- ------------------------------------------------------------------- ------------ ------------
Change in net assets resulting from distributions to
shareholders (4,261,468) (1,672,601)
- ------------------------------------------------------------------- ------------ ------------
SHARE TRANSACTIONS--
- -------------------------------------------------------------------
Proceeds from sale of shares 52,748,566 48,339,864
- -------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 2,549,965 858,211
- -------------------------------------------------------------------
Cost of shares redeemed (61,972,769) (38,942,349)
- ------------------------------------------------------------------- ------------ ------------
Change in net assets resulting from share transactions (6,674,238) 10,255,726
- ------------------------------------------------------------------- ------------ ------------
Change in net assets (2,631,605) 18,568,017
- -------------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------------
Beginning of period 62,579,603 44,011,586
- ------------------------------------------------------------------- ------------ ------------
End of period (including undistributed net investment income of
$40,522 and $147,273, respectively) $ 59,947,998 $ 62,579,603
- ------------------------------------------------------------------- ------------ ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MID-CAP FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
(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 portfolios. The financial statements
included herein are only those of Federated Mid-Cap Fund (the "Fund"), a
diversified portfolio. The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held. The
investment objective of the Fund is 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.
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--Listed equity securities are valued at the last sale
price reported on a national securities exchange. Short-term securities are
valued at the prices provided by an independent pricing service. However,
short-term securities with remaining maturities of sixty days or less at
the time of purchase may be valued at amortized cost, which approximates
fair market value.
REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's manager 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
FEDERATED MID-CAP FUND
- --------------------------------------------------------------------------------
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 over a period not to exceed 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 index futures contract with a broker, the
Fund is required to deposit in a segregated account a specified 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. For the period ended
October 31, 1996, the Fund had realized losses of $252,492 on futures
contracts.
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.
At October 31, 1996, the Fund had outstanding futures contracts as set
forth below:
<TABLE>
<CAPTION>
UNREALIZED
EXPIRATION DATE CONTRACTS TO DELIVER/RECEIVE POSITION APPRECIATION
------------------ ------------------------------ -------- --------------
<S> <C> <C> <C>
December 20, 1996 48 S&P 400 Index Futures Long $133,010
</TABLE>
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
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>
YEAR ENDED OCTOBER 31,
---------------------------
1996 1995
---------- ----------
<S> <C> <C>
- ---------------------------------------------------------------------
Shares sold 4,023,215 4,033,312
- ---------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 206,046 78,357
- ---------------------------------------------------------------------
Shares redeemed (4,766,402) (3,208,182)
- --------------------------------------------------------------------- ---------- ----------
Net change resulting from share transactions (537,141) 903,487
- --------------------------------------------------------------------- ---------- ----------
</TABLE>
(4) MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEE--Federated Management, the Fund's manager, ("Manager"), receives
for its services an annual management fee equal to 0.40% 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
("Sub-Manager"), the Sub-Manager receives an annual fee from the Manager equal
to 0.035% 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 any portion of its fee. 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 0.25%
of average daily net assets of the Fund for the period. The fee paid to FSS is
used to finance certain services for shareholders and to maintain shareholder
accounts. FSS may voluntarily choose to waive any portion of its fee. FSS can
modify or terminate this voluntary waiver at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ"), through its subsidiary, Federated Shareholder Services Company
("FSSC") serves as transfer and dividend disbursing agent for the Fund. The fee
paid to FSSC is based on the size, type, and number of accounts and transactions
made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
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 0.005% 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, 1996, the Fund paid $6,871 pursuant to this agreement.
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
period ended October 31, 1996, were as follows:
<TABLE>
<S> <C>
- -----------------------------------------------------------------------------------
Purchases $ 8,725,444
- ----------------------------------------------------------------------------------- -----------
Sales $15,432,850
- ----------------------------------------------------------------------------------- -----------
</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 Mid-Cap Fund (a portfolio of
Federated Index Trust) as of October 31, 1996, 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. 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, 1996, 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, 1996, 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 16, 1996
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <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 Shareholder Services P.O. Box 8600
Company Boston, Massachusetts 02266-8600
- ------------------------------------------------------------------------------------------
Independent Auditors
Ernst & Young LLP One Oxford Centre
Pittsburgh, Pennsylvania 15219
- ------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FEDERATED MID-CAP FUND
(A PORTFOLIO OF FEDERATED INDEX TRUST)
PROSPECTUS
A No-Load, Open-End, Diversified
Management Investment Company
Prospectus dated December 31, 1996
LOGO
Cusip 31420E205
2062304A (12/96)
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, 1996. 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 1-800-341-7400.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Statement dated December 31, 1996
[LOGO]
Federated Securities Corp. is the distributor of the Funds
and is a subsidiary of Federated Investors.
Cusip 31420E205
2062304B (12/96)
GENERAL INFORMATION ABOUT THE FUND 1
INVESTMENT OBJECTIVE AND POLICIES 1
Types of Investments 1
When-Issued and Delayed Delivery Transactions 3
Lending of Portfolio Securities 3
Reverse Repurchase Agreements 3
Portfolio Turnover 3
INVESTMENT LIMITATIONS 3
FEDERATED INDEX TRUST MANAGEMENT 6
Fund Ownership 10
Trustees' Compensation 11
Trustee Liability 12
MANAGEMENT SERVICES 12
Managers to the Fund 12
Management Fees 12
Other Related Services 12
BROKERAGE TRANSACTIONS 13
OTHER SERVICES 13
Custodian and Portfolio Accountant 13
Transfer Agent 13
Independent Auditors 13
SHAREHOLDER SERVICES 13
PURCHASING SHARES 14
Conversion to Federal Funds 14
Exchanging Securities for Fund Shares 14
DETERMINING NET ASSET VALUE 14
Determining Market Value of Securities 14
REDEEMING SHARES 15
Redemption in Kind 15
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
Economic and Market Information 17
ABOUT FEDERATED INVESTORS 17
STANDARD & POOR'S RATINGS GROUP 18
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, 1996 and October 31, 1995, the portfolio turnover rates for
the Fund were 17% and 26%, 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
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 Securities 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.
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.
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 not determined
by the Trustees to be liquid and repurchase agreements providing for
settlement more than seven days after notice.
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 or Trustee of the
Funds.
Thomas G. Bigley
28th Floor, One Oxford Centre
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Chairman of the Board, Children's Hospital of Pittsburgh; formerly, Senior
Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc.; Trustee,
University of Pittsburgh; Director or Trustee of the Funds.
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; Partner or Trustee in private real
estate ventures in Southwest Florida; formerly, President, Naples Property
Management, Inc. and Northgate Village Development Corporation; Director or
Trustee of the Funds.
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.;
formerly, Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp.;
Director, Ryan Homes, Inc.; Director or Trustee of the Funds.
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 Shareholder Services Company, and
Federated Shareholder Services; Director, Federated Services Company;
President or Executive Vice President of the Funds; Director or Trustee of
some of the Funds. Mr. Donahue is the son of John F. Donahue, Chairman and
Trustee of the Company.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Trustee of the
Funds.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine, 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
or Trustee of the Funds.
Edward L. Flaherty, Jr.@
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney of Counsel, Miller, Ament, Henny & Kochuba; Director, Eat'N Park
Restaurants, Inc.; formerly, Counsel, Horizon Financial, F.A., Western
Region; Director or Trustee of the Funds.
Peter E. Madden
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL
Birthdate: March 16, 1942
Trustee
Consultant; Former State Representative, Commonwealth of Massachusetts;
formerly, President, State Street Bank and Trust Company and State Street
Boston Corporation; Director or Trustee of the Funds.
Gregor F. Meyer
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee
Attorney, Member of Miller, Ament, Henny & Kochuba; Chairman, Meritcare,
Inc.; Director, Eat'N Park Restaurants, Inc.; Director or Trustee 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 or Trustee of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, International Politics; Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer
Library Center, Inc., National Defense University, U.S. Space Foundation
and Czech Management Center; President Emeritus, University of Pittsburgh;
Founding Chairman, National Advisory Council for Environmental Policy and
Technology, Federal Emergency Management Advisory Board and Czech
Management Center; Director or Trustee of the Funds.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public relations/Marketing/Conference Planning, Manchester Craftsmen's
Guild; Restaurant Consultant, Frick Art & History Center; Conference
Coordinator, University of Pittsburgh Art History Department; Director or
Trustee 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.
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 Shareholder Services Company; Trustee or Director of
some of the Funds; President, Executive Vice President and Treasurer of
some of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President , Secretary and Treasurer
Executive Vice President, Secretary, and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management, and Federated Research;
Director, Federated Research Corp. and Federated Global Research Corp.;
Trustee, Federated Shareholder Services Company; Director, Federated
Services Company; President and Trustee, Federated Shareholder Services;
Director, Federated Securities Corp.; Executive Vice President and
Secretary of the Funds; Treasurer of some 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.
*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
Board of Trustees handles the responsibilities of the Board between
meetings of the Board.
As used in the table above, "The Funds" and "Funds" mean the following
investment companies: 111 Corcoran Funds; Annuity Management Series; Arrow
Funds; Automated Government Money Trust; Blanchard Funds; Blanchard
Precious Metals Fund, Inc.; Cash Trust Series II; Cash Trust Series, Inc. ;
DG Investor Series; Edward D. Jones & Co. Daily Passport Cash Trust;
Federated Adjustable Rate U.S. Government Fund, Inc.; Federated American
Leaders Fund, Inc.; Federated ARMs Fund; Federated Equity Funds; Federated
Equity Income Fund, Inc.; Federated Fund for U.S. Government Securities,
Inc.; Federated GNMA Trust; Federated Government Income Securities, Inc.;
Federated Government Trust; Federated High Income Bond Fund, Inc.;
Federated High Yield Trust; Federated Income Securities Trust; Federated
Income Trust; Federated Index Trust; Federated Institutional Trust;
Federated Insurance Series; Federated Investment Portfolios; Federated
Investment Trust; Federated Master Trust; Federated Municipal Opportunities
Fund, Inc.; Federated Municipal Securities Fund, Inc.; Federated Municipal
Trust; Federated Short-Term Municipal Trust; Federated Short-Term U.S.
Government Trust; Federated Stock and Bond Fund, Inc.; 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: 2-5 Years;
Federated U.S. Government Securities Fund: 5-10 Years; Federated Utility
Fund, Inc.; First Priority Funds; Fixed Income Securities, Inc.; High Yield
Cash Trust; Intermediate Municipal Trust; International Series, Inc.;
Investment Series Funds, Inc.; Investment Series Trust; Liberty Term
Trust, Inc. - 1999; Liberty U.S. Government Money Market Trust; Liquid Cash
Trust; Managed Series Trust; Money Market Management, Inc.; Money Market
Obligations Trust; Money Market Trust; Municipal Securities Income Trust;
Newpoint Funds; Peachtree Funds; RIMCO Monument Funds; Targeted Duration
Trust; Tax-Free Instruments Trust; The Planters Funds; The Starburst Funds;
The Starburst Funds II; The Virtus Funds; Trust for Financial Institutions;
Trust for Government Cash Reserves; Trust for Short-Term U.S. Government
Securities; Trust for U.S. Treasury Obligations; and World Investment
Series, Inc.
FUND OWNERSHIP
Officers and Trustees own less than 1% of the Fund's outstanding shares.
As of December 4, 1996, 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 462,929 shares (10.57%); Covie & Co.,
Chicago, IL, owned approximately 359,819 shares (8.22%); FIRNATICIA, Iowa
City, IA, owned approximately 335,099 shares, (7.65%); and Mitra & Co.,
Milwaukee, WI, owned approximately 629,561 shares (14.38%).
TRUSTEES' COMPENSATION
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
TRUST TRUST*# FROM FUND COMPLEX +
John F. Donahue $ -0- $-0- for the Trust and
Chairman and Trustee 54 other investment companies in
the Fund Complex
J. Christopher Donahue$ -0- $-0- for the Trust and
Executive Vice President 16 other investment companies
in the Fund andTrustee Complex
Thomas G. Bigley++ $1,853.85 $86,331 for the Trust and
Trustee 54 other investment companies in
the Fund Complex
John T. Conroy, Jr. $2,025.23 $115,760 for the Trust and
Trustee 54 other investment companies in
the Fund Complex
William J. Copeland $2,025.23 $115,760 for the Trust and
Trustee 54 other investment companies in
the Fund Complex
James E. Dowd $2,025.23 $115,760 for the Trust and
Trustee 54 other investment companies in
the Fund Complex
Lawrence D. Ellis, M.D. $1,853.85 $104,898 for the Trust
and
Trustee 54 other investment companies in
the Fund Complex
Edward L. Flaherty, Jr. $2,025.23 $115,760 for the Trust
and
Trustee 54 other investment companies in
the Fund Complex
Peter E. Madden $1,853.85 $104,898 for the Trust and
Trustee 54 other investment companies in
the Fund Complex
Gregor F. Meyer $1,853.85 $104,898 for the Trust and
Trustee 54 other investment companies in
the Fund Complex
John E. Murray, Jr. $1,853.85 $104,898 for the Trust and
Trustee 54 other investment companies in
the Fund Complex
TRUSTEES' COMPENSATION (CONT'D.)
Wesley W. Posvar $1,853.85 $104,898 for the Trust and
Trustee 54 other investment companies in
the Fund Complex
Marjorie P. Smuts $1,853.85 $104,898 for the Trust and
Trustee 54 other investment companies in
the Fund Complex
*Information is furnished for the fiscal year ended October 31, 1996.
#The aggregate compensation is provided for the Trust which is comprised of
three portfolios.
+The information is provided for the last calendar year.
++Mr. Bigley served on 39 investment companies in the Federated Funds
Complex from January 1 through September 30, 1995. On October 1, 1995, he
was appointed a Trustee on 15 additional Federated Funds.
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 NBD 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, 1996, 1995 and 1994, the manager
earned $225,754, $208,809 and $115,033, respectively, of which $79,194,
$106,606 and $115,033 was voluntarily waived in 1996, 1995 and 1994,
respectively, because of undertakings to limit the Fund's expenses.
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, 1996, 1995 and 1994, the Fund
paid total brokerage commissions of $23,672, $45,385 and $54, 595,
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 ACCOUNTANT
State Street Bank and Trust Company, Boston, Massachusetts, is custodian
for the securities and cash of the Fund. Federated Services Company,
Pittsburgh, Pennsylvania, provides certain accounting and recordkeeping
services with respect to the Funds's portfolio investments.
TRANSFER AGENT
Federated Services Company, through its registered transfer agent
Federated Shareholder 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
This arrangement permits the payment of fees to Federated Shareholder
Services 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, 1996, the Fund paid shareholder
service fees in the amount of $141, 096 of which $112, 978 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 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 returns for the one-year period ended
October 31, 1996 and for the period from November 5, 1992 (start of
performance) to October 31, 1996, were 15.80% and 13.67% , 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, 1996 was
1.35%.
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 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.
Advertising and other promotional literature may include charts, graphs
and other illustrations using the Fund's returns, or returns in general,
that demonstrate basic investment concepts such as tax-deferred
compounding, dollar-cost averaging and systematic investment. In addition,
the Fund can compare its performance, or performance for the types of
securities in which it invests, to a variety of other investments, such as
bank savings accounts, certificates of deposit, and Treasury bills.
ECONOMIC AND MARKET INFORMATION
Advertising and sales literature for the Fund may include discussions of
economic, financial and political developments and their effect on the
securities market. Such discussions may take the form of commentary on
these developments by Fund portfolio managers and their views and analysis
on how such developments could affect the Funds. In addition, advertising
and sales literature may quote statistics and give general information
about the mutual fund industry, including the growth of the industry, from
sources such as the Investment Company Institute.
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. Traders handle
trillions of dollars in annual trading volume.
In the equity sector, Federated Investors has more than 25 years'
experience. As of December 31, 1995, Federated Investors managed 22 equity
funds totaling approximately $5.4 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 $3 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. Federated's service to
financial professionals and institutions has earned it high ratings in
several surveys performed by DALBAR, Inc. DALBAR is recognized as the
industry benchmark for service quality measurement. 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.
FEDERATED MID-CAP FUND
- --------------------------------------------------------------------------------
ANNUAL REPORT FOR FISCAL YEAR ENDED OCTOBER 31, 1996
MANAGEMENT DISCUSSION AND ANALYSIS
---------------------------------------------------------------------------
The fund's total return for the 12 months ended October 31, 1996 was
15.80%.* The target index, the Standard & Poor's MidCap 400 Index (the
"Index"), had a total return of 17.36% during the period.** The fund's
performance lagged that of the Index due to transaction costs,
administrative expenses, and slight differences between the composition of
the fund versus that of the Index.
The stock market reached new highs during the last 12 months, despite
predictions by some analysts that the stock market has become overbought
and should decline. Investor confidence has apparently remained high due to
relatively stable interest rates and inflation, and strong corporate
earnings. Additional factors supporting the market have been stock
buybacks, purchases by foreign investors, strong cash flows into equity
mutual funds and expectations of stable government policy after the recent
elections.
During the fund's fiscal year the strongest performing sectors in the
Index were technology, energy and finance, while healthcare, homebuilding
and office products were among the worst performing sectors in the Index.
* Performance quoted represents past performance and is not indicative of
future results. Investment return and principal value will fluctuate, so
that an investor's shares, when redeemed, may be worth more or less than
their original cost.
** Standard and Poor's MidCap 400 Index is an unmanaged index consisting of
400 common stocks issued by medium-sized domestic companies with a
median market capitalization of $1.1 billion. Actual investments cannot
be made in an index. The Mid-Cap Fund seeks investment results that
correspond to the aggregate price and total return performance of the
Standard & Poor's MidCap Index, "Standard & Poor's(R)," "S&P(R)," "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 neither
affiliated with nor promoted, sponsored, sold, or endorsed by Standard &
Poor's Ratings Group. Its only relationship to the Fund is the licensing
of the use of the Index.
FEDERATED MID-CAP FUND
- --------------------------------------------------------------------------------
GROWTH OF $25,000 INVESTED IN FEDERATED MID-CAP FUND
The graph below illustrates the hypothetical investment of $25,000 in the
Federated Mid-Cap Fund (the "Fund") from November 5, 1992 (start of performance)
to October 31, 1996, compared to the Standard and Poor's Mid-Cap 400 Index (S&P
400).+
[`Graphic representation ``A3'' omitted. See Appendix.'']
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED OCTOBER 31, 1996
<TABLE>
<S> <C>
1 Year.......................................................... 15.80%
Start of Performance (11/5/92).................................. 13.67%
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
THIS REPORT MUST BE PRECEDED OR ACCOMPANIED BY THE FUND'S PROSPECTUS DATED
DECEMBER 31, 1996, AND, TOGETHER WITH FINANCIAL STATEMENTS CONTAINED THEREIN,
CONSTITUTES THE FUND'S ANNUAL REPORT.
* The Fund's performance assumes the reinvestment of all dividends and
distributions. The S&P 400 has been adjusted to reflect reinvestment of
dividends on securities in the index.
+ The S&P 400 is not adjusted to reflect sales charges, expenses, or other fees
that the SEC requires to be reflected in the Fund's performance. This index is
unmanaged.
FEDERATED INVESTORS
LOGO
Since 1955
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.
Cusip 31420E205
006686-A (12/96)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 generally 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, 1996, with the Securities and Exchange Commission ("SEC"). 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 1-800-341-7400. To
obtain other information or to make inquiries about the Fund, contact the Fund
at the address listed in the back of this prospectus. The Statement of
Additional Information, material incorporated by reference into this document,
and other information regarding the Fund is maintained electronically with the
SEC at Internet Web site (http://www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
Prospectus dated December 31, 1996
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................................................................9
Investing in the Fund.........................................................10
Share Purchases.............................................................10
Minimum Investment Required.................................................10
What Shares Cost............................................................10
Exchanging Securities for Fund Shares.......................................10
Certificates and Confirmations..............................................11
Dividends...................................................................11
Capital Gains...............................................................11
Redeeming Shares..............................................................11
Telephone Redemption........................................................11
Written Requests............................................................11
Accounts with Low Balances..................................................12
Shareholder Information.......................................................12
Voting Rights...............................................................12
Tax Information...............................................................12
Federal Income Tax..........................................................12
State and Local Taxes.......................................................13
Performance Information.......................................................13
Financial Statements..........................................................14
Report of Ernst & Young LLP,
Independent Auditors........................................................96
Addresses......................................................Inside Back Cover
SUMMARY OF FUND EXPENSES
FEDERATED MINI-CAP FUND
<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)........................................................ 0.48%
12b-1 Fee................................................................................ None
Total Other Expenses..................................................................... 0.26%
Shareholder Services Fee (after waiver) (2)........................... 0.04%
Total Operating Expenses (3)........................................................ 0.74%
</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 shareholder services fee has been reduced to reflect the voluntary
waiver of a portion of the shareholder services fee. The shareholder service
provider can terminate this voluntary waiver at any time at its sole
discretion. The maximum shareholder services fee is 0.25%.
(3) The total operating expenses would have been 0.97% absent the voluntary
waiver of portions 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 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 $41 $ 92
</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 MINI-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 96.
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
---------------------------------------------------
1996 1995 1994 1993 1992(A)
- -------------------------------------------- ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $13.33 $11.65 $12.66 $10.39 $10.00
- --------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------
Net investment income 0.16 0.15 0.11 0.17 0.02
- --------------------------------------------
Net realized and unrealized gain (loss) on
investments and futures contracts 1.78 1.74 (0.23) 2.27 0.38
- -------------------------------------------- ------ ------ ------ ------ -------
Total from investment operations 1.94 1.89 (0.12) 2.44 0.40
- -------------------------------------------- ------ ------ ------ ------ -------
LESS DISTRIBUTIONS
- --------------------------------------------
Distributions from net investment income (0.16) (0.14) (0.11) (0.17) (0.01 )
- --------------------------------------------
Distributions from net realized gain on
investments and futures contracts (0.72) (0.07) (0.78) -- --
- -------------------------------------------- ------ ------ ------ ------ -------
Total distributions (0.88) (0.21) (0.89) (0.17) (0.01 )
- -------------------------------------------- ------ ------ ------ ------ -------
NET ASSET VALUE, END OF PERIOD $14.39 $13.33 $11.65 $12.66 $10.39
-----
- -------------------------------------------- ------ ------ ------ ------
TOTAL RETURN (B) 15.09% 16.44% (0.91%) 23.73% 4.00 %
- --------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------
Expenses 0.74% 0.75% 0.73% 0.37% 0.00 %
- --------------------------------------------
Net investment income 1.14% 1.23% 0.98% 1.48% 2.04 %*
- --------------------------------------------
Expense waiver/reimbursement (c) 0.23% 0.05% 0.11% 0.86% 0.87 %*
- --------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------
Net assets, end of period (000 omitted) $144,690 $132,399 $98,441 $76,139 $7,75 1
- --------------------------------------------
Average commission rate paid $0.0277 -- -- -- --
- --------------------------------------------
Portfolio turnover 42% 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.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated January 30, 1990. The Declaration of Trust permits the Trust to
offer separate series of shares of beneficial interest representing interests in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. This prospectus relates only to the Fund. The Fund
is designed primarily for institutions investing on behalf of their customers. A
minimum initial investment of $25,000 over a 90-day period is required.
Fund shares are currently sold and redeemed at net asset value without a sales
charge or redemption fee being imposed by the Fund. The Fund's net asset value
per share fluctuates.
INVESTMENT INFORMATION
INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide investment results that
generally correspond to the aggregate price and dividend performance of the
approximately 2,000 publicly traded common stocks that are ranked in terms of
capitalization below the top 1,000 stocks that comprise the large and mid-range
capitalization sector of the United States equity market. The investment
objective of the Fund cannot be changed without the approval of shareholders.
These stocks comprise the Russell 2000(@) Index (the "Index"), an index of small
capitalization stocks. While there is no assurance that the Fund will achieve
its investment objective, it endeavors to do so by following the investment
policies described in this prospectus.
The Fund is neither affiliated with nor promoted, sponsored or endorsed by the
Frank Russell Company. Frank Russell's only relationship to the Fund is the
licensing of the use of the Index.
Frank Russell Company is the owner of the trademarks and copyrights relating to
the Index. The Russell 2000(@) Index is a trademark/service mark of the Frank
Russell Company. Russell(TM) is a trademark of the Frank Russell Company. Frank
Russell Company is not responsible for and has not reviewed the Fund or any
associated literature or publications and Frank Russell Company makes no
representation or warranty, express or implied, as to their accuracy, or
completeness, or otherwise.
INVESTMENT POLICIES
The investment policies described below may be changed by the Board of Trustees
("Trustees") without shareholder approval. Shareholders will be notified before
any material changes in these policies become effective.
The Fund pursues its investment objective by investing primarily in a pool of
securities that will duplicate the investment characteristics of the Index.
Under normal market circumstances, the Fund will invest at least 80% of its
assets in the common stocks 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 Russell 2000 Index is reconstituted annually, through a ranking of the total
market value of public stocks, at the end of the second calendar quarter. The
Fund is also reconstituted at that time to match the Index. This annual
reconstitution significantly affects turnover and transaction costs. During the
year, the Fund is also adjusted as changes occur in the Index. Despite this
trading activity to track the Index, portfolio turnover is expected to be below
that of most actively managed small stock funds. Therefore, the accompanying
costs, including accounting costs, brokerage fees, custodial expenses, and
transfer taxes are expected to be lower as well.
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;
- - notes, bonds, and discount notes issued or guaranteed by U.S. government
agencies and instrumentalities supported by the full faith and credit of the
United States;
- - notes, bonds, and discount notes of U.S. government agencies or
instrumentalities which receive or have access to federal funding; and
- - notes, bonds, and discount notes of other U.S. government instrumentalities
supported only by the credit of the instrumentalities.
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.
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 limitations cannot be changed without shareholder approval.
The following investment limitation, however, may be changed by the Trustees
without shareholder approval. Shareholders will be notified before any material
change in this policy becomes effective.
The Fund will not invest more than 15% of its net assets in securities that are
illiquid.
FEDERATED INDEX TRUST INFORMATION
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES
The Trust is managed by a Board of Trustees. The 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.
MANAGEMENT FEES. The Fund's Manager receives an annual management fee equal to
0.50% 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.
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 $80 billion invested across more than 250 funds under management and/or
administration by its subsidiaries, as of December 31, 1995, Federated Investors
is one of the largest mutual fund investment managers in the United States. With
more than 1,800 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.
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 interests. 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.
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 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
NBD Corporation. It serves as investment adviser principally to corporate
defined benefit and defined contribution plans which have, as of June 30, 1996,
placed approximately $22.2 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 340 nationwide non-financial institution clients
invest. In total, ANB manages 79 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.
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.
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 .25% of the average daily net asset value of its shares,
computed at an annual rate, to obtain certain personal services for shareholders
and to maintain shareholder accounts. 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.
SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS
In addition to payments made pursuant to the Shareholder Services Agreement,
Federated Securities Corp. and Federated Shareholder Services, from their own
assets, may pay financial institutions supplemental fees for the performance of
substantial sales services, distribution-related support services, or
shareholder services. The support may include sponsoring sales, educational and
training seminars for their employees, providing sales literature, and
engineering computer software programs that emphasize the attributes of the
Fund. Such assistance will be predicated upon the amount of shares the financial
institution sells or may sell, and/or upon the type and nature of sales or
marketing support furnished by the financial institution. Any payments made by
the distributor may be reimbursed by the Fund's Manager or its affiliates.
FUND ADMINISTRATION
ADMINISTRATIVE SERVICES
Federated Services Company, 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.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the Managers look for prompt execution of the order at a favorable
price. In working with dealers, the Managers will generally utilize those who
are recognized dealers in specific portfolio instruments, except when a better
price and execution of the order can be obtained elsewhere. In selecting among
firms believed to meet these criteria, the Managers may give consideration to
those firms which have sold or are selling shares of the Fund and other funds
distributed by Federated Securities Corp. The Managers make decisions on
portfolio transactions and select brokers and dealers, subject to review by the
Trustees.
NET ASSET VALUE
The Fund's net asset value per share fluctuates. It is determined by dividing
the sum of the market value of all securities and other assets, less
liabilities, by the number of shares outstanding.
INVESTING IN THE FUND
SHARE PURCHASES
Fund shares are sold on days on which the New York Stock Exchange is open.
Shares of the Fund may be purchased either by wire or mail. To purchase shares
of the Fund, open an account by calling Federated Securities Corp. Information
needed to establish the account will be taken over the telephone. The Fund
reserves the right to reject any purchase request.
BY WIRE
To purchase shares of the Fund by Federal Reserve wire, call the Fund to place
an order. Shareholders have until 4:00 p.m. (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 Shareholder Services Company, c/o State Street Bank
and Trust Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit to:
Federated Index Trust, Federated Mini-Cap Fund; 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; and 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
Shareholder Services Company, P.O. Box 8600, Boston, Massachusetts 02266-8600.
Orders by mail are considered received when payment by check is converted into
federal funds. This is generally the next business day after the check is
received.
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. Investors who purchase
Fund shares through a financial intermediary may be charged a service fee by
that financial intermediary.
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.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Shareholder 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. Investors who redeem shares through a financial
intermediary may be charged a service fee by that financial intermediary.
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. All owners of the
account must sign the request exactly as the shares are registered. If
share certificates have been issued, they should be sent unendorsed with the
written request by registered or certified mail.
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.
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, Donnelly & Meck, 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
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ------------------------------------------------------------------ --------------
<C> <C> <S> <C>
*COMMON STOCKS--95.1%
- -------------------------------------------------------------------------------------
BASIC INDUSTRY--6.9%
------------------------------------------------------------------
3,200 (a) Advanced Polymer Systems, Inc. $ 25,000
------------------------------------------------------------------
5,500 Albany International Corp., Class A 123,750
------------------------------------------------------------------
10,800 (a) Amax Gold, Inc. 59,400
------------------------------------------------------------------
3,700 AMCOL International Corp. 55,036
------------------------------------------------------------------
900 Ameron, Inc. 37,236
------------------------------------------------------------------
3,900 Aptargroup, Inc. 125,775
------------------------------------------------------------------
8,300 Arcadian Corp. 204,387
------------------------------------------------------------------
18,800 (a) Armco, Inc. 70,500
------------------------------------------------------------------
6,500 Ball Corp. 156,812
------------------------------------------------------------------
2,800 Barnett, Inc. 66,150
------------------------------------------------------------------
49,100 Battle Mountain Gold Co. 374,386
------------------------------------------------------------------
6,200 Birmingham Steel Corp. 99,200
------------------------------------------------------------------
5,800 BMC Industries, Inc. 171,824
------------------------------------------------------------------
4,700 Brady (W.H.) Co. 111,038
------------------------------------------------------------------
3,400 Brush Wellman, Inc. 64,174
------------------------------------------------------------------
3,700 (a) Buckeye Cellulose Corp. 96,663
------------------------------------------------------------------
13,500 (a) Burlington Industries, Inc. 153,563
------------------------------------------------------------------
6,500 (a) Calgene, Inc. 32,093
------------------------------------------------------------------
8,700 Calgon Carbon Corp. 87,000
------------------------------------------------------------------
</TABLE>
<TABLE>
<C> <C> <S> <C>
4,100 CalMat Co. 76,363
------------------------------------------------------------------
2,550 Cambrex Corp. 79,688
------------------------------------------------------------------
5,300 Caraustar Industries, Inc. 155,025
------------------------------------------------------------------
3,400 Carpenter Technology Corp. 110,924
------------------------------------------------------------------
2,500 (a) Centex Construction Products, Inc. 39,063
------------------------------------------------------------------
1,200 Chaparral Steel Co. 15,900
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
<C> <C> <S> <C>
BASIC INDUSTRY--CONTINUED
------------------------------------------------------------------
1,800 Chemed Corp. $ 70,200
------------------------------------------------------------------
4,600 Chesapeake Corp. 129,950
------------------------------------------------------------------
2,300 Cleveland Cliffs, Inc. 94,300
------------------------------------------------------------------
4,700 Coeur d'Alene Mines Corp. 68,738
------------------------------------------------------------------
14,900 (a) Collins & Aikman Corp. 89,400
------------------------------------------------------------------
1,100 Columbus McKinnion Corporation 17,188
------------------------------------------------------------------
4,200 (a) Cone Mills Corp. 33,075
------------------------------------------------------------------
15,001 Crompton and Knowles Corp. 270,018
------------------------------------------------------------------
3,400 Dekalb Genetics Corp., Class B 134,300
------------------------------------------------------------------
3,899 Delta & Pine Land Co. 140,364
------------------------------------------------------------------
5,200 Dexter Corp. 161,200
------------------------------------------------------------------
4,500 Donaldson Company, Inc. 131,625
------------------------------------------------------------------
2,800 (a) Dravo Corp. 39,900
------------------------------------------------------------------
1,900 Elcor Corp. 36,574
------------------------------------------------------------------
2,000 (a) Embrace Systems Corp. 1,000
------------------------------------------------------------------
2,300 (a) Energy Conversion Devices, Inc. 32,775
------------------------------------------------------------------
900 Fab Industries, Inc. 23,963
------------------------------------------------------------------
5,700 Ferro Corp. 153,900
------------------------------------------------------------------
1,800 (a) Fibreboard Corp. 57,825
------------------------------------------------------------------
1,900 (a) Fieldcrest Cannon, Inc. 27,075
------------------------------------------------------------------
4,400 First Mississippi Corp. 127,600
------------------------------------------------------------------
1,400 Florida Rock Industries, Inc. 43,400
------------------------------------------------------------------
3,100 (a) Foamex International, Inc. 48,437
------------------------------------------------------------------
3,000 Fuller (H.B.) Co. 125,250
------------------------------------------------------------------
1,900 Furon Co. 39,900
------------------------------------------------------------------
11,700 (a) Gaylord Container Corp. 87,750
------------------------------------------------------------------
1,500 (a) Gelman Sciences, Inc. 46,125
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
<C> <C> <S> <C>
BASIC INDUSTRY--CONTINUED
------------------------------------------------------------------
2,800 (a) Geneva Steel Co., Class A $ 10,500
------------------------------------------------------------------
4,900 Geon Co. 96,163
------------------------------------------------------------------
5,358 (a) Getchell Gold Corp. 238,430
------------------------------------------------------------------
5,600 Glatfelter (P.H.) Co. 106,400
------------------------------------------------------------------
4,100 Greif Brothers Corp., Class A 113,775
------------------------------------------------------------------
2,700 Guilford Mills, Inc. 64,125
------------------------------------------------------------------
11,000 (a) Hecla Mining Co. 61,875
------------------------------------------------------------------
2,300 Imco Recycling, Inc. 36,800
------------------------------------------------------------------
2,614 (a) Intermagnetics General Corp. 37,575
------------------------------------------------------------------
1,500 (a) International Imaging Materials, Inc. 35,625
------------------------------------------------------------------
3,200 (a) Ionics, Inc. 147,200
------------------------------------------------------------------
3,900 J&L Specialty Steel, Inc. 45,825
------------------------------------------------------------------
2,100 (a) Kaiser Aluminum Corp. 23,363
------------------------------------------------------------------
600 (a) Landec Corp. 5,325
------------------------------------------------------------------
6,600 Lawter International, Inc. 77,550
------------------------------------------------------------------
1,500 Learonal 33,188
------------------------------------------------------------------
4,050 Lilly Industrial, Inc., Class A 72,900
------------------------------------------------------------------
1,000 Liqui Box Corp. 31,375
------------------------------------------------------------------
2,600 Lone Star Industries, Inc. 95,550
------------------------------------------------------------------
4,400 (a) Lone Star Technologies, Inc. 70,400
------------------------------------------------------------------
11,200 Longview Fibre Co. 194,600
------------------------------------------------------------------
3,200 Lukens, Inc. 44,000
------------------------------------------------------------------
3,700 (a) Lydall, Inc. 81,863
------------------------------------------------------------------
400 MacDermid, Inc. 36,800
------------------------------------------------------------------
3,300 (a) Material Sciences Corp. 50,325
------------------------------------------------------------------
1,200 (a) Maxxam, Inc. 50,400
------------------------------------------------------------------
1,400 (a) McWhorter Technologies, Inc. 26,950
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
<C> <C> <S> <C>
BASIC INDUSTRY--CONTINUED
------------------------------------------------------------------
3,500 Medusa Corp. $ 115,063
------------------------------------------------------------------
2,700 (a) Mercer International, Inc. 33,750
------------------------------------------------------------------
700 Mine Safety Appliances Co. 35,174
------------------------------------------------------------------
4,900 Minerals Technologies, Inc. 192,325
------------------------------------------------------------------
4,600 Mississippi Chemical Corp. 115,575
------------------------------------------------------------------
2,053 Mosinee Paper Corp. 58,511
------------------------------------------------------------------
3,600 (a) Mycogen Corp. 57,600
------------------------------------------------------------------
900 NCH, Corp. 50,175
------------------------------------------------------------------
4,600 (a) National Steel Corp., Class B 39,675
------------------------------------------------------------------
5,200 NL Industries, Inc. 44,200
------------------------------------------------------------------
3,000 Northland Cranberries, Inc., Class A 57,750
------------------------------------------------------------------
2,700 OM Group, Inc. 110,700
------------------------------------------------------------------
2,100 Optical Coating Laboratories, Inc. 24,019
------------------------------------------------------------------
3,700 Oregon Steel Mills 58,738
------------------------------------------------------------------
2,700 O'Sullivan Corp. 29,025
------------------------------------------------------------------
5,057 (a) Paxar Corp. 81,544
------------------------------------------------------------------
1,300 Petrolite Corp. 41,925
------------------------------------------------------------------
3,250 Pittway Corp., Class A 158,438
------------------------------------------------------------------
2,900 Pope & Talbot, Inc. 45,675
------------------------------------------------------------------
1,000 Puerto Rican Cement Co., Inc. 29,250
------------------------------------------------------------------
2,600 Quanex Corp. 74,100
------------------------------------------------------------------
4,000 Rexene Corp. 52,500
------------------------------------------------------------------
7,150 Rock-Tenn Co. 128,700
------------------------------------------------------------------
1,500 (a) Rogers Corp. 39,938
------------------------------------------------------------------
1,800 Rouge Steel Co., Class A 36,675
------------------------------------------------------------------
2,600 (a) Royal Gold, Inc. 33,150
------------------------------------------------------------------
1,000 Schnitzer Steel Industries, Inc., Class A 26,625
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
<C> <C> <S> <C>
BASIC INDUSTRY--CONTINUED
------------------------------------------------------------------
8,100 Schulman (A.), Inc. $ 171,113
------------------------------------------------------------------
3,100 (a) Shorewood Packaging Corp. 58,513
------------------------------------------------------------------
3,700 Southdown, Inc. 101,288
------------------------------------------------------------------
3,200 Spartech Corp. 33,600
------------------------------------------------------------------
3,000 Springs Industries, Inc., Class A 135,375
------------------------------------------------------------------
1,900 Stepen Chemical Co. 33,013
------------------------------------------------------------------
3,200 (a) Stillwater Mining Co. 55,200
------------------------------------------------------------------
41,700 (a) Sunshine Mining Co. 52,125
------------------------------------------------------------------
1,900 Tejon Ranch Co. 31,113
------------------------------------------------------------------
2,400 Texas Industries, Inc. 136,200
------------------------------------------------------------------
1,000 (a) Tremont Corp. 34,250
------------------------------------------------------------------
2,600 Universal Forest Products, Inc. 30,875
------------------------------------------------------------------
2,500 (a) U.S. Can Corp. 40,000
------------------------------------------------------------------
3,300 Valspar Corp. 162,113
------------------------------------------------------------------
6,175 Wausau Paper Mills Co. 118,869
------------------------------------------------------------------
1,300 (a) WCI Steel, Inc. 12,838
------------------------------------------------------------------
6,400 Wellman, Inc. 113,600
------------------------------------------------------------------
3,600 (a) WestPoint Stevens, Inc. 95,850
------------------------------------------------------------------
5,000 (a) WHX Corp. 41,875
------------------------------------------------------------------
1,700 (a) Zoltek Cos., Inc. 50,150
------------------------------------------------------------------ --------------
Total 9,990,424
------------------------------------------------------------------ --------------
CONSUMER DURABLES--4.9%
------------------------------------------------------------------
3,200 (a) 3DO Co. 18,400
------------------------------------------------------------------
7,100 (a) Acclaim Entertainment, Inc. 35,055
------------------------------------------------------------------
1,500 Action Performance Companies, Inc. 22,500
------------------------------------------------------------------
2,500 (a) Activision, Inc. 31,562
------------------------------------------------------------------
900 American Homestar Corporation 19,125
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
<C> <C> <S> <C>
CONSUMER DURABLES--CONTINUED
------------------------------------------------------------------
2,900 Apogee Enterprises, Inc. $ 111,650
------------------------------------------------------------------
4,750 Arctic Cat, Inc. 44,531
------------------------------------------------------------------
2,100 Armor All Products Corp. 35,175
------------------------------------------------------------------
4,800 Arvin Industries, Inc. 109,800
------------------------------------------------------------------
1,500 (a) Avatar Holdings, Inc. 45,375
------------------------------------------------------------------
700 Barnes Group, Inc. 39,375
------------------------------------------------------------------
2,900 Bassett Furniture Industries, Inc. 64,887
------------------------------------------------------------------
2,900 Borg-Warner Automotive, Inc. 111,288
------------------------------------------------------------------
2,900 Breed Technologies, Inc. 66,700
------------------------------------------------------------------
3,700 (a) Broderbund Software, Inc. 104,063
------------------------------------------------------------------
1,900 Bush Industries, Inc., Class A 31,587
------------------------------------------------------------------
1,400 (a) Cannondale Corp. 26,950
------------------------------------------------------------------
2,900 Carlisle Cos., Inc. 164,938
------------------------------------------------------------------
3,300 (a) Castle & Cooke, Inc. 50,737
------------------------------------------------------------------
1,900 Cavalier Homes, Inc. 35,388
------------------------------------------------------------------
6,100 Centex Corp. 183,762
------------------------------------------------------------------
10,072 (a) Champion Enterprises, Inc. 198,922
------------------------------------------------------------------
20,900 Chyron Corporation 107,113
------------------------------------------------------------------
3,200 CLARCOR, Inc. 69,600
------------------------------------------------------------------
3,200 Coachmen Industries, Inc. 89,600
------------------------------------------------------------------
1,400 (a) Coastcast Corp. 25,550
------------------------------------------------------------------
700 (a) Comforce Corp. 10,937
------------------------------------------------------------------
1,500 Continental Homes Holding Corp. 24,375
------------------------------------------------------------------
2,700 Cross (A.T.) Co., Class A 30,713
------------------------------------------------------------------
3,600 (a) Culligan Water Technologies 135,000
------------------------------------------------------------------
4,600 (a) Department 56, Inc. 101,200
------------------------------------------------------------------
3,954 D. R. Horton, Inc. 36,080
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
<C> <C> <S> <C>
CONSUMER DURABLES--CONTINUED
------------------------------------------------------------------
3,100 (a) Ethan Allen Interiors, Inc. $ 110,825
------------------------------------------------------------------
4,000 Exide Corp. 104,000
------------------------------------------------------------------
8,700 Fedders Corp. 51,113
------------------------------------------------------------------
7,600 Federal-Mogul Corp. 170,050
------------------------------------------------------------------
1,000 (a) Fossil, Inc. 11,875
------------------------------------------------------------------
12,700 (a) Furniture Brands International, Inc. 169,863
------------------------------------------------------------------
6,400 (a) Gentex Corp. 152,000
------------------------------------------------------------------
3,220 Harman International Industries, Inc. 165,428
------------------------------------------------------------------
230 Hayes Wheels International, Inc. 7,648
------------------------------------------------------------------
2,900 Huffy Corp. 38,063
------------------------------------------------------------------
1,900 (a) ITI Technologies, Inc. 54,625
------------------------------------------------------------------
7,300 Jostens, Inc. 156,950
------------------------------------------------------------------
3,017 K2, Inc. 69,391
------------------------------------------------------------------
8,400 Kaufman & Broad Homes Corp. 100,800
------------------------------------------------------------------
2,900 La-Z Boy Chair Co. 90,263
------------------------------------------------------------------
5,800 Lennar Corp. 129,050
------------------------------------------------------------------
3,200 Lewis Galoob Toys, Inc. 86,000
------------------------------------------------------------------
3,000 Libbey, Inc. 72,000
------------------------------------------------------------------
1,400 (a) L.L. Knickerbocker Company 14,875
------------------------------------------------------------------
4,700 (a) Lo-Jack Corp. 48,762
------------------------------------------------------------------
6,700 Mascotech, Inc. 105,525
------------------------------------------------------------------
1,600 Matthews International Corp., Class A 47,400
------------------------------------------------------------------
1,500 (a) Mikasa, Inc. 16,312
------------------------------------------------------------------
4,400 (a) Mohawk Industries, Inc. 106,700
------------------------------------------------------------------
2,747 Myers Industries, Inc. 42,579
------------------------------------------------------------------
800 National Presto Industries, Inc. 30,000
------------------------------------------------------------------
2,400 (a) NVR, Inc. 22,650
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
<C> <C> <S> <C>
CONSUMER DURABLES--CONTINUED
------------------------------------------------------------------
2,000 Oneida Ltd. $ 28,750
------------------------------------------------------------------
4,300 Outboard Marine Corp. 66,650
------------------------------------------------------------------
2,000 (a) Palm Harbor Homes, Inc. 56,250
------------------------------------------------------------------
5,900 Polaris Industries Partners, L.P., Class A 115,788
------------------------------------------------------------------
3,900 Pulte Corp. 103,350
------------------------------------------------------------------
2,099 (a) Recoton Corp. 29,911
------------------------------------------------------------------
2,100 Rival Co. 49,350
------------------------------------------------------------------
2,100 Russ Berrie & Co., Inc. 37,800
------------------------------------------------------------------
3,200 Ryland Group, Inc. 41,200
------------------------------------------------------------------
2,500 (a) Samsonite Corp. 84,375
------------------------------------------------------------------
4,100 (a) Scotts Co. 76,363
------------------------------------------------------------------
3,500 Simpson Industries, Inc. 34,563
------------------------------------------------------------------
2,000 Skyline Corp. 55,000
------------------------------------------------------------------
3,400 Smith (A.O.) Corp. 89,250
------------------------------------------------------------------
4,700 (a) Sola International, Inc. 169,788
------------------------------------------------------------------
2,000 (a) Southern Energy Homes, Inc. 29,750
------------------------------------------------------------------
5,200 (a) Spectrum Holobyte, Inc. 29,250
------------------------------------------------------------------
2,300 SPX Corp. 65,263
------------------------------------------------------------------
1,800 Standard Motor Products, Inc. 25,425
------------------------------------------------------------------
6,500 Standard Pacific Corp. 34,938
------------------------------------------------------------------
3,125 Standard Products Co. 75,781
------------------------------------------------------------------
4,000 Stanhome, Inc. 106,000
------------------------------------------------------------------
3,500 Stant Corp. 42,000
------------------------------------------------------------------
1,500 Starrett (L.S.) Co., Class A 36,750
------------------------------------------------------------------
4,200 Sturm Ruger & Co., Inc. 78,750
------------------------------------------------------------------
4,600 Superior Industries International, Inc. 112,124
------------------------------------------------------------------
900 (a) Syratech Corp. 28,013
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
<C> <C> <S> <C>
CONSUMER DURABLES--CONTINUED
------------------------------------------------------------------
5,150 (a) TBC Corp. $ 34,118
------------------------------------------------------------------
1,100 Thor Industries, Inc. 27,500
------------------------------------------------------------------
4,700 (a) Toll Brothers, Inc. 80,488
------------------------------------------------------------------
6,000 (a) Top Source Technologies, Inc. 23,250
------------------------------------------------------------------
9,100 (a) Topps Co. 34,694
------------------------------------------------------------------
2,600 Toro Co. 81,575
------------------------------------------------------------------
3,700 (a) Toy Biz, Inc., Class A 65,675
------------------------------------------------------------------
7,500 (a) Tyco Toys, Inc. 47,813
------------------------------------------------------------------
2,501 (a) U.S. Home Corp. 54,084
------------------------------------------------------------------
3,200 United Stationers, Inc. 72,000
------------------------------------------------------------------
1,900 Walbro Corp. 39,663
------------------------------------------------------------------
1,500 WD 40 Co. 75,000
------------------------------------------------------------------
3,800 Webb (Del) Corp. 60,800
------------------------------------------------------------------
3,400 Windmere Corp. 53,975
------------------------------------------------------------------
3,100 Winnebago Industries, Inc. 22,862
------------------------------------------------------------------
1,950 Wynns International, Inc. 55,331
------------------------------------------------------------------
2,900 X-Rite, Inc. 54,012
------------------------------------------------------------------
5,813 (a) Zenith Electronics Corp. 76,295
------------------------------------------------------------------ --------------
Total 7,018,252
------------------------------------------------------------------ --------------
CONSUMER NON-DURABLES--3.5%
------------------------------------------------------------------
3,800 Authentic Fitness Corp. 42,275
------------------------------------------------------------------
2,655 Block Drug, Inc., Class A 119,309
------------------------------------------------------------------
3,900 Brown Group, Inc. 80,438
------------------------------------------------------------------
1,300 Bush Boake Allen, Inc. 33,474
------------------------------------------------------------------
3,700 (a) Canandaigua Wine Co., Inc., Class B 87,875
------------------------------------------------------------------
6,400 Chiquita Brands International 80,000
------------------------------------------------------------------
3,900 Church and Dwight, Inc. 83,850
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
<C> <C> <S> <C>
CONSUMER NON-DURABLES--CONTINUED
------------------------------------------------------------------
1,200 Coca-Cola Bottling Co. $ 48,000
------------------------------------------------------------------
8,200 Coors Adolph Co., Class B 159,900
------------------------------------------------------------------
500 (a) Culbro Corp. 26,938
------------------------------------------------------------------
8,700 Dean Foods Co. 252,300
------------------------------------------------------------------
7,250 Dimon, Inc. 137,750
------------------------------------------------------------------
2,000 (a) Donnkenny, Inc. 25,250
------------------------------------------------------------------
2,300 Dreyers Grand Ice Cream, Inc. 59,224
------------------------------------------------------------------
2,000 (a) Earthgrains Co. 106,000
------------------------------------------------------------------
200 Farmer Brothers Co. 30,300
------------------------------------------------------------------
12,450 Flowers Industries, Inc. 291,019
------------------------------------------------------------------
2,700 (a) FoodBrands America, Inc. 35,437
------------------------------------------------------------------
3,500 (a) Gibson Greetings, Inc. 54,688
------------------------------------------------------------------
5,400 (a) Gymboree Corp. 168,750
------------------------------------------------------------------
5,300 (a) Hartmarx Corp. 24,513
------------------------------------------------------------------
2,600 Herbalife International, Inc. 51,675
------------------------------------------------------------------
4,500 Hudson Foods, Inc., Class A 74,813
------------------------------------------------------------------
3,500 International Multifoods Corp. 53,375
------------------------------------------------------------------
3,975 (a) Just For Feet, Inc. 102,852
------------------------------------------------------------------
4,000 Justin Industries, Inc. 41,000
------------------------------------------------------------------
4,600 Kellwood Co. 82,800
------------------------------------------------------------------
1,400 (a) Kenneth Cole Productions, Inc., Class A 23,100
------------------------------------------------------------------
3,300 Lance, Inc. 57,750
------------------------------------------------------------------
1,400 (a) Marisa Christina, Inc. 12,424
------------------------------------------------------------------
2,900 (a) Martek Biosciences Corp. 62,350
------------------------------------------------------------------
2,600 Michael Foods, Inc. 32,500
------------------------------------------------------------------
1,700 (a) Mondavi Robert Corp., Class A 48,450
------------------------------------------------------------------
1,600 (a) Morningstar Group, Inc. 27,000
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
CONSUMER NON-DURABLES--CONTINUED
------------------------------------------------------------------
3,174 Natures Sunshine Products, Inc. $ 70,225
------------------------------------------------------------------
7,600 (a) Nautica Enterprise, Inc. 233,700
------------------------------------------------------------------
3,400 (a) NBTY, Inc. 53,124
------------------------------------------------------------------
2,400 OshKosh B'Gosh, Inc., Class A 36,000
------------------------------------------------------------------
2,300 (a) Paragon Trade Brands, Inc. 60,375
------------------------------------------------------------------
3,600 Pepsi-Cola Puerto Rico Bottling Co., Class B 18,000
------------------------------------------------------------------
1,800 (a) Pete's Brewing Co. 12,600
------------------------------------------------------------------
5,100 Phillips Van Heusen Corp. 56,100
------------------------------------------------------------------
900 Pilgrims Pride Corp. 7,087
------------------------------------------------------------------
5,200 (a) Playtex Products, Inc. 44,200
------------------------------------------------------------------
1,500 (a) Quiksilver, Inc. 31,875
------------------------------------------------------------------
6,700 Ralcorp Holdings, Inc. 140,700
------------------------------------------------------------------
1,700 (a) Redhook Ale Brewery, Inc. 26,350
------------------------------------------------------------------
1,600 Riviana Foods, Inc. 23,800
------------------------------------------------------------------
1,500 Sanderson Farms, Inc. 20,250
------------------------------------------------------------------
4,500 Savannah Foods & Industries, Inc. 72,000
------------------------------------------------------------------
3,500 (a) Schweitzer-Mauduit International, Inc. 107,624
------------------------------------------------------------------
100 Seaboard Corp. 21,124
------------------------------------------------------------------
3,400 (a) Smithfield Foods, Inc. 98,600
------------------------------------------------------------------
6,300 Smucker (J.M.) Co., Class A 103,950
------------------------------------------------------------------
3,200 St. John Knits, Inc. 146,400
------------------------------------------------------------------
2,400 (a) Starter Corp. 14,400
------------------------------------------------------------------
10,700 Stride Rite Corp. 88,274
------------------------------------------------------------------
3,600 (a) The Boston Beer Co., Inc., Class A 44,550
------------------------------------------------------------------
1,800 (a) Timberland Co., Class A 59,175
------------------------------------------------------------------
3,825 Tootsie Roll Industries, Inc. 140,568
------------------------------------------------------------------
1,400 (a) USA Detergents, Inc. 46,200
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
CONSUMER NON-DURABLES--CONTINUED
------------------------------------------------------------------
2,000 Unitog Co. $ 54,000
------------------------------------------------------------------
7,600 Universal Corp. 207,100
------------------------------------------------------------------
5,600 Universal Foods Corp. 198,100
------------------------------------------------------------------
1,700 (a) Vans, Inc. 28,262
------------------------------------------------------------------
3,450 WLR Foods, Inc. 43,556
------------------------------------------------------------------
5,737 Wolverine World Wide, Inc. 141,991
------------------------------------------------------------------ --------------
Total 5,067,639
------------------------------------------------------------------ --------------
ENERGY MINERALS--3.9%
------------------------------------------------------------------
1,600 (a) Addington Resources, Inc. 44,800
------------------------------------------------------------------
1,400 Ashland Coal, Inc. 33,074
------------------------------------------------------------------
1,100 (a) Atwood Oceanics, Inc. 61,050
------------------------------------------------------------------
6,470 (a) Barrett Resources 248,285
------------------------------------------------------------------
1,200 Belco Oil & Gas Corporation 29,850
------------------------------------------------------------------
2,100 (a) Belden & Blake Corp. 55,650
------------------------------------------------------------------
5,600 (a) Benton Oil & Gas Co. 137,200
------------------------------------------------------------------
4,200 Berry Petroleum Co., Class A 51,450
------------------------------------------------------------------
7,381 (a) BJ Services Co. 331,221
------------------------------------------------------------------
4,000 (a) Box Energy Corp., Class B 35,000
------------------------------------------------------------------
3,900 (a) Brown Tom, Inc. 73,612
------------------------------------------------------------------
4,500 Cabot Oil & Gas Corp., Class A 69,750
------------------------------------------------------------------
3,200 (a) Cairn Energy USA, Inc. 34,000
------------------------------------------------------------------
5,200 Camco International, Inc. 201,500
------------------------------------------------------------------
1,300 (a) Cliffs Drilling Co. 55,737
------------------------------------------------------------------
3,300 Cross Timbers Oil Co. 77,963
------------------------------------------------------------------
1,500 (a) Crown Center Petroleum Corp., Class A 20,438
------------------------------------------------------------------
4,100 Devon Energy Corp. 142,988
------------------------------------------------------------------
5,100 Diamond Shamrock, Inc. 149,812
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
ENERGY MINERALS--CONTINUED
------------------------------------------------------------------
2,500 (a) Energy Ventures, Inc. $ 110,000
------------------------------------------------------------------
2,100 (a) Falcon Drilling Co., Inc. 74,288
------------------------------------------------------------------
2,400 (a) Flores & Rucks, Inc. 113,400
------------------------------------------------------------------
2,000 Forcenergy Gas Exploration, Inc. 54,750
------------------------------------------------------------------
4,700 (a) Forest Oil Corp. 70,500
------------------------------------------------------------------
1,500 Getty Petroleum Corp. 25,500
------------------------------------------------------------------
1,500 Giant Industries, Inc. 23,062
------------------------------------------------------------------
4,600 (a) Global Industries Ltd. 82,800
------------------------------------------------------------------
14,300 (a) Harken Energy Corp. 35,750
------------------------------------------------------------------
5,400 Helmerich & Payne, Inc. 292,274
------------------------------------------------------------------
1,200 Holly Corp. 29,850
------------------------------------------------------------------
700 (a) Hondo Oil & Gas Co. 9,275
------------------------------------------------------------------
2,600 (a) Hugoton Energy Corp. 22,750
------------------------------------------------------------------
2,100 KCS Energy, Inc. 90,563
------------------------------------------------------------------
3,100 Lomak Petroleum, Inc. 50,763
------------------------------------------------------------------
1,600 (a) Louis Dreyfus Natural Gas Corp. 27,000
------------------------------------------------------------------
8,700 (a) Marine Drilling Cos., Inc. 120,713
------------------------------------------------------------------
13,800 (a) Mesa, Inc. 63,825
------------------------------------------------------------------
8,100 Mitchell Energy & Development, Class A 159,974
------------------------------------------------------------------
3,700 (a) Newfield Exploration Co. 174,825
------------------------------------------------------------------
2,500 (a) Nuevo Energy Co. 124,688
------------------------------------------------------------------
5,000 (a) Oceaneering International, Inc. 90,000
------------------------------------------------------------------
4,200 (a) Offshore Logistics, Inc. 69,825
------------------------------------------------------------------
7,700 Parker & Parsley Petroleum Co. 221,375
------------------------------------------------------------------
10,400 (a) Parker Drilling Co. 88,400
------------------------------------------------------------------
3,500 (a) Plains Resources, Inc. 49,000
------------------------------------------------------------------
2,800 (a) Pool Energy Services Co. 41,300
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
ENERGY MINERALS--CONTINUED
------------------------------------------------------------------
5,400 (a) Pride Petroleum Services, Inc. $ 94,500
------------------------------------------------------------------
1,800 Production Operations Corp. 71,550
------------------------------------------------------------------
7,100 Quaker State Corp. 118,924
------------------------------------------------------------------
1,400 (a) RPC Energy Services, Inc. 21,875
------------------------------------------------------------------
1,500 (a) Seacor Holdings, Inc. 81,000
------------------------------------------------------------------
2,100 (a) Seitel, Inc. 83,475
------------------------------------------------------------------
6,000 Snyder Oil Corp. 91,500
------------------------------------------------------------------
3,300 (a) Solv Ex Corp. 42,900
------------------------------------------------------------------
1,900 (a) Stone Energy Corp. 39,900
------------------------------------------------------------------
2,700 (a) Swift Energy Co. 66,150
------------------------------------------------------------------
5,600 (a) Tesoro Petroleum Corp. 82,600
------------------------------------------------------------------
2,100 (a) TransTexas Gas Corp. 29,400
------------------------------------------------------------------
8,800 (a) Tuboscope Vetco International Corp. 134,200
------------------------------------------------------------------
5,609 (a) United Meridian Corp. 264,323
------------------------------------------------------------------
3,700 (a) Varco International, Inc. 73,074
------------------------------------------------------------------
2,300 Vintage Petroleum, Inc. 67,850
------------------------------------------------------------------
3,200 Zeigler Coal Holding Co. 58,000
------------------------------------------------------------------ --------------
Total 5,591,051
------------------------------------------------------------------ --------------
FINANCE--22.4%
------------------------------------------------------------------
1,601 1st Source Corp. 36,622
------------------------------------------------------------------
9,100 (a) 20th Century Industries 145,600
------------------------------------------------------------------
2,400 Aames Financial Corp 107,100
------------------------------------------------------------------
3,200 Aaron Rents, Inc. 46,400
------------------------------------------------------------------
2,700 (a) Acceptance Insurance Cos., Inc. 54,675
------------------------------------------------------------------
3,000 Acordia, Inc. 85,500
------------------------------------------------------------------
2,640 Albank Financial Corp. 73,260
------------------------------------------------------------------
3,100 Alex Brown, Inc. 175,925
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
FINANCE--CONTINUED
------------------------------------------------------------------
8,900 Alexander & Alexander Services, Inc. $ 135,724
------------------------------------------------------------------
800 (a) Alexander's, Inc. 58,800
------------------------------------------------------------------
4,300 Alfa Corp. 46,225
------------------------------------------------------------------
3,000 Allied Capital Commercial 65,250
------------------------------------------------------------------
3,000 Allied Group, Inc. 126,750
------------------------------------------------------------------
2,800 AmVestors Financial Corp. 40,950
------------------------------------------------------------------
2,650 Amcore Financial, Inc. 54,987
------------------------------------------------------------------
3,500 (a) AMERCO 122,500
------------------------------------------------------------------
1,847 American Annuity Group, Inc. 25,165
------------------------------------------------------------------
4,400 American Bankers Insurance Group, Inc. 211,200
------------------------------------------------------------------
2,400 American Federal Bank, FSB SC 44,100
------------------------------------------------------------------
4,600 American Health Properties, Inc. 98,900
------------------------------------------------------------------
1,700 American Heritage Life Investments 37,611
------------------------------------------------------------------
3,100 (a) American Travellers Corp. 106,562
------------------------------------------------------------------
6,100 (a) Americredit Corp. 115,900
------------------------------------------------------------------
5,600 (a) Amerin Corp. 110,600
------------------------------------------------------------------
1,800 Amli Residential Properties Trust 39,600
------------------------------------------------------------------
1,150 Anchor Bancorp Wisconsin, Inc. 40,537
------------------------------------------------------------------
2,700 Apartment Investment & Management Co., Class A 62,775
------------------------------------------------------------------
3,800 Argonaut Group, Inc. 111,150
------------------------------------------------------------------
3,612 Associated Banc Corp. 144,480
------------------------------------------------------------------
2,200 Associated Estates Realty Corp. 45,100
------------------------------------------------------------------
4,300 Astoria Financial Corp. 152,112
------------------------------------------------------------------
6,300 Avalon Properties, Inc. 145,686
------------------------------------------------------------------
2,500 Baldwin & Lyons, Inc., Class B 44,844
------------------------------------------------------------------
4,060 Bancorpsouth, Inc. 103,022
------------------------------------------------------------------
1,925 Bank Granite Corp. 54,862
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
FINANCE--CONTINUED
------------------------------------------------------------------
1,400 Bankatlantic Bancorp, Inc. $ 18,375
------------------------------------------------------------------
2,812 Bankers Corp. 54,130
------------------------------------------------------------------
3,900 Bankers Life Holding Corporation 96,037
------------------------------------------------------------------
1,500 Banknorth Group, Inc. 51,750
------------------------------------------------------------------
2,500 Bay Apartment Communities, Inc. 75,000
------------------------------------------------------------------
1,300 Bay View Capital Corp. 51,350
------------------------------------------------------------------
5,900 Beacon Properties Corp. 173,312
------------------------------------------------------------------
3,100 Berkley, W. R. Corp. 161,200
------------------------------------------------------------------
5,500 Berkshire Realty Co., Inc. 54,312
------------------------------------------------------------------
2,200 Blanch, E. W. Holdings, Inc. 45,374
------------------------------------------------------------------
1,048 (a) BOK Financial Corp. 26,724
------------------------------------------------------------------
2,746 Bradley Real Estate, Inc. 45,652
------------------------------------------------------------------
1,265 Brenton Bank, Inc. 29,728
------------------------------------------------------------------
6,994 BRE Properties, Inc., Class A 160,862
------------------------------------------------------------------
3,700 Burnham Pacific Properties, Inc. 45,788
------------------------------------------------------------------
9,900 (a) Cal Fed Bancorp, Inc. 230,175
------------------------------------------------------------------
3,300 Cali Realty Corp. 88,688
------------------------------------------------------------------
3,200 Camden Property Trust 87,200
------------------------------------------------------------------
800 CapMAC Holdings, Inc. 26,700
------------------------------------------------------------------
2,300 Capital Re Corp. 89,125
------------------------------------------------------------------
800 Capitol American Financial Corp. 29,000
------------------------------------------------------------------
7,650 Capstead Management Corp. 164,475
------------------------------------------------------------------
2,500 (a) Capsure Holdings Corp. 22,500
------------------------------------------------------------------
2,000 Carolina First Corporation 35,000
------------------------------------------------------------------
7,400 Carr Realty Corp. 185,925
------------------------------------------------------------------
16,100 (a) Catellus Development Corp. 158,988
------------------------------------------------------------------
4,500 CBL & Associates Properties, Inc. 106,313
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
FINANCE--CONTINUED
------------------------------------------------------------------
1,700 CBT Corp., KY $ 42,500
------------------------------------------------------------------
3,250 CCB Financial Corp. 185,250
------------------------------------------------------------------
3,100 Center Financial Corp. 78,081
------------------------------------------------------------------
2,400 CenterPoint Properties Corp. 66,000
------------------------------------------------------------------
4,900 Centura Banks, Inc. 190,487
------------------------------------------------------------------
2,500 Chelsea GCA Realty, Inc. 75,313
------------------------------------------------------------------
1,993 Chemical Financial Corp. 76,731
------------------------------------------------------------------
2,225 Chittenden Corp. 55,069
------------------------------------------------------------------
1,100 Citfed Bancorp, Inc. 49,225
------------------------------------------------------------------
2,900 Citizens Bancorp 148,625
------------------------------------------------------------------
2,300 Citizens Banking Corp. 67,275
------------------------------------------------------------------
1,500 Citizens Corp. 30,188
------------------------------------------------------------------
7,900 City National Corp. 138,250
------------------------------------------------------------------
1,100 Cityscape Financial Corporation 28,325
------------------------------------------------------------------
2,400 CMAC Investment Corp. 165,900
------------------------------------------------------------------
4,067 CNB Bancshares, Inc. 120,993
------------------------------------------------------------------
4,000 (a) Coast Savings Financial, Inc. 131,500
------------------------------------------------------------------
1,700 Cole Taylor Financial Group, Inc. 51,106
------------------------------------------------------------------
4,450 Collective Bancorp, Inc. 133,500
------------------------------------------------------------------
2,000 Colonial BancGroup, Inc. 75,750
------------------------------------------------------------------
3,800 Colonial Properties Trust 100,700
------------------------------------------------------------------
2,500 Columbus Realty Trust 52,500
------------------------------------------------------------------
2,478 Commerce Bancorp, Inc. 66,286
------------------------------------------------------------------
4,300 Commerce Group, Inc. 103,200
------------------------------------------------------------------
3,200 Commercial Federal Corp. 134,000
------------------------------------------------------------------
3,400 Commercial Net Lease Realty 46,750
------------------------------------------------------------------
4,869 Commonwealth Bancorp 61,471
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
FINANCE--CONTINUED
------------------------------------------------------------------
2,500 Community First Bankshares, Inc. $ 61,875
------------------------------------------------------------------
2,300 CORT Business Services Corp. 48,300
------------------------------------------------------------------
1,700 Corus Bankshares, Inc. 52,275
------------------------------------------------------------------
4,900 Cousins Properties, Inc. 112,088
------------------------------------------------------------------
1,000 CPB, Inc. 30,375
------------------------------------------------------------------
5,200 Crawford & Co., Class B 102,700
------------------------------------------------------------------
4,500 (a) Credit Acceptance Corp. 121,500
------------------------------------------------------------------
4,500 Crescent Real Estate Equities, Inc. 187,875
------------------------------------------------------------------
6,600 Criimi Mae, Inc. 77,550
------------------------------------------------------------------
5,200 Crown American Realty Trust 40,300
------------------------------------------------------------------
4,840 Cullen Frost Bankers, Inc. 145,503
------------------------------------------------------------------
9,400 CWM Mortgage Holdings, Inc. 195,050
------------------------------------------------------------------
6,600 Dauphin Deposit Corp. 216,150
------------------------------------------------------------------
2,640 (a) Delphi Financial Group, Inc., Class A 74,250
------------------------------------------------------------------
4,100 Deposit Guaranty Corp. 206,024
------------------------------------------------------------------
4,100 Developers Diversified Realty 137,863
------------------------------------------------------------------
2,405 Downey Financial Corp. 62,530
------------------------------------------------------------------
6,100 Duke Realty Investments, Inc. 210,450
------------------------------------------------------------------
1,600 Eaton Vance Corp. 70,000
------------------------------------------------------------------
1,550 (a) Electro Rent Corp. 35,650
------------------------------------------------------------------
2,700 Enhance Financial Services Group, Inc. 90,113
------------------------------------------------------------------
4,800 Equity Inns, Inc. 55,800
------------------------------------------------------------------
3,900 Evans Withycombe Residential, Inc. 82,388
------------------------------------------------------------------
2,900 Excel Realty Trust, Inc. 63,438
------------------------------------------------------------------
2,500 Executive Risk, Inc. 103,125
------------------------------------------------------------------
7,000 Federal Realty Investment Trust 165,375
------------------------------------------------------------------
4,900 FelCor Suite Hotels, Inc. 160,475
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
FINANCE--CONTINUED
------------------------------------------------------------------
1,982 Fidelity National Financial, Inc. $ 31,464
------------------------------------------------------------------
2,100 (a) Financial Federal Corp. 29,400
------------------------------------------------------------------
6,843 Financial Security Assurance Holdings Ltd. 191,604
------------------------------------------------------------------
1,548 Financial Trust Corp. 41,990
------------------------------------------------------------------
2,100 First American Financial Corp. 79,013
------------------------------------------------------------------
2,500 First Citizens Bancshares, Inc., Class A 168,125
------------------------------------------------------------------
3,343 First Colorado Bancorp, Inc. 52,234
------------------------------------------------------------------
2,600 First Commerce Bancshares, Inc., Class A 72,475
------------------------------------------------------------------
4,869 First Commercial Corp. 163,106
------------------------------------------------------------------
4,800 First Commmonwealth Financial Corp. 86,400
------------------------------------------------------------------
2,988 First Financial Bancorp 92,616
------------------------------------------------------------------
1,325 First Financial Bankshares, Inc. 47,866
------------------------------------------------------------------
1,112 First Financial Corp. 37,808
------------------------------------------------------------------
6,400 First Financial Corp. Wisconsin 173,600
------------------------------------------------------------------
5,000 First Hawaiian, Inc. 155,000
------------------------------------------------------------------
1,299 First Indiana Corp. 31,663
------------------------------------------------------------------
5,200 First Industrial Realty Trust 134,550
------------------------------------------------------------------
5,218 First Michigan Bank Corp. 130,450
------------------------------------------------------------------
2,600 First Midwest Bancorp, Inc. 82,874
------------------------------------------------------------------
2,400 First Savings Bank of Washington Bancorp, Inc. 40,800
------------------------------------------------------------------
1,400 First United Bancshares 39,025
------------------------------------------------------------------
1,702 First Western Bancorp, Inc. 45,316
------------------------------------------------------------------
2,700 FirstBank Puerto Rico 62,775
------------------------------------------------------------------
2,100 (a) FirstFed Financial Corp. 46,200
------------------------------------------------------------------
2,200 Firstbank Illinois Co. 71,500
------------------------------------------------------------------
6,600 Firstmerit Corp. 214,500
------------------------------------------------------------------
1,230 F & M Bancorporation, Inc. 37,515
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
FINANCE--CONTINUED
------------------------------------------------------------------
4,155 F & M National Corp. $ 76,868
------------------------------------------------------------------
1,974 FNB Corp. 46,635
------------------------------------------------------------------
1,900 Foremost Corp. 104,738
------------------------------------------------------------------
800 Forest City Enterprises, Inc., Class A 39,600
------------------------------------------------------------------
2,450 Fort Wayne National Corp. 84,831
------------------------------------------------------------------
8,700 Franchise Finance Corporation of America 208,800
------------------------------------------------------------------
4,165 Fremont General Corp. 122,347
------------------------------------------------------------------
2,415 Frontier Insurance Group, Inc. 95,996
------------------------------------------------------------------
7,151 Fulton Financial Corp. 144,808
------------------------------------------------------------------
1,500 Fund American Enterprises, Inc. 134,437
------------------------------------------------------------------
3,500 Gables Residential Trust 84,875
------------------------------------------------------------------
4,102 Gainsco, Inc. 39,482
------------------------------------------------------------------
3,100 Gallagher (Arthur J.) & Co. 91,063
------------------------------------------------------------------
4,300 GATX Corp. 205,325
------------------------------------------------------------------
5,900 General Growth Properties, Inc. 148,975
------------------------------------------------------------------
9,540 (a) Glendale Federal Bank 175,298
------------------------------------------------------------------
4,700 Glimcher Realty Trust 90,475
------------------------------------------------------------------
3,200 Great Financial Corp. 93,600
------------------------------------------------------------------
2,100 (a) Guarantee Mutual Life Co. 40,950
------------------------------------------------------------------
5,021 Guaranty National Corp. 79,081
------------------------------------------------------------------
1,700 Hancock Holding Co. 67,575
------------------------------------------------------------------
1,300 Harleysville Group, Inc. 36,400
------------------------------------------------------------------
1,437 Harleysville National Corp. 35,745
------------------------------------------------------------------
600 Harris Savings Bank, PA 9,150
------------------------------------------------------------------
4,400 Hartford Steam Boiler Insurance 189,750
------------------------------------------------------------------
6,100 HCC Insurance Holdings, Inc. 155,550
------------------------------------------------------------------
6,200 Health Care Property Investors, Inc. 217,775
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
FINANCE--CONTINUED
------------------------------------------------------------------
3,100 Health Care REIT, Inc. $ 73,238
------------------------------------------------------------------
2,500 Healthcare Realty Trust, Inc. 61,563
------------------------------------------------------------------
1,100 Heritage Financial Services, Inc. 23,100
------------------------------------------------------------------
2,500 (a) Highlands Insurance Group, Inc. 49,374
------------------------------------------------------------------
6,400 Highwoods Properties, Inc. 184,000
------------------------------------------------------------------
3,000 Hilb Rogal & Hamilton Co. 38,250
------------------------------------------------------------------
2,600 Home Beneficial Corp., Class B 64,675
------------------------------------------------------------------
5,327 Home Financial Corp. 86,564
------------------------------------------------------------------
1,200 Homeland Bankshares Corp. 46,200
------------------------------------------------------------------
5,100 Horace Mann Educators Corp. 174,675
------------------------------------------------------------------
3,772 Horizon Group, Inc. 79,684
------------------------------------------------------------------
4,900 Hospitality Properties Trust 127,400
------------------------------------------------------------------
3,002 Hubco, Inc. 64,553
------------------------------------------------------------------
3,411 (a) Imperial Bancorp 66,088
------------------------------------------------------------------
4,054 (a) Imperial Credit Industries, Inc. 73,479
------------------------------------------------------------------
5,600 (a) Insignia Financial Group, Inc., Class A 121,100
------------------------------------------------------------------
2,800 Integon Corp. 52,850
------------------------------------------------------------------
2,600 Inter Regional Financial Group, Inc. 84,175
------------------------------------------------------------------
2,200 Interpool, Inc. 47,850
------------------------------------------------------------------
800 (a) Investment Technology Group, Inc. 13,800
------------------------------------------------------------------
5,500 IRT Property Co. 52,938
------------------------------------------------------------------
3,700 Irvine Apartment Communities, Inc. 85,100
------------------------------------------------------------------
600 Irwin Financial Corp. 26,250
------------------------------------------------------------------
2,200 (a) Jayhawk Acceptance Corp. 31,350
------------------------------------------------------------------
2,400 JDN Realty Corp. 60,000
------------------------------------------------------------------
2,100 Jefferies Group, Inc. 75,075
------------------------------------------------------------------
3,300 Jefferson Bankshares, Inc. 90,750
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
FINANCE--CONTINUED
------------------------------------------------------------------
4,900 John Alden Financial Corp. $ 91,263
------------------------------------------------------------------
1,200 John Nuveen & Co., Inc., Class A 33,300
------------------------------------------------------------------
2,800 JP Realty, Inc. 63,700
------------------------------------------------------------------
1,800 JSB Financial, Inc. 66,150
------------------------------------------------------------------
700 Kansas City Life Insurance Co. 39,200
------------------------------------------------------------------
8,199 Keystone Financial, Inc. 213,173
------------------------------------------------------------------
5,800 Kimco Realty Corp. 167,475
------------------------------------------------------------------
2,600 Klamath First Bancorp 36,563
------------------------------------------------------------------
3,300 (a) Koger Equity, Inc. 51,563
------------------------------------------------------------------
2,775 Legg Mason, Inc. 89,494
------------------------------------------------------------------
1,200 Liberty Bancorp, Inc.-Oklahoma 46,500
------------------------------------------------------------------
3,200 Liberty Corp. 110,400
------------------------------------------------------------------
1,000 Liberty Financial Cos., Inc. 35,125
------------------------------------------------------------------
6,200 Liberty Property Trust 134,074
------------------------------------------------------------------
2,100 Life Re Corp. 76,913
------------------------------------------------------------------
3,300 (a) Life USA Holdings, Inc. 31,350
------------------------------------------------------------------
5,400 Long Island Bancorp, Inc. 160,650
------------------------------------------------------------------
3,900 LTC Properties, Inc. 66,300
------------------------------------------------------------------
3,900 Macerich Co. (The) 85,800
------------------------------------------------------------------
2,309 MAF Bancorp, Inc. 70,425
------------------------------------------------------------------
3,000 Magna Bancorp 55,500
------------------------------------------------------------------
6,000 Magna Group, Inc. 168,000
------------------------------------------------------------------
1,803 (a) MAIC Holdings, Inc. 58,598
------------------------------------------------------------------
5,300 Manufactured Home Communities, Inc. 103,350
------------------------------------------------------------------
2,950 Mark Twain Bancshares, Inc. 135,331
------------------------------------------------------------------
900 (a) Markel Corp. 78,300
------------------------------------------------------------------
1,900 McDonald & Co. Investors, Inc. 46,313
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
FINANCE--CONTINUED
------------------------------------------------------------------
1,300 McGrath Rentcorp. $ 30,874
------------------------------------------------------------------
1,000 Meadowbrook Insurance Group, Inc. 25,500
------------------------------------------------------------------
2,100 Meridian Industrial Trust, Inc. 36,750
------------------------------------------------------------------
7,300 Merry Land and Investment Co. 153,300
------------------------------------------------------------------
2,500 MGI Properties, Inc. 47,813
------------------------------------------------------------------
4,427 Mid Am, Inc. 77,473
------------------------------------------------------------------
2,200 Mid-American Apartment Communities, Inc. 55,825
------------------------------------------------------------------
3,200 Mills Corp. 66,800
------------------------------------------------------------------
3,200 ML Bancorp, Inc. 44,600
------------------------------------------------------------------
2,000 MMI Companies, Inc. 57,500
------------------------------------------------------------------
3,275 Morgan Keegan, Inc. 47,897
------------------------------------------------------------------
3,300 NAC Re Corp. 115,913
------------------------------------------------------------------
2,660 (a) National Auto Credit, Inc. 28,595
------------------------------------------------------------------
900 National Bancorp Alaska, Inc. 58,950
------------------------------------------------------------------
1,980 National City Bancshares, Inc. 57,420
------------------------------------------------------------------
5,350 National Community Bancorp 187,250
------------------------------------------------------------------
2,300 National Golf Properties, Inc. 66,700
------------------------------------------------------------------
4,100 National Health Investors, Inc. 142,988
------------------------------------------------------------------
1,469 National Penn Bancshares, Inc. 38,560
------------------------------------------------------------------
500 (a) National Western Life Insurance Co., Class A 38,500
------------------------------------------------------------------
8,900 Nationwide Health Properties, Inc. 200,250
------------------------------------------------------------------
1,974 New York Bancorp, Inc. 66,869
------------------------------------------------------------------
1,500 (a) NHP, Inc. 24,750
------------------------------------------------------------------
3,000 North American Mortgage Co. 62,624
------------------------------------------------------------------
5,300 North Fork Bancorp, Inc. 167,613
------------------------------------------------------------------
1,014 North Side Savings Bank 48,926
------------------------------------------------------------------
1,100 Nymagic, Inc. 19,113
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
FINANCE--CONTINUED
------------------------------------------------------------------
3,300 Oasis Residential, Inc. $ 70,125
------------------------------------------------------------------
5,300 Old National Bancorp 192,125
------------------------------------------------------------------
6,700 (a) Olympic Financial Ltd. 106,363
------------------------------------------------------------------
1,300 Omega Financial Corp. 43,550
------------------------------------------------------------------
3,639 Omega Healthcare Investors 110,535
------------------------------------------------------------------
2,995 Onbancorp, Inc. 108,943
------------------------------------------------------------------
4,475 One Valley Bancorp West Virginia, Inc. 145,997
------------------------------------------------------------------
2,956 Orion Capital Corp. 160,733
------------------------------------------------------------------
1,200 (a) Oxford Resources Corp., Class A 30,600
------------------------------------------------------------------
3,200 Paragon Group, Inc. 51,200
------------------------------------------------------------------
900 Park National Corp. 43,425
------------------------------------------------------------------
4,900 Penncorp Financial Group, Inc. 169,663
------------------------------------------------------------------
1,600 Pennsylvania Real Estate Investment Trust 35,800
------------------------------------------------------------------
1,743 People First Corp. 39,218
------------------------------------------------------------------
2,700 Peoples Bank Bridgeport 69,524
------------------------------------------------------------------
5,041 Peoples Heritage Financial Group 115,943
------------------------------------------------------------------
7,400 PHH Corp. 220,150
------------------------------------------------------------------
1,650 Pikeville National Corp. 36,300
------------------------------------------------------------------
1,600 Pioneer Financial Services, Inc. 27,200
------------------------------------------------------------------
4,600 Pioneer Group, Inc. 110,400
------------------------------------------------------------------
2,300 Piper Jaffray Cos., Inc. 26,738
------------------------------------------------------------------
1,200 Poe & Brown, Inc. 30,975
------------------------------------------------------------------
3,400 (a) Policy Management System Corp. 122,400
------------------------------------------------------------------
4,700 Post Properties, Inc. 185,650
------------------------------------------------------------------
5,500 Presidential Life Corp. 62,563
------------------------------------------------------------------
3,100 Price Enterprises, Inc. 51,538
------------------------------------------------------------------
1,800 Price REIT, Inc. 58,950
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
FINANCE--CONTINUED
------------------------------------------------------------------
2,600 Provident Bancorp, Inc. $ 115,213
------------------------------------------------------------------
1,543 Provident Bankshares Corp. 55,548
------------------------------------------------------------------
11,700 Public Storage, Inc. 269,100
------------------------------------------------------------------
1,800 PXRE Corp. 44,550
------------------------------------------------------------------
1,533 Queens County Bancorp, Inc. 67,069
------------------------------------------------------------------
2,332 Quick & Reilly Group, Inc. 61,507
------------------------------------------------------------------
800 (a) RAC Financial Group, Inc. 48,000
------------------------------------------------------------------
3,350 Raymond James Financial, Inc. 81,656
------------------------------------------------------------------
2,600 RCSB Financial, Inc. 75,400
------------------------------------------------------------------
5,000 Realty Income Corp. 115,000
------------------------------------------------------------------
1,900 Reckson Associates Realty Corp. 67,688
------------------------------------------------------------------
1,800 Redwood Trust, Inc. 59,400
------------------------------------------------------------------
2,000 Regency Realty Corp. 43,500
------------------------------------------------------------------
3,600 Reinsurance Group of America 163,350
------------------------------------------------------------------
13,000 Reliance Group Holdings, Inc. 107,250
------------------------------------------------------------------
3,433 Republic Bancorp, Inc. 40,768
------------------------------------------------------------------
2,306 (a) Resource Bancshares Mortgage Group, Inc. 34,446
------------------------------------------------------------------
4,400 Resource Mortgage Capital, Inc. 115,500
------------------------------------------------------------------
5,200 RFS Hotel Investors, Inc. 84,500
------------------------------------------------------------------
4,400 Riggs National Corp. 75,350
------------------------------------------------------------------
3,700 (a) Risk Capital Holdings, Inc. 66,600
------------------------------------------------------------------
1,300 RLI Corp. 35,912
------------------------------------------------------------------
2,500 ROC Communities, Inc. 60,938
------------------------------------------------------------------
8,250 Rollins Truck Leasing Corp. 93,844
------------------------------------------------------------------
7,413 Roosevelt Financial Group, Inc. 128,801
------------------------------------------------------------------
2,100 Saul Centers, Inc. 30,712
------------------------------------------------------------------
2,000 Security Capital Corp. 132,000
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
FINANCE--CONTINUED
------------------------------------------------------------------
1,800 Security Connecticut Corp. $ 57,600
------------------------------------------------------------------
3,100 Selective Insurance Group, Inc. 106,175
------------------------------------------------------------------
1,900 (a) Silicon Valley Bancshares 49,638
------------------------------------------------------------------
1,300 Sirrom Capital Corp. 47,450
------------------------------------------------------------------
2,100 Smith (Charles E.) Residential Realty, Inc. 51,188
------------------------------------------------------------------
4,400 South West Property Trust, Inc. 66,000
------------------------------------------------------------------
10,408 Sovereign Bancorp, Inc. 122,294
------------------------------------------------------------------
1,600 Sovran Self Storage, Inc. 43,000
------------------------------------------------------------------
6,600 Spieker Properties, Inc. 202,950
------------------------------------------------------------------
2,400 S & T Bancorp, Inc. 76,200
------------------------------------------------------------------
3,944 St. Paul Bancorp, Inc. 104,023
------------------------------------------------------------------
3,600 Standard Financial, Inc. 64,125
------------------------------------------------------------------
1,250 State Auto Financial Corp. 17,500
------------------------------------------------------------------
1,800 Storage Trust Realty 41,625
------------------------------------------------------------------
900 Student Loan Corp. 30,600
------------------------------------------------------------------
900 Sumitomo Bank California 22,837
------------------------------------------------------------------
3,200 Summit Properties, Inc. 62,800
------------------------------------------------------------------
3,200 Sun Communities, Inc. 91,600
------------------------------------------------------------------
2,825 Susquehanna Bankshares, Inc. 84,044
------------------------------------------------------------------
6,600 Taubman Centers, Inc. 74,250
------------------------------------------------------------------
4,200 The Trust Company of New Jersey 57,750
------------------------------------------------------------------
3,300 Thornburg Mortgage Asset Co. 58,163
------------------------------------------------------------------
1,092 Toronto-Dominion Bank 25,526
------------------------------------------------------------------
3,400 Town & Country Trust 49,300
------------------------------------------------------------------
1,800 T R Financial Corp. 54,675
------------------------------------------------------------------
2,400 Trans Financial, Inc. 47,400
------------------------------------------------------------------
1,100 Transnational Re Corp., Class A 27,637
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
FINANCE--CONTINUED
------------------------------------------------------------------
1,200 Trenwick Group, Inc. $ 58,950
------------------------------------------------------------------
2,600 Trinet Corporate Realty Trust, Inc. 83,850
------------------------------------------------------------------
4,345 Trustco Bank Corp. 96,670
------------------------------------------------------------------
5,900 Trustmark Corp. 147,500
------------------------------------------------------------------
7,300 (a) UICI 186,150
------------------------------------------------------------------
3,649 UMB Financial Corp. 144,136
------------------------------------------------------------------
1,200 (a) Union Acceptance Corp., Class A 21,150
------------------------------------------------------------------
3,300 United Bankshares, Inc. 98,175
------------------------------------------------------------------
5,250 United Carolina Bancshares 136,500
------------------------------------------------------------------
4,980 United Companies Financial Corp. 148,777
------------------------------------------------------------------
12,200 United Dominion Realty Trust, Inc. 172,325
------------------------------------------------------------------
2,050 United Fire & Casualty Co. 64,575
------------------------------------------------------------------
1,800 Universal Health Realty Trust, Inc. 34,425
------------------------------------------------------------------
2,900 Urban Shopping Centers, Inc. 74,675
------------------------------------------------------------------
1,100 Usbancorp, Inc. 42,900
------------------------------------------------------------------
2,100 U.S. Trust Corp. 130,725
------------------------------------------------------------------
3,400 UST Corp. 60,988
------------------------------------------------------------------
2,900 Vallicorp Holdings, Inc. 45,675
------------------------------------------------------------------
4,050 Vesta Insurance Group, Inc. 103,781
------------------------------------------------------------------
5,200 Vornado Realty Trust 223,600
------------------------------------------------------------------
2,300 Walden Residential Properties, Inc. 53,763
------------------------------------------------------------------
9,200 Washington Federal, Inc. 220,800
------------------------------------------------------------------
2,300 Washington National Corp. 65,838
------------------------------------------------------------------
6,800 Washington Real Estate Investment Trust 107,950
------------------------------------------------------------------
2,400 Weeks Corp. 68,700
------------------------------------------------------------------
5,100 Weingarten Realty Investors 195,712
------------------------------------------------------------------
3,650 Wellsford Residential Properties 83,950
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
FINANCE--CONTINUED
------------------------------------------------------------------
1,600 Wesbanco, Inc. $ 48,600
------------------------------------------------------------------
2,100 WestAmerica Bancorporation 106,575
------------------------------------------------------------------
2,065 Westcorp, Inc. 49,044
------------------------------------------------------------------
3,700 Western Investment Real Estate Trust 47,175
------------------------------------------------------------------
1,500 (a) Western Water Co. 28,875
------------------------------------------------------------------
1,000 (a) WFS Financial, Inc. 21,000
------------------------------------------------------------------
1,200 (a) White River Corp. 69,600
------------------------------------------------------------------
3,225 Whitney Holding Corp. 102,394
------------------------------------------------------------------
600 Winthrop Resources Corp. 16,800
------------------------------------------------------------------
4,500 World Acceptance Corp. 29,813
------------------------------------------------------------------
3,500 Xtra Corp. 145,250
------------------------------------------------------------------
2,200 Zenith National Insurance Corp. 59,950
------------------------------------------------------------------
2,400 (a) Zurich Reinsurance Centre Holdings, Inc. 72,000
------------------------------------------------------------------ --------------
Total 32,292,272
------------------------------------------------------------------ --------------
HEALTH CARE--9.4%
------------------------------------------------------------------
2,650 (a) Access Health, Inc. 87,450
------------------------------------------------------------------
4,500 (a) Acuson Corp. 95,062
------------------------------------------------------------------
3,766 ADAC Laboratories 77,202
------------------------------------------------------------------
3,000 (a) Advanced Technology Labs, Inc. 91,500
------------------------------------------------------------------
8,000 (a) Advanced Tissue Sciences, Inc., Class A 130,000
------------------------------------------------------------------
2,800 (a) Agouron Pharmaceuticals, Inc. 160,300
------------------------------------------------------------------
2,900 A. L. Pharma, Inc., Class A 36,250
------------------------------------------------------------------
3,100 (a) Alkermes, Inc. 41,074
------------------------------------------------------------------
6,000 (a) Alliance Pharmaceutical Corp. 84,000
------------------------------------------------------------------
3,400 (a) Alteon, Inc. 28,050
------------------------------------------------------------------
5,100 (a) AmeriSource Health Corp., Class A 216,112
------------------------------------------------------------------
1,450 (a) American HomePatient, Inc. 34,437
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
HEALTH CARE--CONTINUED
------------------------------------------------------------------
3,800 (a) American Medical Response $ 114,000
------------------------------------------------------------------
5,900 (a) American Oncology Resources, Inc. 47,200
------------------------------------------------------------------
1,600 Amisys Managed Care Systems 24,400
------------------------------------------------------------------
3,800 (a) Amylin Pharmaceuticals, Inc. 42,750
------------------------------------------------------------------
3,700 (a) Angeion Corp. 15,725
------------------------------------------------------------------
1,200 (a) Aphton Corp. 20,700
------------------------------------------------------------------
1,200 (a) Arbor Health Care Co. 26,250
------------------------------------------------------------------
2,500 Arrow International, Inc. 73,125
------------------------------------------------------------------
1,100 Arthrocare Corporation 10,175
------------------------------------------------------------------
3,200 (a) ATS Medical, Inc. 22,400
------------------------------------------------------------------
5,900 Ballard Medical Products 103,987
------------------------------------------------------------------
1,050 (a) Barr Laboratories, Inc. 29,006
------------------------------------------------------------------
1,700 Bindley Western Industries, Inc. 29,111
------------------------------------------------------------------
2,250 (a) Bio Rad Laboratories, Inc., Class A 54,562
------------------------------------------------------------------
9,400 (a) Bio-Technology General Corp. 76,375
------------------------------------------------------------------
1,400 Biomatrix, Inc. 21,350
------------------------------------------------------------------
2,600 (a) Capstone Pharmacy Services 30,388
------------------------------------------------------------------
1,700 (a) Carrington Laboratories, Inc. 21,250
------------------------------------------------------------------
4,900 Carter Wallace, Inc. 75,950
------------------------------------------------------------------
3,100 (a) Cellpro, Inc. 36,425
------------------------------------------------------------------
5,100 (a) Cephalon, Inc. 114,113
------------------------------------------------------------------
5,200 (a) Cerner Corp. 63,050
------------------------------------------------------------------
2,163 Chad Therapeutics Inc. 35,690
------------------------------------------------------------------
2,200 (a) Circon Corp. 36,300
------------------------------------------------------------------
1,000 (a) ClinTrials, Inc. 37,125
------------------------------------------------------------------
4,100 (a) CNS, Inc. 69,700
------------------------------------------------------------------
3,400 (a) Coastal Physician Group, Inc. 17,850
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
HEALTH CARE--CONTINUED
------------------------------------------------------------------
4,100 Cocensys, Inc. $ 25,625
------------------------------------------------------------------
1,900 Collagen Corp. 36,813
------------------------------------------------------------------
6,000 (a) Columbia Laboratories, Inc. 72,000
------------------------------------------------------------------
9,600 (a) Community Psychiatric Centers 85,200
------------------------------------------------------------------
2,200 (a) Compdent Corp. 75,624
------------------------------------------------------------------
500 Conceptus, Inc. 6,000
------------------------------------------------------------------
3,100 (a) CONMED Corp. 53,475
------------------------------------------------------------------
1,551 (a) Copley Pharmaceutical 22,586
------------------------------------------------------------------
4,200 (a) Cor Therapeutics, Inc. 37,800
------------------------------------------------------------------
8,800 (a) Coram Healthcare Corp. 42,900
------------------------------------------------------------------
6,200 (a) Coventry Corp. 62,775
------------------------------------------------------------------
700 CRA Managed Care, Inc. 35,525
------------------------------------------------------------------
6,300 Creative BioMolecules, Inc. 54,338
------------------------------------------------------------------
1,400 Cryolife, Inc. 18,725
------------------------------------------------------------------
2,100 (a) Curative Technologies, Inc. 47,775
------------------------------------------------------------------
3,500 (a) Cygnus, Inc. 50,313
------------------------------------------------------------------
4,200 (a) Cytel Corp. 11,550
------------------------------------------------------------------
9,509 (a) Cytogen Corp. 51,111
------------------------------------------------------------------
700 Cytyc Corp. 9,013
------------------------------------------------------------------
3,000 (a) Datascope Corp. 51,000
------------------------------------------------------------------
2,500 Depotech Corp. 39,063
------------------------------------------------------------------
2,400 Diagnostic Products Corp. 71,400
------------------------------------------------------------------
7,700 (a) Dura Pharmaceuticals, Inc. 265,650
------------------------------------------------------------------
1,400 (a) EmCare Holdings, Inc. 35,000
------------------------------------------------------------------
1,800 Emeritus Corp. 20,474
------------------------------------------------------------------
2,800 (a) Endosonics Corp. 35,350
------------------------------------------------------------------
800 Enterprise Systems, Inc. 12,900
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
HEALTH CARE--CONTINUED
------------------------------------------------------------------
4,274 (a) Enzo Biochem, Inc. $ 77,991
------------------------------------------------------------------
2,700 (a) Epitope, Inc. 41,175
------------------------------------------------------------------
3,000 (a) Equimed, Inc. 17,813
------------------------------------------------------------------
1,800 (a) Ergo Science Corp. 24,750
------------------------------------------------------------------
3,594 (a) Foxmeyer Health Corp. 7,637
------------------------------------------------------------------
2,700 (a) Fuisz Technologies Ltd. 21,938
------------------------------------------------------------------
2,800 (a) Geltex Pharmaceuticals, Inc. 53,200
------------------------------------------------------------------
6,100 (a) Genelabs Technologies, Inc. 24,781
------------------------------------------------------------------
5,300 (a) Genesis Health Ventures, Inc. 121,238
------------------------------------------------------------------
5,500 (a) Gensia, Inc. 27,500
------------------------------------------------------------------
6,100 (a) Gilead Sciences, Inc. 142,588
------------------------------------------------------------------
4,262 (a) GranCare, Inc. 76,716
------------------------------------------------------------------
2,900 (a) Gulf South Medical Supplies, Inc. 63,800
------------------------------------------------------------------
5,000 (a) Haemonetics Corp. 89,375
------------------------------------------------------------------
500 (a) HCIA, Inc. 13,875
------------------------------------------------------------------
2,925 (a) Health Management Systems, Inc. 68,738
------------------------------------------------------------------
2,691 (a) Healthdyne Technologies, Inc. 23,883
------------------------------------------------------------------
1,700 Healthplan Services Corporation 30,812
------------------------------------------------------------------
1,400 (a) Henry Schein, Inc. 55,650
------------------------------------------------------------------
2,100 (a) Hologic, Inc. 47,775
------------------------------------------------------------------
11,208 (a) Horizon/CMS Healthcare Corp. 116,283
------------------------------------------------------------------
2,700 HPR Inc. 37,800
------------------------------------------------------------------
4,000 (a) Human Genome Sciences, Inc. 146,000
------------------------------------------------------------------
5,100 (a) Hybridon, Inc. 40,163
------------------------------------------------------------------
6,728 ICN Pharmaceuticals, Inc. 127,832
------------------------------------------------------------------
6,400 (a) ICOS Corp. 48,000
------------------------------------------------------------------
1,600 (a) ICU Medical, Inc. 14,200
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
HEALTH CARE--CONTINUED
------------------------------------------------------------------
2,600 (a) IDEC Pharmaceuticals Corp. $ 56,225
------------------------------------------------------------------
1,100 (a) IDX Systems Corp. 32,450
------------------------------------------------------------------
14,900 (a) Imatron, Inc. 59,134
------------------------------------------------------------------
4,200 (a) Imclone Systems, Inc. 36,225
------------------------------------------------------------------
4,000 (a) Immulogic Pharmaceutical Corp. 33,500
------------------------------------------------------------------
3,300 (a) Immune Response Corp. 23,925
------------------------------------------------------------------
3,900 (a) Immunex Corp. 52,650
------------------------------------------------------------------
4,400 (a) Immunomedics, Inc. 30,800
------------------------------------------------------------------
2,000 (a) Imnet Systems Inc. 28,000
------------------------------------------------------------------
2,200 (a) InControl, Inc. 17,875
------------------------------------------------------------------
1,300 (a) Inbrand Corp. 42,738
------------------------------------------------------------------
1,500 (a) Incyte Pharmaceuticals, Inc. 60,750
------------------------------------------------------------------
2,200 (a) Inhale Therapeutic Systems 31,900
------------------------------------------------------------------
2,400 (a) Inphynet Medical Management, Inc. 38,400
------------------------------------------------------------------
6,100 (a) Integra Lifesciences Corp. 30,500
------------------------------------------------------------------
4,800 Integrated Health Services, Inc. 118,200
------------------------------------------------------------------
500 (a) Intercardia, Inc. 11,500
------------------------------------------------------------------
6,300 Invacare Corp. 176,400
------------------------------------------------------------------
5,400 (a) Isis Pharmaceuticals, Inc. 87,750
------------------------------------------------------------------
2,400 (a) I-Stat Corp. 49,800
------------------------------------------------------------------
4,900 (a) Isolyser Co., Inc. 34,912
------------------------------------------------------------------
4,200 Jones Medical Industries, Inc. 182,700
------------------------------------------------------------------
2,600 (a) KeraVision, Inc. 40,300
------------------------------------------------------------------
3,400 Kinetic Concepts, Inc. 44,625
------------------------------------------------------------------
500 Labone, Inc. 8,500
------------------------------------------------------------------
18,300 (a) Laboratory Corporation of America Holdings 61,763
------------------------------------------------------------------
400 (a) LCA Vision, Inc. 1,400
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
HEALTH CARE--CONTINUED
------------------------------------------------------------------
2,250 Life Technologies, Inc. $ 52,313
------------------------------------------------------------------
2,300 (a) Lifescore Biomedical, Inc. 38,813
------------------------------------------------------------------
4,792 (a) Ligand Pharmaceuticals, Inc., Class B 59,301
------------------------------------------------------------------
6,500 (a) Liposome Co., Inc. 111,313
------------------------------------------------------------------
3,000 (a) Living Centers of America, Inc. 70,125
------------------------------------------------------------------
1,100 (a) Lunar Corp. 34,238
------------------------------------------------------------------
6,100 (a) Magellan Health Services, Inc. 112,088
------------------------------------------------------------------
6,200 (a) Mariner Health Group, Inc. 52,700
------------------------------------------------------------------
5,800 (a) Marquette Medical Systems, Class A 91,350
------------------------------------------------------------------
7,100 (a) Matria Healthcare, Inc. 52,363
------------------------------------------------------------------
3,600 (a) Matrix Pharmaceuticals, Inc. 27,225
------------------------------------------------------------------
3,800 (a) Maxicare Health Plans, Inc. 71,725
------------------------------------------------------------------
1,700 (a) MDL Information Systems, Inc. 26,137
------------------------------------------------------------------
1,900 (a) MedCath, Inc. 24,700
------------------------------------------------------------------
2,500 (a) Medimmune, Inc. 38,750
------------------------------------------------------------------
4,800 Mentor Corp. 106,200
------------------------------------------------------------------
1,900 Meridian Diagnostics, Inc. 19,950
------------------------------------------------------------------
9,000 (a) Mid Atlantic Medical Services, Inc. 96,750
------------------------------------------------------------------
700 (a) MiniMed, Inc. 18,374
------------------------------------------------------------------
2,900 (a) Multicare Cos., Inc. 52,200
------------------------------------------------------------------
1,800 (a) Myriad Genetics, Inc. 44,550
------------------------------------------------------------------
6,600 (a) NABI, Inc. 61,050
------------------------------------------------------------------
1,800 (a) National Surgery Centers, Inc. 48,600
------------------------------------------------------------------
2,500 (a) NeoPath, Inc. 40,781
------------------------------------------------------------------
4,100 (a) Neoprobe Corp. 58,938
------------------------------------------------------------------
3,000 (a) Neurex Corp. 46,875
------------------------------------------------------------------
2,800 (a) Neurogen Corp. 60,900
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
HEALTH CARE--CONTINUED
------------------------------------------------------------------
5,900 (a) Neuromedical Systems, Inc. $ 100,300
------------------------------------------------------------------
5,600 (a) Nexstar Pharmaceuticals, Inc. 87,500
------------------------------------------------------------------
2,700 (a) Northfield Laboratories, Inc. 28,519
------------------------------------------------------------------
14,200 (a) NovaCare, Inc. 117,150
------------------------------------------------------------------
3,200 (a) Noven Pharmaceuticals, Inc. 43,600
------------------------------------------------------------------
4,200 (a) OccuSystems, Inc. 114,974
------------------------------------------------------------------
3,600 (a) Oncogene Science, Inc. 25,650
------------------------------------------------------------------
2,800 (a) Organogenesis, Inc. 50,050
------------------------------------------------------------------
3,300 (a) OrthoLogic Corp. 21,656
------------------------------------------------------------------
3,400 (a) Orthodontic Centers of America, Inc. 48,875
------------------------------------------------------------------
1,900 (a) Ostex International, Inc. 12,588
------------------------------------------------------------------
2,500 (a) Owen Healthcare, Inc. 37,188
------------------------------------------------------------------
5,675 Owens & Minor, Inc. 53,203
------------------------------------------------------------------
3,500 (a) Palomar Medical Technologies, Inc. 25,375
------------------------------------------------------------------
1,700 (a) Parexel International Corp. 83,300
------------------------------------------------------------------
2,400 (a) Pathogenesis Corp. 50,400
------------------------------------------------------------------
2,400 (a) Patterson Dental Co. 67,200
------------------------------------------------------------------
1,250 (a) PDT, Inc. 31,250
------------------------------------------------------------------
1,700 (a) Pediatrix Medical Group 66,937
------------------------------------------------------------------
1,600 (a) Perclose, Inc. 26,400
------------------------------------------------------------------
14,400 (a) Perrigo Co. 136,800
------------------------------------------------------------------
2,751 (a) Pharmaceutical Product Development, Inc. 52,613
------------------------------------------------------------------
2,300 (a) Pharmacopedia, Inc. 43,700
------------------------------------------------------------------
2,500 (a) PHP Healthcare Corp. 57,188
------------------------------------------------------------------
1,500 (a) PhyMatrix Corp. 24,938
------------------------------------------------------------------
3,800 (a) Physician Computer Network, Inc. 33,963
------------------------------------------------------------------
8,200 (a) Physician Corp. of America 90,713
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
HEALTH CARE--CONTINUED
------------------------------------------------------------------
1,400 (a) Physicians Health Services, Inc., Class A $ 23,450
------------------------------------------------------------------
3,900 (a) Physicians Resource Group, Inc. 105,300
------------------------------------------------------------------
3,600 (a) Physio-Control International Corp. 70,200
------------------------------------------------------------------
2,600 (a) Possis Corp. 42,900
------------------------------------------------------------------
1,800 (a) Prime Medical Services 22,050
------------------------------------------------------------------
2,400 (a) Protein Design Laboratories, Inc. 57,000
------------------------------------------------------------------
1,400 (a) Protocol Systems, Inc. 15,050
------------------------------------------------------------------
600 (a) Raptor Systems, Inc. 12,674
------------------------------------------------------------------
3,600 (a) Regency Health Services, Inc. 40,500
------------------------------------------------------------------
4,400 (a) Regeneron Pharmaceuticals, Inc. 83,600
------------------------------------------------------------------
5,100 (a) Renal Treatment Centers, Inc. 136,425
------------------------------------------------------------------
1,100 (a) Res-Care, Inc. 18,700
------------------------------------------------------------------
2,100 (a) Research Industries Corp. 40,688
------------------------------------------------------------------
3,000 (a) Resound Corp. 23,250
------------------------------------------------------------------
3,500 (a) Respironics, Inc. 52,500
------------------------------------------------------------------
2,000 (a) Rexall Sundown, Inc. 54,250
------------------------------------------------------------------
800 (a) RightCHOICE Managed Care, Inc., Class A 7,900
------------------------------------------------------------------
2,500 (a) Roberts Pharmaceutical Corp. 38,594
------------------------------------------------------------------
5,300 (a) Rotech Medical Corp. 84,800
------------------------------------------------------------------
2,500 (a) RTW, Inc. 38,750
------------------------------------------------------------------
1,600 (a) Safeskin Corp. 63,000
------------------------------------------------------------------
2,200 (a) SangStat Medical Corp. 57,750
------------------------------------------------------------------
4,800 (a) Scherer (R.P.) Corp. 222,600
------------------------------------------------------------------
2,900 (a) SciClone Pharmaceuticals, Inc. 29,725
------------------------------------------------------------------
7,500 (a) Scios Nova, Inc. 43,125
------------------------------------------------------------------
1,000 Seafield Capital Corp. 35,313
------------------------------------------------------------------
5,800 (a) Sepracor, Inc. 94,250
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
HEALTH CARE--CONTINUED
------------------------------------------------------------------
6,200 (a) Sequus Pharmaceuticals, Inc. $ 87,188
------------------------------------------------------------------
1,800 (a) Serologicals Corp. 54,900
------------------------------------------------------------------
3,200 (a) Sierra Health Services, Inc. 91,600
------------------------------------------------------------------
4,500 (a) Sofamor Danek Group, Inc. 123,750
------------------------------------------------------------------
4,600 (a) Somatix Therapy Corp. 15,238
------------------------------------------------------------------
3,900 (a) Somatogen, Inc. 41,438
------------------------------------------------------------------
2,300 SpaceLabs Medical, Inc. 46,575
------------------------------------------------------------------
2,100 (a) Spine-Tech, Inc. 53,025
------------------------------------------------------------------
2,800 (a) Staar Surgical Co. 34,650
------------------------------------------------------------------
800 (a) Summit Care Corp. 12,700
------------------------------------------------------------------
1,200 (a) Summit Medical Systems 9,450
------------------------------------------------------------------
6,300 (a) Summit Technology, Inc. 34,650
------------------------------------------------------------------
8,724 (a) Sun Healthcare Group, Inc. 111,231
------------------------------------------------------------------
3,600 (a) Sunrise Medical, Inc. 53,550
------------------------------------------------------------------
3,600 (a) Synetic, Inc. 132,750
------------------------------------------------------------------
800 (a) Systemix, Inc. 11,900
------------------------------------------------------------------
2,200 (a) Target Therapeutics, Inc. 81,400
------------------------------------------------------------------
1,900 (a) Techne Corp. 45,125
------------------------------------------------------------------
3,300 (a) Technological Medical Products, Inc. 42,075
------------------------------------------------------------------
3,900 (a) TheraTx, Inc. 39,000
------------------------------------------------------------------
1,900 (a) Theragenics Corp. 32,300
------------------------------------------------------------------
3,300 (a) Theratech, Inc. 36,506
------------------------------------------------------------------
1,400 (a) Thoratec Laboratories Corp. 14,000
------------------------------------------------------------------
3,800 (a) Transcend Services, Inc. 19,000
------------------------------------------------------------------
3,000 (a) Uniphase Corp. 144,750
------------------------------------------------------------------
1,100 (a) United Dental Care, Inc. 33,000
------------------------------------------------------------------
1,350 United Wisconsin Services, Inc. 34,931
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
HEALTH CARE--CONTINUED
------------------------------------------------------------------
6,800 (a) Universal Health Services, Inc., Class B $ 170,000
------------------------------------------------------------------
2,200 (a) UROHEALTH Systems, Inc., Class A 21,725
------------------------------------------------------------------
4,100 (a) Uromed Corp. 41,513
------------------------------------------------------------------
6,600 (a) U.S. Bioscience, Inc. 75,900
------------------------------------------------------------------
4,100 (a) Ventritex, Inc. 93,531
------------------------------------------------------------------
3,700 (a) Vertex Pharmaceuticals, Inc. 123,025
------------------------------------------------------------------
3,300 (a) Veterinary Centers of America 60,638
------------------------------------------------------------------
3,100 (a) Vical, Inc. 41,463
------------------------------------------------------------------
2,300 (a) VISX, Inc. 58,075
------------------------------------------------------------------
1,300 Vital Signs, Inc. 27,625
------------------------------------------------------------------
500 (a) Vitalink Pharmacy Services, Inc. 11,500
------------------------------------------------------------------
2,900 (a) Vivus, Inc. 97,150
------------------------------------------------------------------
2,700 West Co., Inc. 72,563
------------------------------------------------------------------
5,300 XOMA Corp. 18,881
------------------------------------------------------------------
4,800 (a) Zila, Inc. 32,400
------------------------------------------------------------------ --------------
Total 13,562,168
------------------------------------------------------------------ --------------
MISCELLANEOUS--0.3%
------------------------------------------------------------------
500 American Financial Enterprises 12,750
------------------------------------------------------------------
600 Capital Southwest Corp. 42,300
------------------------------------------------------------------
3,800 (a) Chancellor Corp., Class A 122,550
------------------------------------------------------------------
12,800 (a) Thrifty PayLess Holdings, Inc., Class B 273,600
------------------------------------------------------------------ --------------
Total 451,200
------------------------------------------------------------------ --------------
PRODUCER MANUFACTURING--6.8%
------------------------------------------------------------------
1,700 (a) ABC Rail Products Corp. 25,711
------------------------------------------------------------------
2,200 (a) ABT Building Products Corp. 46,200
------------------------------------------------------------------
2,800 (a) ACX Technologies, Inc. 49,700
------------------------------------------------------------------
2,500 (a) Acme Metals, Inc. 45,000
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
PRODUCER MANUFACTURING--CONTINUED
------------------------------------------------------------------
700 (a) Advanced Lighting Technologies, Inc. $ 13,125
------------------------------------------------------------------
900 (a) Ag-Chem Equipment Co., Inc . 14,175
------------------------------------------------------------------
1,700 Alamo Group, Inc. 27,200
------------------------------------------------------------------
5,000 Allen Group, Inc. 79,375
------------------------------------------------------------------
2,000 Allied Products 49,500
------------------------------------------------------------------
1,700 (a) Alltrista Corp. 36,125
------------------------------------------------------------------
1,900 Amcast Industrial Corp. 38,712
------------------------------------------------------------------
900 (a) American Buildings Co. 18,872
------------------------------------------------------------------
7,100 Ametek, Inc. 141,112
------------------------------------------------------------------
1,000 Amtrol, Inc. 28,250
------------------------------------------------------------------
8,500 (a) Anixter International, Inc. 126,437
------------------------------------------------------------------
2,600 Applied Power, Inc., Class A 93,600
------------------------------------------------------------------
13,600 (a) Aura System, Inc. 31,450
------------------------------------------------------------------
2,400 (a) Avondale Industries, Inc. 39,300
------------------------------------------------------------------
4,310 Baldor Electric Co. 86,738
------------------------------------------------------------------
5,100 Belden, Inc. 146,625
------------------------------------------------------------------
2,350 Blount International, Inc., Class A 84,600
------------------------------------------------------------------
5,200 BW/IP Holding, Inc. 70,200
------------------------------------------------------------------
3,300 (a) Cable Design Technologies, Class A 85,800
------------------------------------------------------------------
2,100 Cascade Corp. 27,563
------------------------------------------------------------------
1,200 Charter Power Systems, Inc. 29,700
------------------------------------------------------------------
1,900 (a) Chase Brass Industries, Inc. 35,863
------------------------------------------------------------------
900 Chicago Miniature Lamp, Inc. 26,775
------------------------------------------------------------------
8,600 Cincinnati Milacron, Inc. 164,475
------------------------------------------------------------------
1,500 (a) Citation Corp. 17,625
------------------------------------------------------------------
10,900 (a) Coltec Industries, Inc. 188,025
------------------------------------------------------------------
3,100 Commercial Intertech Corp. 34,487
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
PRODUCER MANUFACTURING--CONTINUED
------------------------------------------------------------------
2,600 Commercial Metals Corp. $ 80,600
------------------------------------------------------------------
2,000 Commonwealth Aluminum Corp. 31,500
------------------------------------------------------------------
3,100 (a) Cuno, Inc. 49,600
------------------------------------------------------------------
1,800 (a) Detroit Diesel Corp. 33,300
------------------------------------------------------------------
1,100 DT Industries, Inc. 43,450
------------------------------------------------------------------
5,300 Duriron, Inc. 141,775
------------------------------------------------------------------
2,900 (a) Fairchild Corp., Class A 48,938
------------------------------------------------------------------
1,300 (a) Falcon Building Products, Inc. 15,275
------------------------------------------------------------------
4,000 (a) Figgie International Holdings, Inc., Class A 42,500
------------------------------------------------------------------
1,000 Franklin Electronics, Inc. 40,250
------------------------------------------------------------------
5,800 Freeport McMoRan, Inc. 184,875
------------------------------------------------------------------
1,300 General Binding Corp. 32,175
------------------------------------------------------------------
600 (a) Gibraltar Steel Corp. 14,550
------------------------------------------------------------------
7,500 Giddings & Lewis, Inc. 88,125
------------------------------------------------------------------
800 Gleason Corp. 24,100
------------------------------------------------------------------
4,900 (a) Global Industrial Technologies, Inc. 91,263
------------------------------------------------------------------
4,600 Goulds Pumps, Inc. 106,375
------------------------------------------------------------------
2,675 Graco, Inc. 61,190
------------------------------------------------------------------
1,200 Greenbrier Cos., Inc. 13,200
------------------------------------------------------------------
3,500 Greenfield Industries, Inc. 92,750
------------------------------------------------------------------
6,200 (a) Griffon Corp. 58,900
------------------------------------------------------------------
3,000 Handy & Harman 57,000
------------------------------------------------------------------
1,400 Hardinge, Inc. 35,000
------------------------------------------------------------------
7,800 Hexcel Corporation 142,350
------------------------------------------------------------------
2,250 (a) Holophane Corp. 42,750
------------------------------------------------------------------
5,100 HON Industries, Inc. 178,500
------------------------------------------------------------------
1,800 Hunt Manufacturers Co. 30,375
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
PRODUCER MANUFACTURING--CONTINUED
------------------------------------------------------------------
1,200 Huntco, Inc., Class A $ 21,450
------------------------------------------------------------------
3,600 IDEX Corp. 135,450
------------------------------------------------------------------
2,000 (a) Insilco Corp. 78,000
------------------------------------------------------------------
4,000 Interface, Inc. 67,500
------------------------------------------------------------------
3,800 Intermet Corp. 45,124
------------------------------------------------------------------
4,000 Juno Lighting, Inc. 62,250
------------------------------------------------------------------
4,000 Kaman Corp., Class A 46,500
------------------------------------------------------------------
3,600 Kaydon Corp. 146,700
------------------------------------------------------------------
5,700 Kennametal, Inc. 193,800
------------------------------------------------------------------
6,700 Keystone International, Inc. 120,600
------------------------------------------------------------------
4,000 Kimball International, Inc., Class B 144,000
------------------------------------------------------------------
2,900 Kuhlman Corp. 46,763
------------------------------------------------------------------
5,400 Lincoln Electric Co. 149,850
------------------------------------------------------------------
1,400 Lindsay Manufacturing Co. 60,200
------------------------------------------------------------------
2,600 (a) Littlefuse, Inc. 107,250
------------------------------------------------------------------
1,600 LSI Industries, Inc. 16,000
------------------------------------------------------------------
4,400 Magnetek, Inc. 48,950
------------------------------------------------------------------
2,500 Manitowoc, Inc. 83,750
------------------------------------------------------------------
1,700 (a) MICROS Systems Corp. 58,862
------------------------------------------------------------------
5,400 Miller Herman, Inc. 232,875
------------------------------------------------------------------
2,200 (a) Miller Industries, Inc. 51,425
------------------------------------------------------------------
4,700 Modine Manufacturing Co. 116,325
------------------------------------------------------------------
3,700 (a) Mueller Industries, Inc. 148,925
------------------------------------------------------------------
1,600 NACCO Industries, Inc., Class A 74,000
------------------------------------------------------------------
16,200 (a) Navistar International Corp. 149,850
------------------------------------------------------------------
1,400 (a) NCI Building System, Inc. 45,850
------------------------------------------------------------------
1,850 NN Ball & Roller, Inc. 24,975
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
PRODUCER MANUFACTURING--CONTINUED
------------------------------------------------------------------
4,600 (a) Nu-Kote Holdings, Inc., Class A $ 43,700
------------------------------------------------------------------
3,800 (a) Oak Industries, Inc. 96,424
------------------------------------------------------------------
1,400 (a) Oregon Metallurgical Corp. 44,100
------------------------------------------------------------------
2,050 (a) Osmonics, Inc. 43,563
------------------------------------------------------------------
2,600 Pacific Scientific Co. 28,275
------------------------------------------------------------------
1,600 (a) Park Ohio Industries, Inc. 24,000
------------------------------------------------------------------
1,700 Penn Engineering & Manufacturing Corp. 29,750
------------------------------------------------------------------
8,100 Pentair, Inc. 204,525
------------------------------------------------------------------
4,500 Pittston Co. 83,813
------------------------------------------------------------------
2,400 Ply Gem Industries, Inc. 29,400
------------------------------------------------------------------
4,450 Precision Castparts Corp. 208,037
------------------------------------------------------------------
4,400 Regal Beloit Corp. 78,100
------------------------------------------------------------------
1,700 Reliance Steel & Aluminum Co. 62,263
------------------------------------------------------------------
1,600 Robbins & Myers, Inc. 36,000
------------------------------------------------------------------
2,800 Roper Industries, Inc. 118,300
------------------------------------------------------------------
1,900 Scotsman Industries, Inc. 45,600
------------------------------------------------------------------
1,100 (a) Shiloh Industries, Inc. 18,150
------------------------------------------------------------------
800 (a) Simpson Manufacturing Co., Inc. 16,600
------------------------------------------------------------------
2,200 (a) Specialty Equipment Cos., Inc. 27,225
------------------------------------------------------------------
100 (a) Spinnaker Industries, Inc. 5,000
------------------------------------------------------------------
1,300 (a) SPS Technologies, Inc. 78,000
------------------------------------------------------------------
2,600 Standex International Corp. 79,950
------------------------------------------------------------------
1,600 Steel Technologies, Inc. 20,800
------------------------------------------------------------------
6,800 Stewart & Stevenson Services 144,500
------------------------------------------------------------------
3,800 Teleflex, Inc. 182,874
------------------------------------------------------------------
1,900 Tennant Co. 45,363
------------------------------------------------------------------
1,000 (a) Thermo Power Corp. 9,563
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
PRODUCER MANUFACTURING--CONTINUED
------------------------------------------------------------------
2,200 Thomas Industries, Inc. $ 42,350
------------------------------------------------------------------
3,100 Titan Wheel International, Inc. 39,524
------------------------------------------------------------------
3,300 TJ International, Inc. 62,700
------------------------------------------------------------------
1,100 (a) Tower Automotive, Inc. 32,038
------------------------------------------------------------------
1,600 Tredegar Industries, Inc. 61,200
------------------------------------------------------------------
3,200 (a) Triangle Pacific Corp. 67,700
------------------------------------------------------------------
4,840 Triarc Companies, Inc., Class A 56,870
------------------------------------------------------------------
3,400 Trimas Corp. 78,200
------------------------------------------------------------------
5,800 Trinova Corp. 190,674
------------------------------------------------------------------
900 (a) TurboChef, Inc. 10,013
------------------------------------------------------------------
4,900 UNR Industries, Inc. 33,075
------------------------------------------------------------------
8,300 (a) U.S. Filter Corp. 286,350
------------------------------------------------------------------
7,400 (a) U.S. Office Products Co. 214,600
------------------------------------------------------------------
2,200 Valhi, Inc. 12,925
------------------------------------------------------------------
1,900 Valmont Industries, Inc. 65,550
------------------------------------------------------------------
4,050 Wabash National Corp. 65,306
------------------------------------------------------------------
8,000 (a) Walter Industries, Inc. 112,000
------------------------------------------------------------------
2,100 Watsco, Inc. 40,688
------------------------------------------------------------------
4,300 Watts Industries, Inc., Class A 89,763
------------------------------------------------------------------
4,000 Westinghouse Electric Corp. 43,500
------------------------------------------------------------------
2,900 (a) Wolverine Tube, Inc. 115,638
------------------------------------------------------------------
3,700 Zebra Technologies Co., Class A 106,838
------------------------------------------------------------------
2,600 Zero Corp. 47,775
------------------------------------------------------------------
2,700 Zurn Industries, Inc. 67,838
------------------------------------------------------------------ --------------
Total 9,907,200
------------------------------------------------------------------ --------------
RETAIL TRADE--4.1%
------------------------------------------------------------------
900 (a) American Eagle Outfitters, Inc. 15,750
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
RETAIL TRADE--CONTINUED
------------------------------------------------------------------
2,700 AMRE, Inc. $ 24,974
------------------------------------------------------------------
5,000 (a) Ann Taylor Stores Corp. 90,625
------------------------------------------------------------------
3,850 Arbor Drugs, Inc. 87,106
------------------------------------------------------------------
2,200 (a) Baby Superstore, Inc. 59,675
------------------------------------------------------------------
6,800 (a) Best Buy Co., Inc. 111,350
------------------------------------------------------------------
3,500 Big B, Inc. 59,500
------------------------------------------------------------------
1,700 Blair Corp. 28,263
------------------------------------------------------------------
2,050 (a) BMC West Corp. 24,600
------------------------------------------------------------------
8,100 (a) Bombay Co., Inc. 42,525
------------------------------------------------------------------
2,200 (a) Books-A-Million, Inc. 14,850
------------------------------------------------------------------
400 (a) Buckle, Inc. 10,200
------------------------------------------------------------------
3,500 (a) Burlington Coat Factory Warehouse 42,874
------------------------------------------------------------------
3,500 (a) Carson Pirie Scott & Co. 87,063
------------------------------------------------------------------
5,600 Casey's General Stores, Inc. 100,800
------------------------------------------------------------------
6,200 Cash America International, Inc. 44,950
------------------------------------------------------------------
5,100 Cato Corp., Class A 24,544
------------------------------------------------------------------
20,200 Charming Shoppes, Inc. 93,424
------------------------------------------------------------------
2,600 (a) Chronimed, Inc. 37,700
------------------------------------------------------------------
10,275 Claire's Stores, Inc. 174,675
------------------------------------------------------------------
10,600 CML Group, Inc. 51,675
------------------------------------------------------------------
2,200 (a) Cole National Corp., Class A 51,975
------------------------------------------------------------------
3,000 CPI Corp. 57,000
------------------------------------------------------------------
400 Dart Group Corp., Class A 38,000
------------------------------------------------------------------
1,200 Delchamps, Inc. 25,050
------------------------------------------------------------------
1,800 (a) Discount Auto Parts, Inc. 39,150
------------------------------------------------------------------
3,400 (a) Dress Barn, Inc. 44,625
------------------------------------------------------------------
4,300 Duty Free International, Inc. 68,800
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
RETAIL TRADE--CONTINUED
------------------------------------------------------------------
4,100 (a) Eagle Hardware & Garden, Inc. $ 117,362
------------------------------------------------------------------
3,200 (a) Egghead, Inc. 16,400
------------------------------------------------------------------
1,400 Elcom International, Inc. 12,425
------------------------------------------------------------------
3,500 (a) Express Scripts, Inc., Class A 101,938
------------------------------------------------------------------
3,100 (a) Fabri-Centers of America, Class A 40,300
------------------------------------------------------------------
8,900 Family Dollar Stores, Inc. 151,300
------------------------------------------------------------------
9,900 Fingerhut Companies, Inc. 147,263
------------------------------------------------------------------
3,100 (a) Friedmans, Inc., Class A 50,763
------------------------------------------------------------------
1,800 Gadzooks, Inc. 52,200
------------------------------------------------------------------
3,700 (a) Garden Ridge Corp. 35,613
------------------------------------------------------------------
5,300 (a) Genesco, Inc. 47,700
------------------------------------------------------------------
4,600 Hancock Fabrics, Inc. 39,100
------------------------------------------------------------------
10,300 HEARx, Ltd. 23,175
------------------------------------------------------------------
6,600 (a) Hechinger Co., Class A 21,038
------------------------------------------------------------------
10,500 Heilig-Meyers Co. 136,500
------------------------------------------------------------------
4,500 (a) Hollywood Entertainment Corp. 93,374
------------------------------------------------------------------
1,500 Ingles Markets, Inc., Class A 23,437
------------------------------------------------------------------
1,600 (a) Jenny Craig, Inc. 14,400
------------------------------------------------------------------
3,500 Lands' End, Inc. 75,250
------------------------------------------------------------------
3,000 Longs Drug Stores Corp. 134,625
------------------------------------------------------------------
5,500 (a) MacFrugal's Bargains CloseOuts, Inc. 134,063
------------------------------------------------------------------
2,325 (a) Mens Wearhouse, Inc. 47,953
------------------------------------------------------------------
5,800 (a) Meyer (Fred), Inc. 203,725
------------------------------------------------------------------
4,300 (a) Michaels Stores, Inc. 43,538
------------------------------------------------------------------
3,050 (a) Microage, Inc. 61,000
------------------------------------------------------------------
1,000 (a) Movie Gallery, Inc. 13,500
------------------------------------------------------------------
2,900 (a) National Media Corp. 34,800
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
RETAIL TRADE--CONTINUED
------------------------------------------------------------------
2,600 New Engineers Business Service, Inc. $ 46,800
------------------------------------------------------------------
1,000 (a) O'Reilly Automotive, Inc. 35,374
------------------------------------------------------------------
8,600 (a) Payless Cashway, Inc., Class A 16,125
------------------------------------------------------------------
785 (a) Penney (J.C.) Co., Inc. 41,213
------------------------------------------------------------------
2,750 (a) Petco Animal Supplies, Inc. 64,625
------------------------------------------------------------------
8,495 Pier 1 Imports, Inc. 118,930
------------------------------------------------------------------
12,200 Premark International, Inc. 254,675
------------------------------------------------------------------
3,300 (a) Proffitts, Inc. 133,237
------------------------------------------------------------------
1,850 Quality Food Centers, Inc. 67,524
------------------------------------------------------------------
2,400 Regis Corp. Minnesota 58,200
------------------------------------------------------------------
3,000 (a) Renters Choice, Inc. 57,000
------------------------------------------------------------------
1,700 Riser Foods, Inc., Class A 45,688
------------------------------------------------------------------
5,300 Ross Stores, Inc. 219,950
------------------------------------------------------------------
5,800 Ruddick Corp. 75,400
------------------------------------------------------------------
21,500 (a) Service Merchandise, Inc. 126,312
------------------------------------------------------------------
3,700 Shopko Stores, Inc. 59,663
------------------------------------------------------------------
2,100 Smart & Final, Inc. 49,350
------------------------------------------------------------------
1,967 Smith's Food & Drug Centers, Inc., Class B 51,388
------------------------------------------------------------------
4,250 (a) Sports & Recreation, Inc. 36,655
------------------------------------------------------------------
6,700 (a) Sports Authority, Inc. 162,475
------------------------------------------------------------------
1,850 (a) Stein Mart, Inc. 33,069
------------------------------------------------------------------
1,536 Strawbridge & Clothier, Inc., Class A 26,112
------------------------------------------------------------------
900 (a) Tractor Supply Co. 18,674
------------------------------------------------------------------
2,000 (a) Urban Outfitters, Inc. 31,500
------------------------------------------------------------------
2,100 (a) Value City Department Stores, Inc. 26,775
------------------------------------------------------------------
5,600 (a) Valuevision International, Inc., Class A 30,100
------------------------------------------------------------------
6,700 (a) Waban, Inc. 175,038
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<S> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
RETAIL TRADE--CONTINUED
------------------------------------------------------------------
1,600 (a) West Marine, Inc. $ 56,400
------------------------------------------------------------------
1,100 (a) Wet Seal, Inc., Class A 34,650
------------------------------------------------------------------
3,000 Whole Foods Market, Inc. 76,875
------------------------------------------------------------------
4,000 (a) Williams-Sonoma, Inc. 110,000
------------------------------------------------------------------
6,800 (a) Zale Corp. 131,750
------------------------------------------------------------------ --------------
Total 5,895,992
------------------------------------------------------------------ --------------
SERVICES--10.4%
------------------------------------------------------------------
2,900 (a) 7th Level, Inc. 14,862
------------------------------------------------------------------
3,000 ABM Industries, Inc. 52,875
------------------------------------------------------------------
2,050 (a) ABR Information Services, Inc. 141,962
------------------------------------------------------------------
3,150 Ackerley Communications, Inc. 38,587
------------------------------------------------------------------
4,700 (a) ADVO, Inc. 66,387
------------------------------------------------------------------
4,000 (a) Air and Water Technology Corp., Class A 25,500
------------------------------------------------------------------
3,300 (a) Alliance Entertainment Corp. 13,200
------------------------------------------------------------------
13,000 (a) Allied Waste Industries, Inc. 117,812
------------------------------------------------------------------
7,100 (a) Allwaste, Inc. 32,837
------------------------------------------------------------------
600 (a) AMC Entertainment, Inc. 10,350
------------------------------------------------------------------
2,250 (a) American Business Information 43,311
------------------------------------------------------------------
2,650 American Business Products, Inc. 58,962
------------------------------------------------------------------
9,000 American Media, Inc. 47,250
------------------------------------------------------------------
3,200 (a) American Radio Systems Corp. 97,600
------------------------------------------------------------------
600 (a) Ameristar Casinos, Inc. 3,225
------------------------------------------------------------------
3,200 Amresco, Inc. 67,600
------------------------------------------------------------------
1,300 (a) Anchor Gaming 65,000
------------------------------------------------------------------
2,000 Angelica Corp. 39,000
------------------------------------------------------------------
5,437 Apple South, Inc. 63,884
------------------------------------------------------------------
6,700 Applebee's International, Inc. 163,311
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
SERVICES--CONTINUED
------------------------------------------------------------------
3,000 (a) APS Holding Corp., Class A $ 62,250
------------------------------------------------------------------
3,100 (a) Argosy Gaming Corp. 19,375
------------------------------------------------------------------
2,400 (a) Argyle Television, Inc., Class A 66,600
------------------------------------------------------------------
1,200 Ascent Entertainment Group, Inc. 22,200
------------------------------------------------------------------
3,500 (a) ATC Communications, Inc. 66,500
------------------------------------------------------------------
8,300 (a) Aztar Corp. 67,437
------------------------------------------------------------------
300 (a) Bally's Grand, Inc. 9,600
------------------------------------------------------------------
6,750 Banta Corp. 142,594
------------------------------------------------------------------
3,300 Barefoot, Inc. 33,412
------------------------------------------------------------------
1,000 (a) BARRA, Inc. 27,984
------------------------------------------------------------------
2,650 Bearings, Inc. 68,900
------------------------------------------------------------------
3,000 Bell & Howell Group, Inc. 80,250
------------------------------------------------------------------
700 Berlitz International, Inc. 15,224
------------------------------------------------------------------
1,400 (a) BET Holdings, Inc., Class A 40,950
------------------------------------------------------------------
3,000 Big Flower Press Holdings, Inc. 46,500
------------------------------------------------------------------
3,200 (a) Billing Information Concepts 83,600
------------------------------------------------------------------
9,200 Bob Evans Farms, Inc. 115,000
------------------------------------------------------------------
2,700 (a) Borg Warner Security Corp. 28,013
------------------------------------------------------------------
3,800 Bowne & Co., Inc. 88,825
------------------------------------------------------------------
5,200 Boyd Gaming Corporation 38,350
------------------------------------------------------------------
3,600 Bristol Hotel Company 96,750
------------------------------------------------------------------
2,200 (a) BT Office Products International, Inc. 18,150
------------------------------------------------------------------
8,925 (a) Buffets, Inc. 99,291
------------------------------------------------------------------
1,300 Butler Manufacturing Co. 40,950
------------------------------------------------------------------
3,800 (a) Career Horizons, Inc. 154,375
------------------------------------------------------------------
2,100 (a) Carmike Cinemas, Inc., Class A 49,875
------------------------------------------------------------------
3,850 (a) Casino American, Inc. 18,769
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
SERVICES--CONTINUED
------------------------------------------------------------------
2,100 (a) Casino Data Systems $ 30,187
------------------------------------------------------------------
5,400 (a) Casino Magic Corp. 15,188
------------------------------------------------------------------
2,400 Castle (A.M.) & Co. 44,400
------------------------------------------------------------------
4,000 (a) Catalina Marketing Corp. 203,500
------------------------------------------------------------------
2,200 (a) CDI Corp. 60,500
------------------------------------------------------------------
1,000 Central Parking Corp. 34,624
------------------------------------------------------------------
4,400 Checkfree Corp. 80,300
------------------------------------------------------------------
1,800 (a) Cheesecake Factory, Inc. 33,300
------------------------------------------------------------------
4,000 CKE Restaurants, Inc. 119,000
------------------------------------------------------------------
600 (a) CKS Group, Inc. 11,624
------------------------------------------------------------------
1,500 CMG Information Services, Inc. 15,000
------------------------------------------------------------------
2,430 (a) Consolidated Products, Inc. 41,310
------------------------------------------------------------------
1,900 (a) Continental Waste Industries, Inc. 47,262
------------------------------------------------------------------
1,600 (a) Copart, Inc. 29,400
------------------------------------------------------------------
2,850 (a) Corestaff, Inc. 72,675
------------------------------------------------------------------
1,500 (a) CSS Industries, Inc. 35,250
------------------------------------------------------------------
800 (a) Daisytek International Corp. 30,600
------------------------------------------------------------------
2,400 (a) Daka International, Inc. 21,300
------------------------------------------------------------------
3,500 Dames & Moore, Inc. 46,813
------------------------------------------------------------------
5,400 (a) Data Broadcasting Corp. 40,500
------------------------------------------------------------------
600 Data Processing Resources Corp. 12,075
------------------------------------------------------------------
1,800 Data Transmission Network Corp. 38,700
------------------------------------------------------------------
1,100 (a) Day Runner, Inc. 30,800
------------------------------------------------------------------
2,800 (a) DeVRY, Inc. 139,650
------------------------------------------------------------------
1,900 (a) Dendrite International, Inc. 50,588
------------------------------------------------------------------
1,400 (a) Desktop Data, Inc. 33,250
------------------------------------------------------------------
2,900 (a) Destec Energy, Inc. 43,500
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
SERVICES--CONTINUED
------------------------------------------------------------------
1,400 (a) Devon Group, Inc. $ 35,000
------------------------------------------------------------------
630 Diana Corp. 17,167
------------------------------------------------------------------
4,900 (a) Doubletree Corp. 198,756
------------------------------------------------------------------
900 Eagle River Interactive, Inc. 8,438
------------------------------------------------------------------
1,350 (a) Edmark Corp. 14,681
------------------------------------------------------------------
1,600 (a) Emmis Broadcasting Corp., Class A 58,000
------------------------------------------------------------------
3,800 Employee Solutions, Inc. 84,075
------------------------------------------------------------------
3,500 Ennis Business Forms, Inc. 38,500
------------------------------------------------------------------
1,800 (a) Equity Corporation International 41,400
------------------------------------------------------------------
4,650 (a) Evergreen Media Corp., Class A 125,550
------------------------------------------------------------------
6,800 (a) Extended Stay America, Inc. 137,700
------------------------------------------------------------------
1,400 (a) EZ Communications, Inc., Class A 53,900
------------------------------------------------------------------
1,600 Fair Isaac & Co., Inc. 60,200
------------------------------------------------------------------
3,500 Fisher Scientific International, Inc. 157,063
------------------------------------------------------------------
8,100 Fleming Cos., Inc. 140,737
------------------------------------------------------------------
8,400 (a) Foodmaker, Inc. 81,900
------------------------------------------------------------------
1,700 (a) Franklin Electronic Publishers, Inc. 21,675
------------------------------------------------------------------
3,600 (a) Franklin Quest Co. 72,900
------------------------------------------------------------------
1,200 (a) GC Cos., Inc. 40,650
------------------------------------------------------------------
4,450 G & K Services, Inc., Class A 129,050
------------------------------------------------------------------
3,700 (a) Golden Books Family Entertainment, Inc. 41,163
------------------------------------------------------------------
2,450 Granite Construction, Inc. 47,163
------------------------------------------------------------------
2,000 GRC International 28,250
------------------------------------------------------------------
200 Grey Advertising, Inc. 46,900
------------------------------------------------------------------
9,800 (a) Greyhound Lines, Inc. 35,525
------------------------------------------------------------------
1,200 HA-LO Industries, Inc. 37,200
------------------------------------------------------------------
7,200 Handleman Co. 46,800
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
SERVICES--CONTINUED
------------------------------------------------------------------
6,600 Harland (John H.) Co. $ 205,425
------------------------------------------------------------------
3,337 Harte-Hanks 86,345
------------------------------------------------------------------
1,300 Harveys Casino Resorts 20,963
------------------------------------------------------------------
1,700 (a) Heftel Broadcasting Corp., Class A 61,625
------------------------------------------------------------------
7,000 (a) Heritage Media Corp., Class A 106,750
------------------------------------------------------------------
5,000 Hollinger International Publishing, Inc. 62,500
------------------------------------------------------------------
3,300 (a) Hollywood Park, Inc. 32,381
------------------------------------------------------------------
5,700 (a) Host Marriott Services Corp. 50,588
------------------------------------------------------------------
3,100 Houghton Mifflin Co. 153,838
------------------------------------------------------------------
1,100 Hughes Supply, Inc. 41,800
------------------------------------------------------------------
3,900 (a) Identix, Inc. 31,688
------------------------------------------------------------------
1,700 (a) Inference Corp. 20,825
------------------------------------------------------------------
1,800 (a) IHOP Corp. 39,600
------------------------------------------------------------------
4,600 (a) Insituform Technologies, Inc., Class A 30,474
------------------------------------------------------------------
500 (a) Intelliquest Information Group, Inc. 11,000
------------------------------------------------------------------
3,300 (a) Interim Services, Inc. 132,000
------------------------------------------------------------------
3,300 (a) International Dairy Queen, Inc., Class A 63,525
------------------------------------------------------------------
650 (a) ITT Educational Services, Inc. 23,644
------------------------------------------------------------------
4,600 (a) Jacobs Engineering Group, Inc. 101,775
------------------------------------------------------------------
1,400 (a) Jacor Communications, Inc., Class A 39,200
------------------------------------------------------------------
2,100 (a) JP Foodservice, Inc. 46,725
------------------------------------------------------------------
2,900 (a) Katz Media Group 24,288
------------------------------------------------------------------
2,200 (a) KFX, Inc. 14,300
------------------------------------------------------------------
2,500 (a) Kinder-Care Learning Centers, Inc. 49,375
------------------------------------------------------------------
1,800 Landauer, Inc. 35,325
------------------------------------------------------------------
3,500 (a) Landrys Seafood Restaurants, Inc. 71,750
------------------------------------------------------------------
1,500 Lawson Products, Inc. 31,875
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
SERVICES--CONTINUED
------------------------------------------------------------------
1,000 (a) Learning Tree International, Inc. $ 42,250
------------------------------------------------------------------
2,700 (a) Lin Television Corp. 102,263
------------------------------------------------------------------
1,200 (a) Longhorn Steaks, Inc. 19,200
------------------------------------------------------------------
5,100 Luby's Cafeterias, Inc. 107,100
------------------------------------------------------------------
1,600 (a) Mail Boxes, ETC. 32,600
------------------------------------------------------------------
500 (a) Manhattan Bagel Co., Inc. 5,125
------------------------------------------------------------------
2,550 Marcus Corp. 56,738
------------------------------------------------------------------
1,400 (a) Mastec, Inc. 68,075
------------------------------------------------------------------
1,400 (a) May & Speh, Inc. 23,275
------------------------------------------------------------------
6,500 McClatchy Newspapers, Inc. , Class A 181,188
------------------------------------------------------------------
2,600 Media General, Inc., Class A 77,350
------------------------------------------------------------------
1,200 Merrill Corp. 26,700
------------------------------------------------------------------
7,942 (a) Metromedia International Group, Inc. 78,427
------------------------------------------------------------------
3,200 (a) Molten Metal Technology 42,800
------------------------------------------------------------------
2,000 (a) Morrison Health Care, Inc. 24,250
------------------------------------------------------------------
2,000 (a) Morrison Knudsen Corp. 18,000
------------------------------------------------------------------
2,400 Nash Finch Co. 39,000
------------------------------------------------------------------
7,600 (a) National Education Corp. 123,500
------------------------------------------------------------------
2,315 (a) Newpark Resources, Inc. 86,813
------------------------------------------------------------------
1,900 (a) NFO Research, Inc. 44,175
------------------------------------------------------------------
4,400 (a) Noel Group, Inc. 28,600
------------------------------------------------------------------
2,600 Norrell Corp. 65,000
------------------------------------------------------------------
3,700 (a) NPC International, Inc. 31,450
------------------------------------------------------------------
10,700 Ogden Corp. 193,938
------------------------------------------------------------------
4,200 (a) OHM Corp. 32,025
------------------------------------------------------------------
1,100 (a) On Assignment, Inc. 33,825
------------------------------------------------------------------
1,700 (a) Papa Johns International, Inc. 84,575
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
SERVICES--CONTINUED
------------------------------------------------------------------
3,300 Patriot American Hospitality, Inc. $ 115,913
------------------------------------------------------------------
300 (a) Paxson Communications Corp. 2,663
------------------------------------------------------------------
1,200 (a) PEC Israel Economic Corp. 18,300
------------------------------------------------------------------
600 (a) Penn National Gaming, Inc. 20,700
------------------------------------------------------------------
1,850 (a) Performance Food Group Co. 28,444
------------------------------------------------------------------
2,500 (a) Personnel Group of America, Inc. 69,063
------------------------------------------------------------------
5,500 Petroleum Heat & Power, Inc., Class A 40,563
------------------------------------------------------------------
9,400 Phoenix Duff & Phelps Corp. 57,575
------------------------------------------------------------------
1,100 (a) Pinkertons, Inc. 29,425
------------------------------------------------------------------
3,300 (a) Playboy Enterprises, Inc., Class B 39,600
------------------------------------------------------------------
6,300 (a) Players International, Inc. 42,525
------------------------------------------------------------------
5,700 (a) PMT Services, Inc. 114,000
------------------------------------------------------------------
4,600 (a) Prepaid Legal Services, Inc. 54,050
------------------------------------------------------------------
1,700 (a) Primadonna Resorts, Inc. 27,413
------------------------------------------------------------------
5,100 (a) Primark Corp. 126,863
------------------------------------------------------------------
6,700 (a) Pime Hospitality Corp. 102,175
------------------------------------------------------------------
1,000 (a) Profit Recovery Group International, Inc. 15,250
------------------------------------------------------------------
5,200 (a) PsiNet, Inc. 49,400
------------------------------------------------------------------
1,000 Pulitzer Publishing Co. 63,500
------------------------------------------------------------------
1,000 (a) Quality Dining, Inc. 21,500
------------------------------------------------------------------
800 (a) Quintel Entertainment, Inc. 6,400
------------------------------------------------------------------
1,900 (a) Rainforest Cafe Inc. 61,750
------------------------------------------------------------------
6,800 (a) Red Lion Hotels, Inc. 204,000
------------------------------------------------------------------
2,200 (a) Red Roof Inns, Inc. 29,425
------------------------------------------------------------------
5,437 (a) Regal Cinemas, Inc. 141,362
------------------------------------------------------------------
2,600 (a) Renaissance Communications Corp. 91,975
------------------------------------------------------------------
600 (a) Renaissance Solutions, Inc. 24,150
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
SERVICES--CONTINUED
------------------------------------------------------------------
2,800 (a) Rexel, Inc. $ 40,600
------------------------------------------------------------------
3,500 (a) Rio Hotel & Casino, Inc. 50,750
------------------------------------------------------------------
13,000 (a) Rollins Environmental Services, Inc. 29,250
------------------------------------------------------------------
4,600 Rollins, Inc. 87,975
------------------------------------------------------------------
1,300 (a) Romac International, Inc. 37,375
------------------------------------------------------------------
3,050 Ruby Tuesday, Inc. 49,563
------------------------------------------------------------------
2,000 (a) Rural / Metro Corp. 73,000
------------------------------------------------------------------
11,300 (a) Ryan's Family Steak Houses, Inc. 83,338
------------------------------------------------------------------
5,700 Rykoff Sexton, Inc. 81,225
------------------------------------------------------------------
12,500 Safety-Kleen Corp. 195,313
------------------------------------------------------------------
1,500 (a) Saga Communications, Inc., Class A 32,063
------------------------------------------------------------------
6,500 (a) Savoy Pictures Entertainment, Inc. 17,875
------------------------------------------------------------------
2,650 Sbarro, Inc. 69,894
------------------------------------------------------------------
2,600 (a) Scholastic Corp. 190,450
------------------------------------------------------------------
2,800 (a) Scientific Games Holdings Corp. 63,350
------------------------------------------------------------------
1,700 (a) Seattle Filmworks, Inc. 32,300
------------------------------------------------------------------
2,900 SEI Corp. 58,725
------------------------------------------------------------------
1,400 (a) SFX Broadcasting, Inc. 60,200
------------------------------------------------------------------
8,100 (a) Shoney's, Inc. 59,738
------------------------------------------------------------------
3,350 (a) ShowBiz Pizza Time, Inc. 61,975
------------------------------------------------------------------
3,400 Showboat, Inc. 64,600
------------------------------------------------------------------
2,400 (a) Shuffle Master, Inc. 26,700
------------------------------------------------------------------
5,000 Shurgard Storage Centers, Inc., Class A 131,250
------------------------------------------------------------------
2,000 (a) Silver King Communications, Inc. 44,500
------------------------------------------------------------------
2,800 (a) Sitel Corp. 55,300
------------------------------------------------------------------
2,000 (a) Sodak Gaming, Inc. 36,250
------------------------------------------------------------------
2,850 (a) Sonic Corp. 64,838
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
SERVICES--CONTINUED
------------------------------------------------------------------
9,300 Sothebys Holdings, Inc., Class A $ 158,100
------------------------------------------------------------------
2,800 Spelling Entertainment Group, Inc. 20,300
------------------------------------------------------------------
1,500 (a) SPS Transaction Services, Inc. 24,000
------------------------------------------------------------------
2,800 Standard Register 72,800
------------------------------------------------------------------
3,900 (a) Station Casinos, Inc. 43,388
------------------------------------------------------------------
500 (a) Steck-Vaughn Publishing Corp. 5,625
------------------------------------------------------------------
1,600 Stone & Webster, Inc. 52,800
------------------------------------------------------------------
4,200 Storage USA, Inc. 145,950
------------------------------------------------------------------
2,400 (a) Strategic Distribution, Inc. 13,800
------------------------------------------------------------------
2,200 (a) Stratosphere Corp. 3,094
------------------------------------------------------------------
2,050 (a) Studio Plus Hotels, Inc. 36,131
------------------------------------------------------------------
4,700 (a) SunRiver Corp. 10,869
------------------------------------------------------------------
800 (a) Superior Services, Inc. 13,800
------------------------------------------------------------------
2,600 (a) Sylvan Learning Systems, Inc. 109,850
------------------------------------------------------------------
2,706 (a) Tetra Tech, Inc. 60,209
------------------------------------------------------------------
2,800 (a) Tetra Technologies, Inc. 58,450
------------------------------------------------------------------
900 (a) Thermo Ecotek Corp. 13,613
------------------------------------------------------------------
350 Thermo Remediation, Inc. 3,675
------------------------------------------------------------------
700 (a) Thermo Terratech, Inc. 7,263
------------------------------------------------------------------
2,775 Thomas Nelson, Inc. 33,994
------------------------------------------------------------------
800 Trigen Energy Corp. 17,700
------------------------------------------------------------------
4,000 True North Communications, Inc. 95,000
------------------------------------------------------------------
4,600 (a) Trump Hotels & Casino Resorts, Inc. 73,025
------------------------------------------------------------------
4,400 Unifirst Corp. 88,550
------------------------------------------------------------------
900 United Television, Inc. 79,200
------------------------------------------------------------------
8,400 (a) United Waste Systems, Inc. 288,750
------------------------------------------------------------------
1,000 (a) U.S. Order, Inc. 9,688
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
SERVICES--CONTINUED
------------------------------------------------------------------
4,800 (a) Valassis Communication, Inc. $ 86,400
------------------------------------------------------------------
400 Value Line, Inc. 15,150
------------------------------------------------------------------
3,200 (a) Vanstar Corp. 76,000
------------------------------------------------------------------
2,000 (a) Veritas DGC, Inc. 41,000
------------------------------------------------------------------
1,100 (a) Volt Information Science, Inc. 42,350
------------------------------------------------------------------
3,900 VWR Corp. 49,725
------------------------------------------------------------------
2,400 Wackenhut Corp., Class A 39,000
------------------------------------------------------------------
1,200 (a) Wackenhut Corrections Corp. 22,200
------------------------------------------------------------------
700 Waverly, Inc. 19,600
------------------------------------------------------------------
6,100 (a) Westwood One, Inc. 93,788
------------------------------------------------------------------
2,800 Wiley (John) & Sons, Inc., Class A 85,750
------------------------------------------------------------------
1,700 (a) Wilmar Industries, Inc. 36,550
------------------------------------------------------------------
3,900 (a) WMS Industries, Inc. 95,550
------------------------------------------------------------------
7,300 (a) World Color Press 163,338
------------------------------------------------------------------
1,900 (a) Young Broadcasting, Inc., Class A 54,150
------------------------------------------------------------------
1,200 (a) Youth Services International, Inc. 18,600
------------------------------------------------------------------ --------------
Total 15,059,860
------------------------------------------------------------------ --------------
TECHNOLOGY--14.4%
------------------------------------------------------------------
1,500 (a) 3D Systems Corp. 15,000
------------------------------------------------------------------
3,500 AAR Corp. 99,750
------------------------------------------------------------------
1,600 (a) ACT Networks, Inc. 54,800
------------------------------------------------------------------
3,400 (a) Actel Corp. 60,774
------------------------------------------------------------------
4,700 (a) Acxiom Corp. 184,475
------------------------------------------------------------------
1,200 Advanced Energy Industries, Inc. 4,950
------------------------------------------------------------------
700 (a) Advent Software, Inc. 22,750
------------------------------------------------------------------
2,400 (a) Affiliated Computer Services, Inc., Class A 132,000
------------------------------------------------------------------
4,800 (a) Alliance Semiconductor Corp. 30,600
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
------------------------------------------------------------------
2,000 Alliant Techsystems, Inc. $ 97,750
------------------------------------------------------------------
2,900 (a) Alternative Resources Corp. 58,362
------------------------------------------------------------------
2,850 (a) Altron, Inc. 42,036
------------------------------------------------------------------
325 (a) American Satellite Newwor, Warrants 0
------------------------------------------------------------------
6,100 (a) Ampex, Inc., Class A 41,175
------------------------------------------------------------------
900 Anadigics, Inc. 28,350
------------------------------------------------------------------
1,700 Analogic Corp. 46,325
------------------------------------------------------------------
3,200 Analysts International Corp. 80,000
------------------------------------------------------------------
1,100 (a) Ancor Communications, Inc. 15,811
------------------------------------------------------------------
3,400 (a) Antec Corp. 36,337
------------------------------------------------------------------
2,600 (a) Applied Digital Access, Inc. 16,250
------------------------------------------------------------------
2,000 (a) Applied Innovation, Inc. 17,000
------------------------------------------------------------------
5,700 (a) Applied Magnetics Corp. 121,837
------------------------------------------------------------------
1,800 (a) Applix, Inc. 43,650
------------------------------------------------------------------
2,300 (a) Arbor Software Corp. 83,374
------------------------------------------------------------------
1,700 (a) Aspen Technologies, Inc. 114,325
------------------------------------------------------------------
5,822 (a) AST Research, Inc. 26,927
------------------------------------------------------------------
800 (a) Astea International, Inc. 4,700
------------------------------------------------------------------
3,900 Augat, Inc. 107,250
------------------------------------------------------------------
5,100 (a) Auspex Systems, Inc. 52,275
------------------------------------------------------------------
3,118 (a) Avant! Corp. 94,304
------------------------------------------------------------------
3,400 Aviall, Inc. 31,025
------------------------------------------------------------------
4,500 (a) Avid Technology, Inc. 62,436
------------------------------------------------------------------
600 Bacou U.S.A., Inc. 9,825
------------------------------------------------------------------
4,379 (a) BancTec, Inc. 89,222
------------------------------------------------------------------
3,800 (a) BBN Corp. 81,225
------------------------------------------------------------------
3,000 (a) BDM International, Inc. 150,750
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
------------------------------------------------------------------
3,700 BE Aerospace, Inc. $ 80,475
------------------------------------------------------------------
1,300 (a) Berg Electronics Corp. 36,725
------------------------------------------------------------------
5,100 (a) Bisys Group, Inc. 189,975
------------------------------------------------------------------
3,500 (a) Black Box Corp. 118,125
------------------------------------------------------------------
1,100 (a) Boca Research, Inc. 13,406
------------------------------------------------------------------
2,325 (a) Boole & Babbage, Inc. 71,494
------------------------------------------------------------------
6,600 (a) Borland International, Inc. 33,413
------------------------------------------------------------------
4,700 (a) Boston Technology, Inc. 78,138
------------------------------------------------------------------
1,100 (a) BRC Holdings, Inc. 43,450
------------------------------------------------------------------
1,900 (a) Brightpoint, Inc. 47,500
------------------------------------------------------------------
1,900 (a) Brite Voice Systems, Inc. 23,750
------------------------------------------------------------------
2,600 (a) Broadband Technologies, Inc. 46,475
------------------------------------------------------------------
1,700 Brooktrout Technology, Inc. 54,825
------------------------------------------------------------------
3,550 (a) Burr Brown Corp. 75,438
------------------------------------------------------------------
2,900 (a) Caere Corp. 23,200
------------------------------------------------------------------
2,700 California Amplifier, Inc. 22,275
------------------------------------------------------------------
3,500 (a) California Microwave 51,624
------------------------------------------------------------------
2,100 (a) C-COR Electronics, Inc. 32,550
------------------------------------------------------------------
2,000 (a) Cellstar Corp. 15,000
------------------------------------------------------------------
4,190 (a) Cellular Technical Services, Inc. 67,564
------------------------------------------------------------------
1,300 Centennial Technologies, Inc. 72,313
------------------------------------------------------------------
8,100 (a) Cheyenne Software, Inc. 246,038
------------------------------------------------------------------
4,400 (a) Chips & Technologies, Inc. 87,450
------------------------------------------------------------------
1,600 (a) Ciber, Inc. 56,800
------------------------------------------------------------------
2,500 (a) Cidco, Inc. 47,188
------------------------------------------------------------------
5,100 (a) Citrix Systems Inc. 281,775
------------------------------------------------------------------
2,200 Clarify, Inc. 106,150
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
------------------------------------------------------------------
7,000 (a) Cognex Corp. $ 90,124
------------------------------------------------------------------
1,900 (a) Coherent Communications Systems Corp. 36,812
------------------------------------------------------------------
2,400 (a) Coherent, Inc. 93,600
------------------------------------------------------------------
2,000 Cohu, Inc. 33,000
------------------------------------------------------------------
2,400 (a) Colonial Data Technologies Corp. 22,800
------------------------------------------------------------------
4,700 (a) Compucom System, Inc. 45,825
------------------------------------------------------------------
2,900 (a) Computer Horizons Corp. 89,900
------------------------------------------------------------------
700 Computer Language Research, Inc. 7,963
------------------------------------------------------------------
600 Computer Management Sciences 17,550
------------------------------------------------------------------
4,900 (a) Computer Network Technology 26,644
------------------------------------------------------------------
5,200 (a) Computer Products, Inc. 102,700
------------------------------------------------------------------
1,800 Computer Task Group, Inc. 67,950
------------------------------------------------------------------
13,600 (a) Computervision Corp. 122,400
------------------------------------------------------------------
2,100 Comshare, Inc. 28,875
------------------------------------------------------------------
4,600 (a) Comverse Technology, Inc. 161,000
------------------------------------------------------------------
2,900 (a) Control Data Systems, Inc. 68,150
------------------------------------------------------------------
1,300 Cooper & Chyan Technology, Inc. 39,812
------------------------------------------------------------------
9,400 (a) CopyTele, Inc. 67,268
------------------------------------------------------------------
2,100 (a) C.P. Clare Corp. 17,325
------------------------------------------------------------------
4,650 (a) Credence Systems Corp. 63,355
------------------------------------------------------------------
2,300 (a) Cree Research, Inc. 26,450
------------------------------------------------------------------
600 CSG Systems International, Inc. 10,050
------------------------------------------------------------------
900 CTS Corp. 37,800
------------------------------------------------------------------
1,200 Cubic Corp. 24,750
------------------------------------------------------------------
500 Curtiss Wright Corp. 27,063
------------------------------------------------------------------
1,200 (a) Cybercash, Inc. 34,500
------------------------------------------------------------------
3,700 (a) Cyrix Corp. 65,675
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
------------------------------------------------------------------
5,700 Dallas Semiconductor Corp. $ 114,000
------------------------------------------------------------------
2,300 Daniel Industries, Inc. 29,613
------------------------------------------------------------------
7,700 (a) Data General Corp. 114,538
------------------------------------------------------------------
1,500 Data Translation, Inc. 15,938
------------------------------------------------------------------
800 (a) Datastream Systems, Inc. 14,600
------------------------------------------------------------------
1,000 Davox Corp. 36,000
------------------------------------------------------------------
1,600 DecisionOne Corp. 22,800
------------------------------------------------------------------
1,550 (a) D H Technology, Inc. 36,038
------------------------------------------------------------------
1,600 (a) Dialogic Corp. 54,800
------------------------------------------------------------------
6,700 Diamond Multimedia Systems, Inc. 79,563
------------------------------------------------------------------
2,400 (a) Digi International, Inc. 35,400
------------------------------------------------------------------
1,200 (a) Digital Systems Int., Inc. 16,350
------------------------------------------------------------------
3,400 (a) Digtial Microwave Corp. 77,775
------------------------------------------------------------------
1,800 (a) DII Group, Inc. 39,600
------------------------------------------------------------------
2,800 (a) Dionex Corp. 107,100
------------------------------------------------------------------
2,000 (a) Documentum, Inc. 74,500
------------------------------------------------------------------
4,500 (a) DSP Communications, Inc. 171,000
------------------------------------------------------------------
4,000 (a) Dynatech Corp. 197,750
------------------------------------------------------------------
1,600 (a) EIS International, Inc. 13,600
------------------------------------------------------------------
1,900 (a) Electro Scientific Industries, Inc. 38,950
------------------------------------------------------------------
3,900 (a) Electroglas, Inc. 51,188
------------------------------------------------------------------
1,100 (a) Eltron International, Inc. 38,913
------------------------------------------------------------------
2,000 (a) Encad, Inc. 82,000
------------------------------------------------------------------
2,500 (a) Envoy Corp. 91,875
------------------------------------------------------------------
2,700 (a) EPIC Design Technology, Inc. 66,150
------------------------------------------------------------------
3,600 (a) ESS Technology, Inc. 57,600
------------------------------------------------------------------
1,800 (a) Esterline Technologies Corp. 42,075
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
------------------------------------------------------------------
2,900 (a) Etec Systems, Inc. $ 78,300
------------------------------------------------------------------
1,900 (a) Evans & Sutherland Computer Co. 39,900
------------------------------------------------------------------
4,700 (a) Exabyte Corp. 62,275
------------------------------------------------------------------
1,900 (a) Excalibur Technologies Corp. 27,075
------------------------------------------------------------------
700 Excite, Inc. 4,288
------------------------------------------------------------------
9,900 (a) Executone Information Systems, Inc. 25,369
------------------------------------------------------------------
2,000 FastComm Communications Corp. 16,750
------------------------------------------------------------------
3,300 (a) Filenet Corp. 93,637
------------------------------------------------------------------
4,800 (a) FSI International, Inc. 49,800
------------------------------------------------------------------
5,800 (a) FTP Software, Inc. 36,975
------------------------------------------------------------------
1,700 (a) Fusion Systems Corp. 30,600
------------------------------------------------------------------
1,400 Galileo Electro-Optics Corp. 30,800
------------------------------------------------------------------
1,850 (a) Gasonics International Corp. 13,644
------------------------------------------------------------------
5,700 GenCorp, Inc. 94,050
------------------------------------------------------------------
4,300 (a) GenRad, Inc. 87,075
------------------------------------------------------------------
4,500 (a) General DataComm Industries, Inc. 43,313
------------------------------------------------------------------
2,900 (a) General Magic, Inc. 8,700
------------------------------------------------------------------
1,400 General Scanning, Inc. 14,175
------------------------------------------------------------------
3,500 (a) Genus, Inc. 18,375
------------------------------------------------------------------
12,400 Geotek Industries, Inc. 91,450
------------------------------------------------------------------
1,900 Geoworks 38,713
------------------------------------------------------------------
3,700 Gerber Scientific, Inc. 49,950
------------------------------------------------------------------
1,300 Greenwich Air Services, Inc., Class A 29,250
------------------------------------------------------------------
725 Hach Co. 12,416
------------------------------------------------------------------
1,700 (a) HADCO Corp. 51,638
------------------------------------------------------------------
1,900 (a) Harbinger Corp. 51,300
------------------------------------------------------------------
2,200 (a) Harmonic Lightwaves, Inc. 37,125
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
------------------------------------------------------------------
1,600 Helix Technology Corp. $ 42,600
------------------------------------------------------------------
1,600 Henry Jack & Associates, Inc. 64,600
------------------------------------------------------------------
1,800 HMT Technology Corp. 24,975
------------------------------------------------------------------
3,300 HNC Software 103,950
------------------------------------------------------------------
1,200 (a) Hutchinson Technology, Inc. 53,700
------------------------------------------------------------------
3,600 (a) Hyperion Software Corp. 73,350
------------------------------------------------------------------
1,000 (a) IDT Corp. 11,125
------------------------------------------------------------------
1,500 (a) IKOS Systems, Inc. 26,813
------------------------------------------------------------------
5,800 (a) IMP, Inc. 16,313
------------------------------------------------------------------
1,900 (a) In Focus Systems, Inc. 36,100
------------------------------------------------------------------
2,000 (a) Inacom Corp. 63,250
------------------------------------------------------------------
500 (a) Individual, Inc. 2,875
------------------------------------------------------------------
800 (a) Indus Group, Inc. 16,200
------------------------------------------------------------------
6,000 (a) Information Resources, Inc. 75,750
------------------------------------------------------------------
1,700 (a) Inso Corp. 83,725
------------------------------------------------------------------
16,700 (a) Integrated Device Technology, Inc. 137,775
------------------------------------------------------------------
600 (a) Integrated Measurement Systems, Inc 9,375
------------------------------------------------------------------
1,900 (a) Integrated Packaging Assembly Corp. 16,625
------------------------------------------------------------------
3,100 (a) Integrated Process Equipment Corp. 33,713
------------------------------------------------------------------
3,200 (a) Integrated Silicon Solution, Inc. 26,000
------------------------------------------------------------------
3,200 (a) Integrated Systems, Inc. 86,400
------------------------------------------------------------------
6,500 Intelligent Electronics, Inc. 57,688
------------------------------------------------------------------
1,800 (a) Inter-Tel, Inc. 27,225
------------------------------------------------------------------
9,900 (a) Interdigital Communications Corp. 63,731
------------------------------------------------------------------
8,700 (a) Intergraph Corp. 81,563
------------------------------------------------------------------
4,200 (a) Intersolv, Inc. 34,125
------------------------------------------------------------------
3,400 (a) Intervoice, Inc. 44,200
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
------------------------------------------------------------------
600 (a) Intevac, Inc. $ 8,700
------------------------------------------------------------------
800 (a) IPC Information Systems, Inc. 12,000
------------------------------------------------------------------
1,000 (a) Iron Mountain, Inc. 30,000
------------------------------------------------------------------
2,100 (a) Itron, Inc. 34,913
------------------------------------------------------------------
1,300 (a) Jabil Circuit, Inc. 31,200
------------------------------------------------------------------
600 (a) JDA Software Group, Inc. 20,625
------------------------------------------------------------------
1,200 John Fluke Manufacturing, Co. 48,000
------------------------------------------------------------------
3,500 (a) Keane, Inc. 162,313
------------------------------------------------------------------
8,300 (a) Kemet Corp. 160,813
------------------------------------------------------------------
5,200 (a) Kent Electronics Corp. 118,950
------------------------------------------------------------------
1,800 (a) Kronos, Inc. 52,425
------------------------------------------------------------------
4,200 (a) Kulicke & Soffa Industries 55,125
------------------------------------------------------------------
4,750 (a) Lattice Semiconductor Corp. 162,688
------------------------------------------------------------------
3,500 (a) Legato Systems, Inc. 124,250
------------------------------------------------------------------
2,800 (a) Level One Communications, Inc. 79,100
------------------------------------------------------------------
1,500 (a) Logic Works, Inc. 8,625
------------------------------------------------------------------
2,600 Logicon, Inc. 107,575
------------------------------------------------------------------
7,500 (a) LTX Corp. 29,531
------------------------------------------------------------------
1,000 (a) Mafco Consolidated Group, Inc. 27,875
------------------------------------------------------------------
1,600 (a) Manugistics Group, Inc. 68,800
------------------------------------------------------------------
3,700 (a) Marshall Industries 111,463
------------------------------------------------------------------
2,200 (a) Mattson Technology, Inc. 20,075
------------------------------------------------------------------
1,300 (a) Maxis, Inc. 16,900
------------------------------------------------------------------
3,100 Measurex Corp. 79,825
------------------------------------------------------------------
3,400 (a) Mercury Interactive Corp. 43,350
------------------------------------------------------------------
800 (a) Merix Corp. 16,800
------------------------------------------------------------------
1,800 (a) MetaTools, Inc. 34,650
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
------------------------------------------------------------------
6,700 Methode Electronics, Inc., Class A $ 130,650
------------------------------------------------------------------
2,500 (a) Metricom, Inc. 35,313
------------------------------------------------------------------
1,700 (a) MicroTouch Systems, Inc. 30,813
------------------------------------------------------------------
7,300 (a) Microchip Technology, Inc. 264,625
------------------------------------------------------------------
3,300 (a) Microcom, Inc. 27,638
------------------------------------------------------------------
1,100 (a) Microware Systems Corp. 20,075
------------------------------------------------------------------
2,600 (a) MRV Communications, Inc. 56,550
------------------------------------------------------------------
2,000 MTS Systems Corp. 40,000
------------------------------------------------------------------
4,300 Mylex Corp. 54,825
------------------------------------------------------------------
3,000 National Computer Systems, Inc. 64,500
------------------------------------------------------------------
5,600 National Data Corp. 230,300
------------------------------------------------------------------
1,800 (a) National Instruments Corp. 51,300
------------------------------------------------------------------
1,700 (a) Neose Technologies, Inc. 27,625
------------------------------------------------------------------
6,600 (a) Netmanage, Inc. 44,963
------------------------------------------------------------------
3,400 (a) Network Appliance, Inc. 119,000
------------------------------------------------------------------
4,500 (a) Network Equipment Technologies, Inc. 60,188
------------------------------------------------------------------
2,100 (a) Network Peripherals, Inc. 36,488
------------------------------------------------------------------
1,200 (a) Nichols Research Corp. 41,700
------------------------------------------------------------------
2,900 (a) Nimbus CD International, Inc. 28,638
------------------------------------------------------------------
2,400 Novadigm, Inc. 19,500
------------------------------------------------------------------
3,500 (a) Novellus Systems, Inc. 144,375
------------------------------------------------------------------
7,700 (a) Oak Technology, Inc. 77,963
------------------------------------------------------------------
3,500 OEA, Inc. 132,125
------------------------------------------------------------------
3,900 (a) OIS Optical Imaging Systems, Inc. 10,725
------------------------------------------------------------------
900 (a) OnTrak Systems, Inc. 13,050
------------------------------------------------------------------
1,900 (a) Optical Data Systems, Inc. 27,788
------------------------------------------------------------------
5,600 (a) Orbital Sciences Corp. 117,600
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
------------------------------------------------------------------
1,400 (a) Ortel Corp. $ 29,050
------------------------------------------------------------------
2,100 Park Electrochemical Corp. 43,050
------------------------------------------------------------------
3,400 (a) P-COM, Inc. 74,800
------------------------------------------------------------------
1,900 (a) Peak Technologies Group, Inc. 22,325
------------------------------------------------------------------
1,500 (a) Perceptron, Inc. 37,125
------------------------------------------------------------------
1,100 (a) Periphonics Corp. 39,050
------------------------------------------------------------------
2,800 (a) Phoenix Technology, Ltd. 48,300
------------------------------------------------------------------
1,900 (a) Photronic Labs, Inc. 51,300
------------------------------------------------------------------
1,400 (a) Pinnacle Systems, Inc. 15,225
------------------------------------------------------------------
4,825 Pioneer Standard Electronics, Inc. 50,663
------------------------------------------------------------------
1,800 (a) Pixar, Inc. 28,575
------------------------------------------------------------------
1,700 (a) Planar Systems, Inc. 17,213
------------------------------------------------------------------
1,800 (a) Plantronics, Inc. 67,725
------------------------------------------------------------------
10,598 (a) Platinum Technology, Inc. 152,346
------------------------------------------------------------------
4,500 (a) Power Control Technologies, Inc. 34,875
------------------------------------------------------------------
3,000 (a) Precision Systems, Inc. 19,125
------------------------------------------------------------------
1,200 (a) Premenos Technology Corp. 10,200
------------------------------------------------------------------
1,300 (a) PRI Automation, Inc. 46,150
------------------------------------------------------------------
1,000 (a) Prism Solutions, Inc. 4,938
------------------------------------------------------------------
2,400 (a) Progress Software Corp. 37,500
------------------------------------------------------------------
1,300 (a) Project Software & Development, Inc. 44,200
------------------------------------------------------------------
1,800 (a) Proxim, Inc. 40,950
------------------------------------------------------------------
5,225 (a) Pure Atria Corp. 142,381
------------------------------------------------------------------
6,400 (a) Quarterdeck Office Systems 32,800
------------------------------------------------------------------
1,400 (a) Quickresponse Services, Inc. 51,975
------------------------------------------------------------------
2,900 (a) Quickturn Design Systems, Inc. 42,413
------------------------------------------------------------------
1,000 (a) RadiSys Corp. 63,750
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
------------------------------------------------------------------
1,300 (a) Rainbow Technologies, Inc. $ 23,238
------------------------------------------------------------------
5,800 (a) Ramtron International Corp. 42,775
------------------------------------------------------------------
2,400 (a) Red Brick Systems, Inc. 56,400
------------------------------------------------------------------
2,400 (a) Remedy Corp. 117,000
------------------------------------------------------------------
7,600 (a) Riscorp, Inc., Class A 38,000
------------------------------------------------------------------
2,600 (a) RMI Titanium Co. 62,725
------------------------------------------------------------------
3,300 (a) Robotic Vision Systems, Inc. 33,000
------------------------------------------------------------------
4,700 (a) Rohr, Inc. 86,950
------------------------------------------------------------------
4,200 (a) ROSS Technology, Inc. 19,425
------------------------------------------------------------------
10,100 (a) S3, Inc. 190,638
------------------------------------------------------------------
3,300 (a) Sandisk Corp. 43,725
------------------------------------------------------------------
3,600 (a) Sanmina Corp. 164,700
------------------------------------------------------------------
4,200 (a) Santa Cruz Operation, Inc. 29,925
------------------------------------------------------------------
300 (a) Sapient Corp. 13,875
------------------------------------------------------------------
1,600 (a) Scopus Technology, Inc. 61,600
------------------------------------------------------------------
1,600 (a) SDL, Inc. 27,200
------------------------------------------------------------------
1,400 (a) Secure Computing Corp. 16,275
------------------------------------------------------------------
600 (a) Segue Software, Inc. 8,100
------------------------------------------------------------------
1,450 (a) Semitool, Inc. 13,050
------------------------------------------------------------------
1,700 (a) Sequa Corp., Class A 70,975
------------------------------------------------------------------
6,500 (a) Sequent Computer System, Inc. 96,281
------------------------------------------------------------------
1,900 (a) Sheldahl, Inc. 28,738
------------------------------------------------------------------
5,800 (a) Sierra Semiconductor Corp. 75,763
------------------------------------------------------------------
4,100 (a) Silicon Storage Technology 30,750
------------------------------------------------------------------
6,300 (a) Silicon Valley Group, Inc. 104,738
------------------------------------------------------------------
2,100 (a) Siliconix, Inc. 38,325
------------------------------------------------------------------
1,100 (a) Simula, Inc. 14,988
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
------------------------------------------------------------------
2,700 (a) Smart Modular Technologies, Inc. $ 54,675
------------------------------------------------------------------
800 (a) Smith Micro Software, Inc. 4,600
------------------------------------------------------------------
1,600 Software 2000, Inc. 11,600
------------------------------------------------------------------
900 (a) Speedfam International, Inc. 14,175
------------------------------------------------------------------
1,200 (a) SPSS, Inc. 37,350
------------------------------------------------------------------
2,400 (a) Spyglass, Inc. 28,800
------------------------------------------------------------------
600 (a) SQA, Inc. 16,425
------------------------------------------------------------------
4,500 (a) Stac Electronics 32,063
------------------------------------------------------------------
3,000 (a) Standard Microsystems Corp. 35,250
------------------------------------------------------------------
1,000 (a) Stanford Telcommunications, Inc. 28,500
------------------------------------------------------------------
2,000 (a) State of the Art, Inc. 24,250
------------------------------------------------------------------
3,700 (a) StorMedia, Inc. 42,550
------------------------------------------------------------------
700 (a) Storage Computer Corp. 9,713
------------------------------------------------------------------
5,000 (a) Stratus Computer, Inc. 111,875
------------------------------------------------------------------
6,800 (a) Structural Dynamics Research Corp. 120,700
------------------------------------------------------------------
2,500 (a) SubMicron Systems, Inc. 10,313
------------------------------------------------------------------
1,500 (a) Supertex, Inc. 33,750
------------------------------------------------------------------
11,500 (a) Symantec Corp. 125,063
------------------------------------------------------------------
3,400 (a) Symmetricom, Inc. 56,950
------------------------------------------------------------------
2,800 (a) Sync Research, Inc. 37,100
------------------------------------------------------------------
6,150 System Software Association 71,878
------------------------------------------------------------------
3,000 (a) Systems & Computer Technology Corp. 42,000
------------------------------------------------------------------
4,200 (a) Systemsoft Corp. 118,650
------------------------------------------------------------------
2,400 (a) TCSI Corp. 18,900
------------------------------------------------------------------
7,300 (a) Tech Data Corp. 187,975
------------------------------------------------------------------
1,400 (a) Tech-Sym Corp. 37,625
------------------------------------------------------------------
1,400 Technitrol, Inc. 46,375
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
------------------------------------------------------------------
3,700 (a) Technology Solutions Corp. $ 143,838
------------------------------------------------------------------
1,500 (a) Tekelec, Inc. 22,125
------------------------------------------------------------------
2,200 (a) Telco System, Inc. 45,925
------------------------------------------------------------------
1,400 (a) Teltrend, Inc. 46,200
------------------------------------------------------------------
3,500 Telxon Corp. 42,875
------------------------------------------------------------------
6,600 (a) Tencor Instruments 124,575
------------------------------------------------------------------
700 (a) ThermoSpectra Corp. 9,188
------------------------------------------------------------------
2,050 (a) Thermotrex Corp. 72,775
------------------------------------------------------------------
3,900 Thiokol Corp. 163,313
------------------------------------------------------------------
4,600 (a) Tracor, Inc. 104,650
------------------------------------------------------------------
2,500 (a) TranSwitch Corp. 11,563
------------------------------------------------------------------
5,500 (a) Transaction Systems Architects, Inc., Class A 228,250
------------------------------------------------------------------
2,600 (a) Trident Microsystems, Inc. 52,000
------------------------------------------------------------------
4,200 (a) Trimble Navigation Ltd. 59,588
------------------------------------------------------------------
1,600 (a) Triquint Semiconductor, Inc. 27,800
------------------------------------------------------------------
2,900 (a) Tseng Laboratories, Inc. 18,669
------------------------------------------------------------------
1,950 (a) TSX Corp. 20,231
------------------------------------------------------------------
3,800 (a) Ultratech Stepper, Inc. 64,600
------------------------------------------------------------------
700 (a) Unison Software, Inc. 18,025
------------------------------------------------------------------
2,200 (a) Unitrode Corp. 52,800
------------------------------------------------------------------
1,500 (a) USDATA Corp., Inc. 12,000
------------------------------------------------------------------
1,800 (a) Vantive Corp. 59,400
------------------------------------------------------------------
2,100 (a) Veritas Software Corp. 106,050
------------------------------------------------------------------
1,800 (a) Verity, Inc. 21,375
------------------------------------------------------------------
3,400 (a) Viasoft, Inc. 167,450
------------------------------------------------------------------
6,600 (a) Vicor Corp. 120,450
------------------------------------------------------------------
2,600 (a) VideoLan Technologies, Inc. 8,125
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
------------------------------------------------------------------
2,700 (a) VideoServer, Inc. $ 127,913
------------------------------------------------------------------
3,400 (a) Viewlogic Systems, Inc. 32,088
------------------------------------------------------------------
1,500 (a) Visio Corp. 69,188
------------------------------------------------------------------
800 (a) Visioneer, Inc. 4,800
------------------------------------------------------------------
2,800 (a) Vitesse Semiconductor Corp. 89,250
------------------------------------------------------------------
9,900 (a) VLSI Technology, Inc. 170,775
------------------------------------------------------------------
1,700 (a) Wall Data, Inc. 23,375
------------------------------------------------------------------
7,300 (a) Wang Laboratories, Inc. 170,638
------------------------------------------------------------------
5,000 (a) Waters Corp. 155,000
------------------------------------------------------------------
1,800 Watkins Johnson Co. 32,625
------------------------------------------------------------------
2,000 (a) Whittaker Corp. 28,250
------------------------------------------------------------------
1,900 (a) Wind River Systems, Inc. 80,750
------------------------------------------------------------------
2,900 Wireless Telecom Group, Inc. 30,088
------------------------------------------------------------------
2,900 (a) Wonderware Corp. 24,288
------------------------------------------------------------------
800 (a) Workgroup Technology Corp. 4,700
------------------------------------------------------------------
2,700 Wyle Labs 80,663
------------------------------------------------------------------
4,100 (a) Wyman Gordon Co. 90,200
------------------------------------------------------------------
4,000 (a) Xicor, Inc. 45,500
------------------------------------------------------------------
3,500 Xircom, Inc. 70,875
------------------------------------------------------------------
600 (a) Yahoo, Inc. 11,850
------------------------------------------------------------------
4,200 Zilog, Inc. 82,950
------------------------------------------------------------------
1,000 (a) Zoran Corp. 16,000
------------------------------------------------------------------
800 (a) Zygo Corp. 28,400
------------------------------------------------------------------
1,100 (a) Zytec Corp. 12,100
------------------------------------------------------------------ --------------
Total 20,777,744
------------------------------------------------------------------ --------------
TRANSPORTATION--1.5%
------------------------------------------------------------------
4,300 Airborne Freight Corp. 85,461
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
TRANSPORTATION--CONTINUED
------------------------------------------------------------------
3,500 Airlines Express International Corp. $ 105,875
------------------------------------------------------------------
3,000 (a) Alaska Air Group, Inc. 66,000
------------------------------------------------------------------
10,402 (a) America West Airlines, Inc., Class B 119,623
------------------------------------------------------------------
4,400 (a) American Freightways Corp. 43,450
------------------------------------------------------------------
4,800 (a) APL, Ltd. 105,600
------------------------------------------------------------------
4,300 Arnold Industries, Inc. 68,262
------------------------------------------------------------------
5,100 Atlantic Southeast Airlines, Inc. 107,100
------------------------------------------------------------------
2,200 (a) Covenant Transport, Inc. , Class A 35,475
------------------------------------------------------------------
1,000 Eagle USA Airfreight, Inc. 27,250
------------------------------------------------------------------
2,600 Expeditors International Washington, Inc. 108,875
------------------------------------------------------------------
800 Florida East Coast, Inc. 69,900
------------------------------------------------------------------
1,882 Frozen Food Express Industries, Inc. 16,467
------------------------------------------------------------------
2,400 Harper Group 57,600
------------------------------------------------------------------
3,445 (a) Heartland Express, Inc. 75,790
------------------------------------------------------------------
4,900 Hunt (J.B.) Transportation Services, Inc. 71,663
------------------------------------------------------------------
5,700 (a) Kirby Corp. 111,150
------------------------------------------------------------------
400 (a) Knight Transportation, Inc. 9,000
------------------------------------------------------------------
2,800 (a) Landstar System, Inc. 66,150
------------------------------------------------------------------
5,900 (a) Mesa Air Group, Inc. 54,574
------------------------------------------------------------------
1,100 (a) Midwest Express Holdings, Inc. 37,400
------------------------------------------------------------------
1,900 (a) M.S. Carriers, Inc. 35,625
------------------------------------------------------------------
5,900 (a) OMI Corp. 41,300
------------------------------------------------------------------
6,100 Overseas Shipholding Group, Inc. 103,700
------------------------------------------------------------------
2,000 (a) Railtex, Inc. 45,750
------------------------------------------------------------------
2,900 Roadway Express, Inc. 46,038
------------------------------------------------------------------
1,600 SkyWest, Inc. 24,000
------------------------------------------------------------------
2,500 (a) Swift Transportation Co. 56,875
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
TRANSPORTATION--CONTINUED
------------------------------------------------------------------
3,600 (a) Trans World Airlines, Inc. $ 28,800
------------------------------------------------------------------
1,200 (a) United Transnet, Inc. 17,550
------------------------------------------------------------------
4,750 USFreightways Corp. 103,905
------------------------------------------------------------------
7,700 (a) ValuJet, Inc. 75,074
------------------------------------------------------------------
4,500 Werner Enterprises, Inc. 78,750
------------------------------------------------------------------
1,600 (a) Western Pacific Airlines, Inc. 12,600
------------------------------------------------------------------
4,800 (a) Yellow Corp. 62,700
------------------------------------------------------------------ --------------
Total 2,175,332
------------------------------------------------------------------ --------------
UTILITIES--6.8%
------------------------------------------------------------------
1,800 A+ Network, Inc. 11,250
------------------------------------------------------------------
2,800 ACC Corp. 119,000
------------------------------------------------------------------
3,400 (a) Adelphia Communications Corp., Class A 26,350
------------------------------------------------------------------
11,900 AGL Resources, Inc. 249,900
------------------------------------------------------------------
7,900 Aliant Communications, Inc. 128,374
------------------------------------------------------------------
3,300 (a) American Mobile Satellite Corp. 34,650
------------------------------------------------------------------
800 (a) American Paging, Inc. 4,000
------------------------------------------------------------------
2,100 (a) American Telecasting, Inc. 20,212
------------------------------------------------------------------
1,500 Aquarion Co. 37,874
------------------------------------------------------------------
1,200 Aquila Gas Pipeline Co. 17,400
------------------------------------------------------------------
4,446 (a) Arch Communications Group, Inc. 51,685
------------------------------------------------------------------
1,300 (a) Associated Group, Inc., Class A 36,725
------------------------------------------------------------------
11,300 Atlantic Energy, Inc. NJ 199,162
------------------------------------------------------------------
1,100 (a) Atlantic Telephone Network, Inc. 19,387
------------------------------------------------------------------
3,450 Atmos Energy Corp. 81,937
------------------------------------------------------------------
2,900 Bay State Gas Co. 81,925
------------------------------------------------------------------
3,100 Black Hills Corp. 79,050
------------------------------------------------------------------
5,465 (a) CAI Wireless Systems, Inc. 19,127
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
UTILITIES--CONTINUED
------------------------------------------------------------------
1,400 California Water Service Corp. $ 52,324
------------------------------------------------------------------
2,400 (a) Cellular Communications International, Inc. 75,300
------------------------------------------------------------------
2,600 (a) Cellular Communications of Puerto Rico, Inc. 59,150
------------------------------------------------------------------
1,100 Cellularvision USA, Inc. 8,113
------------------------------------------------------------------
3,505 (a) Centennial Cellular Corp., Class A 45,127
------------------------------------------------------------------
3,800 Central Hudson Gas & Electric Service 114,000
------------------------------------------------------------------
4,800 Central LA Electric Co. 130,200
------------------------------------------------------------------
7,000 Central Maine Power Co. 82,250
------------------------------------------------------------------
6,900 (a) Century Communications, Corp., Class A 47,437
------------------------------------------------------------------
2,800 CFW Communications Co. 61,250
------------------------------------------------------------------
2,900 Cilcorp, Inc. 105,850
------------------------------------------------------------------
16,330 (a) Citizens Utilities Co., Class B 179,630
------------------------------------------------------------------
1,800 Colonial Gas Co. 40,050
------------------------------------------------------------------
3,900 Commonwealth Energy System 93,600
------------------------------------------------------------------
3,000 (a) Comnet Cellular, Inc. 83,250
------------------------------------------------------------------
1,900 Connecticut Energy Corp. 39,662
------------------------------------------------------------------
2,100 Connecticut Natural Gas Corp. 48,037
------------------------------------------------------------------
3,000 (a) C-Tec Corp. 73,125
------------------------------------------------------------------
1,600 E Town 47,000
------------------------------------------------------------------
4,400 Eastern Enterprises 169,400
------------------------------------------------------------------
4,400 Eastern Utilities Association 70,950
------------------------------------------------------------------
12,900 El Paso Electric Co. 67,725
------------------------------------------------------------------
3,500 Empire Distribution Electric Co. 65,625
------------------------------------------------------------------
2,100 Energen Corp. 52,500
------------------------------------------------------------------
3,400 Executive Telecard Ltd. 28,900
------------------------------------------------------------------
5,200 (a) General Communications, Inc., Class A 35,750
------------------------------------------------------------------
2,900 (a) Heartland Wireless Communications, Inc. 63,075
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
UTILITIES--CONTINUED
------------------------------------------------------------------
4,800 HighwayMaster Communications, Inc. $ 84,600
------------------------------------------------------------------
6,400 IES Industries, Inc. 196,800
------------------------------------------------------------------
4,250 Indiana Energy, Inc. 104,125
------------------------------------------------------------------
2,100 (a) Intercel, Inc. 35,174
------------------------------------------------------------------
2,200 (a) Intermedia Communications of Florida, Inc. 70,400
------------------------------------------------------------------
6,533 (a) International Cabletel, Inc. 155,158
------------------------------------------------------------------
5,700 (a) International Family Entertainment, Inc., Class B 101,887
------------------------------------------------------------------
2,100 Interstate Power Co. 63,787
------------------------------------------------------------------
4,582 Jones Intercable, Inc. 53,265
------------------------------------------------------------------
5,500 (a) Kelley Oil & Gas Corp. 15,813
------------------------------------------------------------------
4,301 K N Energy, Inc. 160,750
------------------------------------------------------------------
3,800 Laclede Gas Co. 88,825
------------------------------------------------------------------
3,500 Madison Gas & Electric Co. 71,750
------------------------------------------------------------------
6,150 MDU Resources Group, Inc. 137,606
------------------------------------------------------------------
1,700 (a) MetroCall, Inc. 9,138
------------------------------------------------------------------
3,300 (a) MIDCOM Communications, Inc. 36,300
------------------------------------------------------------------
6,800 Minnesota Power And Light Co. 192,100
------------------------------------------------------------------
11,700 (a) Mobile Telecommunication Technologies Corp. 155,025
------------------------------------------------------------------
9,200 MobileMedia Communications, Inc. 18,687
------------------------------------------------------------------
2,400 (a) NETCOM On-line Communication Services, Inc. 36,600
------------------------------------------------------------------
10,300 Nevada Power Co. 209,863
------------------------------------------------------------------
3,900 New Jersey Resources Corp. 107,738
------------------------------------------------------------------
1,400 North Carolina Natural Gas 41,124
------------------------------------------------------------------
4,800 Northwest Natural Gas Co. 121,800
------------------------------------------------------------------
1,900 Northwestern Public Service Co. 63,413
------------------------------------------------------------------
2,100 NUI Corp. 41,738
------------------------------------------------------------------
5,000 Oneok, Inc. 134,375
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
UTILITIES--CONTINUED
------------------------------------------------------------------
2,900 Orange & Rockland Utilities, Inc. $ 101,863
------------------------------------------------------------------
2,400 Otter Tail Power Co. 77,400
------------------------------------------------------------------
1,600 (a) Palmer Wireless, Inc. 23,100
------------------------------------------------------------------
1,100 Pennsylvania Enterprises 47,575
------------------------------------------------------------------
2,300 (a) Peoples Choice TV Corp. 25,875
------------------------------------------------------------------
3,450 Philadelphia Suburban Corp. 58,650
------------------------------------------------------------------
6,300 Piedmont Natural Gas, Inc. 154,350
------------------------------------------------------------------
1,400 (a) Premiere Technologies, Inc. 22,750
------------------------------------------------------------------
4,788 (a) PriceCellular Corp., Class A 55,061
------------------------------------------------------------------
2,400 (a) ProNet, Inc. 15,900
------------------------------------------------------------------
8,100 Public Service Co. New Mexico 151,875
------------------------------------------------------------------
4,100 Public Service Co. North Carolina, Inc. 73,800
------------------------------------------------------------------
8,400 Rochester Gas & Electric Corp 156,450
------------------------------------------------------------------
12,832 (a) Seagull Energy Corp. 277,492
------------------------------------------------------------------
6,500 Sierra Pacific Resources 181,187
------------------------------------------------------------------
3,400 SIG Corp., Inc. 115,600
------------------------------------------------------------------
1,724 South Jersey Industries, Inc. 40,514
------------------------------------------------------------------
2,535 Southeastern Michigan Gas Energy 45,313
------------------------------------------------------------------
1,700 Southern CA Water Co. 36,975
------------------------------------------------------------------
1,734 (a) Southern Union Co. 43,132
------------------------------------------------------------------
5,300 Southwest Gas Corp. 101,363
------------------------------------------------------------------
5,300 Southwestern Energy Co. 78,838
------------------------------------------------------------------
4,600 (a) Starsight Telecast, Inc. 32,200
------------------------------------------------------------------
3,500 TCA Cable TV, Inc. 93,625
------------------------------------------------------------------
2,640 (a) Tejas Gas Corp. 107,250
------------------------------------------------------------------
1,600 (a) Tel-Save Holdings, Inc. 40,000
------------------------------------------------------------------
2,200 TNP Enterprises, Inc. 56,925
------------------------------------------------------------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ -----------
<C> <C> <S> <C>
*COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
UTILITIES--CONTINUED
------------------------------------------------------------------
1,550 (a) Transaction Network Services, Inc. $ 21,119
------------------------------------------------------------------
2,500 Trescomm International, Inc. 31,875
------------------------------------------------------------------
6,960 (a) Tucson Electric Power Co. 137,460
------------------------------------------------------------------
7,100 UGI Corp. 167,738
------------------------------------------------------------------
2,700 United Cities Gas Co. 56,700
------------------------------------------------------------------
3,000 United Illuminating Co. 99,750
------------------------------------------------------------------
8,400 (a) United International Holdings, Inc., Class A 102,900
------------------------------------------------------------------
2,200 (a) United Video Satellite Group, Inc., Class A 39,050
------------------------------------------------------------------
5,336 United Water Resources, Inc. 83,375
------------------------------------------------------------------
3,200 (a) U.S. Long Distance Corp. 26,800
------------------------------------------------------------------
6,300 (a) Vanguard Cellular Systems, Inc., Class A 104,344
------------------------------------------------------------------
5,200 Washington Energy Co. 100,100
------------------------------------------------------------------
9,400 Washington Gas Light Co. 210,325
------------------------------------------------------------------
3,100 Western Gas Resources, Inc. 49,213
------------------------------------------------------------------
3,900 WICOR, Inc. 138,938
------------------------------------------------------------------
5,200 (a) WinStar Communications, Inc. 109,200
------------------------------------------------------------------
2,800 (a) Wireless One, Inc. 36,400
------------------------------------------------------------------
6,600 WPL Holdings, Inc. 185,625
------------------------------------------------------------------
5,200 WPS Resources Corp. 154,700
------------------------------------------------------------------
600 (a) Xpedite Systems, Inc. 12,300
------------------------------------------------------------------
2,300 Yankee Energy Systems, Inc. 52,324
------------------------------------------------------------------ --------------
Total 9,800,428
------------------------------------------------------------------ --------------
TOTAL COMMON STOCKS (IDENTIFIED COST $123,654,462) 137,589,562
------------------------------------------------------------------ --------------
</TABLE>
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- -------------------------------------------------------------------- ------------
<C> <C> <S> <C>
(B) U.S. TREASURY--0.3%
- ---------------------------------------------------------------------------------------
$ 500,000 United States Treasury Bill, 12/19/1996 (AT AMORTIZED COST) $ 496,765
-------------------------------------------------------------------- ------------
(C) REPURCHASE AGREEMENTS--4.0%
- ---------------------------------------------------------------------------------------
5,725,000 BT Securities Corporation, 5.55%, dated 10/31/1996, due 11/1/1996
(AT AMORTIZED COST) 5,725,000
-------------------------------------------------------------------- ------------
TOTAL INVESTMENTS (IDENTIFIED COST $129,876,227)(D) $143,811,327
-------------------------------------------------------------------- ------------
</TABLE>
* The Fund purchases stock index futures contracts to efficiently manage cash
flows resulting from share holder 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 $6,448,100 at October 31,
1996, which represents 4.5% of net assets. Taking into consideration these
open futures contracts, the Fund's effective, total exposure to stocks is
99.5%.
(a) Non-income producing security.
(b) Represents a security held as collateral which is used to ensure the Fund is
able to satisfy the obligations of its outstanding long futures contracts.
(c) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investment in the repurchase agreement is through participation in a joint
account with other Federated funds.
(d) The cost of investments for federal tax purposes amounts to $130,596,357.
The net unrealized appreciation of investments on a federal tax basis
amounts to $13,214,970 which is comprised of $25,757,669 appreciation and
$12,542,699 depreciation at October 31, 1996.
Note: The categories of investments are shown as a percentage of net assets
($144,690,100) at October 31, 1996.
The following acronyms are used throughout this portfolio:
REIT -- Real Estate Investment Trust
(See Notes which are an integral part of the Financial Statements)
FEDERATED MINI-CAP FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------
Total investments in securities, at value
(identified cost $129,876,227, and tax cost $130,596,357) $143,811,327
- ---------------------------------------------------------------------------------
Income receivable 112,688
- ---------------------------------------------------------------------------------
Receivable for investments sold 4,384
- ---------------------------------------------------------------------------------
Receivable for shares sold 1,303,576
- ---------------------------------------------------------------------------------
Receivable for daily variation margin 68,020
- ---------------------------------------------------------------------------------
Deferred expenses 1,939
- --------------------------------------------------------------------------------- ------------
Total assets 145,301,934
- ---------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------
Payable to bank $379,507
- ----------------------------------------------------------------------
Payable for shares redeemed 167,487
- ----------------------------------------------------------------------
Accrued expenses 64,840
- ---------------------------------------------------------------------- --------
Total liabilities 611,834
- --------------------------------------------------------------------------------- ------------
NET ASSETS for 10,053,780 shares outstanding $144,690,100
- --------------------------------------------------------------------------------- ------------
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------
Paid in capital $118,508,885
- ---------------------------------------------------------------------------------
Net unrealized appreciation of investments and futures contracts 13,889,920
- ---------------------------------------------------------------------------------
Accumulated net realized gain on investments and futures contracts 12,174,378
- ---------------------------------------------------------------------------------
Undistributed net investment income 116,917
- --------------------------------------------------------------------------------- ------------
Total Net Assets $144,690,100
- --------------------------------------------------------------------------------- ------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
$144,690,100 / 10,053,780 shares outstanding $14.39
- --------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MINI-CAP FUND
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -------------------------------------------------------------------------------------------
Dividends $ 2,010,126
- -------------------------------------------------------------------------------------------
Interest 766,755
- ------------------------------------------------------------------------------------------- -----------
Total income 2,776,881
- -------------------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------------------
Management fee $ 736,307
- ------------------------------------------------------------------------------
Custodian fees 86,009
- ------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 81,185
- ------------------------------------------------------------------------------
Directors'/Trustees' fees 3,813
- ------------------------------------------------------------------------------
Auditing fees 14,061
- ------------------------------------------------------------------------------
Legal fees 3,706
- ------------------------------------------------------------------------------
Portfolio accounting fees 55,321
- ------------------------------------------------------------------------------
Shareholder services fee 368,154
- ------------------------------------------------------------------------------
Share registration costs 18,207
- ------------------------------------------------------------------------------
Printing and postage 39,230
- ------------------------------------------------------------------------------
Insurance premiums 4,593
- ------------------------------------------------------------------------------
Taxes 6,390
- ------------------------------------------------------------------------------
Miscellaneous 8,482
- ------------------------------------------------------------------------------ ---------
Total expenses 1,425,458
- ------------------------------------------------------------------------------
Waivers--
- ------------------------------------------------------------------------------
Waiver of management fee $ (22,506)
- ------------------------------------------------------------------
Waiver of shareholder services fee (309,249)
- ------------------------------------------------------------------ ---------
Total waivers (331,755)
- ------------------------------------------------------------------------------ ---------
Net expenses 1,093,703
- ------------------------------------------------------------------------------------------- -----------
Net investment income 1,683,178
- ------------------------------------------------------------------------------------------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES CONTRACTS:
- -------------------------------------------------------------------------------------------
Net realized gain on investments and futures contracts 11,326,674
- -------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments and futures contracts 5,852,231
- ------------------------------------------------------------------------------------------- -----------
Net realized and unrealized gain on investments and futures contracts 17,178,905
- ------------------------------------------------------------------------------------------- -----------
Change in net assets resulting from operations $18,862,083
- ------------------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MINI-CAP FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-----------------------------
1996 1995
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------------------
Net investment income $ 1,683,178 $ 1,300,698
- -------------------------------------------------------------------
Net realized gain (loss) on investments and futures contracts
($12,836,707 and $7,103,741, respectively, as computed for federal
tax purposes) 11,326,674 8,050,853
- -------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments
and futures contracts 5,852,231 6,189,544
- ------------------------------------------------------------------- ------------ ------------
Change in net assets resulting from operations 18,862,083 15,541,095
- ------------------------------------------------------------------- ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -------------------------------------------------------------------
Distributions from net investment income (1,673,293) (1,244,470)
- -------------------------------------------------------------------
Distributions from net realized gains on investments and
futures contracts (7,105,514) (588,727)
- ------------------------------------------------------------------- ------------ ------------
Change in net assets resulting from distributions to
shareholders (8,778,807) (1,833,197)
- ------------------------------------------------------------------- ------------ ------------
SHARE TRANSACTIONS--
- -------------------------------------------------------------------
Proceeds from sale of shares 151,332,868 111,108,338
- -------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 3,949,341 639,919
- -------------------------------------------------------------------
Cost of shares redeemed (153,074,545) (91,497,761)
- ------------------------------------------------------------------- ------------ ------------
Change in net assets resulting from share transactions 2,207,664 20,250,496
- ------------------------------------------------------------------- ------------ ------------
Change in net assets 12,290,940 33,958,394
- -------------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------------
Beginning of period 132,399,160 98,440,766
- ------------------------------------------------------------------- ------------ ------------
End of period (including undistributed net investment income of
$116,917 and $107,032, respectively) $144,690,100 $132,399,160
- ------------------------------------------------------------------- ------------ ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MINI-CAP FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
(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 portfolios. The financial statements
included herein are only those of Federated Mini-Cap Fund (the "Fund"), a
diversified portfolio. The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held. The
investment objective of the Fund is to provide investment results that generally
correspond to the aggregate price and dividend performance of publicly traded
common stocks comprising the small capitalization sector of the United States
equity market.
Effective December 5, 1994, the Board of Trustees (the "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--Listed equity securities are valued at the last sale
price reported on a national securities exchange. Short-term securities are
valued at the prices provided by an independent pricing service. However,
short-term securities with remaining maturities of sixty days or less at
the time of purchase may be valued at amortized cost, which approximates
fair market value.
REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the 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
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
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 over a period not to exceed 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 index futures contract with a broker, the
Fund is required to deposit in a segregated account a specified 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. For the period ended
October 31, 1996, the Fund had realized gains on future contracts of
$267,984.
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.
At October 31, 1996, the Fund had outstanding futures contracts as set
forth below:
<TABLE>
<CAPTION>
UNREALIZED
APPRECIATION
EXPIRATION DATE CONTRACTS TO DELIVER/RECEIVE POSITION (DEPRECIATION)
----------------- ------------------------------ -------- --------------
<S> <C> <C> <C>
December 1996 37 Russell 2000 Long ($47,395)
December 1996 1 S&P 400 Long 2,215
---------
Net Unrealized Depreciation on Futures Contracts ($45,180)
</TABLE>
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
FEDERATED MINI-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>
YEAR ENDED OCTOBER 31,
----------------------------
1996 1995
----------- ----------
<S> <C> <C>
- --------------------------------------------------------------------
Shares sold 10,678,931 8,827,567
- --------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 295,486 52,957
- --------------------------------------------------------------------
Shares redeemed (10,852,665) (7,400,092)
- -------------------------------------------------------------------- ----------- ----------
Net change resulting from share transactions 121,752 1,480,432
- -------------------------------------------------------------------- ----------- ----------
</TABLE>
(4) MANAGEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEE--Federated Management, the Fund's investment adviser (the
"Manager"), receives for its services an annual management fee equal to 0.50% of
the Fund's average daily net assets. The Manager may voluntarily choose to waive
any portion of its fee. The Manager can modify or terminate this voluntary
waiver at any time at its sole discretion.
Under the terms of a sub-advisory agreement between the Manager and the Trust
Division of ANB Investment Management & Trust Company, ANB Investment Management
& Trust Company receives an annual fee from the Manager equal to .065% of the
Fund's average daily net assets.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25%
of average daily net assets of the Fund shares for the period. The fee paid to
FSS is used to finance certain services for shareholders and to maintain
shareholder accounts. FSS may voluntarily choose to waive any portion of its
fee. FSS can modify or terminate this voluntary waiver at any time at its sole
discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services
Company ("FServ"), through its subsidiary, Federated Shareholder Services
Company ("FSSC") serves as transfer and dividend disbursing agent for the Fund.
The fee paid to FSSC is based on the size, type, and number of accounts and
transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Trust's accounting records for
which it receives a fee. The fee is based on the level of the Trust's average
daily net assets for the period, plus out-of-pocket expenses.
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
ORGANIZATIONAL EXPENSES--Organizational expenses of $22,217 were borne initially
by the Manager. The Fund has agreed to reimburse Manager for the organizational
expenses during the five year period following effective date. For the period
ended October 31, 1996, the Fund paid $6,418 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
period ended October 31, 1996, were as follows:
<TABLE>
<S> <C>
- -----------------------------------------------------------------------------------
Purchases $71,280,011
- ----------------------------------------------------------------------------------- -----------
Sales $53,882,999
- ----------------------------------------------------------------------------------- -----------
</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, 1996, 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. 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, 1996, 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, 1996, 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 16, 1996
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Federated Investors Tower
Federated Mini-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 Shareholder 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
A No-Load, Open-End, Diversified
Management Investment Company
Prospectus dated December 31, 1996
LOGO
Cusip 31420E304
2062305A (12/96)
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, 1996. 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 1-800-341-7400 .
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Statement dated December 31, 1996
[LOGO]
Federated Securities Corp. is the distributor of the Funds
and is a subsidiary of Federated Investors.
Cusip 31420E304
2062305B (12/96)
GENERAL INFORMATION ABOUT THE FUND 1
INVESTMENT OBJECTIVE AND POLICIES 1
Types of Investments 1
When-Issued and Delayed Delivery Transactions 3
Lending of Portfolio Securities 3
Reverse Repurchase Agreements 3
Portfolio Turnover 3
INVESTMENT LIMITATIONS 3
FEDERATED INDEX TRUST MANAGEMENT 6
Fund Ownership 10
Trustees' Compensation 11
Trustee Liability 12
MANAGEMENT SERVICES 12
Managers to the Fund 12
Management Fees 12
Other Related Services 12
BROKERAGE TRANSACTIONS 13
OTHER SERVICES 13
Custodian and Portfolio Accountant 13
Transfer Agent 13
Independent Auditors 13
SHAREHOLDER SERVICES 13
PURCHASING SHARES 14
Conversion to Federal Funds 14
Exchanging Securities for Fund Shares 14
DETERMINING NET ASSET VALUE 14
Determining Market Value of Securities 14
REDEEMING SHARES 15
Redemption in Kind 15
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
Economic and Market Information 17
ABOUT FEDERATED INVESTORS 17
FRANK RUSSELL COMPANY 18
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, 1996 and October 31, 1995, the portfolio turnover rates for the
Fund were 42% and 42%, 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
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 Securities 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.
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.
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 not determined
by the Trustees to be liquid and repurchase agreements providing for
settlement more than seven days after notice.
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.
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 or Trustee of the
Funds.
Thomas G. Bigley
28th Floor, One Oxford Centre
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Chairman of the Board, Children's Hospital of Pittsburgh; formerly, Senior
Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc.; Trustee,
University of Pittsburgh; Director or Trustee of the Funds.
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; Partner or Trustee in private real
estate ventures in Southwest Florida; formerly, President, Naples Property
Management, Inc. and Northgate Village Development Corporation; Director or
Trustee of the Funds.
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.;
formerly, Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp.;
Director, Ryan Homes, Inc.; Director or Trustee of the Funds.
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 Shareholder Services Company, and
Federated Shareholder Services; Director, Federated Services Company;
President or Executive Vice President of the Funds; Director or Trustee of
some of the Funds. Mr. Donahue is the son of John F. Donahue, Chairman and
Trustee of the Company.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Trustee of the
Funds.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine, 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
or Trustee of the Funds.
Edward L. Flaherty, Jr.@
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney of Counsel, Miller, Ament, Henny & Kochuba; Director, Eat'N Park
Restaurants, Inc.; formerly, Counsel, Horizon Financial, F.A., Western
Region; Director or Trustee of the Funds.
Peter E. Madden
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL
Birthdate: March 16, 1942
Trustee
Consultant; Former State Representative, Commonwealth of Massachusetts;
formerly, President, State Street Bank and Trust Company and State Street
Boston Corporation; Director or Trustee of the Funds.
Gregor F. Meyer
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee
Attorney, Member of Miller, Ament, Henny & Kochuba; Chairman, Meritcare,
Inc.; Director, Eat'N Park Restaurants, Inc.; Director or Trustee 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 or Trustee of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, International Politics; Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer
Library Center, Inc., National Defense University, U.S. Space Foundation
and Czech Management Center; President Emeritus, University of Pittsburgh;
Founding Chairman, National Advisory Council for Environmental Policy and
Technology, Federal Emergency Management Advisory Board and Czech
Management Center; Director or Trustee of the Funds.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public relations/Marketing/Conference Planning, Manchester Craftsmen's
Guild; Restaurant Consultant, Frick Art & History Center; Conference
Coordinator, University of Pittsburgh Art History Department; Director or
Trustee 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.
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 Shareholder Services Company; Trustee or Director of
some of the Funds; President, Executive Vice President and Treasurer of
some of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President , Secretary and Treasurer
Executive Vice President, Secretary, and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management, and Federated Research;
Director, Federated Research Corp. and Federated Global Research Corp.;
Trustee, Federated Shareholder Services Company; Director, Federated
Services Company; President and Trustee, Federated Shareholder Services;
Director, Federated Securities Corp.; Executive Vice President and
Secretary of the Funds; Treasurer of some 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.
*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
Board of Trustees handles the responsibilities of the Board between
meetings of the Board.
As used in the table above, "The Funds" and "Funds" mean the following
investment companies: 111 Corcoran Funds; Annuity Management Series; Arrow
Funds; Automated Government Money Trust; Blanchard Funds; Blanchard
Precious Metals Fund, Inc.; Cash Trust Series II; Cash Trust Series, Inc. ;
DG Investor Series; Edward D. Jones & Co. Daily Passport Cash Trust;
Federated Adjustable Rate U.S. Government Fund, Inc.; Federated American
Leaders Fund, Inc.; Federated ARMs Fund; Federated Equity Funds; Federated
Equity Income Fund, Inc.; Federated Fund for U.S. Government Securities,
Inc.; Federated GNMA Trust; Federated Government Income Securities, Inc.;
Federated Government Trust; Federated High Income Bond Fund, Inc.;
Federated High Yield Trust; Federated Income Securities Trust; Federated
Income Trust; Federated Index Trust; Federated Institutional Trust;
Federated Insurance Series; Federated Investment Portfolios; Federated
Investment Trust; Federated Master Trust; Federated Municipal Opportunities
Fund, Inc.; Federated Municipal Securities Fund, Inc.; Federated Municipal
Trust; Federated Short-Term Municipal Trust; Federated Short-Term U.S.
Government Trust; Federated Stock and Bond Fund, Inc.; 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: 2-5 Years;
Federated U.S. Government Securities Fund: 5-10 Years; Federated Utility
Fund, Inc.; First Priority Funds; Fixed Income Securities, Inc.; High Yield
Cash Trust; Intermediate Municipal Trust; International Series, Inc.;
Investment Series Funds, Inc.; Investment Series Trust; Liberty Term
Trust, Inc. - 1999; Liberty U.S. Government Money Market Trust; Liquid Cash
Trust; Managed Series Trust; Money Market Management, Inc.; Money Market
Obligations Trust; Money Market Trust; Municipal Securities Income Trust;
Newpoint Funds; Peachtree Funds; RIMCO Monument Funds; Targeted Duration
Trust; Tax-Free Instruments Trust; The Planters Funds; The Starburst Funds;
The Starburst Funds II; The Virtus Funds; Trust for Financial Institutions;
Trust for Government Cash Reserves; Trust for Short-Term U.S. Government
Securities; Trust for U.S. Treasury Obligations; and World Investment
Series, Inc.
FUND OWNERSHIP
Officers and Trustees own less than 1% of the Fund's outstanding shares.
As of December 4, 1996, the following shareholders of record owned 5% or
more of the outstanding shares of the Fund: Mitra & Co., Milwaukee, WI,
owned approximately 932,183 shares (9.05%); Frojack Co., Grand Forks, ND,
owned approximately 951,214 shares (9.24%); and Union Planters National
Bank, Memphis, TN, owned approximately 523,129 shares (5.08%).
TRUSTEES' COMPENSATION
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
TRUST TRUST*# FROM FUND COMPLEX +
John F. Donahue $ -0- $-0- for the Trust and
Chairman and Trustee 54 other investment companies in
the Fund Complex
J. Christopher Donahue$ -0- $-0- for the Trust and
Executive Vice President 16 other investment companies
in the Fund
and Trustee Complex
Thomas G. Bigley++ $1,853.85 $86,331 for the Trust and
Trustee 54 other investment companies in
the Fund Complex
John T. Conroy, Jr. $2,025.23 $115,760 for the Trust and
Trustee 54 other investment companies in
the Fund Complex
William J. Copeland $2,025.23 $115,760 for the Trust and
Trustee 54 other investment companies in
the Fund Complex
James E. Dowd $2,025.23 $115,760 for the Trust and
Trustee 54 other investment companies in
the Fund Complex
Lawrence D. Ellis, M.D. $1,853.85 $104,898 for the Trust
and
Trustee 54 other investment companies in
the Fund Complex
Edward L. Flaherty, Jr. $2,025.23 $115,760 for the Trust
and
Trustee 54 other investment companies in
the Fund Complex
Peter E. Madden $1,853.85 $104,898 for the Trust and
Trustee 54 other investment companies in
the Fund Complex
Gregor F. Meyer $1,853.85 $104,898 for the Trust and
Trustee 54 other investment companies in
the Fund Complex
John E. Murray, Jr. $1,853.85 $104,898 for the Trust and
Trustee 54 other investment companies in
the Fund Complex
TRUSTEES' COMPENSATION (CONT'D.)
Wesley W. Posvar $1,853.85 $104,898 for the Trust and
Trustee 54 other investment companies in
the Fund Complex
Marjorie P. Smuts $1,853.85 $104,898 for the Trust and
Trustee 54 other investment companies in
the Fund Complex
*Information is furnished for the fiscal year ended October 31, 1996.
#The aggregate compensation is provided for the Trust which is comprised of
three portfolios.
+The information is provided for the last calendar year.
++Mr. Bigley served on 39 investment companies in the Federated Funds
Complex from January 1 through September 30, 1995. On October 1, 1995, he
was appointed a Trustee on 15 additional Federated Funds.
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 NBD 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, 1996, 1995 and 1994, the manager
earned $736,307, $540,284 and $439,054, respectively, of which $22,506,
$56,620 and $96,021, respectively, was voluntarily waived.
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, 1996, 1995 and 1994, the Fund
paid total brokerage commissions of $146,470, $165,266 and $144,250,
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 ACCOUNTANT
State Street Bank and Trust Company, Boston, MA, is custodian for the
securities and cash of the Trust/Fund. Federated Services Company,
Pittsburgh, PA, provides certain accounting and recordkeeping services
with respect to the Trust's/Fund's portfolio investments.
TRANSFER AGENT
Federated Services Company, through its registered transfer agent
Federated Shareholder 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
This arrangement permits the payment of fees to Federated Shareholder
Services 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, 1996, the Fund paid shareholder
service fees in the amount of $368,154 of which $309,249 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 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, 1996 and for the period from August 11, 1992 (Start of
Performance) to October 31, 1996 was 15.09% and 13.54%, 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, 1996 was
1.05%.
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.
Advertising and other promotional literature may include charts, graphs and
other illustrations using the Fund's returns, or returns in general, that
demonstrate basic investment concepts such as tax-deferred compounding,
dollar-cost averaging and systematic investment. In addition, the Fund can
compare its performance, or performance for the types of securities in
which it invests, to a variety of other investments, such as bank savings
accounts, certificates of deposit, and Treasury bills.
ECONOMIC AND MARKET INFORMATION
Advertising and sales literature for the Fund may include discussions of
economic, financial and political developments and their effect on the
securities market. Such discussions may take the form of commentary on
these developments by Fund portfolio managers and their views and analysis
on how such developments could affect the Funds. In addition, advertising
and sales literature may quote statistics and give general information
about the mutual fund industry, including the growth of the industry, from
sources such as the Investment Company Institute.
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. The traders
handle trillions of dolalrs in annual trading volume.
In the equity sector, Federated Investors has more than 25 years'
experience. As of December 31, 1995, Federated Investors managed 22 equity
funds totaling approximately $5.4 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 $3 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. Federated's service to
financial professionals and institutions has earned it high ratings in
several surveys performed by DALBAR, Inc. DALBAR is recognized as the
industry benchmark for service quality measurement. 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.
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
ANNUAL REPORT FOR FISCAL YEAR ENDED OCTOBER 31, 1996
MANAGEMENT DISCUSSION AND ANALYSIS
---------------------------------------------------------------------------
The fund's total return for the 12 months ended October 31, 1996 was
15.09%.* The target index, the Russell 2000 Index (the "Index"), had a
total return of 16.60% during the period.** The fund's performance lagged
that of the Index due to transaction costs, administrative expenses, and
differences in return between the Index and holdings of stock index futures
contracts. It is important to note that transaction costs for small company
stocks are much higher than that for large company stocks due to
illiquidity factors, i.e., there are sometimes very few buyers and sellers
of small company stocks.
The stock market reached new highs during the last 12 months, despite
predictions by some analysts that the stock market has become overbought
and should decline. Investor confidence has apparently remained high due to
relatively stable interest rates and inflation, and strong corporate
earnings. Additional factors supporting the market have been stock
buybacks, purchases by foreign investors, strong cash flows into equity
mutual funds and expectations of stable government policy after the recent
elections.
During the fund's fiscal year the strongest performing sectors in the
Index were energy, finance and consumer/discretionary, while healthcare,
utilities and consumer/staples were among the worst performing sectors in
the Index.
* Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
** Russell 2000 Index is an unmanaged index consisting of 2,000 common
stocks of companies whose market capitalization generally falls just
below the top 1,000 large and mid-cap companies. Actual investments
cannot be made in an index. The Mini-Cap Fund seeks investment results
that correspond to the aggregate price and total return performance of
the Russell 2000(R) Small Stock Index. The Russell 2000(R) Small Stock
Index is a trademark/service mark of the Frank Russell Company.
Russell(TM)is a trademark of the Frank Russell Company. The Fund is
neither affiliated with nor promoted, sponsored, sold, or endorsed by
the Frank Russell Company. Its only relationship to the Fund is the
licensing of the use of the Index.
FEDERATED MINI-CAP FUND
- --------------------------------------------------------------------------------
GROWTH OF $25,000 INVESTED IN FEDERATED MINI-CAP FUND
The graph below illustrates the hypothetical investment of $25,000 in the
Federated Mini-Cap Fund (the "Fund") from August 11, 1992 (start of performance)
to October 31, 1996, compared to the Russell 2000 Index (RUS2).+
[`Graphic representation ``A4'' omitted. See Appendix.'']
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED OCTOBER 31, 1996
<TABLE>
<S> <C>
1 Year.......................................................... 15.09%
Start of Performance (8/11/92).................................. 13.54%
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
THIS REPORT MUST BE PRECEDED OR ACCOMPANIED BY THE FUND'S PROSPECTUS DATED
DECEMBER 31, 1996, AND, TOGETHER WITH FINANCIAL STATEMENTS CONTAINED THEREIN,
CONSTITUTES THE FUND'S ANNUAL REPORT.
* The Fund's performance assumes the reinvestment of all dividends and
distributions. The RUS2 has been adjusted to reflect reinvestment of dividends
on securities in the index.
+ The RUS2 is not adjusted to reflect sales charges, expenses, or other fees
that the SEC requires to be reflected in the Fund's performance. This index is
unmanaged.
FEDERATED INVESTORS
LOGO
Since 1955
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.
Cusip 31420E304
006683 (12/96)
APPENDIX
A1. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The
Institutional Shares of Federated Max-Cap Fund (the "Fund") are represented
by a solid line. The Standard & Poor's 500 Index (the `S&P 500'') is
represented by a dotted line. The line graph is a visual representation of
a comparison of change in value of a $25,000 hypothetical investment in the
Institutional Shares of the Fund and the S&P 500. The `x'' axis reflects
computation periods from 7/11/90 to 10/31/96. The `y'' axis reflects the
cost of the investment. The right margin reflects the ending value of the
hypothetical investment in the Fund's Institutional Shares as compared to
the S&P 500; the ending values were $58,385 and $59,248, respectively. The
legend in the bottom quadrant of the graphic presentation indicates the
Fund's Institutional Shares Average Annual Total Returns for the period
ended 10/31/96; beginning with the start of performance date of the Fund
(7/11/90), and the one-year and five-year periods thereafter; the Average
Annual Total Returns were 14.40%, 23.71% and 15.12%, respectively.
A2. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The
Institutional Service Shares of Federated Max-Cap Fund (the "Fund") are
represented by a solid line. The Standard & Poor's 500 Index (the `S&P
500') is represented by a dotted line. The line graph is a visual
representation of a comparison of change in value of a $25,000 hypothetical
investment in the Institutional Service Shares of the Fund and the S&P 500.
The `x'' axis reflects computation periods from 9/7/93 to 10/31/96. The
`y'' axis reflects the cost of the investment. The right margin reflects
the ending value of the hypothetical investment in the Fund's Institutional
Service Shares as compared to the S&P 500; the ending values were $40,677
and $41,696, respectively. The legend in the bottom quadrant of the graphic
presentation indicates the Fund's Institutional Service Shares Average
Annual Total Returns for the period ended 10/31/96; beginning with the
start of performance date of the Fund (9/7/93), and the one-year period
thereafter; the Average Annual Total Returns were 16.72% and 23.39%,
respectively.
A3. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The
Federated Mid-Cap Fund (the "Fund") is represented by a solid line. The
Standard & Poor's Mid-Cap 400 Index (the `S&P 400'') is represented by a
dotted line. The line graph is a visual representation of a comparison of
change in value of a $25,000 hypothetical investment in the Fund and the
S&P 400. The `x'' axis reflects computation periods from 11/5/92 to
10/31/96. The `y'' axis reflects the cost of the investment. The right
margin reflects the ending value of the hypothetical investment in the Fund
as compared to the S&P 400; the ending values were $41,681 and $44,062,
respectively. The legend in the bottom quadrant of the graphic presentation
indicates the Fund's Average Annual Total Returns for the period ended
10/31/96; beginning with the start of performance date of the Fund
(11/5/92), and the one-year period thereafter; the Average Annual Total
Returns were 13.67% and 15.80%, respectively.
A4. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The
Federated Mini-Cap Fund (the "Fund") is represented by a solid line. The
Russell 2000 Index (the `RUS2'') is represented by a dotted line. The line
graph is a visual representation of a comparison of change in value of a
$25,000 hypothetical investment in the Fund and the RUS2. The `x'' axis
reflects computation periods from 8/11/92 to 10/31/96. The `y'' axis
reflects the cost of the investment. The right margin reflects the ending
value of the hypothetical investment in the Fund as compared to the RUS2;
the ending values were $42,731 and $46,692, respectively. The legend in the
bottom quadrant of the graphic presentation indicates the Fund's Average
Annual Total Returns for the period ended 10/31/96; beginning with the
start of performance date of the Fund (8/11/92), and the one-year period
thereafter; the Average Annual Total Returns were 13.54% and 15.09%,
respectively.
