[LOGO] Federated Investors
Federated
Bond
Fund
10th Semi-Annual Report
April 30, 1997
Established 1987
President's Message
Dear Shareholder:
Federated Bond Fund was created in 1987, and I am pleased to present its 10th
Semi-Annual Report. This report covers the six-month period from November 1,
1996, through April 30, 1997, and opens with a discussion with the fund's
portfolio manager Joseph Balestrino, Vice President, Federated Advisers.
Following his discussion, detailing both the corporate market and recent
activity in the fund's portfolio, are a series of performance charts, a
complete listing of the fund's holdings, and the financial statements.
In a highly volatile interest rate environment, Federated Bond Fund continued
to produce a strong income stream while outperforming its peer group, the
Lipper Corporate BBB-Rated Bond Funds Average. The performance of the fund's
share classes during the reporting period is shown below.*
Total Return Income Distributions NAV Change
Class A Shares 2.17% $0.35 $9.72 to $9.58= -1%
Class B Shares 1.78% $0.31 $9.72 to $9.58= -1%
Class C Shares 1.78% $0.31 $9.72 to $9.58= -1%
Class F Shares 2.16% $0.35 $9.72 to $9.58= -1%
The fund's portfolio of corporate bonds reflects an emphasis on diversification
and quality. Holdings are extremely well diversified. On April 30, 1997, the
portfolio comprised more than 350 bonds--approximately 80% of them are
investment-grade bonds, with the remaining assets invested in high-yield
bonds.** The fund's average maturity is 13.4 years, and the average duration
is 5.8 years. In carefully selecting issues, fund management has emphasized
those with longer maturities anticipating that long-term rates will benefit
the fund's share price.
Thank you for participating in the monthly income opportunities of Federated
Bond Fund. Remember, it's easy to increase your participation in the
performance potential of a diversified bond portfolio by reinvesting your
earnings automatically in additional fund shares.
As always, we welcome your comments, questions and suggestions.
Sincerely,
/s/ J. Christopher Donahue
J. Christopher Donahue
President
June 15, 1997
* 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. Total returns for the period based on offering price for
Class A Shares, Class B Shares, Class C Shares, and Class F Shares were
-2.45%, -3.85%, 0.72%, and 0.06%, respectively.
** Lower rated bonds involve a higher degree of risk than investment grade
bonds in return for higher yield potential.
Investment Review
[PHOTO APPEARS HERE]
Joseph Balestrino
Vice President
Federated Advisers
Q What are your comments on the high-quality fixed-income market environment
during the six-month reporting period?
A The reporting period saw the environment for high-quality fixed-income
securities turn from generally positive to negative. The fourth quarter of
1996 was generally positive, particularly in November, as interest rates fell
significantly across the yield curve in response to slower economic activity.
In particular, housing, consumer debt formation, and auto sales all pointed
toward a business cycle that appeared to be showing signs of aging. In
addition, the national election provided no surprises. The bond market reacted
to this political status quo in a very positive manner.
However, the first quarter of 1997 proved to be a very negative environment for
high-quality fixed-income securities. December set the stage as interest rates
reversed course and rose, partly reflecting profit-taking as well as a
re-emergence of housing growth. Throughout the first quarter of 1997 and the
end of the reporting period, the overall economy exhibited strength that
surpassed even the most aggressive of forecasts. Particularly surprising was
the resurgence of consumer spending activity that quickly translated into
stronger housing statistics.
While documented inflation figures continued at very low levels, stronger than
expected economic activity far overshadowed lower than expected inflation in
the fixed-income market. Interest rates rose across the entire maturity
spectrum, creating absolute negative total returns for many high-quality
fixed-income portfolios.
Q Federated Bond Fund performed relatively well during this difficult period.
How did the fund measure against all BBB-rated bond funds as tracked by Lipper
Analytical Services, Inc.?
A Consistent with the weak bond market, the fund's Class A Shares, Class B
Shares, Class C Shares, and Class F Shares produced total returns of 2.17%,
1.78%, 1.78%, and 2.16%, respectively, based on net asset value.* These
returns compared favorably to the total return of 1.70% for the average
corporate bond fund as measured by the Lipper Corporate BBB-Rated Bond Funds
Average.**
* 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. Total return for the period based on offering price for
Class A Shares, Class B Shares, Class C Shares, and Class F Shares were
-2.45%, -3.85%, 0.72%, and 0.06%, respectively.
** Lipper figures represent the average of the total returns reported by all of
the mutual funds designated by Lipper Analytical Services, Inc. as falling
into the respective category indicated. These figures do not reflect sales
charges.
Q Did you make any adjustments to the fund's duration and quality?
A Not materially. At the end of August 1996, we concluded that interest rates
had increased faster and higher than justified by the economic fundamentals.
With no visible signs of documented inflation hikes, we increased the
portfolio's duration position to 5.8 years, which helped the fund participate
in significant price appreciation as interest rates fell hard and fast during
the months of September and October 1996. Over the period covered by this
report, the portfolio's duration was maintained within a narrow range, with a
target just slightly shy of a pure neutral position. No significant duration
changes are anticipated over the near term.
Concerning quality, we continued to maintain approximately 23% of total fund
assets in high-yield corporate securities. This minority, but still
significant, position has helped generate not only an above-average income
distribution for shareholders, but just as importantly, helped to cushion the
falling price effect of rising rates during the first quarter of 1997.
Q The fund's income distributions remain an important source of cash flow to
many shareholders. What were the fund's yields on April 30, 1997?
A On April 30, 1997, the fund's daily distribution rate , based on net asset
value, was 7.27% for Class A Shares (6.94% based on offering price) compared
to the 10-year Treasury rate which was 6.72% on that same day. On April 30,
1997, the fund's distribution rates+, based on net asset value, for Class B
Shares, Class C Shares, and Class F Shares were 6.51%, 6.51% and 7.27% (7.19%
based on offering price for Class F Shares), respectively. The fund's 30-day
current net yields for Class A Shares, Class B Shares, Class C Shares, and
Class F Shares were 7.06%, 6.59%, 6.59%, and 7.29%, respectively.++
+ The 30-day distribution rate reflects actual distributions made to
shareholders. It is calculated by dividing the monthly annualized dividend
plus short-term capital gains, if any, by the average 30-day offering
price.
++ The 30-day current net yield is calculated by dividing the investment income
per share for the prior 30 days by the maximum offering price per share on
that date. The figure is compounded and annualized.
Q How were the fund's assets allocated according to bond quality, and what
were the fund's top ten holdings at the end of the reporting period?
A The fund's allocation by quality was:
% of Portfolio
AAA 10.09%
AA 10.24%
A 22.44%
BBB 32.56%
BB 10.01%
B 14.66%
The top ten holdings consisted of:
Name, Coupon Rate, Maturity Date % of Portfolio
Joy Technologies Inc., 10.250% due 09/01/03 2.15%
Trans Ocean Container Corp., 12.25% due 07/01/04 2.13
Figgie International, Inc., 9.875% due 10/01/99 1.83
TKR Cable Inc., 10.50% due 10/30/07 1.67
Valassis Inserts, 9.375% due 03/15/99 1.66
Conseco, Inc., 10.50% due 12/15/04 1.58
Hook-SuperX, 10.125% due 06/01/02 1.57
Delphi Financial Group, 8% due 10/01/03 1.55
Husky Oil Ltd., 7.125% due 11/15/06 1.54
Highwoods Properties, 8.625% due 12/31/49 1.52
Total % of portfolio 17.20%
Q With one rate increase behind us, what is your outlook for the remainder of
1997?
A With the Federal Reserve Board (the "Fed") having raised interest rates,
one must be somewhat cautious, at least over the near term. A one-time
interest rate hike is never the odds-on bet. On the other hand, with low
inflation, the real rate of return on the long 30-year Treasury bond is well
over 400 basis points, far in excess of historical norms. In this environment,
we will be closely monitoring inflation indicators and may look to extend
duration should the real rates of return available in today's marketplace
persist. Even Fed Chairman Alan Greenspan has made specific note of high real
rates and emphatically noted that "1997 is not 1994," which leads us to not
anticipate a prolonged period of rising interest rates.
Two Ways You May Seek to Invest for Success in
Federated Bond Fund
- --------------------------------------------------------------------------------
Initial Investment:
If you had made an initial investment of $10,000, in the Class F Shares of
Federated Bond Fund* on 5/20/87, reinvested dividends and capital gains, and
did not redeem any shares, your account would be worth $24,724 on 4/30/97. You
would have earned a 9.52%** average annual total return for the 9-year
investment life span.
One key to investing wisely is to reinvest all distributions in fund shares.
This increases the number of shares on which you can earn future dividends,
and you gain the benefit of compounding.
As of 4/30/97, the Class A Shares' one-year and since inception (6/28/95) total
returns were 3.75% and 4.66%, respectively. Class B Shares' one-year and since
inception (6/28/95) total returns were 1.88% and 3.70%, respectively. Class C
Shares' one-year and since inception (6/28/95) total returns were 6.73% and
6.51%, respectively. Class F Shares' one-year, five-year and since inception
(5/20/97) total returns were 6.51%, 8.88% and 9.52%, respectively.
Graphic presentation `A1'' omitted. See Appendix.
* On June 15, 1992, at a special meeting of shareholders, the shareholders
approved a change to the name of the fund from High Income Securities Fund
to Federated Bond Fund, and a change to the fund's fundamental investment
objective to pursue as high a level of current income as is consistent
with the preservation of capital. This resulted in shifting the fund's
focus from investing not less than 65% of its assets in high-yield, lower
quality securities to not less than 65% of its assets in investment grade
securities.
** Total return represents the change in the value of an investment after
reinvesting all income and capital gains, and takes into account the 1.00%
sales charge and 1.00% contingent deferred sales charge.
*** The total returns stated take into account the 4.50% sales charge for Class
A Shares, the 5.50% contingent deferred sales charge for Class B Shares, the
1.00% contingent deferred sales charge for Class C Shares, and the 1.00%
sales charge and 1.00% contingent deferred sales charge for Class F Shares.
Data quoted represents past performance and does not guarantee future
results. Investment return and principal value will fluctuate so an
investor's shares, when redeemed, may be worth more or less than their
original costs.
Federated Bond Fund
- --------------------------------------------------------------------------------
One Step at a Time:
$1,000 invested each year for 10 years (reinvesting all dividends and capital
gains) grew to $17,281.
With this approach, the key is consistency.
If you had started investing $1,000 annually in the Class F Shares of Federated
Bond Fund on 5/20/87, reinvested your dividends and capital gains, and did not
redeem any shares, you would have invested only $10,000, but your account would
have reached a total value of $17,281 by 4/30/97. You would have earned an
average annual total return of 9.83%*.
A practical investment plan helps you pursue a high level of income through
corporate bonds. Through systematic investing, you buy shares on a regular
basis and reinvest all earnings. An investment plan works for you when you
invest only $1,000 annually. You can take it one step at a time. Put time,
money and compounding to work!
Graphic presentation `A2'' omitted. See Appendix.
* No method of investing can guarantee a profit or protect against loss in down
markets. However, by investing regularly over time and buying shares at
various prices, investors can purchase more shares at lower prices, and all
accumulated shares have the ability to pay income to the investor.
Because such a plan involves continuous investment, regardless of changing
price levels, the investor should consider whether or not to continue purchases
through periods of low price levels.
Federated Bond Fund
Hypothetical Investor Profile: Investing for High Monthly Income
- --------------------------------------------------------------------------------
John and Joan Wicker are a fictional couple who, like many other shareholders,
look for high monthly income opportunities.
John is an attorney in his late forties with an established client base. Joan
is a school teacher. On May 20, 1987, the Wickers invested $20,000 in the Class
F Shares of Federated Bond Fund.
As this chart shows, over nine years their original investment in Class F
Shares has grown to $49,449. This represents a 9.52% average annual total
return.* For John and Joan, that means extra money to supplement their
daughter's college tuition.
Graphic presentation `A3'' omitted. See Appendix.
* This hypothetical scenario is provided for illustrative purposes only and does
not represent the result obtained by any particular shareholder. Past
performance does not guarantee future results.
Federated Bond Fund
Portfolio of Investments
- --------------------------------------------------------------------------------
April 30, 1997 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
CORPORATE BONDS--87.3%
- ------------------------------------------------------------------------------------------------
AEROSPACE & DEFENSE--0.5%
---------------------------------------------------------------------------------
$ 2,250,000 McDonnell-Douglas Corp., Note, 9.40%, 10/15/2001 $ 2,375,415
---------------------------------------------------------------------------------
500,000 Tracor, Inc., Sr. Sub. Note, 8.50%, 3/1/2007 491,250
--------------------------------------------------------------------------------- --------------
Total 2,866,665
--------------------------------------------------------------------------------- --------------
AIR TRANSPORTATION--0.4%
---------------------------------------------------------------------------------
2,250,000 Southwest Airlines Co., Deb., 7.375%, 3/1/2027 2,153,475
--------------------------------------------------------------------------------- --------------
AUTOMOTIVE--0.6%
---------------------------------------------------------------------------------
600,000 Aftermarket Technology Co., Sr. Sub. Note, 12.00%, 8/1/2004 661,500
---------------------------------------------------------------------------------
50,000 Blue Bird Body Co., Sr. Sub. Note, 10.75%, 11/15/2006 52,500
---------------------------------------------------------------------------------
800,000 Collins & Aikman Products Co., Sr. Sub. Note, 11.50%, 4/15/2006 882,000
---------------------------------------------------------------------------------
550,000 Exide Corp., Sr. Note, 10.00%, 4/15/2005 558,937
---------------------------------------------------------------------------------
250,000 Lear Corp., Sub. Note, 9.50%, 7/15/2006 261,250
---------------------------------------------------------------------------------
500,000 Lear Seating Corp., Sub. Note, 8.25%, 2/1/2002 495,000
--------------------------------------------------------------------------------- --------------
Total 2,911,187
--------------------------------------------------------------------------------- --------------
BANKING--6.0%
---------------------------------------------------------------------------------
4,750,000 ABN-AMRO Bank NV, Chicago, Sub. Deb., 7.30%, 12/1/2026 4,390,425
---------------------------------------------------------------------------------
6,000,000 African Development Bank, Note, 6.875%, 10/15/2015 5,669,880
---------------------------------------------------------------------------------
5,250,000 Banco Santander, Bank Guarantee, 7.875%, 4/15/2005 5,412,488
---------------------------------------------------------------------------------
2,750,000 Crestar Financial Corp., Sub. Note, 8.75%, 11/15/2004 2,971,732
---------------------------------------------------------------------------------
1,325,000 (a)First Nationwide Escrow Corp., Sr. Sub. Note, 10.625%, 10/1/2003 1,404,500
---------------------------------------------------------------------------------
5,240,000 FirstBank Puerto Rico, Sub. Note, 7.625%, 12/20/2005 5,174,159
---------------------------------------------------------------------------------
3,250,000 National Bank of Canada, Montreal, Sub. Note, 8.125%, 8/15/2004 3,400,020
---------------------------------------------------------------------------------
3,000,000 UBS--NY, Sub. Note, 7.25%, 7/15/2006 2,992,170
--------------------------------------------------------------------------------- --------------
Total 31,415,374
--------------------------------------------------------------------------------- --------------
BEVERAGE & TOBACCO--1.6%
---------------------------------------------------------------------------------
800,000 Dimon, Inc., Sr. Note, 8.875%, 6/1/2006 821,000
---------------------------------------------------------------------------------
</TABLE>
Federated Bond Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
CORPORATE BONDS--CONTINUED
- ------------------------------------------------------------------------------------------------
BEVERAGE & TOBACCO--CONTINUED
---------------------------------------------------------------------------------
$ 8,000,000 Philip Morris Cos., Inc., Deb., 7.75%, 1/15/2027 $ 7,665,360
--------------------------------------------------------------------------------- --------------
Total 8,486,360
--------------------------------------------------------------------------------- --------------
BROADCAST RADIO & TV--2.4%
---------------------------------------------------------------------------------
375,000 Chancellor Radio Broadcasting Co., Sr. Sub. Note, 12.50%, 10/1/2004 418,125
---------------------------------------------------------------------------------
400,000 Chancellor Radio Broadcasting Co., Sr. Sub. Note, 9.375%, 10/1/2004 396,000
---------------------------------------------------------------------------------
875,000 Heritage Media Corp., Sr. Sub. Note, 8.75%, 2/15/2006 900,156
---------------------------------------------------------------------------------
600,000 Lamar Advertising Co., Sr. Sub. Note, 9.625%, 12/1/2006 597,000
---------------------------------------------------------------------------------
6,500,000 SCI Television, Inc., Sr. Secd. Note, 11.00%, 6/30/2005 6,881,875
---------------------------------------------------------------------------------
700,000 SFX Broadcasting, Inc., Sr. Sub. Note, 10.75%, 5/15/2006 735,000
---------------------------------------------------------------------------------
500,000 Sinclair Broadcast Group, Inc., Sr. Sub. Note, 10.00%, 12/15/2003 507,500
---------------------------------------------------------------------------------
400,000 Sinclair Broadcast Group, Inc., Sr. Sub. Note, 10.00%, 9/30/2005 406,000
---------------------------------------------------------------------------------
100,000 Sullivan Broadcast Holdings Inc., Deb., 13.25%, 12/15/2006 95,750
---------------------------------------------------------------------------------
750,000 Sullivan Broadcast Holdings Inc., Sr. Sub. Note, 10.25%, 12/15/2005 755,625
---------------------------------------------------------------------------------
500,000 Young Broadcasting, Inc., Sr. Sub. Note, 10.125%, 2/15/2005 507,500
---------------------------------------------------------------------------------
500,000 Young Broadcasting, Inc., Sr. Sub. Note, 9.00%, 1/15/2006 482,500
--------------------------------------------------------------------------------- --------------
Total 12,683,031
--------------------------------------------------------------------------------- --------------
BUILDING & DEVELOPMENT--0.1%
---------------------------------------------------------------------------------
350,000 Building Materials Corp. of America, Sr. Note, 8.625%, 12/15/2006 343,000
--------------------------------------------------------------------------------- --------------
BUSINESS EQUIPMENT & SERVICES--0.4%
---------------------------------------------------------------------------------
400,000 Electronic Retailing Systems International, Inc., Unit, 0/13.25%,
2/1/2004 272,000
---------------------------------------------------------------------------------
500,000 Knoll Inc., Sr. Sub. Note, 10.875%, 3/15/2006 545,625
---------------------------------------------------------------------------------
500,000 (a)Outsourcing Solutions, Inc., Sr. Sub. Note, 11.00%, 11/1/2006 533,750
---------------------------------------------------------------------------------
500,000 United Stationers Supply Co., Sr. Sub. Note, 12.75%, 5/1/2005 558,750
--------------------------------------------------------------------------------- --------------
Total 1,910,125
--------------------------------------------------------------------------------- --------------
CABLE TELEVISION--6.8%
---------------------------------------------------------------------------------
400,000 (a)Australis Holdings Pty Limited, Unit, 0/15.00%, 11/1/2002 234,000
---------------------------------------------------------------------------------
</TABLE>
Federated Bond Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
CORPORATE BONDS--CONTINUED
- ------------------------------------------------------------------------------------------------
CABLE TELEVISION--CONTINUED
---------------------------------------------------------------------------------
$ 250,000 Australis Media Limited, Unit, 0/14.00%, 5/15/2003 $ 157,500
---------------------------------------------------------------------------------
350,000 Bell Cablemedia PLC, Sr. Disc. Note, 0/11.875%, 9/15/2005 287,875
---------------------------------------------------------------------------------
550,000 Bell Cablemedia PLC, Sr. Disc. Note, 0/11.95%, 7/15/2004 489,500
---------------------------------------------------------------------------------
4,000,000 CF Cable TV, Inc., Note, 9.125%, 7/15/2007 4,340,000
---------------------------------------------------------------------------------
250,000 CF Cable TV, Inc., Sr. Secd. 2nd Priority Note, 11.625%, 2/15/2005 283,750
---------------------------------------------------------------------------------
950,000 Cablevision Systems Corp., Sr. Sub. Deb., 9.875%, 2/15/2013 919,125
---------------------------------------------------------------------------------
500,000 Cablevision Systems Corp., Sr. Sub. Note, 9.25%, 11/1/2005 490,000
---------------------------------------------------------------------------------
700,000 Charter Communications Southeast, L.P., Sr. Note, 11.25%, 3/15/2006 726,250
---------------------------------------------------------------------------------
4,500,000 (a)Comcast Corp., 8.50%, 5/1/2027 4,582,395
---------------------------------------------------------------------------------
550,000 Comcast Corp., Sr. Sub. Deb., 9.375%, 5/15/2005 563,750
---------------------------------------------------------------------------------
5,540,000 Continental Cablevision, Sr. Deb., 9.50%, 8/1/2013 6,214,883
---------------------------------------------------------------------------------
2,375,000 Diamond Cable Communications Plc, Sr. Disc. Note, 0/10.75%,
2/15/2007 1,425,000
---------------------------------------------------------------------------------
825,000 EchoStar Satellite Broadcasting Corp., Sr. Disc. Note, 0/13.125%,
3/15/2004 602,250
---------------------------------------------------------------------------------
1,000,000 International Cabletel, Inc., Sr. Defd. Cpn. Note, 0/10.875%,
10/15/2003 823,750
---------------------------------------------------------------------------------
450,000 International Cabletel, Inc., Sr. Defd. Cpn. Note, 0/11.50%, 2/1/2006 293,625
---------------------------------------------------------------------------------
250,000 Le Groupe Videotron Ltee, Sr. Note, 10.625%, 2/15/2005 274,375
---------------------------------------------------------------------------------
500,000 Lenfest Communications Inc., Sr. Note, 8.375%, 11/1/2005 476,250
---------------------------------------------------------------------------------
350,000 Pegasus Media, Note, 12.50%, 7/1/2005 376,250
---------------------------------------------------------------------------------
300,000 Rogers Cablesystems Ltd., Sr. Secd. 2nd Priority Note, 10.00%,
12/1/2007 315,000
---------------------------------------------------------------------------------
750,000 Rogers Cablesystems Ltd., Sr. Sub. Gtd. Note, 11.00%, 12/1/2015 793,125
---------------------------------------------------------------------------------
350,000 (a)TCI Satellite Entertainment, Inc., Sr. Sub. Disc. Note, 0/12.25%,
2/15/2007 185,500
---------------------------------------------------------------------------------
250,000 (a)TCI Satellite Entertainment, Inc., Sr. Sub. Note, 10.875%, 2/15/2007 238,750
---------------------------------------------------------------------------------
7,950,000 TKR Cable, Inc., 10.50%, 10/30/2007 8,674,802
---------------------------------------------------------------------------------
$ 1,675,000 TeleWest PLC, Sr. Disc. Deb., 0/11.00%, 10/1/2007 $ 1,139,000
---------------------------------------------------------------------------------
</TABLE>
Federated Bond Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
CORPORATE BONDS--CONTINUED
- ------------------------------------------------------------------------------------------------
CABLE TELEVISION--CONTINUED
---------------------------------------------------------------------------------
925,000 UIH Australia/Pacific, Sr. Disc. Note, 0/14.00%, 5/15/2006 465,969
---------------------------------------------------------------------------------
250,000 Wireless One, Inc., Sr. Note, 13.00%, 10/15/2003 165,000
---------------------------------------------------------------------------------
250,000 Wireless One, Inc., Unit, 0/13.50%, 8/1/2006 63,750
--------------------------------------------------------------------------------- --------------
Total 35,601,424
--------------------------------------------------------------------------------- --------------
CHEMICALS & PLASTICS--1.0%
---------------------------------------------------------------------------------
400,000 (a)Astor Corp., Sr. Sub. Note, 10.50%, 10/15/2006 414,000
---------------------------------------------------------------------------------
750,000 Buckeye Cellulose Corp., Sr. Sub. Note, 9.25%, 9/15/2008 763,125
---------------------------------------------------------------------------------
300,000 Crain Industries, Inc., Sr. Sub. Note, 13.50%, 8/15/2005 340,500
---------------------------------------------------------------------------------
500,000 Foamex LP, Sr. Sub. Deb., 11.875%, 10/1/2004 540,625
---------------------------------------------------------------------------------
750,000 Harris Chemical North America, Inc., Sr. Note 10.875, 7/15/2001 761,250
---------------------------------------------------------------------------------
541,000 (a)ISP Holding, Inc., Sr. Note, 9.75%, 2/15/2002 564,669
---------------------------------------------------------------------------------
483,000 Polymer Group, Inc., Sr. Note, 12.25%, 7/15/2002 528,885
---------------------------------------------------------------------------------
500,000 RBX Corp., Sr. Sub. Note, Series B, 11.25%, 10/15/2005 391,875
---------------------------------------------------------------------------------
550,000 Sterling Chemicals Holdings, Inc., Sr. Disc. Note, 0/13.50%, 8/15/2008 346,500
---------------------------------------------------------------------------------
150,000 Sterling Chemicals, Inc., Sr. Sub. Note, 11.75%, 8/15/2006 158,625
---------------------------------------------------------------------------------
375,000 Uniroyal Technology Corp., Sr. Secd. Note, 11.75%, 6/1/2003 376,875
--------------------------------------------------------------------------------- --------------
Total 5,186,929
--------------------------------------------------------------------------------- --------------
CLOTHING & TEXTILES--0.6%
---------------------------------------------------------------------------------
325,000 (a)Collins & Aikman Floorcoverings, Inc., Sr. Sub. Note, 10.00%,
1/15/2007 320,531
---------------------------------------------------------------------------------
200,000 (a)GFSI, Inc., Sr. Sub. Note, 9.625%, 3/1/2007 198,000
---------------------------------------------------------------------------------
350,000 (a)Glenoit Corp., Sr. Sub. Note, 11.00%, 4/15/2007 357,000
---------------------------------------------------------------------------------
275,000 Pillowtex Corp., Sr. Sub. Note, 10.00%, 11/15/2006 283,594
---------------------------------------------------------------------------------
200,000 (a)Tultex Corp., Sr. Note, 9.625%, 4/15/2007 207,000
---------------------------------------------------------------------------------
1,600,000 WestPoint Stevens, Inc., Sr. Sub. Deb., 9.375%, 12/15/2005 1,634,000
--------------------------------------------------------------------------------- --------------
Total 3,000,125
--------------------------------------------------------------------------------- --------------
</TABLE>
Federated Bond Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
CORPORATE BONDS--CONTINUED
- ------------------------------------------------------------------------------------------------
CONSUMER PRODUCTS--0.9%
---------------------------------------------------------------------------------
$ 400,000 American Safety Razor Co., Sr. Note, 9.875%, 8/1/2005 $ 415,500
---------------------------------------------------------------------------------
650,000 Herff Jones, Inc., Sr. Sub. Note, 11.00%, 8/15/2005 688,187
---------------------------------------------------------------------------------
300,000 Hosiery Corp. of America, Inc., Sr. Sub. Note, 13.75%, 8/1/2002 330,000
---------------------------------------------------------------------------------
250,000 ICON Health & Fitness, Inc., Sr. Sub. Note, 13.00%, 7/15/2002 276,250
---------------------------------------------------------------------------------
750,000 Playtex Family Products Corp., Sr. Sub. Note, 9.00%, 12/15/2003 740,625
---------------------------------------------------------------------------------
525,000 (a)Renaissance Cosmetics, Inc., Sr. Note, 11.75%, 2/15/2004 532,875
---------------------------------------------------------------------------------
600,000 Revlon Consumer Products Corp., Sr. Sub. Note, 10.50%, 2/15/2003 630,000
---------------------------------------------------------------------------------
550,000 Simmons Co., Sr. Sub. Note, 10.75%, 4/15/2006 569,250
---------------------------------------------------------------------------------
375,000 Syratech Corp., Sr. Note, 11.00%, 4/15/2007 387,188
--------------------------------------------------------------------------------- --------------
Total 4,569,875
--------------------------------------------------------------------------------- --------------
CONTAINER & GLASS PRODUCTS--0.6%
---------------------------------------------------------------------------------
500,000 Owens-Illinois, Inc., Note, 10.00%, 8/1/2002 528,125
---------------------------------------------------------------------------------
950,000 Owens-Illinois, Inc., Sr. Sub. Note, 9.75%, 8/15/2004 1,004,625
---------------------------------------------------------------------------------
500,000 Owens-Illinois, Inc., Sr. Sub. Note, 9.95%, 10/15/2004 532,500
---------------------------------------------------------------------------------
500,000 Packaging Resources Inc., Sr. Note, 11.625%, 5/1/2003 517,500
---------------------------------------------------------------------------------
450,000 (a)Plastic Containers, Inc., Sr. Secd. Note, 10.00%, 12/15/2006 462,938
---------------------------------------------------------------------------------
125,000 (a)U.S. Can Corp., Sr. Sub. Note, 10.125%, 10/15/2006 130,938
--------------------------------------------------------------------------------- --------------
Total 3,176,626
--------------------------------------------------------------------------------- --------------
ECOLOGICAL SERVICES & EQUIPMENT--1.7%
---------------------------------------------------------------------------------
975,000 (a)Allied Waste North America, Inc., Sr. Sub. Note, 10.25%, 12/1/2006 1,031,062
---------------------------------------------------------------------------------
200,000 ICF Kaiser International, Inc., Sr. Sub. Note, 13.00%, 12/31/2003 194,500
---------------------------------------------------------------------------------
650,000 (b)Mid-American Waste Systems, Inc., Sr. Sub. Note, 12.25%, 2/15/2003 356,688
---------------------------------------------------------------------------------
6,710,000 WMX Technologies, Inc., Deb., 8.75%, 5/1/2018 7,110,252
--------------------------------------------------------------------------------- --------------
Total 8,692,502
--------------------------------------------------------------------------------- --------------
EDUCATION--0.6%
---------------------------------------------------------------------------------
3,000,000 Harvard University, Revenue Bonds, 8.125%, 4/15/2007 3,226,830
--------------------------------------------------------------------------------- --------------
</TABLE>
Federated Bond Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
CORPORATE BONDS--CONTINUED
- ------------------------------------------------------------------------------------------------
ELECTRONICS--2.1%
---------------------------------------------------------------------------------
$ 325,000 Advanced Micro Devices, Inc., Sr. Secd. Note, 11.00%, 8/1/2003 $ 354,656
---------------------------------------------------------------------------------
5,500,000 Anixter International, Inc., Company Guarantee, 8.00%, 9/15/2003 5,571,060
---------------------------------------------------------------------------------
600,000 (a)Fairchild Semiconductor Corp., Sr. Sub. Note, 10.125%, 3/15/2007 610,500
---------------------------------------------------------------------------------
4,165,000 Harris Corp., Deb., 10.375%, 12/1/2018 4,582,375
--------------------------------------------------------------------------------- --------------
Total 11,118,591
--------------------------------------------------------------------------------- --------------
FINANCIAL INTERMEDIARIES--5.0%
---------------------------------------------------------------------------------
7,140,000 American General Corp., S.F. Deb., 9.625%, 2/1/2018 7,747,114
---------------------------------------------------------------------------------
500,000 ContiFinancial Corp., Sr. Note, 8.375%, 8/15/2003 503,750
---------------------------------------------------------------------------------
5,150,000 Donaldson, Lufkin and Jenrette Securities Corp., Note, 6.875%,
11/1/2005 4,950,695
---------------------------------------------------------------------------------
6,210,000 Green Tree Financial Corp. , Sr. Sub. Note, 10.25%, 6/1/2002 7,042,388
---------------------------------------------------------------------------------
2,000,000 Merrill Lynch & Co., Inc., Medium Term Note, 7.25%, 6/14/2004 2,005,260
---------------------------------------------------------------------------------
325,000 Olympic Financial Ltd., Unit, 11.50%, 3/15/2007 313,625
---------------------------------------------------------------------------------
3,735,717 (a)World Financial, Pass Thru Cert., Series 96 WFP-B, 6.91%, 9/1/2013 3,631,827
--------------------------------------------------------------------------------- --------------
Total 26,194,659
--------------------------------------------------------------------------------- --------------
FOOD & DRUG RETAILERS--1.9%
---------------------------------------------------------------------------------
500,000 Carr-Gottstein Foods Co., Sr. Sub. Note, 12.00%, 11/15/2005 538,750
---------------------------------------------------------------------------------
7,731,000 Hook-Superx, Inc., Sr. Note, 10.125%, 6/1/2002 8,141,980
---------------------------------------------------------------------------------
500,000 Ralph's Grocery Co., Sr. Note, 10.45%, 6/15/2004 532,500
---------------------------------------------------------------------------------
500,000 Ralph's Grocery Co., Sr. Sub. Note, 11.00%, 6/15/2005 533,750
---------------------------------------------------------------------------------
400,000 Smith's Food & Drug Centers, Inc., Sr. Sub. Note, 11.25%, 5/15/2007 447,500
--------------------------------------------------------------------------------- --------------
Total 10,194,480
--------------------------------------------------------------------------------- --------------
FOOD PRODUCTS--0.4%
---------------------------------------------------------------------------------
400,000 Curtice-Burns Foods, Inc., Sr. Sub. Note, 12.25%, 2/1/2005 428,000
---------------------------------------------------------------------------------
600,000 (a)International Home Foods, Inc., Sr. Sub. Note, 10.375%, 11/1/2006 612,000
---------------------------------------------------------------------------------
200,000 (a)MBW Foods Inc., Sr. Sub. Note, 9.875%, 2/15/2007 199,000
---------------------------------------------------------------------------------
500,000 PMI Acquisition Corp., Sr. Sub. Note, 10.25%, 9/1/2003 522,500
---------------------------------------------------------------------------------
$ 425,000 Van de Kamp's, Inc., Sr. Sub. Note, 12.00%, 9/15/2005 $ 463,250
--------------------------------------------------------------------------------- --------------
</TABLE>
Federated Bond Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
CORPORATE BONDS--CONTINUED
- ------------------------------------------------------------------------------------------------
FOOD PRODUCTS--CONTINUED
---------------------------------------------------------------------------------
Total 2,224,750
--------------------------------------------------------------------------------- --------------
FOREST PRODUCTS--2.1%
---------------------------------------------------------------------------------
400,000 Container Corp. of America, Sr. Note, 11.25%, 5/1/2004 426,000
---------------------------------------------------------------------------------
600,000 (a)Four M Corp., Sr. Note, 12.00%, 6/1/2006 594,000
---------------------------------------------------------------------------------
4,250,000 Pope & Talbot, Inc., 8.375%, 6/1/2013 3,937,498
---------------------------------------------------------------------------------
425,000 Repap New Brunswick, 2nd Priority Sr. Secd. Note, 10.625%,
4/15/2005 403,750
---------------------------------------------------------------------------------
400,000 Riverwood International Corp., Sr. Sub. Note, 10.875%, 4/1/2008 334,000
---------------------------------------------------------------------------------
450,000 S. D. Warren Co., Sr. Sub. Note, 12.00%, 12/15/2004 497,250
---------------------------------------------------------------------------------
4,000,000 Smurfit Capital, Note, 6.75%, 11/20/2005 3,832,480
---------------------------------------------------------------------------------
500,000 Stone Container Corp., Sr. Note, 11.50%, 10/1/2004 497,500
---------------------------------------------------------------------------------
200,000 (a)Stone Container Corp., Rating Adjustable Senior Notes, 11.875%,
8/1/2016 204,000
---------------------------------------------------------------------------------
250,000 (a)Uniforet Inc., Sr. Note, 11.125%, 10/15/2006 231,250
--------------------------------------------------------------------------------- --------------
Total 10,957,728
--------------------------------------------------------------------------------- --------------
HEALTH SERVICES-0.4%
---------------------------------------------------------------------------------
2,000,000 Columbia/HCA Healthcare Corp., Note, 9.00%, 12/15/2014 2,253,820
--------------------------------------------------------------------------------- --------------
HEALTH CARE--1.1%
---------------------------------------------------------------------------------
1,000,000 (a)Dade International, Inc., Sr. Sub. Note, 11.125%, 5/1/2006 1,100,000
---------------------------------------------------------------------------------
450,000 (a)Genesis Health Ventures, Inc., Sr. Sub. Note, 9.25%, 10/1/2006 450,000
---------------------------------------------------------------------------------
2,350,000 Tenet Healthcare Corp., Sr. Note, 8.00%, 1/15/2005 2,303,000
---------------------------------------------------------------------------------
1,250,000 Tenet Healthcare Corp., Sr. Sub. Note, 10.125%, 3/1/2005 1,346,875
---------------------------------------------------------------------------------
700,000 Tenet Healthcare Corp., Sr. Sub. Note, 8.625%, 1/15/2007 694,750
--------------------------------------------------------------------------------- --------------
Total 5,894,625
--------------------------------------------------------------------------------- --------------
HOTELS, MOTELS, INNS & CASINOS--0.1%
---------------------------------------------------------------------------------
500,000 Courtyard by Marriott II LP, Sr. Note, 10.75%, 2/1/2008 526,250
--------------------------------------------------------------------------------- --------------
INDUSTRIAL PRODUCTS & EQUIPMENT--4.7%
---------------------------------------------------------------------------------
$ 700,000 Cabot Safety Acquisition Corp., Sr. Sub. Note, 12.50%, 7/15/2005 $ 756,000
---------------------------------------------------------------------------------
</TABLE>
Federated Bond Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
CORPORATE BONDS--CONTINUED
- ------------------------------------------------------------------------------------------------
INDUSTRIAL PRODUCTS & EQUIPMENT--CONTINUED
---------------------------------------------------------------------------------
400,000 (a)Continental Global Group, Inc., Sr. Note, 11.00%, 4/1/2007 409,500
---------------------------------------------------------------------------------
650,000 (a)Euramax International PLC, Sr. Sub. Note, 11.25%, 10/1/2006 680,875
---------------------------------------------------------------------------------
9,118,000 Figgie International Holdings, Inc., Sr. Note, 9.875%, 10/1/1999 9,471,322
---------------------------------------------------------------------------------
375,000 Hawk Corp., Sr. Note, 10.25%, 12/1/2003 377,812
---------------------------------------------------------------------------------
250,000 (a)International Knife & Saw, Inc., Sr. Sub. Note, 11.375%, 11/15/2006 255,000
---------------------------------------------------------------------------------
200,000 Johnstown America Industries, Inc., Sr. Sub. Note, 11.75%, 8/15/2005 197,000
---------------------------------------------------------------------------------
10,239,000 Joy Technologies, Inc., Sr. Note, 10.25%, 9/1/2003 11,186,517
---------------------------------------------------------------------------------
450,000 MMI Products, Inc., Sr. Sub. Note, 11.25%, 4/15/2007 465,750
---------------------------------------------------------------------------------
375,000 Mettler-Toledo, Inc., Sr. Sub. Note, 9.75%, 10/1/2006 389,063
---------------------------------------------------------------------------------
450,000 Unifrax Investment Corp., Sr. Note, 10.50%, 11/1/2003 463,500
--------------------------------------------------------------------------------- --------------
Total 24,652,339
--------------------------------------------------------------------------------- --------------
INSURANCE--13.0%
---------------------------------------------------------------------------------
6,000,000 Allmerica Financial Corp., Sr. Note, 7.625%, 10/15/2025 5,765,700
---------------------------------------------------------------------------------
7,025,000 Conseco, Inc., Sr. Note, 10.50%, 12/15/2004 8,176,538
---------------------------------------------------------------------------------
2,110,000 Continental Corp., Note, 8.25%, 4/15/1999 2,173,173
---------------------------------------------------------------------------------
2,500,000 Delphi Financial Group, Inc., 9.31%, 3/25/2027 2,524,850
---------------------------------------------------------------------------------
8,000,000 Delphi Financial Group, Inc., Note, 8.00%, 10/1/2003 8,023,600
---------------------------------------------------------------------------------
3,000,000 (a)Equitable Life , Note, 7.70%, 12/1/2015 2,927,520
---------------------------------------------------------------------------------
6,250,000 GE Global Insurance, Note, 7.00%, 2/15/2026 5,793,187
---------------------------------------------------------------------------------
3,460,000 GEICO Corp., Deb., 9.15%, 9/15/2021 3,789,807
---------------------------------------------------------------------------------
7,250,000 (a)Pacific Mutual Life Insurance Company, Note, 7.90%, 12/30/2023 7,224,835
---------------------------------------------------------------------------------
3,000,000 (a)Principal Mutual Life Insurance Company, Note, 8.00%, 3/1/2044 2,906,100
---------------------------------------------------------------------------------
5,500,000 (a)Reinsurance Group of America, Sr. Note, 7.25%, 4/1/2006 5,428,720
---------------------------------------------------------------------------------
3,000,000 SunAmerica, Inc., Deb., 8.125%, 4/28/2023 3,023,070
---------------------------------------------------------------------------------
1,000,000 SunAmerica, Inc., Medium Term Note, 7.34%, 8/30/2005 995,433
---------------------------------------------------------------------------------
5,750,000 USF&G Corp., Company Guarantee, 8.47%, 1/10/2027 5,632,832
---------------------------------------------------------------------------------
$ 4,000,000 (a)Union Central Life Insurance Co., Note, 8.20%, 11/1/2026 $ 3,847,200
--------------------------------------------------------------------------------- --------------
</TABLE>
Federated Bond Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
CORPORATE BONDS--CONTINUED
- ------------------------------------------------------------------------------------------------
INSURANCE--CONTINUED
---------------------------------------------------------------------------------
Total 68,232,565
--------------------------------------------------------------------------------- --------------
LEISURE & ENTERTAINMENT--2.0%
---------------------------------------------------------------------------------
900,000 AMF Group, Inc., Sr. Sub. Disc. Note, 0/12.25%, 3/15/2006 608,625
---------------------------------------------------------------------------------
250,000 AMF Group, Inc., Sr. Sub. Note, 10.875%, 3/15/2006 261,875
---------------------------------------------------------------------------------
325,000 Cobblestone Golf Group, Inc., Sr. Note, 11.50%, 6/1/2003 338,000
---------------------------------------------------------------------------------
6,350,000 Paramount Communications, Inc., Sr. Deb., 8.25%, 8/1/2022 6,061,329
---------------------------------------------------------------------------------
400,000 Premier Parks, Inc., Sr. Note, 12.00%, 8/15/2003 440,000
---------------------------------------------------------------------------------
1,450,000 Six Flags Theme Parks, Sr. Sub. Disc. Note, 0/12.25%, 6/15/2005 1,428,250
---------------------------------------------------------------------------------
1,725,000 Viacom, Inc., Sub. Deb., 8.00%, 7/7/2006 1,632,281
--------------------------------------------------------------------------------- --------------
Total 10,770,360
--------------------------------------------------------------------------------- --------------
MACHINERY & EQUIPMENT--0.4%
---------------------------------------------------------------------------------
725,000 Alvey Systems, Inc., Sr. Sub. Note, 11.375%, 1/31/2003 750,375
---------------------------------------------------------------------------------
675,000 Clark Material Handling Corp., Sr. Note, 10.75%, 11/15/2006 685,125
---------------------------------------------------------------------------------
317,000 Primeco Inc., Sr. Sub. Note, 12.75%, 3/1/2005 359,003
---------------------------------------------------------------------------------
375,000 (a)Tokheim Corp., Sr. Sub. Note, 11.50%, 8/1/2006 403,125
--------------------------------------------------------------------------------- --------------
Total 2,197,628
--------------------------------------------------------------------------------- --------------
METALS & MINING--2.9%
---------------------------------------------------------------------------------
500,000 Echo Bay Mines Ltd., Jr. Sub. Deb., 11.00%, 4/1/2027 495,000
---------------------------------------------------------------------------------
5,000,000 Inco Ltd., Note, 9.60%, 6/15/2022 5,376,250
---------------------------------------------------------------------------------
175,000 (a)Neenah Corp., Sr. Sub. Note, 11.125%, 5/1/2007 180,250
---------------------------------------------------------------------------------
4,000,000 Placer Dome, Inc., Bond, 8.50%, 12/31/2045 3,836,800
---------------------------------------------------------------------------------
600,000 (a)Royal Oak Mines, Inc., Sr. Sub. Note, 11.00%, 8/15/2006 597,000
---------------------------------------------------------------------------------
4,550,000 Santa Fe Pacific Gold, Note, 8.375%, 7/1/2005 4,790,149
--------------------------------------------------------------------------------- --------------
Total 15,275,449
--------------------------------------------------------------------------------- --------------
OIL & GAS--3.9%
---------------------------------------------------------------------------------
875,000 Abraxas Petroleum Corp., Sr. Note, 11.50%, 11/1/2004 931,875
---------------------------------------------------------------------------------
$ 2,710,000 Ashland, Inc., Deb., 11.125%, 10/15/2017 $ 2,918,589
---------------------------------------------------------------------------------
</TABLE>
Federated Bond Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
CORPORATE BONDS--CONTINUED
- ------------------------------------------------------------------------------------------------
OIL & GAS--CONTINUED
---------------------------------------------------------------------------------
750,000 Falcon Drilling Co., Inc., Sr. Note, 9.75%, 1/15/2001 768,750
---------------------------------------------------------------------------------
300,000 Forcenergy Gas Exploration, Inc., Sr. Sub. Note, 8.50%, 2/15/2007 286,500
---------------------------------------------------------------------------------
600,000 Forcenergy Gas Exploration, Inc., Sr. Sub. Note, 9.50%, 11/1/2006 609,000
---------------------------------------------------------------------------------
175,000 Giant Industries, Inc., Sr. Sub. Note, 9.75%, 11/15/2003 177,625
---------------------------------------------------------------------------------
8,150,000 Husky Oil Ltd., Sr. Note, 7.125%, 11/15/2006 8,004,604
---------------------------------------------------------------------------------
350,000 Mesa Operating Company, Sr. Sub. Note, 10.625%, 7/1/2006 383,250
---------------------------------------------------------------------------------
2,500,000 Sun Co., Inc., Deb., 9.375%, 6/1/2016 2,719,625
---------------------------------------------------------------------------------
2,450,000 Tosco Corp., Sr. Note, 7.625%, 5/15/2006 2,503,802
---------------------------------------------------------------------------------
1,000,000 United Meridian Corp., Sr. Sub. Note, 10.375%, 10/15/2005 1,075,000
--------------------------------------------------------------------------------- --------------
Total 20,378,620
--------------------------------------------------------------------------------- --------------
PRINTING & PUBLISHING--3.1%
---------------------------------------------------------------------------------
600,000 Affiliated Newspaper Investments, Inc., Sr. Disc. Note, 0/13.25%,
7/1/2006 519,000
---------------------------------------------------------------------------------
350,000 Garden State Newspapers, Inc., Sr. Sub. Note, 12.00%, 7/1/2004 383,250
---------------------------------------------------------------------------------
375,000 Hollinger International Publishing, Inc., Sr. Sub. Note, 9.25%,
2/1/2006 374,062
---------------------------------------------------------------------------------
375,000 Hollinger International Publishing, Inc., Sr. Sub. Note, 9.25%,
3/15/2007 375,000
---------------------------------------------------------------------------------
300,000 K-III Communications Corp., Company Guarantee, Series B, 8.50%, 2/1/2006 295,500
---------------------------------------------------------------------------------
1,500,000 News America Holdings, Inc., 10.125%, 10/15/2012 1,683,795
---------------------------------------------------------------------------------
4,000,000 News America Holdings, Inc., Deb., 7.90%, 12/1/2095 3,708,584
---------------------------------------------------------------------------------
400,000 Petersen Publishing Co., LLC, Sr. Sub. Note, 11.125%, 11/15/2006 434,000
---------------------------------------------------------------------------------
8,305,000 Valassis Communication, Inc., Sr. Sub. Note, 9.375%, 3/15/1999 8,608,548
--------------------------------------------------------------------------------- --------------
Total 16,381,739
--------------------------------------------------------------------------------- --------------
REAL ESTATE--0.9%
---------------------------------------------------------------------------------
4,000,000 Price REIT, Inc., Sr. Note, 7.50%, 11/5/2006 3,981,680
---------------------------------------------------------------------------------
$ 900,000 Trizec Finance Ltd., Sr. Note, 10.875%, 10/15/2005 $ 990,000
--------------------------------------------------------------------------------- --------------
</TABLE>
Federated Bond Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
CORPORATE BONDS--CONTINUED
- ------------------------------------------------------------------------------------------------
REAL ESTATE--CONTINUED
---------------------------------------------------------------------------------
Total 4,971,680
--------------------------------------------------------------------------------- --------------
RETAILERS--2.4%
---------------------------------------------------------------------------------
850,000 Brylane Capital Corp., Sr. Sub. Note, 10.00%, 9/1/2003 884,000
---------------------------------------------------------------------------------
5,600,000 May Department Stores Co., Deb., 8.125%, 8/15/2035 5,683,608
---------------------------------------------------------------------------------
6,000,000 Penney (J.C.) Co., Inc., Deb., 7.65%, 8/15/2016 5,897,640
--------------------------------------------------------------------------------- --------------
Total 12,465,248
--------------------------------------------------------------------------------- --------------
SERVICES--1.2%
---------------------------------------------------------------------------------
600,000 Coinmach Corp., Sr. Note, 11.75%, 11/15/2005 663,000
---------------------------------------------------------------------------------
250,000 (a)KinderCare Learning Centers, Inc., Sr. Sub. Note, 9.50%, 2/15/2009 237,500
---------------------------------------------------------------------------------
5,000,000 Loewen Group Int'l, Sr. Note, 8.25%, 4/15/2003 5,044,500
---------------------------------------------------------------------------------
175,000 (a)Ryder TRS, Inc., Sr. Sub. Note, 10.00%, 12/1/2006 176,313
--------------------------------------------------------------------------------- --------------
Total 6,121,313
--------------------------------------------------------------------------------- --------------
SOVEREIGN GOVERNMENT--5.4%
---------------------------------------------------------------------------------
4,565,000 Colombia, Republic of, Note, 7.25%, 2/15/2003 4,388,106
---------------------------------------------------------------------------------
4,500,000 (a)Freeport Terminal(Malta) Ltd, Gtd. Global Note, 7.50%, 3/29/2009 4,536,090
---------------------------------------------------------------------------------
1,400,000 New Zealand, Government of, Deb., 10.50%, 7/16/2000 1,440,866
---------------------------------------------------------------------------------
1,500,000 Quebec, Province of, Deb., 13.25%, 9/15/2014 1,769,085
---------------------------------------------------------------------------------
2,000,000 Quebec, Province of, Deb., 7.50%, 7/15/2023 1,925,920
---------------------------------------------------------------------------------
4,100,000 South Africa, Republic of, Global Bond Deb., 9.625%, 12/15/1999 4,323,815
---------------------------------------------------------------------------------
3,500,000 Sweden, Kingdom of, Deb., 10.25%, 11/1/2015 4,381,090
---------------------------------------------------------------------------------
5,125,000 Swedish Export Credit, 9.875%, 3/15/2038 5,507,581
--------------------------------------------------------------------------------- --------------
Total 28,272,553
--------------------------------------------------------------------------------- --------------
STEEL--0.6%
---------------------------------------------------------------------------------
400,000 Acme Metals, Inc., Sr. Secd. Disc. Note, 0/13.50%, 8/1/2004 424,000
---------------------------------------------------------------------------------
325,000 Bayou Steel Corp., 1st Mtg. Note, 10.25%, 3/1/2001 320,125
---------------------------------------------------------------------------------
600,000 EnviroSource, Inc., Sr. Note, 9.75%, 6/15/2003 570,000
---------------------------------------------------------------------------------
$ 600,000 GS Technologies Operating Co., Inc., Sr. Note, 12.00%, 9/1/2004 $ 630,000
---------------------------------------------------------------------------------
</TABLE>
Federated Bond Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
CORPORATE BONDS--CONTINUED
- ------------------------------------------------------------------------------------------------
STEEL--CONTINUED
---------------------------------------------------------------------------------
350,000 Republic Engineered Steel, Inc., 1st Mtg. Note, 9.875%, 12/15/2001 318,063
---------------------------------------------------------------------------------
750,000 Ryerson Tull, Inc., Sr. Note, 9.125%, 7/15/2006 774,375
--------------------------------------------------------------------------------- --------------
Total 3,036,563
--------------------------------------------------------------------------------- --------------
SURFACE TRANSPORTATION--2.7%
---------------------------------------------------------------------------------
750,000 Gearbulk Holding Limited, Sr. Note, 11.25%, 12/1/2004 823,125
---------------------------------------------------------------------------------
700,000 Statia Terminals International N.V., 1st Mtg. Note, 11.75%, 11/15/2003 724,500
---------------------------------------------------------------------------------
800,000 Stena AB, Sr. Note, 10.50%, 12/15/2005 852,000
---------------------------------------------------------------------------------
9,475,000 Trans Ocean Container Corp., Sr. Sub. Note, 12.25%, 7/1/2004 11,066,421
---------------------------------------------------------------------------------
750,000 Trism, Inc., Sr. Sub. Note, 10.75%, 12/15/2000 641,250
--------------------------------------------------------------------------------- --------------
Total 14,107,296
--------------------------------------------------------------------------------- --------------
TELECOMMUNICATIONS & CELLULAR--2.9%
---------------------------------------------------------------------------------
600,000 American Communications Services Inc., Sr. Disc. Note, 0/12.75%,
4/1/2006 298,500
---------------------------------------------------------------------------------
1,000,000 Brooks Fiber Properties, Inc., Sr. Disc. Note, 0/10.875%, 3/1/2006 655,000
---------------------------------------------------------------------------------
500,000 Brooks Fiber Properties, Inc., Sr. Disc. Note, 0/11.875%, 11/1/2006 313,750
---------------------------------------------------------------------------------
750,000 Cellular Communications International, Inc., Sr. Disc. Note, 13.25% accrual,
8/15/2000 543,750
---------------------------------------------------------------------------------
475,000 Cellular Communications of Puerto Rico, Inc., Sr. Sub. Note, 10.00%, 2/1/2007 457,781
---------------------------------------------------------------------------------
225,000 (a)Dobson Communications Corp., Sr. Note, 11.75%, 4/15/2007 213,187
---------------------------------------------------------------------------------
1,625,000 Intermedia Communications of Florida, Inc., Sr. Disc. Note, 0/12.50%, 5/15/2006 1,064,375
---------------------------------------------------------------------------------
500,000 (a)McLeod, Inc., Sr. Disc. Note, 0/10.50%, 3/1/2007 286,250
---------------------------------------------------------------------------------
1,100,000 (a)Millicom International Cellular S. A., Sr. Disc. Note, 0/13.50%,
6/1/2006 772,750
---------------------------------------------------------------------------------
550,000 NEXTEL Communications, Inc., Sr. Disc. Note, 0/11.50%, 9/1/2003 456,500
---------------------------------------------------------------------------------
550,000 NEXTEL Communications, Inc., Sr. Disc. Note, 0/9.75%, 8/15/2004 402,188
---------------------------------------------------------------------------------
$ 400,000 Nextlink Communications, LLC, Sr. Note, Series AI, 12.50%,
4/15/2006 $ 410,000
---------------------------------------------------------------------------------
</TABLE>
Federated Bond Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
CORPORATE BONDS--CONTINUED
- ------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS & CELLULAR--CONTINUED
---------------------------------------------------------------------------------
500,000 (a)Paging Network, Inc., Sr. Sub. Note, 10.00%, 10/15/2008 450,000
---------------------------------------------------------------------------------
500,000 Paging Network, Inc., Sr. Sub. Note, 10.125%, 8/1/2007 453,750
---------------------------------------------------------------------------------
500,000 PanAmSat, LP, Sr. Sub. Disc. Note, 0/11.375%, 8/1/2003 477,500
---------------------------------------------------------------------------------
125,000 PhoneTel Technologies, Inc., Sr. Note, 12.00%, 12/15/2006 123,750
---------------------------------------------------------------------------------
875,000 (a)Qwest Communications International, Inc., Sr. Note, 10.875%,
4/1/2007 894,688
---------------------------------------------------------------------------------
750,000 Teleport Communications Group, Inc., Sr. Disc. Note, 0/11.125%,
7/1/2007 519,375
---------------------------------------------------------------------------------
125,000 Teleport Communications Group, Inc., Sr. Note, 9.875%, 7/1/2006 130,625
---------------------------------------------------------------------------------
4,750,000 U.S. West Capital Funding, Inc., Company Guarantee, 7.90%,
2/1/2027 4,695,423
---------------------------------------------------------------------------------
750,000 USA Mobile Communications, Inc., Sr. Note, 9.50%, 2/1/2004 633,750
---------------------------------------------------------------------------------
950,000 Vanguard Cellular Systems, Inc., Deb., 9.375%, 4/15/2006 935,750
--------------------------------------------------------------------------------- --------------
Total 15,188,642
--------------------------------------------------------------------------------- --------------
UTILITIES--3.9%
---------------------------------------------------------------------------------
300,000 (a)CalEnergy Co., Inc., Sr. Note, 9.50%, 9/15/2006 314,250
---------------------------------------------------------------------------------
1,125,000 California Energy Co., Inc., Sr. Note, 10.25%, 1/15/2004 1,198,125
---------------------------------------------------------------------------------
750,000 El Paso Electric Co., 1st Mtg. Note, 9.40%, 5/1/2011 804,802
---------------------------------------------------------------------------------
5,150,000 Enersis S.A., Note, 7.40%, 12/1/2016 4,894,972
---------------------------------------------------------------------------------
5,500,000 (a)Israel Electric Corp. Ltd., Sr. Note, 7.875%, 12/15/2026 5,401,000
---------------------------------------------------------------------------------
1,500,000 Kansas Electric Power Cooperative, Collateral Trust, 9.73%,
12/15/2017 1,604,835
---------------------------------------------------------------------------------
6,500,000 (a)Tenaga Nasional Berhad, Deb., 7.50%, 1/15/2096 6,054,880
--------------------------------------------------------------------------------- --------------
Total 20,272,864
--------------------------------------------------------------------------------- --------------
TOTAL CORPORATE BONDS (IDENTIFIED COST $458,317,002) 457,913,290
--------------------------------------------------------------------------------- --------------
</TABLE>
Federated Bond Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OR SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
GOVERNMENT AGENCIES--1.3%
- ------------------------------------------------------------------------------------------------
$ 7,035,000 Federal National Mortgage Association, 0/8.62%, 3/9/2022 $ 6,679,521
--------------------------------------------------------------------------------- --------------
TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST $6,493,646) 6,679,521
--------------------------------------------------------------------------------- --------------
MUNICIPAL SECURITIES--5.8%
- ------------------------------------------------------------------------------------------------
6,050,000 Kansas City, MO Redevelopment Authority, 7.65% Bonds (FSA LOC), 11/1/2018 5,888,647
---------------------------------------------------------------------------------
3,000,000 Miami Florida Revenue Pension Obligation, 7.20% Bonds (AMBAC LOC), 12/1/2025 2,759,730
---------------------------------------------------------------------------------
4,940,000 Minneapolis/St. Paul, MN Airport Commission, UT GO Taxable
Revenue Bonds (Series 9), 8.95% (Minneapolis/St. Paul, MN),
1/1/2022 5,309,314
---------------------------------------------------------------------------------
4,675,000 Pittsburgh, PA Urban Redevelopment Authority, 8.01% Bonds
(Aluminum Co. of America), 6/1/2015 4,731,240
---------------------------------------------------------------------------------
2,635,000 Pittsburgh, PA Urban Redevelopment Authority, 9.07% Bonds (CGIC GTD), 9/1/2014 2,881,662
---------------------------------------------------------------------------------
2,200,000 Southeastern, PA Transportation Authority, (Series B), 8.75% Bonds (FGIC GTD),
3/1/2020 2,345,728
---------------------------------------------------------------------------------
4,200,000 St. Johns County, FL Convention Center, Taxable Municipal Revenue Bonds, 8.00%
(FSA INS), 1/1/2026 4,246,872
---------------------------------------------------------------------------------
2,080,000 Tampa Florida Sports Authority, 8.02% Bonds (MBIA GTD),
10/1/2026 2,082,122
--------------------------------------------------------------------------------- --------------
TOTAL MUNICIPAL SECURITIES (IDENTIFIED COST $30,529,584) 30,245,315
--------------------------------------------------------------------------------- --------------
PREFERRED STOCKS--3.0%
- ------------------------------------------------------------------------------------------------
BANKING--0.1%
---------------------------------------------------------------------------------
15,000 California Federal Preferred Capital Corp., REIT Perpetual Pfd. Stock, Series A,
$2.28 376,875
--------------------------------------------------------------------------------- --------------
BROADCAST RADIO & TV--0.3%
---------------------------------------------------------------------------------
6,694 (a)American Radio Systems Corp., Cumulative Exchangeable Pfd. Stock, $11.38 662,706
---------------------------------------------------------------------------------
3,500 (a)Chancellor Broadcasting Co., Exchangeable Pfd. Stock, $12.00 344,750
---------------------------------------------------------------------------------
</TABLE>
Federated Bond Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
PREFERRED STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
BROADCAST RADIO & TV--CONTINUED
---------------------------------------------------------------------------------
6,000 (a)Sinclair Broadcast Group, Inc., Pfd., Series A, $11.63 $ 603,000
--------------------------------------------------------------------------------- --------------
Total 1,610,456
--------------------------------------------------------------------------------- --------------
CABLE TELEVISION--0.1%
---------------------------------------------------------------------------------
300 Pegasus Communications Corp., Unit, Series A 299,250
--------------------------------------------------------------------------------- --------------
INDUSTRIAL PRODUCTS & EQUIPMENT--0.1%
---------------------------------------------------------------------------------
500 (a)Fairfield Manufacturing Co., Inc., Exchangeable Pfd. Stock, Series A, $11.25 500,000
--------------------------------------------------------------------------------- --------------
PRINTING & PUBLISHING--0.1%
---------------------------------------------------------------------------------
6,205 K-III Communications Corp., Cumulative PIK Pfd., Series B, 11.625% 675,569
--------------------------------------------------------------------------------- --------------
REAL ESTATE--2.3%
---------------------------------------------------------------------------------
8,000 Highwoods Properties, Inc., REIT Perpetual Pfd. Stock, Series A, $8.625 7,909,000
---------------------------------------------------------------------------------
80,000 Security Capital Industrial Trust, REIT Perpetual Pfd. Stock,
Series C, $4.27 3,930,000
--------------------------------------------------------------------------------- --------------
Total 11,839,000
--------------------------------------------------------------------------------- --------------
TOTAL PREFERRED STOCKS (IDENTIFIED COST $15,304,901) 15,301,150
--------------------------------------------------------------------------------- --------------
COMMON STOCKS--0.0%
- ------------------------------------------------------------------------------------------------
BROADCAST RADIO & TV--0.0%
---------------------------------------------------------------------------------
1,600 Sullivan Broadcast Holdings Inc., Class B 16,000
--------------------------------------------------------------------------------- --------------
CABLE TELEVISION--0.0%
---------------------------------------------------------------------------------
400 Australis Holdings Pty Limited, Warrants 0
---------------------------------------------------------------------------------
564 Pegasus Communications Corp. 5,852
---------------------------------------------------------------------------------
750 Wireless One, Inc., Warrants 0
--------------------------------------------------------------------------------- --------------
Total 5,852
--------------------------------------------------------------------------------- --------------
CHEMICALS & PLASTICS--0.0%
---------------------------------------------------------------------------------
400 Sterling Chemicals Holdings, Inc., Warrants 14,000
---------------------------------------------------------------------------------
</TABLE>
Federated Bond Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
CHEMICALS & PLASTICS--CONTINUED
---------------------------------------------------------------------------------
3,750 Uniroyal Technology Corp., Warrants $ 5,391
--------------------------------------------------------------------------------- --------------
Total 19,391
--------------------------------------------------------------------------------- --------------
CONSUMER PRODUCTS--0.0%
---------------------------------------------------------------------------------
50 Hosiery Corp. of America, Inc. 350
---------------------------------------------------------------------------------
400 (a)IHF Capital, Inc., Warrants 20,200
--------------------------------------------------------------------------------- --------------
Total 20,550
--------------------------------------------------------------------------------- --------------
ECOLOGICAL SERVICES & EQUIPMENT--0.0%
---------------------------------------------------------------------------------
4,800 ICF Kaiser International, Inc., Warrants 1,200
--------------------------------------------------------------------------------- --------------
FOOD & DRUG RETAILERS--0.0%
---------------------------------------------------------------------------------
17,674 Grand Union Co. 59,097
--------------------------------------------------------------------------------- --------------
PRINTING & PUBLISHING--0.0%
---------------------------------------------------------------------------------
500 (b)Affiliated Newspaper Investments, Inc. 40,250
--------------------------------------------------------------------------------- --------------
STEEL--0.0%
---------------------------------------------------------------------------------
150 (a)Bar Technologies, Inc., Warrants 7,500
--------------------------------------------------------------------------------- --------------
TELECOMMUNICATIONS & CELLULAR--0.0%
---------------------------------------------------------------------------------
750 Cellular Communications International, Inc., Warrants 7,500
--------------------------------------------------------------------------------- --------------
TOTAL COMMON STOCKS (IDENTIFIED COST $3,074,142) 177,340
--------------------------------------------------------------------------------- --------------
ASSET-BACKED SECURITIES--0.6%
- ------------------------------------------------------------------------------------------------
STRUCTURED PRODUCT--0.6%
---------------------------------------------------------------------------------
$ 1,000,000 Green Tree Financial Corp. 1992-2, Class B, 9.15%, 1/15/2018 1,005,020
---------------------------------------------------------------------------------
1,000,000 Merrill Lynch Mortgage Investment, Inc. 1988-H, Class B, 9.70%,
6/15/2008 1,033,440
---------------------------------------------------------------------------------
1,000,000 Residential Funding Corp. 1993-S26, Class A10, 7.50%, 7/25/2023 948,800
--------------------------------------------------------------------------------- --------------
TOTAL ASSET-BACKED SECURITIES (IDENTIFIED COST $3,051,875) 2,987,260
--------------------------------------------------------------------------------- --------------
</TABLE>
Federated Bond Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
(C) REPURCHASE AGREEMENT--1.1%
- ------------------------------------------------------------------------------------------------
$ 5,730,000 BT Securities Corporation, 5.43%, dated 4/30/1997, due 5/1/1997
(at amortized cost) $ 5,730,000
--------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (IDENTIFIED COST $522,501,150)(D) $ 519,033,876
--------------------------------------------------------------------------------- --------------
</TABLE>
(a) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. At April 30, 1997, these securities amounted
to $65,365,674 which represents 12.5% of total net assets.
(b) Non-income producing security.
(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 $522,501,150.
The net depreciation of investments on a federal tax basis amounts to
$3,467,274 which is comprised of $6,348,195 appreciation and $9,815,469
depreciation at April 30, 1997.
Note: The categories of investments are shown as a percentage of net assets
($524,438,234) at April 30, 1997.
The following acronyms are used throughout this portfolio:
AMBAC--American Municipal Bond Assurance Corporation
CGIC--Capital Guaranty Insurance Corporation
FGIC--Financial Guaranty Insurance Company
FSA--Financial Security Assurance
GO--General Obligation
GTD--Guaranty
INS--Insured
LLC--Limited Liability Corporation
LOC--Letter of Credit
LP--Limited Partnership
MBIA--Municipal Bond Investors Assurance
PIK--Payment in Kind
PLC--Public Limited Company
REIT--Real Estate Investment Trust
UT--Unlimited Tax
MID-AMERICAN WASTE SYSTEMS, INC.
On January 22, 1997, Mid-American Waste filed for protection under Chapter 11 of
the Bankruptcy Code. The company has agreed to be acquired by USA Waste
Services, Inc. The timing and outcome of this potential transaction are
uncertain. Mid-American Waste has been deemed illiquid as a result of
contractual agreements relating to litigation.
(See Notes which are an integral part of the Financial Statements)
Federated Bond Fund
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
April 30, 1997 (unaudited)
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------------------------
Total investments in securities, at value (identified and tax cost $522,501,150) $519,033,876
- ---------------------------------------------------------------------------------------------------
Cash 2,949
- ---------------------------------------------------------------------------------------------------
Income receivable 10,885,726
- ---------------------------------------------------------------------------------------------------
Receivable for shares sold 1,534,323
- --------------------------------------------------------------------------------------------------- -----------
Total assets 531,456,874
- ---------------------------------------------------------------------------------------------------
LIABILITIES:
- ----------------------------------------------------------------------------------------
Payable for investments purchased $4,707,444
- ----------------------------------------------------------------------------------------
Payable for shares redeemed 578,640
- ----------------------------------------------------------------------------------------
Income distribution payable 1,494,248
- ----------------------------------------------------------------------------------------
Accrued expenses 238,308
- ---------------------------------------------------------------------------------------- ---------
Total liabilities 7,018,640
- --------------------------------------------------------------------------------------------------- -----------
NET ASSETS for 54,754,627 shares outstanding $524,438,234
- --------------------------------------------------------------------------------------------------- -----------
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------------------------
Paid in capital $531,239,705
- ---------------------------------------------------------------------------------------------------
Net unrealized depreciation of investments (3,467,274)
- ---------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (3,445,190)
- ---------------------------------------------------------------------------------------------------
Undistributed net investment income 110,993
- --------------------------------------------------------------------------------------------------- -----------
Total Net Assets $524,438,234
- --------------------------------------------------------------------------------------------------- -----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ---------------------------------------------------------------------------------------------------
CLASS A SHARES:
- ---------------------------------------------------------------------------------------------------
Net Asset Value Per Share ($50,838,438 / 5,307,483 shares outstanding) $9.58
- --------------------------------------------------------------------------------------------------- -----------
Offering Price Per Share (100/95.50 of $9.58)* $10.03
- --------------------------------------------------------------------------------------------------- -----------
Redemption Proceeds Per Share (99.50/100 of $9.58)** $9.53
- --------------------------------------------------------------------------------------------------- -----------
CLASS B SHARES:
- ---------------------------------------------------------------------------------------------------
Net Asset Value Per Share ($152,682,386 / 15,940,229 shares outstanding) $9.58
- --------------------------------------------------------------------------------------------------- -----------
Offering Price Per Share $9.58
- --------------------------------------------------------------------------------------------------- -----------
Redemption Proceeds Per Share (94.50/100 of $9.58)** $9.05
- --------------------------------------------------------------------------------------------------- -----------
CLASS C SHARES:
- ---------------------------------------------------------------------------------------------------
Net Asset Value Per Share ($29,057,918 / 3,033,915 shares outstanding) $9.58
- --------------------------------------------------------------------------------------------------- -----------
Offering Price Per Share $9.58
- --------------------------------------------------------------------------------------------------- -----------
Redemption Proceeds Per Share (99.00/100 of $9.58)** $9.48
- --------------------------------------------------------------------------------------------------- -----------
CLASS F SHARES:
- ---------------------------------------------------------------------------------------------------
Net Asset Value Per Share ($291,859,492 / 30,473,000 shares outstanding) $9.58
- --------------------------------------------------------------------------------------------------- -----------
Offering Price Per Share (100/99.00 of $9.58)* $9.68
- --------------------------------------------------------------------------------------------------- -----------
Redemption Proceeds Per Share (99.00/100 of $9.58)** $9.48
- --------------------------------------------------------------------------------------------------- -----------
</TABLE>
* See "Investing in Class A Shares" and" Investing in Class F Shares" in the
Prospectus.
** See "Contingent Deferred Sales Charge" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
Federated Bond Fund
Statement of Operations
- --------------------------------------------------------------------------------
Six Months Ended April 30, 1997 (unaudited)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Dividends $ 137,470
- ----------------------------------------------------------------------------------------------------
Interest 20,598,526
- ---------------------------------------------------------------------------------------------------- -----------
Total income 20,735,996
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------------
Investment advisory fee $1,844,118
- ----------------------------------------------------------------------------------------
Administrative personnel and services fee 185,662
- ----------------------------------------------------------------------------------------
Custodian fees 22,266
- ----------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 214,862
- ----------------------------------------------------------------------------------------
Directors'/Trustees' fees 5,314
- ----------------------------------------------------------------------------------------
Auditing fees 8,455
- ----------------------------------------------------------------------------------------
Legal fees 2,294
- ----------------------------------------------------------------------------------------
Portfolio accounting fees 82,507
- ----------------------------------------------------------------------------------------
Distribution services fee--Class B Shares 524,222
- ----------------------------------------------------------------------------------------
Distribution services fee--Class C Shares 96,672
- ----------------------------------------------------------------------------------------
Shareholder services fee--Class A Shares 55,518
- ----------------------------------------------------------------------------------------
Shareholder services fee--Class B Shares 174,741
- ----------------------------------------------------------------------------------------
Shareholder services fee--Class C Shares 32,224
- ----------------------------------------------------------------------------------------
Shareholder services fee--Class F Shares 352,223
- ----------------------------------------------------------------------------------------
Share registration costs 56,826
- ----------------------------------------------------------------------------------------
Printing and postage 41,286
- ----------------------------------------------------------------------------------------
Insurance premiums 3,561
- ----------------------------------------------------------------------------------------
Taxes 18,319
- ----------------------------------------------------------------------------------------
Miscellaneous 4,226
- ---------------------------------------------------------------------------------------- ----------
Total expenses 3,725,296
- ----------------------------------------------------------------------------------------
Waivers--
- -----------------------------------------------------------------------------
Waiver of investment advisory fee $(388,878)
- -----------------------------------------------------------------------------
Waiver of shareholder services fee--Class A Shares (11,103)
- -----------------------------------------------------------------------------
Waiver of shareholder services fee--Class F Shares (28,178)
- ----------------------------------------------------------------------------- ---------
Total waivers (428,159)
- ---------------------------------------------------------------------------------------- ----------
Net expenses 3,297,137
- ---------------------------------------------------------------------------------------------------- -----------
Net investment income 17,438,859
- ---------------------------------------------------------------------------------------------------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ----------------------------------------------------------------------------------------------------
Net realized gain on investments 141,013
- ----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments (8,154,414)
- ---------------------------------------------------------------------------------------------------- -----------
Net realized and unrealized loss on investments (8,013,401)
- ---------------------------------------------------------------------------------------------------- -----------
Change in net assets resulting from operations $ 9,425,458
- ---------------------------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Federated Bond Fund
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
(UNAUDITED) YEAR ENDED
APRIL 30, 1997 OCTOBER 31, 1996
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------------------------------------------
OPERATIONS--
- ------------------------------------------------------------------------
Net investment income $ 17,438,859 $ 25,420,514
- ------------------------------------------------------------------------
Net realized gain (loss) on investments ($141,013 net gain and $129,446
net loss, respectively, as computed for federal tax purposes) 141,013 (149,872)
- ------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) (8,154,414) 317,325
- ------------------------------------------------------------------------ -------------------- ------------------
Change in net assets resulting from operations 9,425,458 25,587,967
- ------------------------------------------------------------------------ -------------------- ------------------
NET EQUALIZATION CREDITS (DEBITS)-- 228,618 620,232
- ------------------------------------------------------------------------ -------------------- ------------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ------------------------------------------------------------------------
Distributions from net investment income
- ------------------------------------------------------------------------
Class A Shares (1,606,538) (1,762,704)
- ------------------------------------------------------------------------
Class B Shares (4,578,363) (5,584,736)
- ------------------------------------------------------------------------
Class C Shares (844,023) (916,585)
- ------------------------------------------------------------------------
Class F Shares (10,248,436) (17,390,922)
- ------------------------------------------------------------------------ -------------------- ------------------
Change in net assets resulting from distributions to shareholders (17,277,360) (25,654,947)
- ------------------------------------------------------------------------ -------------------- ------------------
SHARE TRANSACTIONS (EXCLUSIVE OF AMOUNTS ALLOCATED TO NET INVESTMENT
INCOME)--
- ------------------------------------------------------------------------
Proceeds from sale of shares 146,158,177 287,180,090
- ------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 8,885,210 12,940,331
- ------------------------------------------------------------------------
Cost of shares redeemed (76,263,349) (81,239,742)
- ------------------------------------------------------------------------ -------------------- ------------------
Change in net assets resulting from share transactions 78,780,038 218,880,679
- ------------------------------------------------------------------------ -------------------- ------------------
Change in net assets 71,156,754 219,433,931
- ------------------------------------------------------------------------
NET ASSETS:
- ------------------------------------------------------------------------
Beginning of period 453,281,480 233,847,549
- ------------------------------------------------------------------------ -------------------- ------------------
End of period (including undistributed net investment income of $110,993
and $0, respectively) $ 524,438,234 $ 453,281,480
- ------------------------------------------------------------------------ -------------------- ------------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Federated Bond Fund
Financial Highlights--Class A Shares
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED
APRIL 30, OCTOBER 31,
1997 1996 1995(A)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.72 $ 9.76 $ 9.64
- ------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------
Net investment income 0.36 0.71 0.26
- ------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.15) (0.04) 0.11
- ------------------------------------------------------------------------------ ------- --------- -----------
Total from investment operations 0.21 0.67 0.37
- ------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------------------------------------------
Distributions from net investment income (0.35) (0.71) (0.25)
- ------------------------------------------------------------------------------ ------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 9.58 $ 9.72 $ 9.76
- ------------------------------------------------------------------------------ ------- --------- -----------
TOTAL RETURN (B) 2.17% 7.21% 3.92%
- ------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------------------------
Expenses 1.05%* 1.05% 1.02%*
- ------------------------------------------------------------------------------
Net investment income 7.36%* 7.46% 8.22%*
- ------------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.21%* 0.25% 0.35%*
- ------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $50,838 $37,045 $5,070
- ------------------------------------------------------------------------------
Portfolio turnover 33% 49% 77%
- ------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from June 28, 1995 (date of initial
public offering) to October 31, 1995.
(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 Bond Fund
Financial Highlights--Class B Shares
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED
APRIL 30, OCTOBER 31,
1997 1996 1995(A)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.72 $ 9.76 $ 9.64
- ----------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------
Net investment income 0.32 0.64 0.24
- ----------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.15) (0.04) 0.11
- ---------------------------------------------------------------------------- ------- --------- -----------
Total from investment operations 0.17 0.60 0.35
- ----------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------------
Distributions from net investment income (0.31) (0.64) (0.23)
- ---------------------------------------------------------------------------- ------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 9.58 $ 9.72 $ 9.76
- ---------------------------------------------------------------------------- ------- --------- -----------
TOTAL RETURN (B) 1.78% 6.40% 3.72%
- ----------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------
Expenses 1.84%* 1.85% 1.81%*
- ----------------------------------------------------------------------------
Net investment income 6.54%* 6.66% 7.36%*
- ----------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.16%* 0.20% 0.30%*
- ----------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------
Net assets, end of period (000 omitted) $152,682 $125,620 $27,768
- ----------------------------------------------------------------------------
Portfolio turnover 33% 49% 77%
- ----------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from June 28, 1995 (date of initial
public offering) to October 31, 1995.
(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 Bond Fund
Financial Highlights--Class C Shares
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED
APRIL 30, OCTOBER 31,
1997 1996 1995(A)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.72 $ 9.76 $ 9.64
- ------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------
Net investment income 0.32 0.64 0.24
- ------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.15) (0.04) 0.11
- ------------------------------------------------------------------------------ ------- --------- -----------
Total from investment operations 0.17 0.60 0.35
- ------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------------------------------------------
Distributions from net investment income (0.31) (0.64) (0.23)
- ------------------------------------------------------------------------------ ------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 9.58 $ 9.72 $ 9.76
- ------------------------------------------------------------------------------ ------- --------- -----------
TOTAL RETURN (B) 1.78% 6.40% 3.72%
- ------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------------------------
Expenses 1.84%* 1.85% 1.81%*
- ------------------------------------------------------------------------------
Net investment income 6.55%* 6.70% 7.31%*
- ------------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.16%* 0.20% 0.30%*
- ------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $29,058 $22,897 $5,508
- ------------------------------------------------------------------------------
Portfolio turnover 33% 49% 77%
- ------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from June 28, 1995 (date of initial
public offering) to October 31, 1995.
(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 Bond Fund
Financial Highlights--Class F Shares
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED)
APRIL 30, YEAR ENDED OCTOBER 31, YEAR ENDED DECEMBER 31,
1997 1996 1995 1994 1993 1992(A) 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 9.72 $ 9.76 $ 9.08 $ 10.30 $ 9.23 $ 8.81 $ 6.89 $ 8.79 $ 9.86
- -----------------------
INCOME FROM INVESTMENT
OPERATIONS
- -----------------------
Net investment income 0.36 0.71 0.79 0.76 0.77 0.59 1.01 1.08 1.23
- -----------------------
Net realized and
unrealized gain
(loss) on investments (0.15) (0.04) 0.65 (1.09) 1.07 0.43 1.92 (1.84) (1.07)
- ----------------------- ------ --------- --------- --------- --------- ----------- --------- --------- ---------
Total from investment
operations 0.21 0.67 1.44 (0.33) 1.84 1.02 2.93 (0.76) 0.16
- ----------------------- ------ --------- --------- --------- --------- ----------- --------- --------- ---------
LESS DISTRIBUTIONS
- -----------------------
Distributions from
net investment income (0.35) (0.71) (0.76) (0.75) (0.77) (0.60) (1.01) (1.14) (1.23)
- -----------------------
Distributions from
net realized gain on
investment
transactions -- -- -- (0.14) -- -- -- -- --
- ----------------------- ------ --------- --------- --------- --------- ----------- --------- --------- ---------
Total distributions (0.35) (0.71) (0.76) (0.89) (0.77) (0.60) (1.01) (1.14) (1.23)
- ----------------------- ------ --------- --------- --------- --------- ----------- --------- --------- ---------
NET ASSET VALUE, END OF
PERIOD $ 9.58 $ 9.72 $ 9.76 $ 9.08 $ 10.30 $ 9.23 $ 8.81 $ 6.89 $ 8.79
- ----------------------- ------ --------- --------- --------- --------- ----------- --------- --------- ---------
TOTAL RETURN (C) 2.16% 7.18% 16.51% (3.41%) 20.61% 11.79% 44.62% (9.59%) 1.32%
- -----------------------
RATIOS TO AVERAGE NET
ASSETS
- -----------------------
Expenses 1.08%* 1.08% 1.03% 1.05% 1.04% 0.49%* 1.00% 1.01% 1.14%
- -----------------------
Net investment income 7.32%* 7.38% 8.20% 7.92% 7.69% 8.05%* 12.17% 13.43% 12.81%
- -----------------------
Expense waiver/
reimbursement (d) 0.18%* 0.22% 0.31% 0.33% 0.61% 2.01%* 1.50% 1.49% 1.36%
- -----------------------
SUPPLEMENTAL DATA
- -----------------------
Net assets, end of
period (000 omitted) $291,859 $267,720 $195,502 $146,270 $125,762 $54,886 $7,484 $4,734 $4,968
- -----------------------
Portfolio Turnover 33 % 49% 77% 74% 51% 49 % 33% 28% 38%
- -----------------------
<CAPTION>
<S> <C>
1988(B)
NET ASSET VALUE,
BEGINNING OF PERIOD $ 10.06
- -----------------------
INCOME FROM INVESTMENT
OPERATIONS
- -----------------------
Net investment income 0.61
- -----------------------
Net realized and
unrealized gain
(loss) on investments (0.16)
- ----------------------- -----------
Total from investment
operations 0.45
- ----------------------- -----------
LESS DISTRIBUTIONS
- -----------------------
Distributions from
net investment income (0.65)
- -----------------------
Distributions from
net realized gain on
investment
transactions --
- ----------------------- -----------
Total distributions (0.65)
- ----------------------- -----------
NET ASSET VALUE, END OF
PERIOD $ 9.86
- ----------------------- -----------
TOTAL RETURN (C) 4.62%
- -----------------------
RATIOS TO AVERAGE NET
ASSETS
- -----------------------
Expenses 1.00%*
- -----------------------
Net investment income 12.58%*
- -----------------------
Expense waiver/
reimbursement (d) 1.00%*
- -----------------------
SUPPLEMENTAL DATA
- -----------------------
Net assets, end of
period (000 omitted)
- -----------------------
Portfolio Turnover 31 %
- -----------------------
</TABLE>
* Computed on an annualized basis.
(a) During the ten month period, the Fund changed its fiscal year-end from
December 31 to October 31.
(b) Reflects operations for the period from July 8, 1988 (date of initial
public investment) to December 31, 1988.
(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 Bond Fund
Notes to Financial Statements
- --------------------------------------------------------------------------------
April 30, 1997 (unaudited)
1. ORGANIZATION
Investment Series Funds, Inc. (the "Corporation") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as a open-end,
management investment company. The Corporation consist of one portfolio. The
financial statements included herein are those of Federated Bond Fund (the
"Fund"), a diversified portfolio. The Fund offers four classes of shares: Class
A Shares, Class B Shares, Class C Shares and Class F Shares. The investment
objective of the Fund is to provide as high a level of current income as is
consistent with the preservation of capital.
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 corporate bonds, U.S. government securities
(other fixed income and asset-backed securities), and unlisted securities
and private placement securities are generally valued at the mean of the
latest bid and asked price as furnished by an independent pricing service.
Listed equity securities are valued at the last sale price reported on a
national securities exchange. Short-term securities are valued at the
prices provided by an independent pricing service. However, short-term
securities with remaining maturities of sixty days or less at the time of
purchase may be valued at amortized cost, which approximates fair market
value.
REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Directors (the
"Directors"). Risks may arise from the potential inability of
counterparties to honor the terms of the repurchase agreement. Accordingly,
the Fund could receive less than the repurchase price on the sale of
collateral securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code"). Dividend
income and distributions to shareholders are recorded on the ex-dividend
date.
Federated Bond Fund
- --------------------------------------------------------------------------------
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
At October 31, 1996, the Fund, for federal tax purposes, had a capital loss
carryforward of $3,590,286, which will reduce the Fund's taxable income
arising from future net realized gain on investments, if any, to the extent
permitted by the Code, and thus will reduce the amount of the distributions
to shareholders which would otherwise be necessary to relieve the Fund of
any liability for federal tax. Pursuant to the Code, such capital loss
carryforward will expire as follows:
<TABLE>
<CAPTION>
EXPIRATION YEAR EXPIRATION AMOUNT
<S> <C>
2002 $3,359,826
- ------------------------------------------------------------------------------------
2003 $ 101,014
- ------------------------------------------------------------------------------------
2004 $ 129,446
- ------------------------------------------------------------------------------------
</TABLE>
EQUALIZATION--The Fund follows the accounting practice known as
equalization. With equalization, a portion of the proceeds from sales and
costs of redemptions of Fund shares (equivalent, on a per share basis, to
the amount of undistributed net investment income on the date of the
transaction) is credited or charged to undistributed net investment income.
As a result, undistributed net investment income per share is unaffected by
sales or redemptions of Fund shares.
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.
RESTRICTED SECURITIES--Restricted securities are securities that may only
be resold upon registration under federal securities laws or in
transactions exempt from such registration. In some cases, the issuer of
restricted securities has agreed to register such securities for resale, at
the issuer's expense either upon demand by the Fund or in connection with
another registered offering of the securities. Many restricted securities
may be resold in the secondary market in transactions exempt from
registration. Such restricted securities may be determined to be liquid
under criteria established by the Directors. The Fund will not incur any
registration costs upon such resales. The Fund's restricted securities are
valued at the price provided by dealers in the secondary market or, if no
market prices are available, at the fair value as determined by the Fund's
pricing committee.
Additional information on each restricted security held at April 30, 1997
is as follows:
Federated Bond Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ACQUISITION ACQUISITION
SECURITY DATE COST
<S> <C> <C>
Allied Waste North America, Inc., Sr. Sub. Note 11/25/1996-4/21/1997 $ 1,013,358
- -----------------------------------------------------------------
American Radio Systems Corp. 1/27/1997-4/10/1997 652,850
- -----------------------------------------------------------------
Astor Corporation, Sr. Sub. Note 10/2/1996 402,875
- -----------------------------------------------------------------
Australis Holdings Pty Limited, Unit 10/29/1996 224,833
- -----------------------------------------------------------------
Bar Technologies, Inc., Warrants 8/27/1996 0
- -----------------------------------------------------------------
CalEnergy Co., Inc., Sr. Note 9/18/1996 99,616
- -----------------------------------------------------------------
Chancellor Broadcasting Co. 1/8/1997 350,000
- -----------------------------------------------------------------
Collins & Aikman Floorcoverings, Inc., Sr. Sub. Note 1/17/1997 350,000
- -----------------------------------------------------------------
Comcast Corp. 4/25/1997 4,490,508
- -----------------------------------------------------------------
Continental Global Group, Inc., Sr. Note 3/26/1997 400,000
- -----------------------------------------------------------------
Dade International, Inc., Sr. Sub. Note 4/30/1996-7/15/1996 718,250
- -----------------------------------------------------------------
Dobson Communications Corp., Sr. Note 3/19/1997 225,000
- -----------------------------------------------------------------
Equitable Life, Note 10/17/1996 2,980,650
- -----------------------------------------------------------------
Euramax International Plc, Sr. Sub. Note 9/18/1996 504,000
- -----------------------------------------------------------------
Fairchild Semiconductor Corp. 3/6/1997-4/15/1997 605,863
- -----------------------------------------------------------------
Fairfield Manufacturing Co., Inc. 3/7/1997 500,000
- -----------------------------------------------------------------
First Nationwide Escrow Corp., Sr. Sub. Note 9/13/1996 686,875
- -----------------------------------------------------------------
Four M Corp., Sr. Secd. Note 5/23/1996 150,000
- -----------------------------------------------------------------
Freeport Terminal (Malta) Ltd, Gtd. Global Note 3/17/1994-12/7/1995 4,551,806
- -----------------------------------------------------------------
Genesis Health Ventures, Inc., Sr. Sub. Note 10/1/1996 450,000
- -----------------------------------------------------------------
GFSI, Inc., Sr. Sub. Note 2/20/1997-2/21/1997 202,875
- -----------------------------------------------------------------
Glenoit Corp., Sr. Sub. Note 3/26/1997 349,331
- -----------------------------------------------------------------
IHF Capital, Inc., Warrants 11/4/1994 3,952
- -----------------------------------------------------------------
ISP Holding, Inc., Sr. Note 5/24/1994-2/14/1996 762,733
- -----------------------------------------------------------------
International Home Foods, Inc., Sr. Sub. Note 10/29/1996 550,000
- -----------------------------------------------------------------
International Knife & Saw, Inc., Sr. Sub. Note 10/31/1996 250,000
- -----------------------------------------------------------------
Israel Electric Corp. Ltd., Sr. Note 1/28/1997 5,543,305
- -----------------------------------------------------------------
Kindercare Learning Centers, Inc., Sr. Sub. Note 2/10/1997 250,000
- -----------------------------------------------------------------
MBW Foods, Inc., Sr. Sub 2/15/1997 $ 201,875
- -----------------------------------------------------------------
Mcleod, Inc., Sr. Disc. Note 2/27/1997 305,000
</TABLE>
Federated Bond Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ACQUISITION ACQUISITION
SECURITY DATE COST
- ----------------------------------------------------------------- ------------------------- ---------------
<S> <C> <C>
Millicom International Cellular S. A.,
Sr. Sub. Disc. Note 5/24/1996 559,044
- -----------------------------------------------------------------
Neenah Corp., Sr. Sub. Note 4/23/1997 175,000
- -----------------------------------------------------------------
Outsourcing Solutions, Inc., Sr. Sub. Note 10/31/1996 251,563
- -----------------------------------------------------------------
Pacific Mutual Life Insurance Company, Note 6/26/1996 4,366,260
- -----------------------------------------------------------------
Paging Network, Inc., Sr. Sub. Note 10/10/1996-2/20/1997 506,166
- -----------------------------------------------------------------
Plastic Containers, Inc., Sr. Secd. Note 12/11/1996-12/12/1996 458,624
- -----------------------------------------------------------------
Principal Mutual Life Insurance Co., Note 8/28/1995 2,847,450
- -----------------------------------------------------------------
Qwest Communications International, Inc., Sr. Note 3/25/1997-4/18/1997 878,991
- -----------------------------------------------------------------
Renaissance Cosmetics, Inc. 2/3/1997 525,000
- -----------------------------------------------------------------
Reinsurance Group of America, Sr. Note 3/19/1996 5,483,170
- -----------------------------------------------------------------
Royal Oak Mines, Sr. Sub. Note 8/5/1996-8/28/1996 599,750
- -----------------------------------------------------------------
Ryder TRS, Inc., Sr. Sub. Note 11/20/1996 175,000
- -----------------------------------------------------------------
Sinclair Broadcast Group, Inc. 3/5/1997-4/17/1997 595,500
- -----------------------------------------------------------------
Stone Container Corp., Rating Adjustable Senior Notes 9/29/1994 496,410
- -----------------------------------------------------------------
TCI Stellite Entertainment, Inc. Sr. Sub Disc Notes 2/14/1997-3/24/1997 244,168
- -----------------------------------------------------------------
Tenaga Nasional Berhad, Deb. 2/16/1996-10/3/1996 6,219,973
- -----------------------------------------------------------------
Tokheim Corp., Sr. Sub. Note 8/16/1996-9/4/1996 382,938
- -----------------------------------------------------------------
Tultex Corp., Sr., Note 4/10/1997 200,000
- -----------------------------------------------------------------
U.S. Can Corp., Sr. Sub. Note 10/10/1996 125,000
- -----------------------------------------------------------------
Union Central Life Insurance Co. 10/31/1996 3,979,120
- -----------------------------------------------------------------
Uniforet Inc., Sr. Note 10/7/1996 250,000
- -----------------------------------------------------------------
World Financial 11/18/1996 3,750,000
- -----------------------------------------------------------------
</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 Bond Fund
- --------------------------------------------------------------------------------
3. CAPITAL STOCK
At April 30, 1997, par value shares ($0.0001 per share) authorized were as
follows:
<TABLE>
<CAPTION>
POUND OF PAR
VALUE
CAPITAL STOCK
CLASS NAME AUTHORIZED
<S> <C>
Class A Shares 25,000,000
- -----------------------------------------------------------------------------------------------
Class B Shares 25,000,000
- -----------------------------------------------------------------------------------------------
Class C Shares 25,000,000
- -----------------------------------------------------------------------------------------------
Class F Shares 525,000,000
- -----------------------------------------------------------------------------------------------
Unclassified 400,000,000
- ----------------------------------------------------------------------------------------------- -----------------
Total 1,000,000,000
- ----------------------------------------------------------------------------------------------- -----------------
</TABLE>
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1997 OCTOBER 31, 1996
CLASS A SHARES SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 3,940,724 $ 38,044,311 3,691,576 $ 35,793,135
- --------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 127,566 1,233,912 150,861 1,442,578
- --------------------------------------------------------
Shares redeemed (2,572,475) (24,722,741) (550,070) (5,293,729)
- -------------------------------------------------------- ----------- -------------- ---------- -------------
Net change resulting from Class A Share
transactions 1,495,815 $ 14,555,482 3,292,367 $ 31,941,984
- -------------------------------------------------------- ----------- -------------- ---------- -------------
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1997 OCTOBER 31, 1996
CLASS B SHARES SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 3,895,871 $ 37,784,221 12,011,129 $ 116,306,127
- -----------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 276,257 2,672,479 336,941 3,224,612
- -----------------------------------------------------
Shares redeemed (1,158,079) (11,194,668) (2,267,434) (22,140,487)
- ----------------------------------------------------- ----------- -------------- ------------ --------------
Net change resulting from Class B Share
transactions 3,014,049 $ 29,262,032 10,080,636 $ 97,390,252
- ----------------------------------------------------- ----------- -------------- ------------ --------------
</TABLE>
Federated Bond Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1997 OCTOBER 31, 1996
CLASS C SHARES SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 1,004,888 $ 9,705,477 2,109,387 $ 20,275,115
- ----------------------------------------------------------
Shares issued to shareholders in payment of distributions
declared 63,820 616,985 68,973 660,034
- ----------------------------------------------------------
Shares redeemed (390,811) (3,771,063) (386,472) (3,688,591)
- ---------------------------------------------------------- ---------- ------------- ---------- -------------
Net change resulting from Class C Share transactions 677,897 $ 6,551,399 1,791,888 $ 17,246,558
- ---------------------------------------------------------- ---------- ------------- ---------- -------------
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1997 OCTOBER 31, 1996
CLASS F SHARES SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 6,264,672 $ 60,624,168 11,961,299 $ 114,805,713
- -----------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 451,394 4,361,834 793,767 7,613,107
- -----------------------------------------------------
Shares redeemed (3,792,189) (36,574,877) (5,233,916) (50,116,935)
- ----------------------------------------------------- ----------- -------------- ------------ --------------
Net change resulting from Class F Share
transactions 2,923,877 $ 28,411,125 7,521,150 $ 72,301,885
- ----------------------------------------------------- ----------- -------------- ------------ --------------
Net change resulting from share transactions 8,111,638 $ 78,780,038 22,686,041 $ 218,880,679
- ----------------------------------------------------- ----------- -------------- ------------ --------------
</TABLE>
Federated Bond Fund
- --------------------------------------------------------------------------------
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Advisers, the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee equal to
0.75% of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ is based on the level of average
aggregate daily net assets of all funds advised by subsidiaries of Federated
Investors for the period. The administrative fee received during the period of
the Administrative Services Agreement shall be at least $125,000 per portfolio
and $30,000 per each additional class of shares.
DISTRIBUTION SERVICES FEE--The Fund has adopted a Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will
compensate Federated Securities Corp. ("FSC"), the principal distributor, from
the net assets of the Fund to finance activities intended to result in the sale
of the Fund's Class A Shares, Class B Shares and Class C Shares. The Plan
provides that the Fund may incur distribution expenses according to the
following schedule annually, to compensate FSC.
<TABLE>
<CAPTION>
% OF AVG. DAILY NET
SHARE CLASS NAME ASSETS OF CLASS
<S> <C>
Class A Shares 0.25%
- -----------------------------------------------------------------------------------------
Class B Shares 0.75%
- -----------------------------------------------------------------------------------------
Class C Shares 0.75%
- -----------------------------------------------------------------------------------------
</TABLE>
For the period ended April 30, 1997, Class A Shares did not incur a distribution
services fee.
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 AND EXPENSES--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.
Federated Bond Fund
- --------------------------------------------------------------------------------
GENERAL--Certain of the Officers and Directors of the Corporation are Officers
and Directors or Trustees of the above companies.
5. INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended
April 30, 1997, were as follows:
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------------------------
PURCHASES $ 236,244,712
- -------------------------------------------------------------------------------------------------- --------------
SALES $ 161,682,532
- -------------------------------------------------------------------------------------------------- --------------
</TABLE>
Directors Officers
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. J. Christopher Donahue
William J. Copeland President
J. Christopher Donahue Edward C. Gonzales
James E. Dowd Executive Vice President
Lawrence D. Ellis, M.D. John W. McGonigle
Edward L. Flaherty, Jr. Executive Vice President, Treasurer and Secretary
Peter E. Madden Richard B. Fisher
Gregor F. Meyer Vice President
John E. Murray, Jr. S. Elliott Cohan
Wesley W. Posvar Assistant Secretary
Marjorie P. Smuts
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded
or accompanied by the fund's prospectus, which contains facts concerning its
objective and policies, management fees, expenses and other information.
[LOGO] FEDERATED INVESTORS
Federated Securities Corp., Distributor
Cusip 461444507
Cusip 461444606
Cusip 461444705
Cusip 461444309
2072302 (6/97) [LOGO OF RECYCLED PAPER]
APPENDIX
A1. The graphic presentation here displayed consists of a boxed legend in the
upper left quadrant indicating the components of the
corresponding mountain chart. The color coded mountain chart is a visual
representation of the narrative text above it. The `x'' axis
reflects computation periods from 5/20/87 to 4/30/97. The `y'' axis is
measured in increments of $4,000 ranging from $0 to $26,000 and
indicates that the ending value of hypothetical initial investment of $10,000
in the fund's Class F Shares, assuming the reinvestment of
capital gains and dividends, would have grown to $24,724 on 4/30/97.
A2. The graphic presentation here displayed consists of a boxed legend in
the upper left quadrant indicating the components of the corresponding
mountain chart. The color coded mountain chart is a visual representation of
the narrative text above it. The `x'' axis reflects computation periods from
5/20/87 to 4/30/97. The `y'' axis is measured in increments of $4,000 ranging
from $0 to $18,000 and indicates that the ending value of hypothetical yearly
investments of $1,000 in the fund's Class F Shares, assuming the reinvestment of
capital gains and dividends,would have grown to $17,281 on 4/30/97.
A3. The graphic presentation here displayed consists of a boxed legend in
the upper left quadrant indicating the components of the corresponding
mountain chart. The color-coded mountain chart is a visual representation of
the narrative text beneath it. The `x'' axis reflects computation periods
from 5/20/87 to 4/30/97. The `y'' axis is measured in increments of $5,000
ranging from $0 to $50,000 and indicates that the ending value of a
hypothetical initial investment of $20,000 in the fund's Class F Shares would
have grown to $49,449 on 4/30/97.
