1933 Act File No. 33-51247
1940 Act File No. 811-7129
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No. ..........
Post-Effective Amendment No. 5 ........... X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 6 .......................... X
MANAGED SERIES TRUST
(Exact Name of Registrant as Specified in Charter)
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
John W. McGonigle, Esquire,
Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
X on January 31, 1996 pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a) (i)
on pursuant to paragraph (a) (i).
75 days after filing pursuant to paragraph (a)(ii)
on pursuant to paragraph (a)(ii) of Rule 485.
-----------------
If appropriate, check the following box:
This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has filed with the Securities and Exchange Commission a
declaration pursuant to Rule 24f-2 under the Investment Company Act of 1940,
and:
X filed the Notice required by that Rule on January 16, 1996; or
intends to file the Notice required by that Rule on or about; or
during the most recent fiscal year did not sell any securities pursuant
to Rule 24f-2 under the Investment Company Act of 1940, and, pursuant to
Rule 24f-2(b)(2), need not file the Notice.
CROSS-REFERENCE SHEET
This Amendment to the Registration Statement of MANAGED SERIES TRUST
(formerly, Allocation Series Trust), which consists of four portfolios: (1)
Federated Managed Income Fund (formerly, Managed Income Fund), (2) Federated
Managed Growth and Income Fund (formerly, Managed Growth and Income Fund),
(3) Federated Managed Growth Fund (formerly, Managed Growth Fund), and (4)
Federated Managed Aggressive Growth Fund (formerly, Managed Aggressive
Growth Fund), each having two classes of shares, (a) Institutional Shares
and (b) Select Shares, is comprised of the following:
PART A. INFORMATION REQUIRED IN A PROSPECTUS.
Prospectus Heading
(Rule 404(c) Cross Reference)
Item 1. Cover Page...............(1-4) Cover Page.
Item 2. Synopsis.................(1-4) Summary of Fund Expenses.
Item 3. Condensed Financial
Information..............(1-4) Financial Highlights; (1-4)
Performance Information.
Item 4. General Description of
Registrant...............(1-4) General Information; (1-4)
Investment Information; (1-4) Investment
Objective; (1-4) Investment Policies; (1-
4) Acceptable Investments; (1-4)
Investment Limitations.
Item 5. Management of the Fund...(1-4) Trust Information; (1-4) Management
of the Trust; (1-4) Administration of the
Fund; (1-4) Administrative Services; (1-
4) Brokerage Transactions.
Item 6. Capital Stock and Other
Securities...............(1-4) Dividends; (1-4) Capital Gains; (1-
4) Shareholder Information; (1-4) Voting
Rights; (1-4) Tax Information; (1-4)
Federal Income Tax; (1-4) State and Local
Taxes; (1-4) Other Classes of Shares.
Item 7. Purchase of Securities Being
Offered..................(1-4) Net Asset Value; (1a-4a) Investing
in Institutional Shares; (1b-4b)
Investing in Select Shares; (1-4) Share
Purchases; (1-4) Minimum Investment
Required; (1-4) What Shares Cost; (1-4)
Subaccounting Services; (1a-4a)
Distribution of Institutional Shares;
(1b-4b) Distribution of Select Shares;
(1a-4a) Shareholder Services; (1b-4b)
Distribution Plan and Shareholder
Services; (1-4) Other Payments to
Financial Institutions; (1-4) Systematic
Investment Plan; (1-4) Certificates and
Confirmations.
Item 8. Redemption or Repurchase.(1a-4a) Redeeming Institutional Shares;
(1b-4b) Redeeming Select Shares; (1-4)
Through a Financial Institution; (1-4)
Telephone Redemption; (1-4) Written
Requests; (1-4) Systematic Withdrawal
Program; (1-4) Accounts with Low
Balances.
Item 9. Pending Legal Proceedings None.
PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION.
Item 10. Cover Page...............(1-4) Cover Page.
Item 11. Table of Contents........(1-4) Table of Contents.
Item 12. General Information and
History..................(1-4) General Information About the
Trust.
Item 13. Investment Objectives and
Policies.................(1-4) Investment Objectives and Policies;
(1-4) Investment Limitations.
Item 14. Management of the Fund...(1-4) Managed Series Trust Management.
Item 15. Control Persons and Principal
Holders of Securities....(1-4) Trust Ownership.
Item 16. Investment Advisory and Other
Services.................(1-4) Investment Advisory Services; (1-4)
Administrative Services.
Item 17. Brokerage Allocation.....(1-4) Brokerage Transactions.
Item 18. Capital Stock and Other
Securities...............(1-4) Massachusetts Partnership Law.
Item 19. Purchase, Redemption and
Pricing of Securities
Being Offered............(1-4) Purchasing Shares; (1-4)
Determining Net Asset Value; (1-4)
Redeeming Shares.
Item 20. Tax Status...............(1-4) Tax Status.
Item 21. Underwriters.............(1-4) Distribution Plan and Shareholder
Services.
Item 22. Calculation of Performance
Data.....................(1-4) Total Return; (1-4) Yield;
(1-4) Performance Comparisons.
Item 23. Financial Statements.....(1-4) filed in Part A.
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
Lifecycle Investing
MANAGED SERIES TRUST
INSTITUTIONAL SHARES
Federated Managed Aggesive Growth Fund is part of Managed Series Trust, a
lifecycle
investing program from Federated Investors.
Other Funds available in Managed Series Trust are Federated Managed Income Fund,
Federated Managed Growth and Income Fund, and Federated Managed
Growth Fund.
(LOGO)
FEDERATED SECURITIES CORP.
Distributor
A subsidiary of Federated Investors
(LOGO)
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
(A PORTFOLIO OF MANAGED SERIES TRUST)
INSTITUTIONAL SHARES
PROSPECTUS
The Institutional Shares of Federated Managed Aggressive Growth Fund (the
"Fund") offered by this prospectus represent interests in the Fund, which is a
diversified investment portfolio of Managed Series Trust (the "Trust"). The
Trust is an open-end management investment company (a mutual fund).
The investment objective of the Fund is to seek capital appreciation. The Fund
invests in both bonds and stocks. Institutional Shares are sold at net asset
value.
THE INSTITUTIONAL SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR
OBLIGATIONS OF ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD,
OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE INSTITUTIONAL SHARES
INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
This prospectus contains the information you should read and know before you
invest in Institutional Shares of the Fund. Keep this prospectus for future
reference.
The Fund has also filed a Statement of Additional Information for Institutional
Shares and Select Shares of all portfolios of the Trust dated January 31, 1996,
with the Securities and Exchange Commission. The information contained in the
Statement of Additional Information is incorporated by reference into this
prospectus. You may request a copy of the Statement of Additional Information,
or a paper copy of this prospectus, if you have received your prospectus
electronically, free of charge by calling 1-800-235-4669. To obtain other
information or to make inquiries about the Fund, contact the Fund at the address
listed in the back of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus dated January 31, 1996
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Investment Limitations 15
TRUST INFORMATION 15
- ------------------------------------------------------
Management of the Trust 15
Distribution of Institutional Shares 19
Administration of the Fund 19
Brokerage Transactions 20
NET ASSET VALUE 20
- ------------------------------------------------------
INVESTING IN INSTITUTIONAL SHARES 20
- ------------------------------------------------------
Share Purchases 20
Minimum Investment Required 21
What Shares Cost 21
Subaccounting Services 22
Systematic Investment Program 22
Certificates and Confirmations 22
Dividends 22
Capital Gains 22
REDEEMING INSTITUTIONAL SHARES 22
- ------------------------------------------------------
Through a Financial Institution 23
Telephone Redemption 23
Written Requests 23
Systematic Withdrawal Program 24
Accounts with Low Balances 24
SHAREHOLDER INFORMATION 25
- ------------------------------------------------------
Voting Rights 25
TAX INFORMATION 25
- ------------------------------------------------------
Federal Income Tax 25
State and Local Taxes 25
PERFORMANCE INFORMATION 25
- ------------------------------------------------------
OTHER CLASSES OF SHARES 26
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--SELECT SHARES 27
- ------------------------------------------------------
FINANCIAL STATEMENTS 28
- ------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 62
- ------------------------------------------------------
APPENDIX 63
- ------------------------------------------------------
ADDRESSES 66
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)............................ None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price).......................... None
Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable)......... None
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee...................................................... None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver) (1)................................ 0.00%
12b-1 Fee........................................................ None
Total Other Expenses (after expense reimbursement)............... 1.00%
Shareholder Services Fee (after waiver) (2)................. 0.00%
Total Operating Expenses (3)........................... 1.00%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver of the
management fee. The adviser can terminate this voluntary waiver at any time
at its sole discretion. The maximum management fee is 0.75%.
(2) The maximum shareholder services fee is 0.25%.
(3) The total operating expenses would have been 2.71% absent the voluntary
waivers of the management fee and the shareholder services fee and the
voluntary reimbursement of certain other operating expenses.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF INSTITUTIONAL SHARES OF THE
FUND WILL BEAR, EITHER DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF
THE VARIOUS COSTS AND EXPENSES, SEE "INVESTING IN INSTITUTIONAL SHARES" AND
"TRUST INFORMATION." WIRE-TRANSFERRED REDEMPTIONS OF LESS THAN $5,000 MAY BE
SUBJECT TO ADDITIONAL FEES.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment assuming
(1) 5% annual return and (2) redemption at the end of each time
period................................................................ $10 $32 $55 $122
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
(FORMERLY, INSTITUTIONAL SERVICE SHARES)
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
Reference is made to the Report of Independent Public Accountants on page 62.
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, NOVEMBER 30,
1995 1994(A)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.82 $ 10.00
- ---------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------------------------------------
Net investment income 0.35 0.17
- ---------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments,
foreign currency, and futures contracts 1.77 (0.25)
- --------------------------------------------------------------------- ------- -------
Total from investment operations 2.12 (0.08)
- --------------------------------------------------------------------- ------- -------
LESS DISTRIBUTIONS
- ---------------------------------------------------------------------
Distributions from net investment income (0.33) (0.10)
- ---------------------------------------------------------------------
Distributions from net realized gain on investments,
foreign currency transactions, and futures contracts (0.02) --
- --------------------------------------------------------------------- ------- -------
Total distributions (0.35) (0.10)
- --------------------------------------------------------------------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 11.59 $ 9.82
- --------------------------------------------------------------------- ------- -------
TOTAL RETURN (B) 21.96% (0.87%)
- ---------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------------------------
Expenses 1.00% 0.89%*
- ---------------------------------------------------------------------
Net investment income 3.42% 3.42%*
- ---------------------------------------------------------------------
Expense waiver/reimbursement 1.71%(c) 1.72%*(d)
- ---------------------------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------------------------
Net assets, end of period (000 omitted) $25,611 $15,696
- ---------------------------------------------------------------------
Portfolio turnover 139% 77%
- ---------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 25, 1994 (date of initial
public investment) to November 30, 1994. For the period from January 27,
1994, the Fund had no investment activity.
(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.
(d) The Adviser waived $6,858 of the investment advisory fee, which represents
0.11% of average net assets, to comply with certain state expense
limitations. The remainder of the waiver/reimbursement was voluntary. This
expense decrease is reflected in both the expense and net investment income
ratios shown above.
(See Notes which are an integral part of the Financial Statements)
Further information about the Fund's performance is contained in the Fund's
annual report for the year ended November 30, 1995, which can be obtained free
of charge.
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated November 15, 1993. The Declaration of Trust permits the Trust to
offer separate series of shares of beneficial interest representing interest in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. As of the date of this prospectus, the Board of
Trustees ("Trustees") have established two classes of shares of the Fund, known
as Institutional Shares and Select Shares. This prospectus relates only to
Institutional Shares.
Institutional Shares ("Shares") of the Fund are designed to give institutions,
individuals, and financial institutions acting in a fiduciary or agency capacity
a convenient means of accumulating an interest in a professionally managed,
diversified investment portfolio. A minimum initial investment of $25,000 over a
90-day period is required.
Shares are currently sold and redeemed at net asset value without a sales charge
imposed by the Fund.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is to seek capital appreciation. There can
be, of course, no assurance that the Fund will achieve its investment objective.
The Fund's investment objective cannot be changed without the approval of
shareholders. Unless otherwise noted, the Fund's investment policies may be
changed by the Trustees without shareholder approval.
INVESTMENT POLICIES
ASSET ALLOCATION. The Fund will primarily invest in two types of assets:
equities and bonds. The Fund's investment approach is based on the conviction
that, over time, the choice of investment asset categories and their relative
long-term weightings within the portfolio will have the primary impact on its
investment performance. Of secondary importance to the Fund's performance are
the shifting of money among asset categories and the selection of securities
within asset categories. Therefore, the Fund will pursue its investment
objective in the following manner: (1) by setting long-term ranges for each
asset category; (2) by moving money among asset categories within those defined
ranges; and (3) by actively selecting securities within each of the asset
categories. The Fund attempts to minimize risk by allocating its assets in such
a fashion.
Within each of these types of investments, the Fund has designated asset
categories. As a matter of investment policy, ranges have been set for each
asset category's portfolio commitment.
The Fund will invest between 60 and 100 percent of its assets in equities. The
equities asset categories are large company stocks, small company stocks,
foreign stocks, and equity reserves.
The Fund will invest between 0 and 40 percent of its assets in bonds. The Fund's
adviser believes that bonds offer opportunities for growth of capital or
otherwise may be desirable under prevailing
market or economic conditions. The bond asset categories are U.S. Treasury
securities, mortgage-backed securities, investment-grade corporate bonds, high
yield corporate bonds and foreign bonds.
The following is a summary of the asset categories and the amount of the Fund's
total assets which may be invested in each asset category:
<TABLE>
<CAPTION>
ASSET CATEGORY RANGE
<S> <C>
EQUITIES 60-100%
Large Company Stocks 0-100%
Small Company Stocks 0-40%
Foreign Stocks 0-40%
Equity Reserves 0-20%
BONDS 0-40%
U.S. Treasury Securities 0-32.5%
Mortgage-Backed Securities 0-12.5%
Investment-Grade Corporate Bonds 0-12.5%
High Yield Corporate Bonds 0-16%
Foreign Bonds 0-16%
</TABLE>
The Fund's adviser will regularly review the Fund's allocation among the asset
categories and make any changes, within the ranges established for each asset
category, that it believes will provide the most favorable outlook for achieving
the Fund's investment objective. The Fund's adviser will attempt to exploit
inefficiencies among the various asset categories. If, for example, foreign
stocks are judged to be unusually attractive relative to other asset categories,
the allocation for foreign stocks may be moved to its upper limit. At other
times, when foreign stocks appear to be overvalued, the commitment may be moved
down to a lesser allocation. There is no assurance, however, that the adviser's
attempts to pursue this strategy will result in a benefit to the Fund.
Each asset category within the Fund will be a managed portfolio. The Fund will
seek superior investment performance through security selection in addition to
determining the percentage of its assets to allocate to each of the asset
categories.
EQUITY ASSET CATEGORIES. The portion of the Fund's assets which is invested in
equities will be allocated among the following asset categories within the
ranges specified:
LARGE COMPANY STOCKS. Large company stocks are common stocks and
securities convertible into or exchangeable for common stocks, such as
rights and warrants, of high-quality companies selected by the Fund's
adviser. Ordinarily, these companies will be in the top 25 percent of their
industries with regard to revenues and have a market capitalization of
$500,000,000 or more. However, other factors, such as a company's product
position, market share, current earnings and/or dividend and earnings
growth prospects, will be considered by the Fund's adviser and may outweigh
revenues. The Fund may invest up to 100 percent of its total assets in
large company stocks.
SMALL COMPANY STOCKS. Small company stocks are common stocks and
securities convertible into or exchangeable for common stocks, such as
rights and warrants, of companies with a market capitalization (market
price number of shares outstanding) below the top 1,000 stocks that
comprise the large and mid-range capitalization sector of the United States
equity market. These stocks are comparable to, but not limited to, the
stocks comprising the Russell 2000 Index, an index of small capitalization
stocks. The Fund may invest up to 40 percent of its total assets in small
company stocks.
INVESTMENT RISKS. Stocks in the small capitalization sector of the
United States equity market have historically been more volatile in
price than larger capitalization stocks, such as those included in the
Standard & Poor's Ratings Group 500 Index. This is because, among other
things, small companies have less certain growth prospects than larger
companies; have a lower degree of liquidity in the equity market; and
tend to have a greater sensitivity to changing economic conditions.
Further, in addition to exhibiting greater volatility, the stocks of
small companies may, to some degree, fluctuate independently of the
stocks of large companies; that is, small company stocks may decline in
price as large company stocks rise in price or vice versa.
FOREIGN STOCKS. Foreign stocks are equity securities of established
companies in economically developed countries other than the United States.
These securities may be either dollar-denominated or denominated in foreign
currencies. American Depository Receipts ("ADRs"), including dollar
denominated ADRs which are issued by domestic banks and traded in the
United States on exchanges or over-the-counter, are treated as foreign
stocks for purposes of the asset category ranges. The Fund may invest up to
40 percent of its total assets in foreign stocks.
EQUITY RESERVES. When the adviser believes that a temporary defensive
position is desirable, the Fund may invest in equity reserves. Equity
reserves will be used to adjust the risk level of the equity portion of the
Fund in response to market conditions. Equity reserves will consist of U.S.
and foreign short-term money market instruments such as commercial paper
rated A-1 by Standard and Poor's Ratings Group ("Standard & Poor's"),
Prime-1 by Moody's Investors Service, Inc. ("Moody's"), or F-1 by Fitch
Investors Service, Inc. ("Fitch"). The Fund may invest up to 20 percent of
its total assets in equity reserves.
BOND ASSET CATEGORIES. The portion of the Fund's assets which is invested in
bonds ("Bond Assets") will be allocated among the following asset categories
within the ranges specified. The prices of fixed income securities fluctuate
inversely to the direction of interest rates. Generally, the Fund will invest in
Bond Assets which are believed to offer opportunities for growth of capital when
the adviser believes interest rates will decline and, therefore, the value of
the debt securities will increase, or the market value of bonds will increase
due to factors affecting certain types of bonds or particular issuers, such as
improvement in credit quality due to company fundamentals or economic conditions
or assumptions on changes in trends in prepayment rates with respect to
mortgage-backed securities. The average duration of the Fund's Bond Assets will
be not less than three nor more than nine years. Duration is a commonly used
measure of the potential volatility of the price of a debt security, or the
aggregate market value of a portfolio of debt securities, prior to maturity.
Securities with shorter durations generally have less volatile prices than
securities of
comparable quality with longer durations. The Fund should be expected to
maintain a higher average duration during periods of lower expected market
volatility, and a lower average duration during periods of higher expected
market volatility.
U.S. TREASURY SECURITIES. U.S. Treasury securities are direct obligations
of the U.S. Treasury, such as U.S. Treasury bills, notes, and bonds. The
Fund may invest up to 32.5 percent of its total assets in U.S. Treasury
securities. The Fund may invest in other U.S. government securities if, in
the judgment of the adviser, other U.S. government securities are more
attractive than U.S. Treasury securities.
MORTGAGE-BACKED SECURITIES. Mortgage-backed securities represent an
undivided interest in a pool of residential mortgages or may be
collateralized by a pool of residential mortgages. Mortgage-backed
securities are generally either issued or guaranteed by the Government
National Mortgage Association ("GNMA"), Federal National Mortgage
Association ("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC") or
other U.S. government agencies or instrumentalities. Mortgage-backed
securities may also be issued by single-purpose, stand-alone finance
subsidiaries or trusts of financial institutions, government agencies,
investment bankers, or companies related to the construction industry. The
Fund may invest up to 12.5 percent of its total assets in mortgage-backed
securities.
INVESTMENT-GRADE CORPORATE BONDS. Investment-grade corporate bonds are
corporate debt obligations having fixed or floating rates of interest and
which are rated BBB or higher by a nationally recognized statistical rating
organization ("NRSRO"). The Fund may invest up to 12.5 percent of its total
assets in investment-grade corporate bonds. In certain cases, the Fund's
adviser may choose bonds which are unrated if it determines that such bonds
are of comparable quality or have similar characteristics to the
investment-grade bonds described above. Yankee bonds, which are U.S.
dollar-denominated bonds issued and traded in the United States by foreign
issuers, are treated as investment-grade corporate bonds for purposes of
the asset category ranges.
HIGH YIELD CORPORATE BONDS. High yield corporate bonds are corporate debt
obligations having fixed or floating rates of interest and which are rated
BB or lower by NRSR's (commonly known as junk bonds). The Fund may invest
up to 16 percent of its total assets in high yield corporate bonds. There
is no minimal acceptable rating for a security to be purchased or held in
the Fund's portfolio, and the Fund may, from time to time, purchase or hold
securities rated in the lowest rating category. (See "Appendix.") In
certain cases the Fund's adviser may choose bonds which are unrated if it
determines that such bonds are of comparable quality or have similar
characteristics to the high yield bonds described above.
INVESTMENT RISKS. Lower-rated securities will usually offer higher
yields than higher-rated securities. However, there is more risk
associated with these investments. This is because of reduced
creditworthiness and increased risk of default. Lower-rated securities
generally tend to reflect short-term corporate and market developments
to a greater extent than higher-rated securities which react primarily
to fluctuations in the general level of interest rates. Short-term
corporate and market developments affecting the price or liquidity of
lower-rated securities could include adverse news affecting major
issuers, underwriters, or dealers of lower-rated corporate debt
obligations. In addition, since there are fewer investors in
lower-rated securities, it may be harder to sell the securities at an
optimum time. As a result of these factors, lower-rated securities tend
to have more price volatility and carry more risk to principal than
higher-rated securities.
Many corporate debt obligations, including many lower-rated bonds,
permit the issuers to call the security and thereby redeem their
obligations earlier than the stated maturity dates. Issuers are more
likely to call bonds during periods of declining interest rates. In
these cases, if the Fund owns a bond which is called, the Fund will
receive its return of principal earlier than expected and would likely
be required to reinvest the proceeds at lower interest rates, thus
reducing income to the Fund.
FOREIGN BONDS. Foreign bonds are high-quality debt securities of countries
other than the United States. The Fund's portfolio of foreign bonds will be
comprised mainly of foreign government, foreign governmental agency or
supranational institution bonds. The Fund will also invest in high-quality
debt securities issued by corporations in countries other than the United
States and subject to the Fund's credit limitations for foreign bonds. The
Fund may invest up to 16 percent of its total assets in foreign bonds.
ACCEPTABLE INVESTMENTS
EQUITY SECURITIES. Common stocks represent ownership interest in a
corporation. Unlike bonds, which are debt securities, common stocks have
neither fixed maturity dates nor fixed schedules of promised payments.
Foreign stocks are equity securities of foreign issuers.
FOREIGN SECURITIES. The foreign bonds in which the Fund invests are rated
within the four highest ratings for bonds by Moody's (Aaa, Aa, A or Baa) or
by Standard & Poor's (AAA, AA, A or BBB) or are unrated if determined to be
of equivalent quality by the Fund's adviser.
INVESTMENT RISKS. Investments in foreign securities involve special
risks that differ from those associated with investments in domestic
securities. The risks associated with investments in foreign securities
apply to securities issued by foreign corporations and sovereign
governments. These risks relate to political and economic developments
abroad, as well as those that result from the differences between the
regulation of domestic securities and issuers and foreign securities
and issuers. These risks may include, but are not limited to,
expropriation, confiscatory taxation, currency fluctuations,
withholding taxes on interest, limitations on the use or transfer of
Fund assets, political or social instability and adverse diplomatic
developments. It may also be more difficult to enforce contractual
obligations or obtain court judgments abroad than would be the case in
the United States because of differences in the legal systems. If the
issuer of the debt or the governmental authorities that control the
repayment of the debt may be unable or unwilling to repay principal or
interest when due in accordance with the terms of such debt, the Fund
may have limited legal recourse in the event of default. Moreover,
individual foreign economies may differ favorably or unfavorably from
the domestic economy in such respects as growth of gross national
product, the rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position.
Additional differences exist between investing in foreign and domestic
securities. Examples of such differences include: less publicly
available information about foreign issuers; credit risks associated
with certain foreign governments; the lack of uniform financial
accounting standards applicable to foreign issuers; less readily
available market quotations on foreign issuers; the likelihood that
securities of foreign issuers may be less liquid or more volatile;
generally higher foreign brokerage commissions; and unreliable mail
service between countries.
EQUITY RESERVES. The Fund's equity reserves may be cash received from the
sale of Fund shares, reserves for temporary defensive purposes or to take
advantage of market opportunities.
REPURCHASE AGREEMENTS. Repurchase agreements are arrangements in which
banks, broker/dealers, and other recognized financial institutions sell
securities to the Fund and agree at the time of sale to repurchase them
at a mutually agreed upon time and price. To the extent that the
original seller does not repurchase the securities from the Fund, the
Fund could receive less than the repurchase price on any sale of such
securities.
CONVERTIBLE SECURITIES. Convertible securities are fixed-income securities
which may be exchanged or converted into a predetermined number of the
issuer's underlying common stock at the option of the holder during a
specified time period. Convertible securities may take the form of
convertible preferred stock, convertible bonds or debentures, units
consisting of "usable" bonds and warrants or a combination of the features
of several of these securities. The investment characteristics of each
convertible security vary widely, which allows convertible securities to be
employed for different investment objectives. The adviser may treat
convertible securities as large company stocks, small company stocks, or
high yield bonds for purposes of the asset category ranges, depending upon
current market conditions, including the relationship of the then-current
price to the conversion price. The convertible securities in which the Fund
invests may be rated "high yield" or of comparable quality at the time of
purchase.
U.S. TREASURY AND OTHER U.S. GOVERNMENT SECURITIES. The U.S. Treasury and
other U.S. government securities in which the Fund invests are either
issued or guaranteed by the U.S. government, its agencies or
instrumentalities. The U.S. government securities in which the Fund may
invest are limited to:
direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds; and
obligations issued by U.S. government agencies or instrumentalities,
including securities that are supported by the full faith and credit of
the U.S. Treasury (such as GNMA certificates); securities that are
supported by the right of the issuer to borrow from the U.S. Treasury
(such as securities of Federal Home Loan Banks); and securities that are
supported by the credit of an agency or instrumentality (such as FNMA and
FHLMC bonds).
MORTGAGE-BACKED SECURITIES. Mortgaged-backed securities are securities
collateralized by residential mortgages. The mortgage-backed securities in
which the Fund may invest may be:
issued by an agency of the U.S. government, typically GNMA, FNMA or
FHLMC;
privately issued securities which are collateralized by pools of
mortgages in which each mortgage is guaranteed as to payment of principal
and interest by an agency or instrumentality of the U.S. government;
privately issued securities which are collateralized by pools of
mortgages in which payment of principal and interest are guaranteed by
the issuer and such guarantee is collateralized by U.S. government
securities; and
other privately issued securities in which the proceeds of the issuance
are invested in mortgage-backed securities and payment of the principal
and interest are supported by the credit of an agency or instrumentality
of the U.S. government.
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"). CMOs are bonds issued by
single-purpose, stand-alone finance subsidiaries or trusts of financial
institutions, government agencies, investment bankers, or companies related
to the construction industry. Most of the CMOs in which the Fund would
invest use the same basic structure:
Several classes of securities are issued against a pool of mortgage
collateral. The most common structure contains four classes of
securities. The first three (A, B, and C bonds) pay interest at their
stated rates beginning with the issue date; the final class (or Z bond)
typically receives the residual income from the underlying investments
after payments are made to the other classes.
The cash flows from the underlying mortgages are applied first to pay
interest and then to retire securities.
The classes of securities are retired sequentially. All principal
payments are directed first to the shortest-maturity class (or A bonds).
When those securities are completely retired, all principal payments are
then directed to the next-shortest maturity security (or B bond). This
process continues until all of the classes have been paid off.
Because the cash flow is distributed sequentially instead of pro rata as with
pass-through securities, the cash flows and average lives of CMOs are more
predictable, and there is a period of time during which the investors in the
longer-maturity classes receive no principal paydowns. The interest portion of
these payments is distributed by the Fund as income and the capital portion is
reinvested.
The Fund will invest only in CMOs which are rated AAA or Aaa by an NRSRO.
REAL ESTATE MORTGAGE INVESTMENT CONDUITS ("REMICS"). REMICs are offerings
of multiple class real estate mortgage-backed securities which qualify and
elect treatment as such under provisions of the Internal Revenue Code.
Issuers of REMICs may take several forms, such as trusts, partnerships,
corporations, associations or a segregated pool of mortgages. Once REMIC
status is elected and obtained, the entity is not subject to federal income
taxation. Instead, income is passed through the entity and is taxed to the
person or persons who hold interests in the REMIC. A REMIC interest must
consist of one or more classes of "regular interests," some of which may
offer adjustable rates, and a single class of "residual interests." To
qualify as a REMIC, substantially all of the assets of the entity must be
in assets directly or indirectly secured principally by real property.
CHARACTERISTICS OF MORTGAGE-BACKED SECURITIES. Mortgage-backed securities
have yield and maturity characteristics corresponding to the underlying
mortgages. Distributions to holders of mortgage-backed securities include
both interest and principal payments. Principal payments represent the
amortization of the principal of the underlying mortgages and any
prepayments of principal due to prepayment, refinancing, or foreclosure of
the underlying mortgages. Although maturities of the underlying mortgage
loans may range up to 30 years, amortization and prepayments substantially
shorten the effective maturities of mortgage-backed securities. Due to
these features, mortgage-backed securities are less effective as a means of
"locking in" attractive long-term interest rates than fixed-income
securities which pay only a stated amount of interest until maturity, when
the entire principal amount is returned. This is caused by the need to
reinvest at lower interest rates both distributions of principal generally
and significant prepayments which become more likely as mortgage interest
rates decline. Since comparatively high interest rates cannot be
effectively "locked in," mortgage-backed securities may have less potential
for capital appreciation during periods of declining interest rates than
other non-callable, fixed-income government securities of comparable stated
maturities. However, mortgage-backed securities may experience less
pronounced declines in value during periods of rising interest rates.
In addition, some of the CMOs purchased by the Fund may represent an
interest solely in the principal repayments or solely in the interest
payments on mortgage-backed securities (stripped mortgage-backed securities
or "SMBSs"). Due to the possibility of prepayments on the underlying
mortgages, SMBSs may be more interest-rate sensitive than other securities
purchased by the Fund. If prevailing interest rates fall below the level at
which SMBSs were issued, there may be substantial prepayments on the
underlying mortgages, leading to the relatively early prepayments of
principal-only SMBSs and a reduction in the amount of payments made to
holders of interest-only SMBSs. It is possible that the Fund might not
recover its original investment in interest-only SMBSs if there are
substantial prepayments on the underlying mortgages. Therefore,
interest-only SMBSs generally increase in value as interest rates rise and
decrease in value as interest rates fall, counter to changes in value
experienced by most fixed-income securities. The Fund's adviser intends to
use this characteristic of interest-only SMBSs to reduce the effects of
interest rate changes on the value of the Fund's portfolio, while
continuing to pursue the Fund's investment objective.
CORPORATE BONDS. The investment-grade corporate bonds in which the Fund
invests are:
rated within the four highest ratings for corporate bonds by Moody's
(Aaa, Aa, A, or Baa), Standard & Poor's (AAA, AA, A, or BBB), or Fitch
(AAA, AA, A, or BBB);
unrated if other long-term debt securities of that issuer are rated, at
the time of purchase, Baa or better by Moody's or BBB or better by
Standard & Poor's or Fitch; or
unrated if determined to be of equivalent quality to one of the foregoing
rating categories by the Fund's adviser.
Securities which are rated BBB by Standard & Poor's or Fitch or Baa by
Moody's have speculative characteristics. Changes in economic conditions or
other circumstances are more likely to lead to weakened capacity to make
principal and interest payments than higher rated
bonds. If a security's rating is reduced below the required minimum after
the Fund has purchased it, the Fund is not required to sell the security,
but may consider doing so.
The high yield corporate bonds in which the Fund invests are rated Ba or
lower by Moody's or BB or lower by Standard & Poor's or Fitch (commonly
known as junk bonds). A description of the rating categories is contained
in the Appendix to this prospectus.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Fund may invest in
the securities of other investment companies, but it will not own more than 3
percent of the total outstanding voting stock of any such investment company,
invest more than 5 percent of its total assets in any one such investment
company, or invest more than 10 percent of its total assets in such other
investment companies in general. To the extent that the Fund invests in
securities issued by other investment companies, the Fund will indirectly bear
its proportionate share of any fees and expenses paid by such companies in
addition to the fees and expenses payable directly by the Fund.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies but which are
subject to restrictions on resale under federal securities law. However, the
Fund will limit investments in illiquid securities, including certain restricted
securities not determined by the Trustees to be liquid, over-the-counter
options, and repurchase agreements providing for settlement in more than seven
days after notice, to 15 percent of its net assets.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
Accordingly, the Fund may pay more or less than the market value of the
securities on the settlement date.
The Fund may dispose of a commitment prior to settlement if the adviser deems it
appropriate to do so. In addition, the Fund may enter into transactions to sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Fund may realize short-term profits or losses upon the sale of such
commitments.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend its portfolio securities on a short-term or long-term basis up to
one-third of the value of its total assets to broker/dealers, banks, or other
institutional borrowers of securities. The Fund will only enter into loan
arrangements with broker/dealers, banks, or other institutions which the adviser
has determined are creditworthy under guidelines established by the Trustees and
will receive collateral in the form of cash or U.S. government securities equal
to at least 100 percent of the value of the securities loaned.
There is the risk that when lending portfolio securities, the securities may not
be available to the Fund on a timely basis and the Fund may, therefore, lose the
opportunity to sell the securities at a
desirable price. In addition, in the event that a borrower of securities would
file for bankruptcy or become insolvent, disposition of the securities may be
delayed pending court action.
FOREIGN CURRENCY TRANSACTIONS. The Fund will enter into foreign currency
transactions to obtain the necessary currencies to settle securities
transactions. Currency transactions may be conducted either on a spot or cash
basis at prevailing rates or through forward foreign currency exchange
contracts.
The Fund may also enter into foreign currency transactions to protect Fund
assets against adverse changes in foreign currency exchange rates or exchange
control regulations. Such changes could unfavorably affect the value of Fund
assets which are denominated in foreign currencies, such as foreign securities
or funds deposited in foreign banks, as measured in U.S. dollars. Although
foreign currency exchanges may be used by the Fund to protect against a decline
in the value of one or more currencies, such efforts may also limit any
potential gain that might result from a relative increase in the value of such
currencies and might, in certain cases, result in losses to the Fund.
CURRENCY RISKS. To the extent that debt securities purchased by the Fund
are denominated in currencies other than the U.S. dollar, changes in
foreign currency exchange rates will affect the Fund's net asset value; the
value of interest earned; gains and losses realized on the sale of
securities; and net investment income and capital gain, if any, to be
distributed to shareholders by the Fund. If the value of a foreign currency
rises against the U.S. dollar, the value of the Fund's assets denominated
in that currency will increase; correspondingly, if the value of a foreign
currency declines against the U.S. dollar, the value of the Fund's assets
denominated in that currency will decrease.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward foreign currency
exchange contract ("forward contract") is an obligation to purchase or sell an
amount of a particular currency at a specific price and on a future date agreed
upon by the parties.
Generally, no commission charges or deposits are involved. At the time the Fund
enters into a forward contract, Fund assets with a value equal to the Fund's
obligation under the forward contract are segregated and are maintained until
the contract has been settled. The Fund will not enter into a forward contract
with a term of more than one year.
The Fund will generally enter into a forward contract to provide the proper
currency to settle a securities transaction at the time the transaction occurs
("trade date"). The period between trade date and settlement date will vary
between 24 hours and 30 days, depending upon local custom.
The Fund may also protect against the decline of a particular foreign currency
by entering into a forward contract to sell an amount of that currency
approximating the value of all or a portion of the Fund's assets denominated in
that currency ("hedging"). The success of this type of short-term hedging
strategy is highly uncertain due to the difficulties of predicting short-term
currency market movements and of precisely matching forward contract amounts and
the constantly changing value of the securities involved. Although the adviser
will consider the likelihood of changes in currency values when making
investment decisions, the adviser believes that it is important to be able to
enter into forward contracts when it believes the interests of the Fund will be
served. The Fund will not enter into forward contracts for hedging purposes in a
particular currency in an amount in
excess of the Fund's assets denominated in that currency. The Fund will not
invest more than 40% of its total assets in forward foreign currency exchange
contracts.
OPTIONS. The Fund may deal in options on foreign currencies, foreign currency
futures, securities, and securities indices, which options may be listed for
trading on a national securities exchange or traded over-the-counter. The Fund
will use options only to manage interest rate and currency risks. The Fund may
write covered call options to generate income. The Fund may write covered call
options and secured put options on up to 25 percent of its net assets and may
purchase put and call options provided that no more than 5 percent of the fair
market value of its net assets may be invested in premiums on such options.
A call option gives the purchaser the right to buy, and the writer the
obligation to sell, the underlying currency, security or other asset at the
exercise price during the option period. A put option gives the purchaser the
right to sell, and the writer the obligation to buy, the underlying currency,
security or other asset at the exercise price during the option period. The
writer of a covered call owns assets that are acceptable for escrow, and the
writer of a secured put invests an amount not less than the exercise price in
eligible assets to the extent that it is obligated as a writer. If a call
written by the Fund is exercised, the Fund foregoes any possible profit from an
increase in the market price of the underlying asset over the exercise price
plus the premium received. In writing puts, there is a risk that the Fund may be
required to take delivery of the underlying asset at a disadvantageous price.
Over-the-counter options ("OTC options") differ from exchange traded options in
several respects. They are transacted directly with dealers and not with a
clearing corporation, and there is a risk of non-performance by the dealer as a
result of the insolvency of such dealer or otherwise, in which event the Fund
may experience material losses. However, in writing options, the premium is paid
in advance by the dealer. OTC options, which may not be continuously liquid, are
available for a greater variety of assets and with a wider range of expiration
dates and exercise prices, than are exchange traded options.
FUTURES AND OPTIONS ON FUTURES. The Fund may purchase and sell futures
contracts to accommodate cash flows into and out of the Fund's portfolio and to
hedge against the effects of changes in the value of portfolio securities due to
anticipated changes in interest rates and market conditions. Interest rate
futures contracts call for the delivery of particular debt instruments at a
certain time in the future. The seller of the contract agrees to make delivery
of the type of instrument called for in the contract, and the buyer agrees to
take delivery of the instrument at the specified future time.
Stock index futures contracts are based on indexes that reflect the market value
of common stock of the firms included in the indexes. An index futures contract
is an agreement pursuant to which two parties agree to take or make delivery of
an amount of cash equal to the differences between the value of the index at the
close of the last trading day of the contract and the price at which the index
contract was originally written. The Fund may utilize stock index futures to
handle cash flows into and out of the Fund and to potentially reduce
transactional costs.
The Fund may also write call options and purchase put options on futures
contracts as a hedge to attempt to protect its portfolio securities against
decreases in value. When the Fund writes a call
option on a futures contract, it is undertaking the obligation of selling a
futures contract at a fixed price at any time during a specified period if the
option is exercised. Conversely, as purchaser of a put option on a futures
contract, the Fund is entitled (but not obligated) to sell a futures contract at
the fixed price during the life of the option.
The Fund may not purchase or sell futures contracts or related options if
immediately thereafter the sum of the amount of margin deposits on the Fund's
existing futures positions and premiums paid for related options would exceed 5
percent of the market value of the Fund's total assets. When the Fund purchases
futures contracts, an amount of cash and cash equivalents, equal to the
underlying commodity value of the futures contracts (less any related margin
deposits), will be deposited in a segregated account with the custodian (or the
broker, if legally permitted) to collateralize the position and thereby insure
that the use of such futures contracts are unleveraged. When the Fund sells
futures contracts, it will either own or have the right to receive the
underlying future or security or will make deposits to collateralize the
position as discussed above.
RISKS. When the Fund uses futures and options on futures as hedging
devices, there is a risk that the prices of the securities subject to the
futures contracts may not correlate perfectly with the prices of the
securities in the Fund's portfolio. This may cause the futures contract and
any related options to react differently than the portfolio securities to
market changes. In addition, the investment adviser could be incorrect in
its expectations about the direction or extent of market factors such as
stock price movements. In these events, the Fund may lose money on the
futures contract or option.
It is not certain that a secondary market for positions in futures
contracts or for options will exist at all times. Although the investment
adviser will consider liquidity before entering into these transactions,
there is no assurance that a liquid secondary market on an exchange or
otherwise will exist for any particular futures contract or option at any
particular time. The Fund's ability to establish and close out futures and
options positions depends on this secondary market.
PORTFOLIO TURNOVER. Although the Fund does not intend to invest for the purpose
of seeking short-term profits, securities in its portfolio will be sold whenever
the Fund's adviser believes it is appropriate to do so in light of the Fund's
investment objective, without regard to the length of time a particular security
may have been held. The Fund's rate of portfolio turnover may exceed that of
certain other mutual funds with the same investment objective. A higher rate of
portfolio turnover involves correspondingly greater transaction expenses which
must be borne directly by the Fund and, thus, indirectly by its shareholders. In
addition, a high rate of portfolio turnover may result in the realization of
larger amounts of capital gains which, when distributed to the Fund's
shareholders, are taxable to them. (Further information is contained in the
Fund's Statement of Additional Information within the sections "Brokerage
Transactions" and "Tax Status"). Nevertheless, transactions for the Fund's
portfolio will be based only upon investment considerations and will not be
limited by any other considerations when the Fund's adviser deems it appropriate
to make changes in the Fund's portfolio.
INVESTMENT LIMITATIONS
The Fund will not:
borrow money directly or through reverse repurchase agreements or pledge
securities except, under certain circumstances, the Fund may borrow up to
one-third of the value of its total assets and pledge up to 15 percent of
the value of those assets to secure such borrowings;
lend any securities except for portfolio securities; or
underwrite any issue of securities, except as it may be deemed to be an
underwriter under the Securities Act of 1933 in connection with the sale
of restricted securities which the Fund may purchase pursuant to its
investment objective, policies and limitations.
The above investment limitations cannot be changed without shareholder approval.
TRUST INFORMATION
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MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Trust's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. The Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Except as noted below with regard to the sub-adviser,
investment decisions for the Fund are made by Federated Management, the Fund's
investment adviser (the "Adviser"), subject to direction by the Trustees. The
Adviser continually conducts investment research and supervision for the Fund
and is responsible for the purchase or sale of portfolio instruments, for which
it receives an annual fee from the Fund.
ADVISORY FEES. The Adviser receives an annual investment advisory fee
equal to .75 of 1% of the Fund's average daily net assets. The fee paid by
the Fund, while higher than the advisory fee paid by other mutual funds in
general, is comparable to fees paid by other mutual funds with similar
objectives and policies. Under the advisory contract, which provides for
voluntary reimbursement of expenses by the Adviser, the Adviser may
voluntarily waive some or all of its fee. This does not include
reimbursement to the Fund of any expenses incurred by shareholders who use
the transfer agent's subaccounting facilities. The Adviser has also
undertaken to reimburse the Fund for operating expenses in excess of
limitations established by certain states.
ADVISER'S BACKGROUND. Federated Management, a Delaware business trust
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940.
SUB-ADVISER. Under the terms of the Sub-Advisory Agreement between the Adviser
and Federated Global Research Corp. (the "Sub-Adviser"), the Sub-Adviser will
provide the Adviser such investment advice, statistical and other factual
information as may, from time to time, be reasonably requested by the Adviser.
SUB-ADVISORY FEES. For its services under the Sub-Advisory Agreement, the
Sub-Adviser receives an allocable portion of the Fund's advisory fee. Such
allocation is based on the amount of foreign securities which the
Sub-Adviser manages for the Fund. This fee is paid by the Adviser out of
its resources and is not an incremental Fund expense.
SUB-ADVISER'S BACKGROUND. Federated Global Research Corp., incorporated in
Delaware on May 12, 1995, is a registered investment adviser under the
Investment Advisers Act of 1940. Prior to September 1995, the Sub-Adviser
had not served as an investment adviser to mutual funds.
The Adviser and Sub-Adviser are subsidiaries of Federated Investors. All of the
Class A (voting) shares of Federated Investors are owned by a trust, the
trustees of which are John F. Donahue, Chairman and Trustee of Federated
Investors, Mr. Donahue's wife, and Mr. Donahue's son, J. Christopher Donahue,
who is President and Trustee of Federated Investors.
Federated Management, Federated Global Research Corp. and other subsidiaries of
Federated Investors serve as investment advisers to a number of investment
companies and private accounts. Certain other subsidiaries also provide
administrative services to a number of investment companies. With over $80
billion invested across more than 250 funds under management and/or
administration by its subsidiaries, as of December 31, 1995, Federated Investors
is one of the largest mutual fund investment managers in the United States. With
more than 1,800 employees, Federated continues to be led by the management who
founded the company in 1955. Federated funds are presently at work in and
through 4,000 financial institutions nationwide. More than 100,000 investment
professionals have selected Federated funds for their clients.
The Trust, the Adviser, and the Sub-Adviser have adopted strict codes of ethics
governing the conduct of all employees who manage the Fund and its portfolio
securities. These codes recognize that such persons owe a fiduciary duty to the
Fund's shareholders and must place the interests of shareholders ahead of the
employees' own interest. Among other things, the codes: require preclearance and
periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered for
purchase or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less than sixty
days. Violations of these codes are subject to review by the Trustees, and could
result in severe penalties.
PORTFOLIO MANAGERS' BACKGROUNDS.
Charles A. Ritter is the portfolio manager for the Fund and performs the
overall allocation of the assets of the Fund among the various asset
categories. He has performed these duties since the Fund's inception. In
allocating the Fund's assets, Mr. Ritter evaluates the market environment
and economic outlook, utilizing the services of the Adviser 's economist
and strategist. Mr. Ritter joined Federated Investors in 1983 and has been
a Vice President of the Fund's Adviser since 1992. From 1988 until 1991,
Mr. Ritter acted as an Assistant Vice President. Mr. Ritter is a Chartered
Financial Analyst and received his M.B.A. in Finance from the University of
Chicago and his M.S. in Economics from Carnegie Mellon University.
The portfolio managers for each of the individual asset categories are as
follows:
Peter R. Anderson and Aash Shah are portfolio managers for the domestic
large company stocks asset category. Mr. Anderson has performed this duty
since the Fund's inception. Mr. Shah assumed his responsibilities in
December 1995. Mr. Anderson joined Federated Investors in 1972 and is
presently a Senior Vice President of the Fund's Adviser. Mr. Anderson is a
Chartered Financial Analyst and received his M.B.A. in Finance from the
University of Wisconsin. Mr. Shah joined Federated Investors in 1993 as an
Investment Analyst and has been an Assistant Vice President of the Fund's
Adviser since 1995. Mr. Shah was employed at Westinghouse Credit Corp. from
1990 to 1993 as an Investment Analyst. Mr. Shah received his M.S.I.A. from
Carnegie Mellon University with a concentration in finance and accounting.
Mr. Shah is a Chartered Financial Analyst.
James Grefenstette is the portfolio manager for the domestic small company
stocks asset category. He has served in this capacity since August 1994.
Mr. Grefenstette joined Federated Investors in 1992 and has been an
Assistant Vice President of the Fund's Adviser since 1994. From 1992 until
1994, Mr. Grefenstette acted as an investment analyst. Mr. Grefenstette was
a credit analyst at Westinghouse Credit Corp. from 1990 until 1992. Mr.
Grefenstette received his M.S.I.A. from Carnegie Mellon University.
Henry Frantzen, Drew Collins, Mark Kopinski, Frank Semack, and Alexandre de
Bethmann portfolio managers for the foreign stocks asset category.
Henry A. Frantzen has been a portfolio manager of the Fund since November
1995. Mr. Frantzen joined Federated Investors in 1995 as an Executive Vice
President of the Fund's Sub-Adviser. Mr. Frantzen served as Chief
Investment Officer of international equities at Brown Brothers Harriman &
Co. from 1992 to 1995. He was the Executive Vice President and Director of
Equities at Oppenheimer Management Corporation from 1989 to 1991. Mr.
Frantzen received his B.S. in finance and marketing from the University of
North Dakota.
Drew J. Collins has been a portfolio manager of the Fund since November
1995. Mr. Collins joined Federated Investors in 1995 as a Senior Vice
President of the Fund's Sub-Adviser. Mr. Collins served as a Vice
President/Portfolio Manager of international equity portfolios at Arnhold
and S. Bleichroeder, Inc. from 1994 to 1995. He served as an Assistant Vice
President/ Portfolio Manager for international equities at the College
Retirement Equities Fund from 1986 to 1994. Mr. Collins is a Chartered
Financial Analyst and received his M.B.A. in finance from the University of
Pennsylvania.
Mark S. Kopinski has been a portfolio manager of the Fund since November
1995. Mr. Kopinski joined Federated Investors in 1995 as a Vice President
of the Fund's Sub-Adviser. Mr. Kopinski served as Vice President/Portfolio
Manager of international equity funds at Twentieth Century Mutual Funds
from 1990 to 1995. Mr. Kopinski received his M.B.A. in Asian Studies from
the University of Illinois.
Frank Semack has been a portfolio manager of the Fund since November 1995.
Mr. Semack joined Federated Investors in 1995 as a Vice President of the
Fund's Sub-Adviser. Mr. Semack served as an Investment Analyst at Omega
Advisers, Inc. from 1993 to 1994. He served as an Associate
Director/Portfolio Manager of Wardley Investment Services, Ltd. from 1987
to 1993. Mr. Semack received his M.Sc. in economics from the London School
of Economics.
Alexandre de Bethmann has been a portfolio manager of the Fund since
November 1995. Mr. de Bethmann joined Federated Investors in 1995 as a Vice
President of the Fund's Sub-Adviser. Mr. de Bethmann served as Assistant
Vice President/Portfolio Manager for Japanese and Korean equities at the
College Retirement Equities Fund from 1994 to 1995. He served as an
International Equities Analyst and then as an Assistant Portfolio Manager
at the College Retirement Equities Fund between 1987 and 1994. Mr. de
Bethmann received his M.B.A. in Finance from Duke University.
Henry Frantzen, Drew Collins, and Robert Kowit are portfolio managers for
the foreign bonds asset category. They have performed these duties since
November 1995.
Robert M. Kowit joined Federated Investors in 1995 as a Vice President of
the Fund's Sub-Adviser. Mr. Kowit served as a Managing Partner of
Copernicus Global Asset Management from January 1995 through October 1995.
From 1990 to 1994, he served as Senior Vice President of International
Fixed Income and Foreign Exchange for John Hancock Advisers. Mr. Kowit
received his M.B.A. from Iona College with a concentration in finance.
Susan M. Nason and Joseph M. Balestrino are portfolio managers for the U.S.
Treasury securities asset category. Ms. Nason has performed this duty since
the Fund's inception. Mr. Balestrino assumed his responsibilities on March
1, 1995. Ms. Nason joined Federated Investors in 1987 and has been a Vice
President of the Fund's Adviser since 1993. Ms. Nason served as an
Assistant Vice President of the Adviser from 1990 until 1992. Ms. Nason is
a Chartered Financial Analyst and received her M.S.I.A. in Finance from
Carnegie Mellon University. Mr. Balestrino joined Federated Investors in
1986 and has been Vice President of the Fund's Adviser since 1995. Mr.
Balestrino served as an Assistant Vice President from 1991 until 1995, and
as an investment analyst of the Adviser from 1989 until 1991. Mr.
Balestrino is a Chartered Financial Analyst and received his M.A. in Urban
and Regional Planning from the University of Pittsburgh.
Thomas M. Franks is the portfolio manager for the equity reserves asset
category. He has performed these duties since the Fund's inception. Mr.
Franks joined Federated Investors in 1985 and has been a Vice President of
the Fund's Adviser since 1990. Mr. Franks is a Chartered Financial Analyst
and received his M.S.I.A. in Business Administration from Carnegie Mellon
University.
Kathleen M. Foody-Malus and James D. Roberge are portfolio managers for the
mortgage-backed securities asset category. Ms. Foody-Malus has performed
this duty since the Fund's inception. Mr. Roberge assumed his
responsibilities on March 1, 1995. Ms. Foody-Malus joined Federated
Investors in 1983 and has been a Vice President of the Fund's Adviser since
1993. Ms. Foody-Malus served as an Assistant Vice President of the Adviser
from 1990 until 1992. Ms. Foody-Malus received her M.B.A. in
Accounting/Finance from the University of Pittsburgh. Mr. Roberge joined
Federated Investors in 1990 and has been a Vice President of the Fund's
Adviser since October, 1994. Prior to this, Mr. Roberge served as an
Assistant Vice President of the Fund's Adviser. From 1990 until 1992, Mr.
Roberge acted as an investment analyst. Mr. Roberge is a Chartered
Financial Analyst and received his M.B.A. in Finance from the University of
Pennsylvania.
Joseph M. Balestrino and Susan M. Nason are portfolio managers for the
investment-grade corporate bonds asset category. They have performed these
duties since the Fund's inception.
Mark E. Durbiano is the portfolio manager for the high yield corporate
bonds asset category. He has performed these duties since the Fund's
inception. Mr. Durbiano joined Federated Investors in 1982 and has been a
Senior Vice President of the Fund's Adviser since January 1996. Mr.
Durbiano was a Vice President of the Fund's Adviser from 1988 through 1995.
Mr. Durbiano is a Chartered Financial Analyst and received his M.B.A. in
Finance from the University of Pittsburgh.
DISTRIBUTION OF INSTITUTIONAL SHARES
Federated Securities Corp. is the principal distributor for Shares. It is a
Pennsylvania corporation organized on November 14, 1969, and is the principal
distributor for a number of investment companies. Federated Securities Corp. is
a subsidiary of Federated Investors.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides administrative personnel and services (including
certain legal and financial reporting services) necessary to operate the Fund.
Federated Administrative Services provides these at an annual rate which relates
to the average aggregate daily net assets of all funds advised by subsidiaries
of Federated Investors ("Federated Funds") as specified below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE DAILY
ADMINISTRATIVE FEE NET ASSETS OF THE FEDERATED FUNDS
<S> <C>
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Administrative Services may choose voluntarily to waive a portion of
its fee.
SHAREHOLDER SERVICES. The Fund has entered into a Shareholder Services
Agreement with Federated Shareholder Services, a subsidiary of Federated
Investors, under which the Fund may make payments up to .25 of 1% of the average
daily net asset value of the Institutional Shares, computed at an annual rate,
to obtain certain personal services for shareholders and provide maintenance of
shareholder accounts ("shareholder services"). From time to time and for such
periods as deemed appropriate, the amount stated above may be reduced
voluntarily.
Under the Shareholder Services Agreement, Federated Shareholder Services will
either perform shareholder services directly or will select financial
institutions to perform shareholder services. Financial institutions will
receive fees based upon shares owned by their clients or customers. The
schedules of such fees and the basis upon which such fees will be paid will be
determined from time to time by the Fund and Federated Shareholder Services.
SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS. In addition to receiving the
payments under the Shareholder Services Agreement, Federated Securities Corp.
and Federated Shareholder Services, from their own assets, may pay financial
institutions supplemental fees for the performance of substantial sales
services, distribution-related support services, or shareholder services. The
support may include sponsoring sales, educational and training seminars for
their employees, providing sales literature, and engineering computer software
programs that emphasize the attributes of the Fund. Such assistance will be
predicated upon the amount of Shares the financial institution sells or may
sell, and/or upon the type and nature of sales or marketing support furnished by
the financial institution. Any payments made by the distributor may be
reimbursed by the Fund's Adviser or its affiliates.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the Adviser looks for prompt execution of the order at a favorable
price. In working with dealers, the Adviser will generally use those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. In selecting among firms
believed to meet these criteria, the Adviser may give consideration to those
firms which have sold or are selling shares of the Fund and other funds
distributed by Federated Securities Corp. The Adviser makes decisions on
portfolio transactions and selects brokers and dealers subject to review by the
Trustees.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund's net asset value per Share fluctuates. The net asset value for Shares
is determined by adding the interest of the Shares in the market value of all
securities and other assets of the Fund, subtracting the interest of the Shares
in the liabilities of the Fund and those attributable to Shares, and dividing
the remainder by the total number of Shares outstanding. The net asset value for
Institutional Shares may exceed that of Select Shares due to the variance in
daily net income realized by each class. Such variance will reflect only accrued
net income to which the shareholders of a particular class are entitled.
INVESTING IN INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
SHARE PURCHASES
Shares are sold on days on which the New York Stock Exchange is open for
business. Shares may be purchased through a financial institution which has a
sales agreement with the distributor or by wire or mail.
To purchase Shares, open an account by calling Federated Securities Corp.
Information needed to establish an account will be taken over the telephone. The
Fund reserves the right to reject any purchase request.
THROUGH A FINANCIAL INSTITUTION. An investor may call his financial institution
(such as a bank or an investment dealer) to place an order to purchase Shares.
Orders through a financial institution
are considered received when the Fund is notified of the purchase order.
Purchase orders through a registered broker/dealer must be received by the
broker before 4:00 p.m. (Eastern time) and must be transmitted by the broker to
the Fund before 5:00 p.m. (Eastern time) in order for Shares to be purchased at
that day's price. Purchase orders through other financial institutions must be
received by the financial institution and transmitted to the Fund before 4:00
p.m. (Eastern time) in order for Shares to be purchased at that day's price. It
is the financial institution's responsibility to transmit orders promptly.
BY WIRE. To purchase Shares by Federal Reserve wire, call the Fund before 4:00
p.m. (Eastern time) to place an order. The order is considered received
immediately. Payment by federal funds must be received before 3:00 p.m. (Eastern
time) on the next business day following the order. Federal funds should be
wired as follows: Federated Services Company, c/o State Street Bank and Trust
Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit to: Federated
Managed Aggressive Growth Fund--Institutional Shares; Fund Number (this number
can be found on the account statement or by contacting the Fund); Group Number
or Wire Order Number; Nominee or Institution Name; and ABA Number 011000028.
Shares cannot be purchased by wire on holidays when wire transfers are
restricted. Questions on wire purchases should be directed to your shareholder
services representative at the telephone number listed on your account
statement.
BY MAIL. To purchase Shares by mail, send a check made payable to Federated
Managed Aggressive Growth Fund--Institutional Shares to Federated Services
Company, P.O. Box 8600, Boston, Massachusetts 02266-8600. Orders by mail are
considered received after payment by check is converted by State Street Bank
into federal funds. This is normally the next business day after State Street
Bank receives the check.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in Shares is $25,000. However, an account may be
opened with a smaller amount as long as the $25,000 minimum is reached within 90
days. An institutional investor's minimum investment will be calculated by
combining all accounts it maintains with the Fund. Accounts established through
a non-affiliated bank or broker may be subject to a smaller minimum investment.
WHAT SHARES COST
Shares are sold at their net asset value next determined after an order is
received. There is no sales charge imposed by the Fund. Investors who purchase
Shares through a non-affiliated bank or broker may be charged an additional
service fee by that bank or broker.
The net asset value is determined as of the close of trading (normally 4:00
p.m., Eastern time) on the New York Stock Exchange, Monday through Friday,
except on (i) days on which there are not sufficient changes in the value of the
Fund's portfolio securities such that its net asset value might be materially
affected; (ii) days during which no Shares are tendered for redemption and no
orders to purchase Shares are received; and (iii) the following holidays: New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day.
SUBACCOUNTING SERVICES
Institutions are encouraged to open single master accounts. However, certain
institutions may wish to use the transfer agent's subaccounting system to
minimize their internal recordkeeping requirements. The transfer agent may
charge a fee based on the level of subaccounting services rendered. Institutions
holding Shares in a fiduciary, agency, custodial, or similar capacity may charge
or pass through subaccounting fees as part of or in addition to normal trust or
agency account fees. They may also charge fees for other services provided which
may be related to the ownership of Shares. This prospectus should, therefore, be
read together with any agreement between the customer and the institution with
regard to the services provided, the fees charged for those services, and any
restrictions and limitations imposed. State securities laws may require certain
financial institutions such as depository institutions to register as dealers.
SYSTEMATIC INVESTMENT PROGRAM
Once a Fund account had been opened, shareholders may add to their investment on
a regular basis. Under this program, funds may be automatically withdrawn
periodically from the shareholder's checking account and invested in Shares at
the net asset value next determined after an order is received by the Fund. A
shareholder may apply for participation in this program through Federated
Securities Corp.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the Fund.
Detailed confirmations of each purchase or redemption are sent to each
shareholder. Quarterly confirmations are sent to report dividends paid during
that quarter.
DIVIDENDS
Dividends are declared and paid quarterly to all shareholders invested in the
Fund on the record date. Unless shareholders request cash payments by writing
the Fund, dividends are automatically reinvested in additional Shares of the
Fund on payment dates at the ex-dividend date net asset value without a sales
charge.
CAPITAL GAINS
Capital gains realized by the Fund, if any, will be distributed at least once
every 12 months.
REDEEMING INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
The Fund redeems Shares at their net asset value next determined after the Fund
receives the redemption request. Redemptions will be made on days on which the
Fund computes its net asset value. Redemption requests must be received in
proper form and can be made through a financial institution, by telephone
request or by written request.
THROUGH A FINANCIAL INSTITUTION
A shareholder may redeem Shares by calling his financial institution (such as a
bank or an investment dealer) to request the redemption. Shares will be redeemed
at the net asset value next determined after the Fund receives the redemption
request from the financial institution. Redemption requests through a registered
broker/dealer must be received by the broker before 4:00 p.m. (Eastern time) and
must be transmitted by the broker to the Fund before 5:00 p.m. (Eastern time) in
order for Shares to be redeemed at that day's net asset value. Redemption
requests through other financial institutions must be received by the financial
institution and transmitted to the Fund before 4:00 p.m. (Eastern time) in order
for Shares to be redeemed at that day's net asset value. The financial
institution is responsible for promptly submitting redemption requests and
providing proper written redemption instructions to the Fund. The financial
institution may charge customary fees and commissions for this service.
TELEPHONE REDEMPTION
Shareholders may redeem their Shares by telephoning the Fund before 4:00 p.m.
(Eastern time). All proceeds will normally be wire transferred the following
business day, but in no event more than seven days, to the shareholder's account
at a domestic commercial bank that is a member of the Federal Reserve System.
Proceeds from redemption requests received on holidays when wire transfers are
restricted will be wired the following business day. Questions about telephone
redemptions on days when wire transfers are restricted should be directed to
your shareholder services representative at the telephone number listed on your
account statement. If at any time, the Fund shall determine it necessary to
terminate or modify this method of redemption, shareholders would be promptly
notified.
An authorization form permitting the Fund to accept telephone requests must
first be completed. Authorization forms and information on this service are
available from Federated Securities Corp. Telephone redemption instructions may
be recorded. If reasonable procedures are not followed by the Fund, it may be
liable for losses due to unauthorized or fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "Written Requests," should be considered.
WRITTEN REQUESTS
Shares may also be redeemed by sending a written request to the Fund. Call the
Fund for specific instructions before redeeming by letter. The shareholder will
be asked to provide in the request his name, the Fund name and class of shares
name, his account number, and the Share or dollar amount requested. If Share
certificates have been issued, they should be sent unendorsed with the written
request by registered or certified mail to: Federated Services Company, P.O. Box
8600, Boston, MA 02266-8600.
SIGNATURES. Shareholders requesting a redemption of any amount to be sent to an
address other than that on record with the Fund, or a redemption payable other
than to the shareholder of record must have signatures on written redemption
requests guaranteed by:
a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund ("BIF"), which is administered by the Federal Deposit
Insurance Corporation ("FDIC");
a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;
a savings bank or savings association whose deposits are insured by the
Savings Association Insurance Fund ("SAIF"), which is administered by the
FDIC; or
any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.
RECEIVING PAYMENT. Normally, a check for the proceeds is mailed within one
business day, but in no event more than seven days, after receipt of a proper
written redemption request, provided the Fund or its agents have received
payment for Shares from the shareholder.
SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive payments of a predetermined amount may take
advantage of the Systematic Withdrawal Program. Under this program, Shares are
redeemed to provide for periodic withdrawal payments in an amount directed by
the shareholder. Depending upon the amount of the withdrawal payments, the
amount of dividends paid and capital gains distributions with respect to Shares,
and the fluctuation of the net asset value of Shares redeemed under this
program, redemptions may reduce, and eventually use up, the shareholder's
investment in the Fund. For this reason, payments under this program should not
be considered as yield or income on the shareholder's investment in the Fund. To
be eligible to participate in this program, a shareholder must have an account
value of at least $25,000. A shareholder may apply for participation in this
program through Federated Securities Corp.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem Shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $25,000. This
requirement does not apply, however, if the balance falls below $25,000 because
of changes in the Fund's net asset value. Before Shares are redeemed to close an
account, the shareholder is notified in writing and allowed 30 days to purchase
additional Shares to meet the minimum requirement.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights except that, in matters
affecting only a particular fund or class, only shares of that fund or class are
entitled to vote. As a Massachusetts business trust, the Trust is not required
to hold annual shareholder meetings. Shareholder approval will be sought only
for certain changes in the Trust's or the Fund's operation and for the election
of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust entitled to vote.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code applicable to regulated investment companies and to
receive the special tax treatment afforded to such companies.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional Shares.
STATE AND LOCAL TAXES
In the opinion of Houston, Houston & Donnelly, counsel to the Trust, Fund shares
may be subject to personal property taxes imposed by counties, municipalities,
and school districts in Pennsylvania to the extent that the portfolio securities
in the Fund would be subject to such taxes if owned directly by residents of
those jurisdictions.
Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its total return and yield for Shares.
Total return represents the change, over a specified period of time, in the
value of an investment in Shares after reinvesting all income and capital gain
distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
The yield of Shares is calculated by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by Shares
over a thirty-day period by the maximum
offering price per share of Shares on the last day of the period. This number is
then annualized using semi-annual compounding. The yield does not necessarily
reflect income actually earned by Shares and, therefore, may not correlate to
the dividends or other distributions paid to shareholders.
From time to time, advertisements for the Fund's Institutional Shares may refer
to ratings, rankings, and other information in certain financial publications
and/or compare the Fund's performance to certain indices.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
The Fund also offers another class of shares called Select Shares that are sold
at net asset value primarily to retail and private banking customers of
financial institutions and are subject to a minimum initial investment of
$1,500.
Select Shares are distributed under a 12b-1 Plan adopted by the Fund and also
are subject to shareholder services fees.
Select Shares and Institutional Shares are subject to certain of the same
expenses. Expense differences, however, between Select Shares and Institutional
Shares may affect the performance of each class.
To obtain more information and a prospectus for Select Shares, investors may
call 1-800-235-4669.
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
FINANCIAL HIGHLIGHTS--SELECT SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 62.
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, NOVEMBER 30,
1995 1994(A)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.80 $ 10.00
- ---------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------------------------------------
Net investment income 0.17 0.13
- ---------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments,
foreign currency, and futures contracts 1.89 (0.25)
- --------------------------------------------------------------------- ------- -------
Total from investment operations 2.06 (0.12)
- --------------------------------------------------------------------- ------- -------
LESS DISTRIBUTIONS
- ---------------------------------------------------------------------
Distributions from net investment income (0.25) (0.08)
- ---------------------------------------------------------------------
Distributions from net realized gain on investments,
foreign currency transactions, and futures contracts (0.02) --
- --------------------------------------------------------------------- ------- -------
Total distributions (0.27) (0.08)
- --------------------------------------------------------------------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 11.59 $ 9.80
- --------------------------------------------------------------------- ------- -------
TOTAL RETURN (B) 21.36% (1.20%)
- ---------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------------------------
Expenses 1.75% 1.64%*
- ---------------------------------------------------------------------
Net investment income 2.65% 2.67%*
- ---------------------------------------------------------------------
Expense waiver/reimbursement 1.71%(c) 1.97%*(d)
- ---------------------------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------------------------
Net assets, end of period (000 omitted) $12,342 $1,673
- ---------------------------------------------------------------------
Portfolio turnover rate 139% 77%
- ---------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 25, 1994 (date of initial
public investment) to November 30, 1994. For the period from January 27,
1994, the Fund had no investment activity.
(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.
(d) The Adviser waived $6,858 of the investment advisory fee, which represents
0.11% of average net assets, to comply with certain state expense
limitations. The remainder of the waiver/reimbursement was voluntary. This
expense decrease is reflected in both the expense and net investment
income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
Further information about the Fund's performance is contained in the Fund's
annual report for the year ended November 30, 1995, which can be obtained free
of charge.
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
STOCKS--47.5%
- -------------------------------------------------------------------------------------------------
(A)LARGE COMPANY STOCKS--13.5%
---------------------------------------------------------------------------------
BASIC INDUSTRY--1.6%
---------------------------------------------------------------------------------
3,600 Allegheny Ludlum Corp. $ 67,050
---------------------------------------------------------------------------------
1,600 Aluminum Co. of America 93,600
---------------------------------------------------------------------------------
1,400 Du Pont (E.I.) de Nemours & Co. 93,100
---------------------------------------------------------------------------------
1,100 Eastman Chemical Co. 72,187
---------------------------------------------------------------------------------
1,400 International Paper Co. 53,375
---------------------------------------------------------------------------------
2,000 Phelps Dodge Corp. 135,750
---------------------------------------------------------------------------------
2,800 Praxair, Inc. 81,550
--------------------------------------------------------------------------------- -------------
Total 596,612
--------------------------------------------------------------------------------- -------------
CONSUMER DURABLES--0.6%
---------------------------------------------------------------------------------
1,600 Eastman Kodak Co. 108,800
---------------------------------------------------------------------------------
2,700 Mattel, Inc. 75,600
---------------------------------------------------------------------------------
2,900 Volvo AB, ADR 60,900
--------------------------------------------------------------------------------- -------------
Total 245,300
--------------------------------------------------------------------------------- -------------
CONSUMER NON-DURABLES--1.2%
---------------------------------------------------------------------------------
1,000 Avon Products, Inc. 72,625
---------------------------------------------------------------------------------
2,200 IBP, Inc. 137,500
---------------------------------------------------------------------------------
1,600 Philip Morris Cos., Inc. 140,400
---------------------------------------------------------------------------------
12,400 RJR Nabisco Holdings Corp., Conv. Pfd., Series C, $0.6012 72,850
---------------------------------------------------------------------------------
1,900 Reebok International Ltd. 49,400
--------------------------------------------------------------------------------- -------------
Total 472,775
--------------------------------------------------------------------------------- -------------
ENERGY MINERALS--0.9%
---------------------------------------------------------------------------------
2,100 Chevron Corp. 103,687
---------------------------------------------------------------------------------
2,300 Occidental Petroleum Corp. 50,888
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
(A)LARGE COMPANY STOCKS--CONTINUED
---------------------------------------------------------------------------------
ENERGY MINERALS--CONTINUED
---------------------------------------------------------------------------------
1,400 Texaco, Inc. $ 103,600
---------------------------------------------------------------------------------
3,400 USX-Marathon Group 62,475
--------------------------------------------------------------------------------- -------------
Total 320,650
--------------------------------------------------------------------------------- -------------
FINANCE--2.8%
---------------------------------------------------------------------------------
1,946 Allstate Corp. 79,786
---------------------------------------------------------------------------------
1,500 American Express Co. 63,750
---------------------------------------------------------------------------------
1,900 Bank of Boston Corp. 88,112
---------------------------------------------------------------------------------
900 CIGNA Corp. 99,000
---------------------------------------------------------------------------------
1,600 Chemical Banking Corp. 96,000
---------------------------------------------------------------------------------
1,700 Citicorp 120,275
---------------------------------------------------------------------------------
1,300 Dean Witter, Discover & Co. 66,300
---------------------------------------------------------------------------------
2,124 Mellon Bank Corp. 113,634
---------------------------------------------------------------------------------
1,500 Merrill Lynch & Co., Inc., STRYPES, $3.12 79,125
---------------------------------------------------------------------------------
1,400 Providian Corp. 56,175
---------------------------------------------------------------------------------
900 Sunamerica, Inc., Conv. Pfd., Series E, $3.10 60,300
---------------------------------------------------------------------------------
2,600 Travelers Group, Inc. 154,700
--------------------------------------------------------------------------------- -------------
Total 1,077,157
--------------------------------------------------------------------------------- -------------
FOOD & DRUG RETAILERS--0.0%
---------------------------------------------------------------------------------
883 Grand Union Co. 6,623
--------------------------------------------------------------------------------- -------------
HEALTH CARE--1.1%
---------------------------------------------------------------------------------
1,400 American Home Products Corp. 127,750
---------------------------------------------------------------------------------
1,400 Becton, Dickinson & Co. 97,650
---------------------------------------------------------------------------------
1,400 Bristol-Myers Squibb Co. 112,350
---------------------------------------------------------------------------------
1,300 Merck & Co., Inc. 80,438
--------------------------------------------------------------------------------- -------------
Total 418,188
--------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
(A)LARGE COMPANY STOCKS--CONTINUED
---------------------------------------------------------------------------------
PRODUCER MANUFACTURING--1.5%
---------------------------------------------------------------------------------
1,300 (b)FMC Corp. $ 96,037
---------------------------------------------------------------------------------
1,100 General Electric Co. 73,975
---------------------------------------------------------------------------------
500 (b)ITT Corp. 61,312
---------------------------------------------------------------------------------
700 Loews Corp. 107,450
---------------------------------------------------------------------------------
1,800 Textron, Inc. 137,925
---------------------------------------------------------------------------------
6,400 (c)Westinghouse Electric Corp., PEPS, Series C, $1.30 105,600
--------------------------------------------------------------------------------- -------------
Total 582,299
--------------------------------------------------------------------------------- -------------
RETAIL TRADE--0.4%
---------------------------------------------------------------------------------
2,500 American Stores Co. 65,625
---------------------------------------------------------------------------------
2,100 Sears, Roebuck & Co. 82,688
--------------------------------------------------------------------------------- -------------
Total 148,313
--------------------------------------------------------------------------------- -------------
SERVICES--0.4%
---------------------------------------------------------------------------------
2,600 Baker Hughes, Inc. 52,975
---------------------------------------------------------------------------------
1,000 Gannett Co., Inc. 61,000
---------------------------------------------------------------------------------
900 (b)Western Atlas, Inc. 43,088
--------------------------------------------------------------------------------- -------------
Total 157,063
--------------------------------------------------------------------------------- -------------
TECHNOLOGY--1.9%
---------------------------------------------------------------------------------
2,300 General Motors Corp., Class E 116,150
---------------------------------------------------------------------------------
1,400 Hewlett-Packard Co. 116,025
---------------------------------------------------------------------------------
1,200 Intel Corp. 73,050
---------------------------------------------------------------------------------
600 International Business Machines Corp. 57,975
---------------------------------------------------------------------------------
1,200 (b)Litton Industries, Inc. 53,850
---------------------------------------------------------------------------------
1,900 Lockheed Martin Corp. 139,413
---------------------------------------------------------------------------------
1,600 Raytheon Co. 71,200
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
(A)LARGE COMPANY STOCKS--CONTINUED
---------------------------------------------------------------------------------
1,600 Rockwell International Corp. $ 78,400
--------------------------------------------------------------------------------- -------------
Total 706,063
--------------------------------------------------------------------------------- -------------
TRANSPORTATION--0.2%
---------------------------------------------------------------------------------
1,300 Consolidated Rail Corp. 90,837
--------------------------------------------------------------------------------- -------------
(D)UTILITIES--0.9%
---------------------------------------------------------------------------------
1,700 AT&T Corp. 112,200
---------------------------------------------------------------------------------
800 (b)CMS Energy Corp. 21,800
---------------------------------------------------------------------------------
1,100 (b)Columbia Gas System, Inc. 47,575
---------------------------------------------------------------------------------
1,100 Enron Corp. 41,250
---------------------------------------------------------------------------------
800 FPL Group, Inc. 34,700
---------------------------------------------------------------------------------
2,500 MCI Communications Corp. 66,875
--------------------------------------------------------------------------------- -------------
Total 324,400
--------------------------------------------------------------------------------- -------------
TOTAL LARGE COMPANY STOCKS 5,146,280
--------------------------------------------------------------------------------- -------------
(A)SMALL COMPANY STOCKS--16.5%
---------------------------------------------------------------------------------
BASIC INDUSTRY--1.7%
---------------------------------------------------------------------------------
4,600 (b)Applied Extrusion Technologies, Inc. 58,075
---------------------------------------------------------------------------------
3,079 Brush Wellman, Inc. 53,882
---------------------------------------------------------------------------------
1,600 Cambrex Corp. 59,200
---------------------------------------------------------------------------------
1,500 Carpenter Technology Corp. 64,875
---------------------------------------------------------------------------------
2,100 Chesapeake Corp. 61,950
---------------------------------------------------------------------------------
1,000 (b)Cytec Industries, Inc. 64,000
---------------------------------------------------------------------------------
3,000 First Mississippi Corp. 76,500
---------------------------------------------------------------------------------
4,000 (b)Magma Copper Co. 85,000
---------------------------------------------------------------------------------
1,200 Springs Industries, Inc., Class A 50,400
---------------------------------------------------------------------------------
1,200 Texas Industries, Inc. 61,500
--------------------------------------------------------------------------------- -------------
Total 635,382
--------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
(A) SMALL COMPANY STOCKS--CONTINUED
---------------------------------------------------------------------------------
CONSUMER DURABLES--1.0%
---------------------------------------------------------------------------------
1,500 Barnes Group, Inc. $ 58,125
---------------------------------------------------------------------------------
2,400 (b)Champion Enterprises, Inc. 72,000
---------------------------------------------------------------------------------
3,400 Coachmen Industries, Inc. 65,875
---------------------------------------------------------------------------------
1,350 Harman International Industries, Inc. 59,231
---------------------------------------------------------------------------------
3,100 (b)Toll Brothers, Inc. 56,188
---------------------------------------------------------------------------------
1,900 Toro Co. 60,088
--------------------------------------------------------------------------------- -------------
Total 371,507
--------------------------------------------------------------------------------- -------------
CONSUMER NON-DURABLES--0.5%
---------------------------------------------------------------------------------
3,600 Hudson Foods, Inc., Class A 57,600
---------------------------------------------------------------------------------
3,500 (b)Mondavi Robert Corp., Class A 111,563
--------------------------------------------------------------------------------- -------------
Total 169,163
--------------------------------------------------------------------------------- -------------
ENERGY MINERALS--0.3%
---------------------------------------------------------------------------------
3,200 KCS Energy, Inc. 44,000
---------------------------------------------------------------------------------
7,900 (b)Tesoro Petroleum Corp. 66,163
--------------------------------------------------------------------------------- -------------
Total 110,163
--------------------------------------------------------------------------------- -------------
FINANCE--3.8%
---------------------------------------------------------------------------------
1,300 Alex Brown, Inc. 59,800
---------------------------------------------------------------------------------
1,700 Allied Group, Inc. 60,350
---------------------------------------------------------------------------------
1,500 American Bankers Insurance Group, Inc. 54,187
---------------------------------------------------------------------------------
2,000 (b)American Travellers Corp. 50,000
---------------------------------------------------------------------------------
1,200 Associated Banc Corp. 47,700
---------------------------------------------------------------------------------
2,523 Bankers First Corp. 69,067
---------------------------------------------------------------------------------
1,600 (b)Brooklyn Bancorp, Inc. 64,400
---------------------------------------------------------------------------------
3,700 CWM Mortgage Holdings, Inc. 55,962
---------------------------------------------------------------------------------
1,800 Centura Banks, Inc. 61,200
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
(A) SMALL COMPANY STOCKS--CONTINUED
---------------------------------------------------------------------------------
FINANCE--CONTINUED
---------------------------------------------------------------------------------
4,900 City National Corp. $ 67,375
---------------------------------------------------------------------------------
1,000 Cullen Frost Bankers, Inc. 50,750
---------------------------------------------------------------------------------
4,000 FirstBank Puerto Rico 75,500
---------------------------------------------------------------------------------
4,300 (b)Glendale Federal Bank 69,338
---------------------------------------------------------------------------------
6,200 Hibernia Corp., Class A 65,100
---------------------------------------------------------------------------------
1,600 Irwin Financial Corp. 63,200
---------------------------------------------------------------------------------
2,250 Money Stores, Inc. 106,313
---------------------------------------------------------------------------------
3,700 North Fork Bancorp, Inc. 86,025
---------------------------------------------------------------------------------
1,000 PHH Corp. 45,750
---------------------------------------------------------------------------------
3,000 Peoples Heritage Financial Group 63,000
---------------------------------------------------------------------------------
1,400 Queens County Bancorp, Inc. 56,350
---------------------------------------------------------------------------------
2,400 (b)St. Francis Capital Corp. 55,800
---------------------------------------------------------------------------------
1,700 Student Loan Corp. 60,138
---------------------------------------------------------------------------------
1,100 WestAmerica Bancorporation 45,375
--------------------------------------------------------------------------------- -------------
Total 1,432,680
--------------------------------------------------------------------------------- -------------
HEALTH CARE--1.5%
---------------------------------------------------------------------------------
3,800 Bindley Western Industries, Inc. 67,925
---------------------------------------------------------------------------------
1,900 (b)Bio Rad Laboratories, Inc., Class A 78,375
---------------------------------------------------------------------------------
2,600 (b)Foxmeyer Health Corp. 67,600
---------------------------------------------------------------------------------
3,200 ICN Pharmaceuticals, Inc. 64,800
---------------------------------------------------------------------------------
7,600 Kinetic Concepts, Inc. 86,450
---------------------------------------------------------------------------------
3,100 (b)Maxicare Health Plans, Inc. 67,813
---------------------------------------------------------------------------------
8,000 (b)North American Biologicals, Inc. 77,000
---------------------------------------------------------------------------------
7,000 (b)Oec-Medical Systems, Inc. 70,000
--------------------------------------------------------------------------------- -------------
Total 579,963
--------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
(A) SMALL COMPANY STOCKS--CONTINUED
---------------------------------------------------------------------------------
PRODUCER MANUFACTURING--1.1%
---------------------------------------------------------------------------------
1,300 AGCO Corp. $ 56,063
---------------------------------------------------------------------------------
1,950 Blount Intl, Inc., Class A 58,744
---------------------------------------------------------------------------------
2,100 Borg-Warner Automotive, Inc. 62,212
---------------------------------------------------------------------------------
4,100 Brenco, Inc. 43,050
---------------------------------------------------------------------------------
3,200 JLG Industries, Inc. 90,800
---------------------------------------------------------------------------------
1,100 NACCO Industries, Inc., Class A 62,700
---------------------------------------------------------------------------------
2,300 (b)NCI Building System, Inc. 52,900
--------------------------------------------------------------------------------- -------------
Total 426,469
--------------------------------------------------------------------------------- -------------
RETAIL TRADE--1.0%
---------------------------------------------------------------------------------
1,700 (b)CompUSA, Inc. 63,112
---------------------------------------------------------------------------------
1,100 (b)Eckerd Corp. 46,887
---------------------------------------------------------------------------------
3,200 Great Atlantic & Pacific Tea Co., Inc. 70,000
---------------------------------------------------------------------------------
5,300 (b)MacFrugal's Bargains CloseOuts, Inc. 69,563
---------------------------------------------------------------------------------
4,900 Pier 1 Imports, Inc. 53,288
---------------------------------------------------------------------------------
4,000 Ruddick Corp. 43,000
---------------------------------------------------------------------------------
2,200 (b)Waban, Inc. 40,700
--------------------------------------------------------------------------------- -------------
Total 386,550
--------------------------------------------------------------------------------- -------------
SERVICES--2.0%
---------------------------------------------------------------------------------
2,500 (b)American Buildings Co. 56,562
---------------------------------------------------------------------------------
1,600 Butler Manufacturing Co. 55,200
---------------------------------------------------------------------------------
3,100 Castle (A.M.) & Co. 75,950
---------------------------------------------------------------------------------
1,900 (b)Devon Group, Inc. 73,150
---------------------------------------------------------------------------------
1,800 Granite Construction, Inc. 49,950
---------------------------------------------------------------------------------
1,300 Plenum Publishing Corp. 47,125
---------------------------------------------------------------------------------
6,700 (b)Pride Petroleum Services, Inc. 65,325
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
(A) SMALL COMPANY STOCKS--CONTINUED
---------------------------------------------------------------------------------
SERVICES--CONTINUED
---------------------------------------------------------------------------------
2,299 Pulitzer Publishing Co. $ 105,754
---------------------------------------------------------------------------------
2,245 Richfood Holdings, Inc. 63,141
---------------------------------------------------------------------------------
1,655 (b)United Video Satellite Group, Inc., Class A 47,995
---------------------------------------------------------------------------------
5,600 (b)Westcott Communications 79,800
---------------------------------------------------------------------------------
3,000 (b)Western Waste Industries 55,125
--------------------------------------------------------------------------------- -------------
Total 775,077
--------------------------------------------------------------------------------- -------------
TECHNOLOGY--2.4%
---------------------------------------------------------------------------------
2,428 (b)Bell Industries, Inc. 55,237
---------------------------------------------------------------------------------
2,300 (b)Burr Brown Corp. 66,125
---------------------------------------------------------------------------------
6,600 (b)Computervision Corp. 82,500
---------------------------------------------------------------------------------
800 (b)Electronics for Imaging, Inc. 68,800
---------------------------------------------------------------------------------
1,200 (b)International Rectifier Corp. 59,550
---------------------------------------------------------------------------------
2,000 (b)Kemet Corp. 61,000
---------------------------------------------------------------------------------
1,700 (b)Marshall Industries 59,925
---------------------------------------------------------------------------------
2,400 (b)Network Equipment Technologies, Inc. 79,500
---------------------------------------------------------------------------------
3,900 (b)S3, Inc. 73,613
---------------------------------------------------------------------------------
1,600 (b)SCI Systems, Inc. 53,600
---------------------------------------------------------------------------------
2,000 (b)Tech-Sym Corp. 59,750
---------------------------------------------------------------------------------
1,800 (b)Tencor Instruments 67,950
---------------------------------------------------------------------------------
1,500 Watkins Johnson Co. 68,063
---------------------------------------------------------------------------------
1,200 Wyle Labs 47,250
--------------------------------------------------------------------------------- -------------
Total 902,863
--------------------------------------------------------------------------------- -------------
TRANSPORTATION--0.3%
---------------------------------------------------------------------------------
3,900 (b)America West Airlines, Inc., Class B 69,712
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
(A) SMALL COMPANY STOCKS--CONTINUED
---------------------------------------------------------------------------------
TRANSPORTATION--CONTINUED
---------------------------------------------------------------------------------
1,500 (b)Continental Airlines, Inc., Class B $ 58,687
--------------------------------------------------------------------------------- -------------
Total 128,399
--------------------------------------------------------------------------------- -------------
(D)UTILITIES--0.9%
---------------------------------------------------------------------------------
2,200 Central Hudson Gas & Electric Service 66,825
---------------------------------------------------------------------------------
1,900 Eastern Enterprises 61,750
---------------------------------------------------------------------------------
2,700 Oneok, Inc. 63,450
---------------------------------------------------------------------------------
4,300 (b)Public Service Co. New Mexico 75,788
---------------------------------------------------------------------------------
500 Tele Danmark 13,938
---------------------------------------------------------------------------------
1,700 Teppco Partners, L.P. 61,625
--------------------------------------------------------------------------------- -------------
Total 343,376
--------------------------------------------------------------------------------- -------------
TOTAL SMALL COMPANY STOCKS 6,261,592
--------------------------------------------------------------------------------- -------------
FOREIGN EQUITY--17.5%
---------------------------------------------------------------------------------
ARGENTINA--0.1%
---------------------------------------------------------------------------------
300 Banco Frances del Rio de la Plata S.A., ADR 7,837
---------------------------------------------------------------------------------
1,500 Compania Naviera Perez Companc SA, Class B 7,278
---------------------------------------------------------------------------------
303 IRSA Inversiones y Representaciones S.A., GDR 6,586
---------------------------------------------------------------------------------
400 YPF Sociedad Anonima, ADR 7,800
--------------------------------------------------------------------------------- -------------
Total 29,501
--------------------------------------------------------------------------------- -------------
AUSTRALIA--0.5%
---------------------------------------------------------------------------------
10,000 Mayne Nickless Ltd. 46,015
---------------------------------------------------------------------------------
10,000 News Corporation Ltd. 52,397
---------------------------------------------------------------------------------
10,500 Woodside Petroleum Ltd. 52,134
---------------------------------------------------------------------------------
19,500 Woolworth's Ltd. 45,588
--------------------------------------------------------------------------------- -------------
Total 196,134
--------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
---------------------------------------------------------------------------------
FINLAND--0.0%
---------------------------------------------------------------------------------
200 Nokia AB-A $ 10,974
--------------------------------------------------------------------------------- -------------
FRANCE--1.0%
---------------------------------------------------------------------------------
900 AXA 53,850
---------------------------------------------------------------------------------
395 Accor SA 47,965
---------------------------------------------------------------------------------
1,000 Compagnie Financiere de Paribas, Class A 55,525
---------------------------------------------------------------------------------
400 LVMH (Moet-Hennessy) 76,145
---------------------------------------------------------------------------------
670 LaFarge-Coppee 42,559
---------------------------------------------------------------------------------
2,600 Lagardere Groupe 50,588
---------------------------------------------------------------------------------
525 Lyonnaise des Eaux SA 50,286
--------------------------------------------------------------------------------- -------------
Total 376,918
--------------------------------------------------------------------------------- -------------
GERMANY, FEDERAL REPUBLIC OF--1.2%
---------------------------------------------------------------------------------
195 BASF AG 42,740
---------------------------------------------------------------------------------
220 Commerzbank AG, Frankfurt 50,882
---------------------------------------------------------------------------------
900 Deutsche Bank AG 42,222
---------------------------------------------------------------------------------
181 Gea AG, Pfd. 57,568
---------------------------------------------------------------------------------
115 Henkel KGaA--Vorzug, Pfd. 43,096
---------------------------------------------------------------------------------
121 Kaufhof Holding AG 36,644
---------------------------------------------------------------------------------
70 Linde AG 41,043
---------------------------------------------------------------------------------
140 Mannesmann AG 45,079
---------------------------------------------------------------------------------
100 Siemens AG 52,237
---------------------------------------------------------------------------------
55 Wella AG, Pfd. 25,859
--------------------------------------------------------------------------------- -------------
Total 437,370
--------------------------------------------------------------------------------- -------------
HONG KONG--0.6%
---------------------------------------------------------------------------------
39,000 Amoy Properties Ltd. 37,311
---------------------------------------------------------------------------------
300 Cheung Kong 1,707
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
---------------------------------------------------------------------------------
HONG KONG--CONTINUED
---------------------------------------------------------------------------------
2,429 HSBC Holdings PLC $ 35,803
---------------------------------------------------------------------------------
22,000 Hong Kong Telecom 37,402
---------------------------------------------------------------------------------
500 Hutchison Whampoa 2,825
---------------------------------------------------------------------------------
82,000 Manhattan Card Co., Ltd. 36,574
---------------------------------------------------------------------------------
5,000 Sun Hung Kai Properties 40,240
---------------------------------------------------------------------------------
10,000 Television Broadcasts Ltd. 37,751
--------------------------------------------------------------------------------- -------------
Total 229,613
--------------------------------------------------------------------------------- -------------
INDONESIA--0.3%
---------------------------------------------------------------------------------
17,000 Astra International 33,873
---------------------------------------------------------------------------------
11,000 Hero Supermarket 21,677
---------------------------------------------------------------------------------
6,000 Indocement 20,363
---------------------------------------------------------------------------------
10,000 Lippo Bank 14,670
---------------------------------------------------------------------------------
10,000 United Tractors 18,174
--------------------------------------------------------------------------------- -------------
Total 108,757
--------------------------------------------------------------------------------- -------------
ITALY--0.3%
---------------------------------------------------------------------------------
11,900 La Rinascente S.P.A. 66,675
---------------------------------------------------------------------------------
42,000 (b)Telecom Italia Mobile 67,760
--------------------------------------------------------------------------------- -------------
Total 134,435
--------------------------------------------------------------------------------- -------------
JAPAN--7.1%
---------------------------------------------------------------------------------
9,000 Asahi Chemical Industry Co. Ltd. 67,224
---------------------------------------------------------------------------------
4,000 Bridgestone Corp. 58,968
---------------------------------------------------------------------------------
2,000 Canon Inc. 35,184
---------------------------------------------------------------------------------
7 DDI Corp. 56,275
---------------------------------------------------------------------------------
3,000 Dai Nippon Printing Co. Ltd. 52,482
---------------------------------------------------------------------------------
11,000 Daimaru, Inc. 72,432
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
---------------------------------------------------------------------------------
JAPAN--CONTINUED
---------------------------------------------------------------------------------
16,000 Dainippon Ink and Chemical, Inc. $ 74,064
---------------------------------------------------------------------------------
5,000 Fujitsu Ltd. 58,968
---------------------------------------------------------------------------------
3,000 Hitachi Cable 21,317
---------------------------------------------------------------------------------
4,000 JUSCO Co. 95,921
---------------------------------------------------------------------------------
8,000 Jaccs 78,624
---------------------------------------------------------------------------------
10,000 (b)Japan Airlines Co. 63,980
---------------------------------------------------------------------------------
4,000 Kandenko Co., Ltd. 48,747
---------------------------------------------------------------------------------
15,000 Kawasaki Heavy Industries 68,256
---------------------------------------------------------------------------------
19,000 Kawasaki Steel 67,410
---------------------------------------------------------------------------------
3,000 Kokuyo Co. 64,570
---------------------------------------------------------------------------------
13,000 Kubota Corp. 85,474
---------------------------------------------------------------------------------
7,000 Kuraray Co. Ltd. 71,548
---------------------------------------------------------------------------------
1,000 Kurita Water Industries 27,813
---------------------------------------------------------------------------------
9,000 Kyowa Hakko Kogyo Co. 88,452
---------------------------------------------------------------------------------
8,000 Minebea Co. 66,516
---------------------------------------------------------------------------------
14,000 Mitsubishi Heavy Industries 111,587
---------------------------------------------------------------------------------
9,000 Mitsui Marine & Fire Insurance Co. 60,590
---------------------------------------------------------------------------------
5,000 NEC Corp. 63,882
---------------------------------------------------------------------------------
3,000 NGK Insulators 29,779
---------------------------------------------------------------------------------
28,000 (b)NKK Corp. 77,052
---------------------------------------------------------------------------------
10,000 Nagoya Railroad Co. Ltd. 49,140
---------------------------------------------------------------------------------
9,000 Nihon Cement Co., Ltd. 59,617
---------------------------------------------------------------------------------
3,000 Nippon Electric Glass Co., Ltd. 55,725
---------------------------------------------------------------------------------
7,000 Nippon Express Co. Ltd. 60,747
---------------------------------------------------------------------------------
11,000 Nippon Sheet Glass Co. 49,081
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
---------------------------------------------------------------------------------
JAPAN--CONTINUED
---------------------------------------------------------------------------------
4,000 Nishimatsu Construction $ 47,961
---------------------------------------------------------------------------------
7,000 Sakura Bank Ltd., Tokyo 75,676
---------------------------------------------------------------------------------
1,000 Secom Co. 67,518
---------------------------------------------------------------------------------
1,000 Sega Enterprises 54,054
---------------------------------------------------------------------------------
4,000 Sekisui House Ltd. 46,781
---------------------------------------------------------------------------------
5,000 Shionogi and Co. 43,096
---------------------------------------------------------------------------------
1,000 Sony Music Entertainment, Inc. 44,717
---------------------------------------------------------------------------------
12,000 Sumitomo Chemical Co. 59,676
---------------------------------------------------------------------------------
20,000 Sumitomo Heavy Industries 63,686
---------------------------------------------------------------------------------
3,000 Takeda Chemical Industries 44,816
---------------------------------------------------------------------------------
7,000 Tokio Marine & Fire 79,803
---------------------------------------------------------------------------------
1,000 Tostem Corp. 30,467
---------------------------------------------------------------------------------
3,000 Toto Ltd. 40,688
---------------------------------------------------------------------------------
3,000 Yamanouchi Pharmaceutical 64,570
--------------------------------------------------------------------------------- -------------
Total 2,704,934
--------------------------------------------------------------------------------- -------------
MALAYSIA--0.4%
---------------------------------------------------------------------------------
3,000 Malayan Banking Bhd 23,768
---------------------------------------------------------------------------------
31,000 Malayan United Industries Bhd 23,583
---------------------------------------------------------------------------------
13,000 Malayawata Steel Berhad 22,239
---------------------------------------------------------------------------------
10,000 Malaysian International Shipping Bhd 24,438
---------------------------------------------------------------------------------
7,000 (d)Tenaga Nasional Berhad 26,212
---------------------------------------------------------------------------------
10,000 UMW Holdings Bhd 23,453
--------------------------------------------------------------------------------- -------------
Total 143,693
--------------------------------------------------------------------------------- -------------
MEXICO--0.1%
---------------------------------------------------------------------------------
800 Cemex SA, Class B, ADR 5,350
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
---------------------------------------------------------------------------------
MEXICO--CONTINUED
---------------------------------------------------------------------------------
500 Empresas ICA Sociedad Controladora S.A., ADR $ 5,125
---------------------------------------------------------------------------------
900 Grupo Financiero Bancomer, S.A. de C.V., Class B, ADR 5,175
---------------------------------------------------------------------------------
200 Pan American Beverage, Class A 6,450
---------------------------------------------------------------------------------
700 Transportacion Maritima Mexicana SA , Class L, ADR 5,338
--------------------------------------------------------------------------------- -------------
Total 27,438
--------------------------------------------------------------------------------- -------------
NETHERLANDS--0.7%
---------------------------------------------------------------------------------
4,850 Elsevier NV 66,192
---------------------------------------------------------------------------------
970 Polygram NV 58,405
---------------------------------------------------------------------------------
2,400 Royal PTT Nederland NV 85,518
---------------------------------------------------------------------------------
500 Unilever NV-Cert 66,078
--------------------------------------------------------------------------------- -------------
Total 276,193
--------------------------------------------------------------------------------- -------------
NEW ZEALAND--0.1%
---------------------------------------------------------------------------------
10,000 Fletcher Challenge Ltd. 24,809
---------------------------------------------------------------------------------
1,419 Fletcher Challenge Ltd.--Forestry Shares 2,001
--------------------------------------------------------------------------------- -------------
Total 26,810
--------------------------------------------------------------------------------- -------------
SINGAPORE--0.4%
---------------------------------------------------------------------------------
9,000 First Capital Corp., Ltd., Singapore 24,247
---------------------------------------------------------------------------------
2,000 Fraser and Neave Ltd. 23,821
---------------------------------------------------------------------------------
13,000 Haw Par Brothers International Ltd. 28,018
---------------------------------------------------------------------------------
3,000 Singapore Airlines Ltd. 28,075
---------------------------------------------------------------------------------
2,000 Singapore Press Holdings Ltd. 31,620
--------------------------------------------------------------------------------- -------------
Total 135,781
--------------------------------------------------------------------------------- -------------
SPAIN--0.3%
---------------------------------------------------------------------------------
235 Acerinox SA 23,547
---------------------------------------------------------------------------------
1,500 Repsol SA 47,280
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
---------------------------------------------------------------------------------
SPAIN--CONTINUED
---------------------------------------------------------------------------------
630 Zardoya-Otis SA $ 65,425
--------------------------------------------------------------------------------- -------------
Total 136,252
--------------------------------------------------------------------------------- -------------
SWEDEN--0.3%
---------------------------------------------------------------------------------
5,000 Stora Kopparbergs, Class A 62,924
---------------------------------------------------------------------------------
2,000 Svedala Industri AB Free 55,373
--------------------------------------------------------------------------------- -------------
Total 118,297
--------------------------------------------------------------------------------- -------------
SWITZERLAND--0.9%
---------------------------------------------------------------------------------
41 BBC Brown Boveri 47,086
---------------------------------------------------------------------------------
600 CS Holding 56,912
---------------------------------------------------------------------------------
50 Ciba-Giegy AG-R 44,577
---------------------------------------------------------------------------------
50 Nestle SA 53,296
---------------------------------------------------------------------------------
10 Roche Holdings AG Genusscheine 75,542
---------------------------------------------------------------------------------
165 Zurich Versicherungsgesellschaft 50,672
--------------------------------------------------------------------------------- -------------
Total 328,085
--------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
---------------------------------------------------------------------------------
UNITED KINGDOM, SCOTLAND & NORTH IRELAND--3.2%
---------------------------------------------------------------------------------
11,000 Associated British Ports Holdings PLC $ 47,658
---------------------------------------------------------------------------------
8,000 BTR PLC 40,968
---------------------------------------------------------------------------------
5,900 Boots Co. PLC 51,124
---------------------------------------------------------------------------------
12,000 (d)British Gas PLC 44,825
---------------------------------------------------------------------------------
17,600 British Steel PLC 45,536
---------------------------------------------------------------------------------
6,700 Cadbury Schweppes PLC 57,133
---------------------------------------------------------------------------------
15,100 Caradon PLC 45,425
---------------------------------------------------------------------------------
9,800 Chubb Security 48,535
---------------------------------------------------------------------------------
7,500 Compass Group 51,382
---------------------------------------------------------------------------------
8,000 Grand Metropolitan PLC 54,133
---------------------------------------------------------------------------------
3,960 Imperial Chemical Industries PLC 46,075
---------------------------------------------------------------------------------
8,500 Marks & Spencer PLC 57,452
---------------------------------------------------------------------------------
5,000 (d)Midlands Electricity 70,959
---------------------------------------------------------------------------------
3,600 RMC Group PLC 57,180
---------------------------------------------------------------------------------
3,650 RTZ Corp. PLC 52,386
---------------------------------------------------------------------------------
7,700 Rank Organisation PLC 48,567
---------------------------------------------------------------------------------
4,900 Reckitt & Colman PLC 50,223
---------------------------------------------------------------------------------
31,600 Rugby Group PLC 51,764
---------------------------------------------------------------------------------
8,900 (d)Scottish Power PLC 51,367
---------------------------------------------------------------------------------
27,500 Sedgwick Group PLC 50,731
---------------------------------------------------------------------------------
8,400 Smith, W.H. Group PLC 55,683
---------------------------------------------------------------------------------
6,000 Thames Water PLC 50,750
---------------------------------------------------------------------------------
12,700 Tomkins PLC 51,329
---------------------------------------------------------------------------------
9,000 Williams Holdings PLC 45,675
--------------------------------------------------------------------------------- -------------
Total 1,226,860
--------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
- -------------- --------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
---------------------------------------------------------------------------------
UNITED KINGDOM, SCOTLAND & NORTH IRELAND--CONTINUED
---------------------------------------------------------------------------------
TOTAL FOREIGN EQUITY 6,648,045
--------------------------------------------------------------------------------- -------------
TOTAL STOCKS (IDENTIFIED COST $16,009,177) 18,055,917
--------------------------------------------------------------------------------- -------------
BONDS--25.7%
- -------------------------------------------------------------------------------------------------
TREASURY--9.1%
---------------------------------------------------------------------------------
$ 2,025,000 United States Treasury Note, 6.50%, 05/15/2005 2,132,447
---------------------------------------------------------------------------------
860,000 United States Treasury Note, 7.25%, 08/15/2004 945,811
---------------------------------------------------------------------------------
350,000 United States Treasury Note, 7.50% 02/15/2005 392,249
--------------------------------------------------------------------------------- -------------
TOTAL TREASURY 3,470,507
--------------------------------------------------------------------------------- -------------
MORTGAGE-BACKED SECURITIES--5.0%
---------------------------------------------------------------------------------
GOVERNMENT AGENCY--5.0%
---------------------------------------------------------------------------------
499,681 Federal Home Loan Mortgage Corp., 7.50%, 10/1/2025 509,040
---------------------------------------------------------------------------------
197,052 Federal Home Loan Mortgage Corp., 7.00%, 4/1/2009 199,513
---------------------------------------------------------------------------------
97,635 Federal National Mortgage Association, 7.00%, 5/1/2001 99,159
---------------------------------------------------------------------------------
244,678 Federal National Mortgage Association, 8.00%, 7/1/2023 252,627
---------------------------------------------------------------------------------
307,666 Government National Mortgage Association, 7.50%, 1/15/2024 314,197
---------------------------------------------------------------------------------
505,454 Government National Mortgage Association, 8.00%, 7/15/2025 523,140
--------------------------------------------------------------------------------- -------------
TOTAL MORTGAGE-BACKED SECURITIES 1,897,676
--------------------------------------------------------------------------------- -------------
HIGH YIELD BONDS--4.5%
---------------------------------------------------------------------------------
AUTOMOTIVE--0.2%
---------------------------------------------------------------------------------
75,000 Exide Corp., Sr. Note, 10%, 4/15/2005 81,000
--------------------------------------------------------------------------------- -------------
BANKING--0.3%
---------------------------------------------------------------------------------
100,000 First Nationwide Holdings, Sr. Note, 12.25%, 5/15/2001 114,125
--------------------------------------------------------------------------------- -------------
BROADCAST RADIO & TV--0.4%
---------------------------------------------------------------------------------
50,000 Chancellor Broadcasting Co., Sr. Sub. Note, 12.50%, 10/1/2004 53,750
---------------------------------------------------------------------------------
50,000 SCI Television, Sr. Secd. Note, 11.00%, 6/30/2005 53,000
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
- -------------- --------------------------------------------------------------------------------- -------------
<C> <S> <C>
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
---------------------------------------------------------------------------------
BROADCAST RADIO & TV--CONTINUED
---------------------------------------------------------------------------------
$ 50,000 Sinclair Broadcast Group, Sr. Sub. Note, 10.00%, 9/30/2005 $ 51,375
--------------------------------------------------------------------------------- -------------
Total 158,125
--------------------------------------------------------------------------------- -------------
CABLE TELEVISION--0.4%
---------------------------------------------------------------------------------
25,000 CAI Wireless Systems, Sr. Note, 12.25%, 9/15/2002 26,469
---------------------------------------------------------------------------------
50,000 Continental Cablevision, Sr. Deb., 9.50%, 8/1/2013 52,750
---------------------------------------------------------------------------------
25,000 Fundy Cable Ltd./Ltee, Sr. Secd. 2nd Priority Note,
11.00%, 11/15/2005 25,563
---------------------------------------------------------------------------------
100,000 International Cabletel, Sr. Note, 0/12.75% 4/15/2005 61,125
--------------------------------------------------------------------------------- -------------
Total 165,907
--------------------------------------------------------------------------------- -------------
CHEMICALS & PLASTICS--0.3%
---------------------------------------------------------------------------------
50,000 Arcadian Partners Lp, Sr. Note, Series B, 10.75%, 5/1/2005 55,000
---------------------------------------------------------------------------------
50,000 G-I Holdings, Sr. Disc. Note, 0%, 10/1/1998 37,937
--------------------------------------------------------------------------------- -------------
Total 92,937
--------------------------------------------------------------------------------- -------------
CLOTHING & TEXTILES--0.1%
---------------------------------------------------------------------------------
50,000 Westpoint Stevens, Inc., Sr. Sub. Deb., 9.375%, 12/15/2005 50,750
--------------------------------------------------------------------------------- -------------
CONGLOMERATES--0.1%
---------------------------------------------------------------------------------
50,000 Sherritt Gordon Ltd., Sr. Note, 9.75%, 4/1/2003 52,250
--------------------------------------------------------------------------------- -------------
CONSUMER PRODUCTS--0.3%
---------------------------------------------------------------------------------
50,000 (c)Herff Jones, Inc., Sr. Sub. Note, 11.00%, 8/15/2005 52,875
---------------------------------------------------------------------------------
50,000 Playtex Family Products Corp., Sr. Sub. Note, 9.00%, 12/15/2003 44,250
--------------------------------------------------------------------------------- -------------
Total 97,125
--------------------------------------------------------------------------------- -------------
CONTAINER & GLASS PRODUCTS--0.1%
---------------------------------------------------------------------------------
50,000 Owens Illinois, Inc., Sr. Sub. Note, 9.75%, 8/15/2004 52,125
--------------------------------------------------------------------------------- -------------
FOOD & DRUG RETAILERS--0.3%
---------------------------------------------------------------------------------
50,000 Pathmark Stores, Inc., Sr. Sub. Note, 9.625%, 5/1/2003 46,813
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
---------------------------------------------------------------------------------
FOOD & DRUG RETAILERS--CONTINUED
---------------------------------------------------------------------------------
$ 50,000 Ralph's Grocery Co., Sr. Note, 10.45%, 6/15/2004 $ 49,375
--------------------------------------------------------------------------------- -------------
Total 96,188
--------------------------------------------------------------------------------- -------------
FOOD PRODUCTS--0.2%
---------------------------------------------------------------------------------
50,000 Curtice-Burns Foods, Inc., Sr. Sub. Note, 12.25%, 2/1/2005 51,500
---------------------------------------------------------------------------------
25,000 (c)Van de Kamp's Inc., Sr. Sub. Note, 12.00%, 9/15/2005 25,813
--------------------------------------------------------------------------------- -------------
Total 77,313
--------------------------------------------------------------------------------- -------------
FOOD SERVICES--0.1%
---------------------------------------------------------------------------------
50,000 Flagstar Corp., Sr. Note, 10.875%, 12/1/2002 45,750
--------------------------------------------------------------------------------- -------------
FOREST PRODUCTS--0.3%
---------------------------------------------------------------------------------
50,000 Repap New Brunswick, 2nd Priority Sr. Secd. Note,
10.625%, 4/15/2005 49,688
---------------------------------------------------------------------------------
50,000 Stone Container Corp., Sr. Note, 9.875%, 2/1/2001 48,688
--------------------------------------------------------------------------------- -------------
Total 98,376
--------------------------------------------------------------------------------- -------------
HEALTHCARE--0.1%
---------------------------------------------------------------------------------
50,000 Tenet Healthcare, Sr. Sub. Note, 10.125%, 3/1/2005 54,438
--------------------------------------------------------------------------------- -------------
HOME PRODUCTS & FURNISHINGS--0.1%
---------------------------------------------------------------------------------
50,000 American Standard, Inc., Sr. Sub. Disc. Deb., 0/10.50%, 6/1/2005 42,250
--------------------------------------------------------------------------------- -------------
LEISURE & ENTERTAINMENT--0.1%
---------------------------------------------------------------------------------
50,000 (c)Six Flags Theme Parks, Sr. Sub. Disc. Note, 0/12.25%, 6/15/2005 39,125
--------------------------------------------------------------------------------- -------------
OIL & GAS--0.1%
---------------------------------------------------------------------------------
50,000 Falcon Drilling Company, Sr. Note, 9.75%, 1/15/2001 50,750
--------------------------------------------------------------------------------- -------------
RETAILERS--0.1%
---------------------------------------------------------------------------------
50,000 Brylane Capital Corp., Sr. Sub. Note, 10.00%, 9/1/2003 43,750
--------------------------------------------------------------------------------- -------------
SERVICES--0.1%
---------------------------------------------------------------------------------
25,000 (c)Coinmach Corporation, Sr. Note, 11.75%, 11/15/2005 25,312
--------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
---------------------------------------------------------------------------------
STEEL--0.3%
---------------------------------------------------------------------------------
$ 50,000 GS Technologies Operating Co., Inc., Sr. Note, 12.00%, 9/1/2004 $ 49,500
---------------------------------------------------------------------------------
50,000 Northwestern Steel & Wire, Sr. Note, 9.50%, 6/15/2001 49,500
--------------------------------------------------------------------------------- -------------
Total 99,000
--------------------------------------------------------------------------------- -------------
TELECOMMUNICATIONS & CELLULAR--0.4%
---------------------------------------------------------------------------------
25,000 (c)IXC Communications, Inc., Sr. Note, 12.50%, 10/1/2005 26,188
---------------------------------------------------------------------------------
25,000 MobileMedia Communication, Sr. Sub. Note, 9.375%, 11/1/2007 25,313
---------------------------------------------------------------------------------
50,000 Nextel Communications, Inc., Sr. Disc. Note, 0/11.50%, 9/1/2003 30,125
---------------------------------------------------------------------------------
50,000 Paging Network, Sr. Sub. Note, 10.125%, 8/1/2007 53,375
--------------------------------------------------------------------------------- -------------
Total 135,001
--------------------------------------------------------------------------------- -------------
UTILITIES--0.1%
---------------------------------------------------------------------------------
50,000 California Energy Co., Sr. Disc. Note, 0/10.25%, 1/15/2004 46,500
--------------------------------------------------------------------------------- -------------
TOTAL HIGH YIELD BONDS 1,718,097
--------------------------------------------------------------------------------- -------------
FOREIGN
CURRENCY
PAR
AMOUNT
- -------------- ---------------------------------------------------------------------------------
FOREIGN BONDS--7.1%
---------------------------------------------------------------------------------
AUSTRALIAN DOLLAR--0.1%
---------------------------------------------------------------------------------
60,000 State Bank of New South Wales, 12.25%, 2/26/2001 51,989
--------------------------------------------------------------------------------- -------------
BELGIUM FRANC--0.4%
---------------------------------------------------------------------------------
200,000 Belgian Gov't., Foreign Gov't. Guarantee, 10.00%, 4/5/1996 6,869
---------------------------------------------------------------------------------
4,000,000 Belgium Kingdom, 7.75%, 10/15/2004 143,774
--------------------------------------------------------------------------------- -------------
Total 150,643
--------------------------------------------------------------------------------- -------------
CANADIAN DOLLAR--0.4%
---------------------------------------------------------------------------------
155,000 Ontario Hydro, 9.00%, 6/24/2002 124,354
--------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN
CURRENCY VALUE
PAR IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN BONDS--CONTINUED
---------------------------------------------------------------------------------
DANISH KRONE--0.3%
---------------------------------------------------------------------------------
500,000 Denmark, 8.00%, 5/15/2003 $ 93,904
--------------------------------------------------------------------------------- -------------
DEUTSCHE MARK--1.2%
---------------------------------------------------------------------------------
150,000 Bundesobligationen, Deb., 7.25%, 10/20/1997 109,656
---------------------------------------------------------------------------------
435,000 Treuhandanstalt, 7.75%, 10/1/2002 332,468
--------------------------------------------------------------------------------- -------------
Total 442,124
--------------------------------------------------------------------------------- -------------
FRENCH FRANC--0.9%
---------------------------------------------------------------------------------
950,000 France O.A.T., 8.50%, 11/25/2002 209,931
---------------------------------------------------------------------------------
600,000 KFW International Finance, 7.00%, 5/12/2000 123,910
--------------------------------------------------------------------------------- -------------
Total 333,841
--------------------------------------------------------------------------------- -------------
ITALIAN LIRA--0.4%
---------------------------------------------------------------------------------
300,000,000 Buoni Poliennali Del Tes, 9.50%, 1/1/2005 169,382
--------------------------------------------------------------------------------- -------------
JAPANESE YEN--1.8%
---------------------------------------------------------------------------------
28,000,000 Export-import Bank Japan, 4.375%, 10/1/2003 308,550
---------------------------------------------------------------------------------
11,000,000 Interamerican Development, Deb., 7.25%, 5/15/2000 134,189
---------------------------------------------------------------------------------
20,000,000 KFW International Finance, 6.00%, 11/29/1999 231,941
--------------------------------------------------------------------------------- -------------
Total 674,680
--------------------------------------------------------------------------------- -------------
NETHERLANDS GUILDER--0.4%
---------------------------------------------------------------------------------
250,000 Netherlands Government, 5.75%, 1/15/2004 152,226
--------------------------------------------------------------------------------- -------------
SPANISH PESETA--0.3%
---------------------------------------------------------------------------------
16,000,000 Spanish Government, 10.00%, 2/28/2005 128,332
--------------------------------------------------------------------------------- -------------
SWEDISH KRONA--0.2%
---------------------------------------------------------------------------------
700,000 Sweden, 6.00%, 2/9/2005 89,068
--------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN
CURRENCY VALUE
PAR IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN BONDS--CONTINUED
---------------------------------------------------------------------------------
UNITED KINGDOM POUND--0.7%
---------------------------------------------------------------------------------
160,000 UK Conversion, 9.00%, 3/3/2000 $ 263,625
--------------------------------------------------------------------------------- -------------
TOTAL FOREIGN BONDS 2,674,168
--------------------------------------------------------------------------------- -------------
TOTAL BONDS (IDENTIFIED COST $9,375,356) 9,760,448
--------------------------------------------------------------------------------- -------------
(A)CASH EQUIVALENTS--26.3%
- -------------------------------------------------------------------------------------------------
TREASURY SECURITIES--14.3%
---------------------------------------------------------------------------------
5,500,000 United States Treasury Bill 3/14/1996 (identified cost $5,416,634) 5,417,720
--------------------------------------------------------------------------------- -------------
(E)REPURCHASE AGREEMENT--12.0%
---------------------------------------------------------------------------------
$ 4,555,000 J.P. Morgan & Co., Inc., 5.930%, dated 10/31/1995, due 12/1/1995
(at amortized cost) 4,555,000
--------------------------------------------------------------------------------- -------------
TOTAL CASH EQUIVALENTS 9,972,720
--------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST $35,356,167) (F) $ 37,789,085
--------------------------------------------------------------------------------- -------------
</TABLE>
(a) The Fund purchases Index futures contracts to efficiently manage cash flows
resulting from shareholder purchases and redemptions, dividend and capital
gain payments to shareholders and corporate actions while maintaining
exposure to stocks and minimizing trading costs. The total market value of
open Index futures contracts is $4,945,475 at November 30, 1995, which
represents 13.0% of net assets. Taking into consideration these open Index
futures contracts, the Fund's effective, total exposure to stocks is 60.6%.
The Fund holds cash equivalents as collateral for thirteen S & P 500
Futures contracts with a market value of $3,960,875. Consequently, the
Fund's exposure to large cap stocks is 24.0% of the fund. The Fund holds
cash equivalents as collateral for the nine S & P Midcap futures contracts
with a market value of $984,600. Consequently, the Fund's exposure to small
cap stocks is 19.1% of the Fund.
(b) Non-income producing security.
(c) Denotes a restricted security which is subject to restrictions on resale
under Federated Securities laws. At the end of the period, these
securities amounted to $274,913 which represents 0.7% of net assets.
(d) The utility stocks are shown in the asset category in which they were
purchased. The Fund's total exposure to utility stocks is 2.3% of net
assets.
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
(e) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations. The investment in the repurchase agreement was through
participation in a joint account with other Federated funds.
(f) The cost of investments for federal tax purposes amounts to $35,390,388.
The net unrealized appreciation of investments on a federal tax basis
amounts to $2,398,697 which is comprised of $2,825,166 appreciation and
$426,469 depreciation at November 30, 1995.
Note: The categories of investments are shown as a percentage of net assets
($37,953,490) at November 30, 1995.
The following acronym(s) are used throughout this portfolio:
ADR--American Depository Receipt
GDR--Global Depository Receipts
LP--Limited Partnership
PEPS--Participating Equity Preferred Stock
PLC--Public Limited Company
STRYPES--Structured Yield Product Exchangeable for Stock
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ----------------------------------------------------------------------------------------------------
Investment in repurchase agreement $ 4,555,000
- --------------------------------------------------------------------------------------
Investments in securities 33,234,085
- -------------------------------------------------------------------------------------- ------------
Total investments in securities, at value (identified cost: $35,356,167
and tax cost: $35,390,388) $ 37,789,085
- ----------------------------------------------------------------------------------------------------
Cash denominated in foreign currencies (identified cost: $58,627) 58,117
- ----------------------------------------------------------------------------------------------------
Income receivable 186,093
- ----------------------------------------------------------------------------------------------------
Receivable for investments sold 196,344
- ----------------------------------------------------------------------------------------------------
Receivable for shares sold 111,753
- ----------------------------------------------------------------------------------------------------
Receivable for foreign currency sold 135,369
- ----------------------------------------------------------------------------------------------------
Deferred expenses 30,822
- ---------------------------------------------------------------------------------------------------- ------------
Total assets 38,507,583
- ----------------------------------------------------------------------------------------------------
LIABILITIES:
- ----------------------------------------------------------------------------------------------------
Payable for investments purchased 282,297
- --------------------------------------------------------------------------------------
Payable for shares redeemed 57,536
- --------------------------------------------------------------------------------------
Payable to Bank 22,902
- --------------------------------------------------------------------------------------
Payable for taxes withheld 2,694
- --------------------------------------------------------------------------------------
Payable for daily variation margin 3,150
- --------------------------------------------------------------------------------------
Payable for foreign currency purchased 135,369
- --------------------------------------------------------------------------------------
Accrued expenses 50,145
- -------------------------------------------------------------------------------------- ------------
Total liabilities 554,093
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSETS for 3,274,929 shares outstanding $ 37,953,490
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSETS CONSIST OF:
- ----------------------------------------------------------------------------------------------------
Paid in capital $ 34,324,214
- ----------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments, translation
of assets and liabilities in foreign currency, and futures contracts 2,678,031
- ----------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments, foreign currency transactions, and futures
contracts 608,988
- ----------------------------------------------------------------------------------------------------
Undistributed net investment income 342,257
- ---------------------------------------------------------------------------------------------------- ------------
Total Net Assets $ 37,953,490
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PROCEEDS PER SHARE:
- ----------------------------------------------------------------------------------------------------
Institutional Shares: $25,611,107 / 2,209,617 shares outstanding $11.59
- ---------------------------------------------------------------------------------------------------- ------------
Select Shares: $12,342,383 / 1,065,312 shares outstanding $11.59
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ------------------------------------------------------------------------------------------------------
Dividends (net of foreign taxes withheld of $10,962) $ 239,488
- ------------------------------------------------------------------------------------------------------
Interest (net of foreign taxes withheld of $662) 841,801
- ------------------------------------------------------------------------------------------------------ ---------
Total income 1,081,289
- ------------------------------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------------------
Investment advisory fee $ 183,693
- -------------------------------------------------------------------------------------------
Administrative personnel and services fee 155,000
- -------------------------------------------------------------------------------------------
Custodian fees 91,401
- -------------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 50,845
- -------------------------------------------------------------------------------------------
Directors'/Trustees' fees 2,173
- -------------------------------------------------------------------------------------------
Auditing fees 12,407
- -------------------------------------------------------------------------------------------
Legal fees 3,809
- -------------------------------------------------------------------------------------------
Portfolio accounting fees 31,136
- -------------------------------------------------------------------------------------------
Distribution services fee--Select Shares 40,751
- -------------------------------------------------------------------------------------------
Shareholder services fee--Institutional Shares 47,647
- -------------------------------------------------------------------------------------------
Shareholder services fee--Select Shares 13,584
- -------------------------------------------------------------------------------------------
Share registration costs 19,542
- -------------------------------------------------------------------------------------------
Printing and postage 34,745
- -------------------------------------------------------------------------------------------
Insurance premiums 3,852
- -------------------------------------------------------------------------------------------
Miscellaneous 13,664
- ------------------------------------------------------------------------------------------- ---------
Total expenses 704,249
- -------------------------------------------------------------------------------------------
Waivers and reimbursements--
- -------------------------------------------------------------------------------------------
Waiver of investment advisory fee $(183,693)
- --------------------------------------------------------------------------------
Waiver of distribution services fee--Select Shares (13,584)
- --------------------------------------------------------------------------------
Waiver of shareholder services fee--Institutional Shares (47,647)
- --------------------------------------------------------------------------------
Reimbursement of other operating expenses (172,998)
- -------------------------------------------------------------------------------- ---------
Total waivers and reimbursements (417,922)
- ------------------------------------------------------------------------------------------- ---------
Net expenses 286,327
- ------------------------------------------------------------------------------------------------------ ---------
Net investment income 794,962
- ------------------------------------------------------------------------------------------------------ ---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FOREIGN CURRENCY, AND FUTURES CONTRACTS:
- ------------------------------------------------------------------------------------------------------
Net realized gain on investments, foreign currency transactions, and futures contracts 651,763
- ------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments, translation of assets
and liabilities in foreign currency, and futures contracts 3,244,417
- ------------------------------------------------------------------------------------------------------ ---------
Net realized and unrealized gain on investments, foreign currency, and futures contracts 3,896,180
- ------------------------------------------------------------------------------------------------------ ---------
Change in net assets resulting from operations $4,691,142
- ------------------------------------------------------------------------------------------------------ ---------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, 1995 NOVEMBER 30, 1994*
<S> <C> <C>
- --------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
- --------------------------------------------------------------------
OPERATIONS--
- --------------------------------------------------------------------
Net investment income $ 794,962 $ 225,576
- --------------------------------------------------------------------
Net realized gain (loss) on investments, foreign
currency transactions, and futures contracts ($888,863 and $31,171
net gains respectively, as computed for federal tax purposes) 651,763 75,474
- --------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of
investments, translation of assets and liabilities in
foreign currency, and futures contracts 3,244,417 (566,386)
- -------------------------------------------------------------------- -------------------- ---------------------
Change in net assets resulting from operations 4,691,142 (265,336)
- -------------------------------------------------------------------- -------------------- ---------------------
DISTRIBUTIONS TO SHAREHOLDERS--
- --------------------------------------------------------------------
Distributions from net investment income:
- --------------------------------------------------------------------
Institutional Shares (547,698) (107,045)
- --------------------------------------------------------------------
Select Shares (101,587) (9,749)
- --------------------------------------------------------------------
Distributions from net realized gain on investments,
foreign currency transactions, and futures contracts
- --------------------------------------------------------------------
Institutional Shares (28,086) --
- --------------------------------------------------------------------
Select Shares (3,092) --
- -------------------------------------------------------------------- -------------------- ---------------------
Change in net assets resulting
from distributions to shareholders (680,463) (116,794)
- -------------------------------------------------------------------- -------------------- ---------------------
SHARE TRANSACTIONS--
- --------------------------------------------------------------------
Proceeds from sale of shares 24,745,587 18,841,563
- --------------------------------------------------------------------
Net asset value of shares issued to shareholders
in payment of distributions declared 492,403 54,330
- --------------------------------------------------------------------
Cost of shares redeemed (8,663,934) (1,145,008)
- -------------------------------------------------------------------- -------------------- ---------------------
Change in net assets resulting from share transactions 16,574,056 17,750,885
- -------------------------------------------------------------------- -------------------- ---------------------
Change in net assets 20,584,735 17,368,755
- --------------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------------
Beginning of period 17,368,755 --
- -------------------------------------------------------------------- -------------------- ---------------------
End of period (including undistributed net investment
income of $342,257 and $120,335 respectively) $ 37,953,490 $ 17,368,755
- -------------------------------------------------------------------- -------------------- ---------------------
</TABLE>
*For the period from January 27, 1994 (start of business) to November 30, 1994.
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Managed Series Trust (the "Trust") is registered under the Investment Company
Act of 1940, as amended (the "Act") as an open-end, management investment
company. The Trust consists of four diversified portfolios. The financial
statements included herein are only those of Federated Managed Aggressive Growth
Fund (the "Fund"). The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held.
The Fund offers two classes of shares: Institutional Shares (formerly,
Institutional Service Shares) and Select Shares. The Institutional Service
Shares changed its name to Institutional Shares effective June 30, 1995.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Short-term securities with remaining maturities of
sixty days or less at the time of purchase may be valued at amortized cost,
which approximates fair market value. All other securities are valued at
prices provided by an independent pricing service.
REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral
securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
Revenue Code, as amended (the "Code"). Dividend income and distributions to
shareholders are recorded on the ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
foreign currency transactions and futures transactions. As a result of
these differences, the following required reclassifications have been made
to the current year financial statements.
<TABLE>
<CAPTION>
INCREASE (DECREASE)
ACCUMULATED
NET REALIZED UNDISTRIBUTED NET
PAID-IN CAPITAL GAIN/LOSS INVESTMENT INCOME
<S> <C> <C>
($740) ($75,505) $76,245
</TABLE>
Net investment income, net realized gains/losses, and net assets were not
affected by this reclassification.
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.
However, federal taxes may be imposed on the Fund upon the disposition of
certain investments in passive foreign investment companies. Withholding
taxes on foreign dividends have been provided for in accordance with the
Fund's understanding of the applicable country's tax rules and rates.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized using the straight-line method over a period of five years from
the Fund's commencement date.
CONCENTRATION OF CREDIT RISK--The Fund invests in securities of non-U.S.
issuers. Although the Fund maintains a diversified investment portfolio,
the political or economic developments within a particular country or
region may have an adverse effect on the ability of domiciled issuers to
meet their obligations. Additionally, political or economic developments
may have an effect on the liquidity and volatility of portfolio securities
and currency holdings.
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
At November 30, 1995, the industry diversification of foreign securities
was as follows:
<TABLE>
<CAPTION>
% OF % OF
INDUSTRY NET ASSETS INDUSTRY NET ASSETS
<S> <C> <C> <C>
Agency 2.1
Industrial Components 0.8
Automobiles 0.1
Insurance 0.8
Banking 0.9
Leisure & Tourism 0.4
Beverages & Tobacco 0.2
Machinery & Engineering 1.7
Broadcasting & Publishing 0.5
Merchandising 1.2
Building Materials &
Components 1.0 Metals 0.7
Miscellaneous Materials
Business & Public Services 0.9 & Commodities 0.3
Chemicals 1.0
Multi-Industry 0.7
Construction & Housing 0.4
Real Estate 0.3
Data Processing &
Reproduction 0.3 Recreation, Other Consumer Goods 0.4
Electrical & Electronics 0.4
Sovereign 4.5
Energy Sources 0.3
State/Provincial 0.1
Financial Services 0.4
Supranational 0.4
Food & Household Products 0.9
Telecommunications 0.7
Forest Products & Paper 0.2
Transportation 0.8
Health & Personal Care 0.9
Utilities--Electrical & Gas 0.5
</TABLE>
FUTURES CONTRACTS--The Fund may purchase and sell futures contracts to
accommodate cash flows into and out of the Fund's portfolio and to hedge
against the effects of changes in the value of portfolio securities due to
anticipated changes in interest rates and market conditions. Upon entering
into a stock futures contract with a broker, the Fund is required to
deposit in a segregated account a specified amount of cash or U.S.
government securities. Futures contracts are valued daily and unrealized
gains or losses are recorded in a "variation margin" account. Daily, the
Fund receives from or pays to the broker a specified amount of cash based
upon changes in the variation margin account. When a contract is closed,
the Fund recognizes a realized gain or loss. Futures contracts have market
risks, including the risk that the change in the value of the contract may
not correlate with changes in the value of the underlying securities. For
the period ended November 30, 1995, the Fund had realized gains of $414,584
on futures contracts.
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
At November 30, 1995, the Fund had outstanding futures contracts as set
forth below:
<TABLE>
<CAPTION>
UNREALIZED
TOTAL FACE APPRECIATION
EXPIRATION DATE CONTRACTS TO DELIVER/RECEIVE VALUE POSITION (DEPRECIATION)
<S> <C> <C> <C> <C>
December 1995 9 S&P Midcap 949,750 Long $ 34,850
December 1995 8 S&P 500 2,262,150 Long 166,850
March 1996 5 S&P 500 1,487,200 Long 44,675
---------- -----------------
Net Unrealized Appreciation (Depreciation) on Futures Contracts $ 246,375
-----------------
</TABLE>
FOREIGN CURRENCY COMMITMENTS--The Fund may enter into foreign currency
commitments for the delayed delivery of securities or foreign currency
exchange transactions. Risks may arise upon entering these transactions
from the potential inability of counterparties to meet the terms of their
commitments and from unanticipated movements in security prices or foreign
exchange rates. The foreign currency transactions are adjusted by the daily
exchange rate of the underlying currency and any gains or losses are
recorded for financial statement purpose as unrealized until the settlement
date. At November 30, 1995, the Fund had outstanding foreign currency
commitments as set forth below:
<TABLE>
<CAPTION>
UNREALIZED
APPRECIATION
SETTLEMENT DATE CONTRACTS TO DELIVER/RECEIVE IN EXCHANGE FOR (DEPRECIATION)
<S> <C> <C> <C>
CONTRACTS PURCHASED:
December 1, 1995 3,779 Argentine Peso $ 3,780 --
December 1, 1995 211,338 Hong Kong Dollar $ 27,326 (4)
December 5, 1995 38,825 Pound Sterling $ 59,189 249
CONTRACTS SOLD:
December 5, 1995 29,566 Pound Sterling $ 45,073 (190)
------
Net Unrealized Appreciation (Depreciation) on Foreign Currency
Commitments $ 55
------
</TABLE>
FOREIGN CURRENCY TRANSLATION--The accounting records of the Fund are
maintained in U.S. dollars. All assets and liabilities denominated in
foreign currencies ("FC") are translated into U.S. dollars based on the
rate of exchange of such currencies against U.S. dollars on the date of
valuation. Purchases and sales of securities, income and expenses are
translated at the rate of exchange quoted on the respective date that such
transactions are recorded. Differences between income and expense amounts
recorded and collected or paid are adjusted when reported by the custodian
bank. The Fund does not isolate that portion of the results of
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
operations resulting from changes in foreign exchange rates on investments
from the fluctuations arising from changes in market prices of securities
held. Such fluctuations are included with the net realized and unrealized
gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales
of FCs, currency gains or losses realized between the trade and settlement
dates on securities transactions, the difference between the amounts of
dividends, interest, and foreign withholding taxes recorded on the Fund's
books, and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes
in the value of assets and liabilities other than investments in securities
at fiscal year end, resulting from changes in the exchange rate.
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 Board of Trustees. 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 November 30,
1995 is as follows:
<TABLE>
<CAPTION>
ACQUISITION ACQUISITION
SECURITY DATE COST
<S> <C> <C>
Coinmach Corporation, Sr. Note 11/14/95 $ 25,000
Herff Jones, Inc., Sr. Sub Note 9/14/95 51,750
IXC Communications, Inc., Sr. Note 9/25/95 24,320
Six Flags Theme Parks, Sr. Sub. Disc. Note 7/17/95 39,262
Van De Kamp's Inc., Sr. Sub Note 9/14/95 25,000
Westinghouse Electric Corp., PEPS 9/27/95 - 9/28/95 97,600
</TABLE>
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares.
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, 1995 NOVEMBER 30, 1994(A)
<S> <C> <C> <C> <C>
INSTITUTIONAL SHARES SHARES AMOUNT SHARES AMOUNT
Shares sold 1,317,111 $ 14,153,127 1,703,344 $ 17,093,888
- ---------------------------------------------------------
Shares issued to shareholders in
payment of distributions declared 39,301 411,923 4,919 49,959
- ---------------------------------------------------------
Shares redeemed (744,515) (7,759,093) (110,543) (1,106,095)
- --------------------------------------------------------- ---------- ------------- ---------- -------------
Net change resulting from
Institutional share transactions 611,897 $ 6,805,957 1,597,720 $ 16,037,752
- --------------------------------------------------------- ---------- ------------- ---------- -------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, 1995 NOVEMBER 30, 1994(A)
<S> <C> <C> <C> <C>
SELECT SHARES SHARES AMOUNT SHARES AMOUNT
Shares sold 970,853 $ 10,592,460 174,124 $ 1,747,675
- ---------------------------------------------------------
Shares issued to shareholders in
payment of distributions declared 7,409 80,480 431 4,371
- ---------------------------------------------------------
Shares redeemed (83,687) (904,841) (3,818) (38,913)
- --------------------------------------------------------- ---------- ------------- ---------- -------------
Net change resulting from
Select share transactions 894,575 $ 9,768,099 170,737 $ 1,713,133
- --------------------------------------------------------- ---------- ------------- ---------- -------------
Net change resulting from
share transactions 1,506,472 $ 16,574,056 1,768,457 $ 17,750,885
- --------------------------------------------------------- ---------- ------------- ---------- -------------
</TABLE>
(a) For the period from January 27, 1994 (start of business) to November 30,
1994.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser,
(the "Adviser"), receives for its services an annual investment advisory fee
equal to .75 of 1% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive any portion of its fee and/or reimburse certain
operating expenses of the Fund. The Adviser can modify or terminate this
voluntary waiver and/or reimbursement at any time at its sole discretion.
Under the terms of a sub-advisory agreement between the Adviser and Federated
Global Research Corp., Federated Global Research Corp. receives an allocable
portion of the Fund's advisory fee. Such allocation is based on the amount of
foreign securities which the Sub-Adviser manages for the Fund. This fee is paid
by the Adviser out of its resources and is not an incremental Fund expense.
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. This fee 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 Select shares. The Plan provides that the Fund may incur
distribution expenses of up to .75 of 1% of average net assets of Select shares
, annually, to compensate FSC. The distributor may voluntarily choose to waive
any portion of its fee. The distributor can modify or terminate this voluntary
waiver at any time at its sole discretion.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of
1% of average daily net assets of the Fund for the period. This fee is to obtain
certain services for shareholders and to maintain shareholder accounts. FSS may
voluntarily choose to waive any portion of its fee. FSS can modify or terminate
this voluntary waiver at any time at its sole discretion. For the fiscal year
ended November 30, 1995, the Institutional Shares fully waived its shareholder
services fee.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Fund. This
fee is based on the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses ($36,187) and start-up
administrative service expenses of ($39,069) were borne initially by Adviser.
The Fund has agreed to reimburse Adviser for the organizational and start-up
administrative expenses during the five year period following effective date.
For the period ended November 30, 1995, the Fund paid $7,834 and $5,001,
pursuant to this agreement.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended November 30, 1995, were as follows:
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------------
PURCHASES $ 43,920,779
- --------------------------------------------------------------------------------------------------- -------------
SALES $ 29,976,038
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
MANAGED SERIES TRUST:
(Federated Managed Aggressive Growth Fund):
We have audited the accompanying statement of assets and liabilities of
Federated Managed Aggressive Growth Fund (an investment portfolio of Managed
Series Trust, a Massachusetts business trust), including the schedule of
portfolio investments, as of November 30, 1995, the related statement of
operations for the year then ended, and the statement of changes in net assets
and the financial highlights (see pages 2 and 27 of the prospectus) for the
periods presented. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Federated Managed Aggressive Growth Fund (an investment portfolio of Managed
Series Trust) as of November 30, 1995, and the results of its operations for the
year then ended, and the changes in its net assets and its financial highlights
for the periods presented, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
January 18, 1996
APPENDIX
- --------------------------------------------------------------------------------
STANDARD AND POOR'S RATINGS GROUP LONG-TERM DEBT RATINGS
AAA--Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.
A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB--Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.
B--Debt rated B has greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or
BB- rating.
CCC--Debt rated CCC has currently identifiable vulnerability to default and is
dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating.
CC--The rating CC typically is applied to debt subordinated to senior debt that
is assigned an actual or implied CCC debt rating.
C--The rating C typically is applied to debt subordinated to senior debt which
is assigned an actual or implied CCC- debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.
CI--The rating CI is reserved for income bonds on which no interest is being
paid.
D--Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D
rating also will be used upon the filing of a bankruptcy petition if debt
service payments are jeopardized.
MOODY'S INVESTORS SERVICE, INC., CORPORATE BOND RATINGS
Aaa--Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment some time in the future.
Baa--Bonds which are rated Baa are considered as medium-grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well.
Ba--Bonds which are Ba are judged to have speculative elements; their future
cannot be considered as well-assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca--Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C--Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
FITCH INVESTORS SERVICE, INC., LONG-TERM DEBT RATINGS
AAA--Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA--Bonds considered to be investment grade and of very high quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F-1+.
A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB--Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds and, therefore, impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.
BB--Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.
B--Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.
CCC--Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.
CC--Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C--Bonds are in imminent default in payment of interest or principal.
DDD, DD, AND D--Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. DDD
represents the highest potential for recovery on these bonds, and D represents
the lowest potential for recovery.
NR--NR indicates that Fitch does not rate the specific issue.
PLUS (+) OR MINUS (-): Plus or minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the AAA category.
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Federated Managed Aggressive Growth Fund
Institutional Shares Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Sub-Adviser
Federated Global 175 Water Street
Research Corp. New York, NY 10038-4965
- ---------------------------------------------------------------------------------------------------------------------
Custodian
State Street Bank and P.O. Box 8600
Trust Company Boston, Massachusetts 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company P.O. Box 8600
Boston, Massachusetts 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED
AGGRESSIVE GROWTH FUND
INSTITUTIONAL SHARES
PROSPECTUS
A Diversified Portfolio of
Managed Series Trust,
an Open-End Management
Investment Company
Prospectus dated January 31, 1996
[LOGO] FEDERATED SECURITIES CORP.
---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
Cusip 56166K701
3122009A-SS (1/96)
Lifecycle Investing
MANAGED SERIES TRUST
From Federated Investors
(LOGO)
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
Lifecycle Investing
MANAGED SERIES TRUST
SELECT SHARES
Federated Managed Aggesive Growth Fund is part of Managed Series Trust, a
lifecycle
investing program from Federated Investors.
Other Funds available in Managed Series Trust are Federated Managed Income Fund,
Federated Managed Growth and Income Fund, and Federated Managed
Growth Fund.
(LOGO)
FEDERATED SECURITIES CORP.
Distributor
A subsidiary of Federated Investors
(LOGO)
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
(A PORTFOLIO OF MANAGED SERIES TRUST)
SELECT SHARES
PROSPECTUS
The Select Shares of Federated Managed Aggressive Growth Fund (the "Fund")
offered by this prospectus represent interests in the Fund, which is a
diversified investment portfolio of Managed Series Trust (the "Trust"). The
Trust is an open-end management investment company (a mutual fund).
The investment objective of the Fund is to seek capital appreciation. The Fund
invests in both bonds and stocks. Select Shares are sold at net asset value.
THE SELECT SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF
ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THESE SELECT SHARES INVOLVES INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
This prospectus contains the information you should read and know before you
invest in Select Shares of the Fund. Keep this prospectus for future reference.
The Fund has also filed a Statement of Additional Information for Select Shares
and Institutional Shares of all portfolios of the Trust dated January 31, 1996
with the Securities and Exchange Commission. The information contained in the
Statement of Additional Information is incorporated by reference into this
prospectus. You may request a copy of the Statement of Additional Information,
or a paper copy of this prospectus, if you have received your prospectus
electronically, free of charge by calling 1-800-235-4669. To obtain other
information or to make inquiries about the Fund, contact the Fund at the address
listed in the back of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus dated January 31, 1996
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--SELECT SHARES 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Investment Limitations 15
TRUST INFORMATION 15
- ------------------------------------------------------
Management of the Trust 15
Distribution of Select Shares 19
Administration of the Fund 20
Brokerage Transactions 20
NET ASSET VALUE 20
- ------------------------------------------------------
INVESTING IN SELECT SHARES 21
- ------------------------------------------------------
Share Purchases 21
Minimum Investment Required 21
What Shares Cost 22
Subaccounting Services 22
Systematic Investment Program 22
Certificates and Confirmations 22
Dividends 22
Capital Gains 23
REDEEMING SELECT SHARES 23
- ------------------------------------------------------
Through a Financial Institution 23
Telephone Redemption 23
Written Requests 24
Systematic Withdrawal Program 24
Accounts with Low Balances 24
SHAREHOLDER INFORMATION 25
- ------------------------------------------------------
Voting Rights 25
TAX INFORMATION 25
- ------------------------------------------------------
Federal Income Tax 25
State and Local Taxes 25
PERFORMANCE INFORMATION 26
- ------------------------------------------------------
OTHER CLASSES OF SHARES 26
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES 27
- ------------------------------------------------------
FINANCIAL STATEMENTS 28
- ------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 62
- ------------------------------------------------------
APPENDIX 63
- ------------------------------------------------------
ADDRESSES 66
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SELECT SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price).................................................................... None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price).................................................................... None
Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable).................................................. None
Redemption Fee (as a percentage of amount redeemed, if applicable)....................................... None
Exchange Fee............................................................................................. None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver) (1)........................................................................ 0.00%
12b-1 Fee (after waiver) (2)............................................................................. 0.50%
Total Other Expenses (after expense reimbursement)....................................................... 1.25%
Shareholder Services Fee................................................................. 0.25%
Total Operating Expenses (3)................................................................... 1.75%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver of the
management fee. The adviser can terminate this voluntary waiver at any time
at its sole discretion. The maximum management fee is 0.75%.
(2) The maximum 12b-1 fee is 0.75%.
(3) The total operating expenses would have been 3.46% absent the voluntary
waivers of the management fee and a portion of the 12b-1 fee and the
voluntary reimbursement of certain other operating expenses.
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of Select Shares of the Fund will
bear, either directly or indirectly. For more complete descriptions of the
various costs and expenses, see "Investing in Select Shares" and "Trust
Information." Wire-transferred redemptions of less than $5,000 may be subject to
additional fees.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment assuming
(1) 5% annual return and (2) redemption at the end of each time
period................................................................ $18 $55 $95 $206
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
FINANCIAL HIGHLIGHTS--SELECT SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 62.
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, NOVEMBER 30,
1995 1994(A)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.80 $ 10.00
- --------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------
Net investment income 0.17 0.13
- --------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments,
foreign currency, and futures contracts 1.89 (0.25)
- -------------------------------------------------------------------------------- ------- -------
Total from investment operations 2.06 (0.12)
- -------------------------------------------------------------------------------- ------- -------
LESS DISTRIBUTIONS
- --------------------------------------------------------------------------------
Distributions from net investment income (0.25) (0.08)
- --------------------------------------------------------------------------------
Distributions from net realized gain on investments,
foreign currency transactions, and futures contracts (0.02) --
- -------------------------------------------------------------------------------- ------- -------
Total distributions (0.27) (0.08)
- --------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 11.59 $ 9.80
- -------------------------------------------------------------------------------- ------- -------
TOTAL RETURN (B) 21.36% (1.20%)
- --------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------------------------------------------
Expenses 1.75% 1.64%*
- --------------------------------------------------------------------------------
Net investment income 2.65% 2.67%*
- --------------------------------------------------------------------------------
Expense waiver/reimbursement 1.71%(c) 1.97*(d)
- --------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $12,342 $1,673
- --------------------------------------------------------------------------------
Portfolio turnover 139% 77%
- --------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 25, 1994 (date of initial
public investment) to November 30, 1994. For the period from January 27,
1994 (start of business) to May 24, 1994, the Fund had no investment
activity.
(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.
(d) The Adviser waived $6,858 of the investment advisory fee, which represents
0.11% of average net assets, to comply with certain state expense
limitations. The remainder of the waiver/reimbursement was voluntary. This
expense decrease is reflected in both the expense and net investment income
ratios shown above.
(See Notes which are an integral part of the Financial Statements)
Further information about the Fund's performance is contained in the Fund's
annual report for the year ended November 30, 1995, which can be obtained free
of charge.
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated November 15, 1993. The Declaration of Trust permits the Trust to
offer separate series of shares of beneficial interest representing interests in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. As of the date of this prospectus, the Board of
Trustees ("Trustees") have established two classes of shares of the Fund, known
as Select Shares and Institutional Shares. This prospectus relates only to
Select Shares.
Select Shares ("Shares") of the Fund are designed primarily for retail and
private banking customers of financial institutions as a convenient means of
accumulating an interest in a professionally managed, diversified portfolio of
bonds and equities. A minimum initial investment of $1,500 is required.
Shares are currently sold and redeemed at net asset value without a sales charge
imposed by the Fund.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is to seek capital appreciation. There can
be, of course, no assurance that the Fund will achieve its investment objective.
The Fund's investment objective cannot be changed without the approval of
shareholders. Unless otherwise noted, the Fund's investment policies may be
changed by the Trustees without shareholder approval.
INVESTMENT POLICIES
ASSET ALLOCATION. The Fund will primarily invest in two types of assets:
equities and bonds. The Fund's investment approach is based on the conviction
that, over time, the choice of investment asset categories and their relative
long-term weightings within the portfolio will have the primary impact on its
investment performance. Of secondary importance to the Fund's performance are
the shifting of money among asset categories and the selection of securities
within asset categories. Therefore, the Fund will pursue its investment
objective in the following manner: (1) by setting long-term ranges for each
asset category; (2) by moving money among asset categories within those defined
ranges; and (3) by actively selecting securities within each of the asset
categories. The Fund attempts to minimize risk by allocating its assets in such
a fashion.
Within each of these types of investments, the Fund has designated asset
categories. As a matter of investment policy, ranges have been set for each
asset category's portfolio commitment.
The Fund will invest between 60 and 100 percent of its assets in equities. The
equities asset categories are large company stocks, small company stocks,
foreign stocks, and equity reserves.
The Fund will invest between 0 and 40 percent of its assets in bonds. The Fund's
adviser believes that bonds offer opportunities for growth of capital or
otherwise may be desirable under prevailing
market or economic conditions. The bond asset categories are U.S. Treasury
securities, mortgage-backed securities, investment-grade corporate bonds, high
yield corporate bonds and foreign bonds.
The following is a summary of the asset categories and the amount of the Fund's
total assets which may be invested in each asset category:
<TABLE>
<CAPTION>
ASSET CATEGORY RANGE
<S> <C>
EQUITIES 60-100%
Large Company Stocks 0-100%
Small Company Stocks 0-40%
Foreign Stocks 0-40%
Equity Reserves 0-20%
BONDS 0-40%
U.S. Treasury Securities 0-32.5%
Mortgage-Backed Securities 0-12.5%
Investment-Grade Corporate Bonds 0-12.5%
High Yield Corporate Bonds 0-16%
Foreign Bonds 0-16%
</TABLE>
The Fund's adviser will regularly review the Fund's allocation among the asset
categories and make any changes, within the ranges established for each asset
category, that it believes will provide the most favorable outlook for achieving
the Fund's investment objective. The Fund's adviser will attempt to exploit
inefficiencies among the various asset categories. If, for example, foreign
stocks are judged to be unusually attractive relative to other asset categories,
the allocation for foreign stocks may be moved to its upper limit. At other
times, when foreign stocks appear to be overvalued, the commitment may be moved
down to a lesser allocation. There is no assurance, however, that the adviser's
attempts to pursue this strategy will result in a benefit to the Fund.
Each asset category within the Fund will be a managed portfolio. The Fund will
seek superior investment performance through security selection in addition to
determining the percentage of its assets to allocate to each of the asset
categories.
EQUITY ASSET CATEGORIES. The portion of the Fund's assets which is invested in
equities will be allocated among the following asset categories within the
ranges specified:
LARGE COMPANY STOCKS. Large company stocks are common stocks and
securities convertible into or exchangeable for common stocks, such as
rights and warrants, of high-quality companies selected by the Fund's
adviser. Ordinarily, these companies will be in the top 25 percent of
their industries with regard to revenues and have a market
capitalization of $500,000,000 or more. However, other factors, such as
a company's product position, market share, current earnings and/or
dividend and earnings growth prospects, will be considered by the
Fund's adviser and may outweigh revenues. The Fund may invest up to 100
percent of its total assets in large company stocks.
SMALL COMPANY STOCKS. Small company stocks are common stocks and
securities convertible into or exchangeable for common stocks, such as
rights and warrants, of
companies with a market capitalization (market price x number of shares
outstanding) below the top 1,000 stocks that comprise the large and
mid-range capitalization sector of the United States equity market.
These stocks are comparable to, but not limited to, the stocks
comprising the Russell 2000 Index, an index of small capitalization
stocks. The Fund may invest up to 40 percent of its total assets in
small company stocks.
INVESTMENT RISKS. Stocks in the small capitalization sector of the
United States equity market have historically been more volatile in
price than larger capitalization stocks, such as those included in the
Standard & Poor's Ratings Group 500 Index. This is because, among other
things, small companies have less certain growth prospects than larger
companies; have a lower degree of liquidity in the equity market; and
tend to have a greater sensitivity to changing economic conditions.
Further, in addition to exhibiting greater volatility, the stocks of
small companies may, to some degree, fluctuate independently of the
stocks of large companies; that is, small company stocks may decline in
price as large company stocks rise in price or vice versa.
FOREIGN STOCKS. Foreign stocks are equity securities of established
companies in economically developed countries other than the United States.
These securities may be either dollar-denominated or denominated in foreign
currencies. American Depository Receipts ("ADRs"), including dollar
denominated ADRs which are issued by domestic banks and traded in the
United States on exchanges or over-the-counter, are treated as foreign
stocks for purposes of the asset category ranges. The Fund may invest up to
40 percent of its total assets in foreign stocks.
EQUITY RESERVES. When the adviser believes that a temporary defensive
position is desirable, the Fund may invest in equity reserves. Equity
reserves will be used to adjust the risk level of the equity portion of the
Fund in response to market conditions. Equity reserves will consist of U.S.
and foreign short-term money market instruments such as commercial paper
rated A-1 by Standard and Poor's Ratings Group ("Standard & Poor's"),
Prime-1 by Moody's Investors Service, Inc. ("Moody's"), or F-1 by Fitch
Investors Service, Inc. ("Fitch"). The Fund may invest up to 20 percent of
its total assets in equity reserves.
BOND ASSET CATEGORIES. The portion of the Fund's assets which is invested in
bonds ("Bond Assets") will be allocated among the following asset categories
within the ranges specified. The prices of fixed income securities fluctuate
inversely to the direction of interest rates. Generally, the Fund will invest in
Bond Assets which are believed to offer opportunities for growth of capital when
the adviser believes interest rates will decline and, therefore, the value of
the debt securities will increase, or the market value of bonds will increase
due to factors affecting certain types of bonds or particular issuers, such as
improvement in credit quality due to company fundamentals or economic conditions
or assumptions on changes in trends in prepayment rates with respect to
mortgage-backed securities. The average duration of the Fund's Bond Assets will
be not less than three nor more than nine years. Duration is a commonly used
measure of the potential volatility of the price of a debt security, or the
aggregate market value of a portfolio of debt securities, prior to maturity.
Securities with shorter durations generally have less volatile prices than
securities of comparable quality with longer durations. The Fund should be
expected to maintain a higher
average duration during periods of lower expected market volatility, and a lower
average duration during periods of higher expected market volatility.
U.S. TREASURY SECURITIES. U.S. Treasury securities are direct obligations
of the U.S. Treasury, such as U.S. Treasury bills, notes, and bonds. The
Fund may invest up to 32.5 percent of its total assets in U.S. Treasury
securities. The Fund may invest in other U.S. government securities if, in
the judgment of the adviser, other U.S. government securities are more
attractive than U.S. Treasury securities.
MORTGAGE-BACKED SECURITIES. Mortgage-backed securities represent an
undivided interest in a pool of residential mortgages or may be
collateralized by a pool of residential mortgages. Mortgage-backed
securities are generally either issued or guaranteed by the Government
National Mortgage Association ("GNMA"), Federal National Mortgage
Association ("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC") or
other U.S. government agencies or instrumentalities. Mortgage-backed
securities may also be issued by single-purpose, stand-alone finance
subsidiaries or trusts of financial institutions, government agencies,
investment bankers, or companies related to the construction industry. The
Fund may invest up to 12.5 percent of its total assets in mortgage-backed
securities.
INVESTMENT-GRADE CORPORATE BONDS. Investment-grade corporate bonds are
corporate debt obligations having fixed or floating rates of interest and
which are rated BBB or higher by a nationally recognized statistical rating
organization ("NRSRO"). The Fund may invest up to 12.5 percent of its total
assets in investment-grade corporate bonds. In certain cases, the Fund's
adviser may choose bonds which are unrated if it determines that such bonds
are of comparable quality or have similar characteristics to the
investment-grade bonds described above. Yankee bonds, which are U.S.
dollar-denominated bonds issued and traded in the United States by foreign
issuers, are treated as investment-grade corporate bonds for purposes of
the asset category ranges.
HIGH YIELD CORPORATE BONDS. High yield corporate bonds are corporate debt
obligations having fixed or floating rates of interest and which are rated
BB or lower by NRSROs (commonly known as junk bonds). The Fund may invest
up to 16 percent of its total assets in high yield corporate bonds. There
is no minimal acceptable rating for a security to be purchased or held in
the Fund's portfolio, and the Fund may, from time to time, purchase or hold
securities rated in the lowest rating category. (See "Appendix.") In
certain cases the Fund's adviser may choose bonds which are unrated if it
determines that such bonds are of comparable quality or have similar
characteristics to the high yield bonds described above.
INVESTMENT RISKS. Lower-rated securities will usually offer higher
yields than higher-rated securities. However, there is more risk
associated with these investments. This is because of reduced
creditworthiness and increased risk of default. Lower-rated securities
generally tend to reflect short-term corporate and market developments
to a greater extent than higher-rated securities which react primarily
to fluctuations in the general level of interest rates. Short-term
corporate and market developments affecting the price or liquidity of
lower-rated securities could include adverse news affecting major
issuers, underwriters, or dealers of lower-rated corporate debt
obligations. In addition,
since there are fewer investors in lower-rated securities, it may be
harder to sell the securities at an optimum time. As a result of these
factors, lower-rated securities tend to have more price volatility and
carry more risk to principal than higher-rated securities.
Many corporate debt obligations, including many lower-rated bonds,
permit the issuers to call the security and thereby redeem their
obligations earlier than the stated maturity dates. Issuers are more
likely to call bonds during periods of declining interest rates. In
these cases, if the Fund owns a bond which is called, the Fund will
receive its return of principal earlier than expected and would likely
be required to reinvest the proceeds at lower interest rates, thus
reducing income to the Fund.
FOREIGN BONDS. Foreign bonds are high-quality debt securities of countries
other than the United States. The Fund's portfolio of foreign bonds will be
comprised mainly of foreign government, foreign governmental agency or
supranational institution bonds. The Fund will also invest in high-quality
debt securities issued by corporations in countries other than the United
States and subject to the Fund's credit limitations for foreign bonds. The
Fund may invest up to 16 percent of its total assets in foreign bonds.
ACCEPTABLE INVESTMENTS
EQUITY SECURITIES. Common stocks represent ownership interest in a
corporation. Unlike bonds, which are debt securities, common stocks have
neither fixed maturity dates nor fixed schedules of promised payments.
Foreign stocks are equity securities of foreign issuers.
FOREIGN SECURITIES. The foreign bonds in which the Fund invests are rated
within the four highest ratings for bonds by Moody's (Aaa, Aa, A or Baa) or
by Standard & Poor's (AAA, AA, A or BBB) or are unrated if determined to be
of equivalent quality by the Fund's adviser.
INVESTMENT RISKS. Investments in foreign securities involve special
risks that differ from those associated with investments in domestic
securities. The risks associated with investments in foreign securities
apply to securities issued by foreign corporations and sovereign
governments. These risks relate to political and economic developments
abroad, as well as those that result from the differences between the
regulation of domestic securities and issuers and foreign securities
and issuers. These risks may include, but are not limited to,
expropriation, confiscatory taxation, currency fluctuations,
withholding taxes on interest, limitations on the use or transfer of
Fund assets, political or social instability and adverse diplomatic
developments. It may also be more difficult to enforce contractual
obligations or obtain court judgments abroad than would be the case in
the United States because of differences in the legal systems. If the
issuer of the debt or the governmental authorities that control the
repayment of the debt may be unable or unwilling to repay principal or
interest when due in accordance with the terms of such debt, the Fund
may have limited legal recourse in the event of default. Moreover,
individual foreign economies may differ favorably or unfavorably from
the domestic economy in such respects as growth of gross national
product, the rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position.
Additional differences exist between investing in foreign and domestic
securities. Examples of such differences include: less publicly
available information about foreign issuers; credit risks associated
with certain foreign governments; the lack of uniform financial
accounting standards applicable to foreign issuers; less readily
available market quotations on foreign issuers; the likelihood that
securities of foreign issuers may be less liquid or more volatile;
generally higher foreign brokerage commissions; and unreliable mail
service between countries.
EQUITY RESERVES. The Fund's equity reserves may be cash received from the
sale of Fund shares, reserves for temporary defensive purposes or to take
advantage of market opportunities.
REPURCHASE AGREEMENTS. Repurchase agreements are arrangements in which
banks, broker/dealers, and other recognized financial institutions sell
securities to the Fund and agree at the time of sale to repurchase them
at a mutually agreed upon time and price. To the extent that the
original seller does not repurchase the securities from the Fund, the
Fund could receive less than the repurchase price on any sale of such
securities.
CONVERTIBLE SECURITIES. Convertible securities are fixed-income securities
which may be exchanged or converted into a predetermined number of the
issuer's underlying common stock at the option of the holder during a
specified time period. Convertible securities may take the form of
convertible preferred stock, convertible bonds or debentures, units
consisting of "usable" bonds and warrants or a combination of the features
of several of these securities. The investment characteristics of each
convertible security vary widely, which allows convertible securities to be
employed for different investment objectives. The adviser may treat
convertible securities as large company stocks, small company stocks, or
high yield bonds for purposes of the asset category ranges, depending upon
current market conditions, including the relationship of the then-current
price to the conversion price. The convertible securities in which the Fund
invests may be rated "high yield" or of comparable quality at the time of
purchase.
U.S. TREASURY AND OTHER U.S. GOVERNMENT SECURITIES. The U.S. Treasury and
other U.S. government securities in which the Fund invests are either
issued or guaranteed by the U.S. government, its agencies or
instrumentalities. The U.S. government securities in which the Fund may
invest are limited to:
direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds; and
obligations issued by U.S. government agencies or instrumentalities,
including securities that are supported by the full faith and credit of
the U.S. Treasury (such as GNMA certificates); securities that are
supported by the right of the issuer to borrow from the U.S. Treasury
(such as securities of Federal Home Loan Banks); and securities that are
supported by the credit of an agency or instrumentality (such as FNMA and
FHLMC bonds).
MORTGAGE-BACKED SECURITIES. Mortgage-backed securities are securities
collateralized by residential mortgages. The mortgage-backed securities in
which the Fund may invest may be:
issued by an agency of the U.S. government, typically GNMA, FNMA or
FHLMC;
privately issued securities which are collateralized by pools of
mortgages in which each mortgage is guaranteed as to payment of principal
and interest by an agency or instrumentality of the U.S. government;
privately issued securities which are collateralized by pools of
mortgages in which payment of principal and interest are guaranteed by
the issuer and such guarantee is collateralized by U.S. government
securities; and
other privately issued securities in which the proceeds of the issuance
are invested in mortgage-backed securities and payment of the principal
and interest are supported by the credit of an agency or instrumentality
of the U.S. government.
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"). CMOs are bonds issued by
single-purpose, stand-alone finance subsidiaries or trusts of financial
institutions, government agencies, investment bankers, or companies
related to the construction industry. Most of the CMOs in which the
Fund would invest use the same basic structure:
Several classes of securities are issued against a pool of mortgage
collateral. The most common structure contains four classes of
securities. The first three (A, B, and C bonds) pay interest at
their stated rates beginning with the issue date; the final class
(or Z bond) typically receives the residual income from the
underlying investments after payments are made to the other
classes.
The cash flows from the underlying mortgages are applied first to
pay interest and then to retire securities.
The classes of securities are retired sequentially. All principal
payments are directed first to the shortest-maturity class (or A
bonds). When those securities are completely retired, all principal
payments are then directed to the next-shortest maturity security
(or B bond). This process continues until all of the classes have
been paid off.
Because the cash flow is distributed sequentially instead of pro rata
as with pass-through securities, the cash flows and average lives of
CMOs are more predictable, and there is a period of time during which
the investors in the longer-maturity classes receive no principal
paydowns. The interest portion of these payments is distributed by the
Fund as income and the capital portion is reinvested.
The Fund will invest only in CMOs which are rated AAA or Aaa by an
NRSRO.
REAL ESTATE MORTGAGE INVESTMENT CONDUITS ("REMICS"). REMICs are
offerings of multiple class real estate mortgage-backed securities
which qualify and elect treatment as such under provisions of the
Internal Revenue Code. Issuers of REMICs may take several forms, such
as trusts, partnerships, corporations, associations or a segregated
pool of mortgages. Once REMIC status is elected and obtained, the
entity is not subject to federal income taxation. Instead, income is
passed through the entity and is taxed to the person or persons who
hold interests in the REMIC. A REMIC interest must consist of one or
more classes of "regular interests," some of which may offer adjustable
rates, and a single class of "residual interests." To qualify as a
REMIC, substantially all of the assets of the entity must be in assets
directly or indirectly secured principally by real property.
CHARACTERISTICS OF MORTGAGE-BACKED SECURITIES. Mortgage-backed
securities have yield and maturity characteristics corresponding to the
underlying mortgages. Distributions to holders of mortgage-backed
securities include both interest and principal payments. Principal
payments represent the amortization of the principal of the underlying
mortgages and any prepayments of principal due to prepayment,
refinancing, or foreclosure of the underlying mortgages. Although
maturities of the underlying mortgage loans may range up to 30 years,
amortization and prepayments substantially shorten the effective
maturities of mortgage-backed securities. Due to these features,
mortgage-backed securities are less effective as a means of "locking
in" attractive long-term interest rates than fixed-income securities
which pay only a stated amount of interest until maturity, when the
entire principal amount is returned. This is caused by the need to
reinvest at lower interest rates both distributions of principal
generally and significant prepayments which become more likely as
mortgage interest rates decline. Since comparatively high interest
rates cannot be effectively "locked in," mortgage-backed securities may
have less potential for capital appreciation during periods of
declining interest rates than other non-callable, fixed-income
government securities of comparable stated maturities. However,
mortgage-backed securities may experience less pronounced declines in
value during periods of rising interest rates.
In addition, some of the CMOs purchased by the Fund may represent an
interest solely in the principal repayments or solely in the interest
payments on mortgage-backed securities (stripped mortgage-backed
securities or "SMBSs"). Due to the possibility of prepayments on the
underlying mortgages, SMBSs may be more interest-rate sensitive than
other securities purchased by the Fund. If prevailing interest rates
fall below the level at which SMBSs were issued, there may be
substantial prepayments on the underlying mortgages, leading to the
relatively early prepayments of principal-only SMBSs and a reduction in
the amount of payments made to holders of interest-only SMBSs. It is
possible that the Fund might not recover its original investment in
interest-only SMBSs if there are substantial prepayments on the
underlying mortgages. Therefore, interest-only SMBSs generally increase
in value as interest rates rise and decrease in value as interest rates
fall, counter to changes in value experienced by most fixed-income
securities. The Fund's adviser intends to use this characteristic of
interest-only SMBSs to reduce the effects of interest rate changes on
the value of the Fund's portfolio, while continuing to pursue the
Fund's investment objective.
CORPORATE BONDS. The investment-grade corporate bonds in which the Fund
invests are:
rated within the four highest ratings for corporate bonds by Moody's
(Aaa, Aa, A, or Baa), Standard & Poor's (AAA, AA, A, or BBB), or Fitch
(AAA, AA, A, or BBB);
unrated if other long-term debt securities of that issuer are rated, at
the time of purchase, Baa or better by Moody's or BBB or better by
Standard & Poor's or Fitch; or
unrated if determined to be of equivalent quality to one of the foregoing
rating categories by the Fund's adviser.
Securities which are rated BBB by Standard & Poor's or Fitch or Baa by
Moody's have speculative characteristics. Changes in economic conditions or
other circumstances are more
likely to lead to weakened capacity to make principal and interest payments
than higher rated bonds. If a security's rating is reduced below the
required minimum after the Fund has purchased it, the Fund is not required
to sell the security, but may consider doing so.
The high yield corporate bonds in which the Fund invests are rated Ba or
lower by Moody's or BB or lower by Standard & Poor's or Fitch (commonly
known as junk bonds). A description of the rating categories is contained
in the Appendix to this prospectus.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Fund may invest in
the securities of other investment companies, but it will not own more than 3
percent of the total outstanding voting stock of any such investment company,
invest more than 5 percent of its total assets in any one such investment
company, or invest more than 10 percent of its total assets in such other
investment companies in general. To the extent that the Fund invests in
securities issued by other investment companies, the Fund will indirectly bear
its proportionate share of any fees and expenses paid by such companies in
addition to the fees and expenses payable directly by the Fund.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies but which are
subject to restrictions on resale under federal securities law. However, the
Fund will limit investments in illiquid securities, including certain restricted
securities not determined by the Trustees to be liquid, over-the-counter
options, and repurchase agreements providing for settlement in more than seven
days after notice, to 15 percent of its net assets.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
Accordingly, the Fund may pay more or less than the market value of the
securities on the settlement date.
The Fund may dispose of a commitment prior to settlement if the adviser deems it
appropriate to do so. In addition, the Fund may enter into transactions to sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Fund may realize short-term profits or losses upon the sale of such
commitments.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend its portfolio securities on a short-term or long-term basis up to
one-third of the value of its total assets to broker/dealers, banks, or other
institutional borrowers of securities. The Fund will only enter into loan
arrangements with broker/dealers, banks, or other institutions which the adviser
has determined are creditworthy under guidelines established by the Trustees and
will receive collateral in the form of cash or U.S. government securities equal
to at least 100 percent of the value of the securities loaned.
There is the risk that when lending portfolio securities, the securities may not
be available to the Fund on a timely basis and the Fund may, therefore, lose the
opportunity to sell the securities at a
desirable price. In addition, in the event that a borrower of securities would
file for bankruptcy or become insolvent, disposition of the securities may be
delayed pending court action.
FOREIGN CURRENCY TRANSACTIONS. The Fund will enter into foreign currency
transactions to obtain the necessary currencies to settle securities
transactions. Currency transactions may be conducted either on a spot or cash
basis at prevailing rates or through forward foreign currency exchange
contracts.
The Fund may also enter into foreign currency transactions to protect Fund
assets against adverse changes in foreign currency exchange rates or exchange
control regulations. Such changes could unfavorably affect the value of Fund
assets which are denominated in foreign currencies, such as foreign securities
or funds deposited in foreign banks, as measured in U.S. dollars. Although
foreign currency exchanges may be used by the Fund to protect against a decline
in the value of one or more currencies, such efforts may also limit any
potential gain that might result from a relative increase in the value of such
currencies and might, in certain cases, result in losses to the Fund.
CURRENCY RISKS. To the extent that debt securities purchased by the Fund
are denominated in currencies other than the U.S. dollar, changes in
foreign currency exchange rates will affect the Fund's net asset value; the
value of interest earned; gains and losses realized on the sale of
securities; and net investment income and capital gain, if any, to be
distributed to shareholders by the Fund. If the value of a foreign currency
rises against the U.S. dollar, the value of the Fund's assets denominated
in that currency will increase; correspondingly, if the value of a foreign
currency declines against the U.S. dollar, the value of the Fund's assets
denominated in that currency will decrease.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward foreign currency
exchange contract ("forward contract") is an obligation to purchase or sell an
amount of a particular currency at a specific price and on a future date agreed
upon by the parties.
Generally, no commission charges or deposits are involved. At the time the Fund
enters into a forward contract, Fund assets with a value equal to the Fund's
obligation under the forward contract are segregated and are maintained until
the contract has been settled. The Fund will not enter into a forward contract
with a term of more than one year.
The Fund will generally enter into a forward contract to provide the proper
currency to settle a securities transaction at the time the transaction occurs
("trade date"). The period between trade date and settlement date will vary
between 24 hours and 30 days, depending upon local custom.
The Fund may also protect against the decline of a particular foreign currency
by entering into a forward contract to sell an amount of that currency
approximating the value of all or a portion of the Fund's assets denominated in
that currency ("hedging"). The success of this type of short-term hedging
strategy is highly uncertain due to the difficulties of predicting short-term
currency market movements and of precisely matching forward contract amounts and
the constantly changing value of the securities involved. Although the adviser
will consider the likelihood of changes in currency values when making
investment decisions, the adviser believes that it is important to be able to
enter into forward contracts when it believes the interests of the Fund will be
served. The Fund will not enter into forward contracts for hedging purposes in a
particular currency in an amount in
excess of the Fund's assets denominated in that currency. The Fund will not
invest more than 40% of its total assets in forward foreign currency exchange
contracts.
OPTIONS. The Fund may deal in options on foreign currencies, foreign currency
futures, securities, and securities indices, which options may be listed for
trading on a national securities exchange or traded over-the-counter. The Fund
will use options only to manage interest rate and currency risks. The Fund may
write covered call options to generate income. The Fund may write covered call
options and secured put options on up to 25 percent of its net assets and may
purchase put and call options provided that no more than 5 percent of the fair
market value of its net assets may be invested in premiums on such options.
A call option gives the purchaser the right to buy, and the writer the
obligation to sell, the underlying currency, security or other asset at the
exercise price during the option period. A put option gives the purchaser the
right to sell, and the writer the obligation to buy, the underlying currency,
security or other asset at the exercise price during the option period. The
writer of a covered call owns assets that are acceptable for escrow, and the
writer of a secured put invests an amount not less than the exercise price in
eligible assets to the extent that it is obligated as a writer. If a call
written by the Fund is exercised, the Fund foregoes any possible profit from an
increase in the market price of the underlying asset over the exercise price
plus the premium received. In writing puts, there is a risk that the Fund may be
required to take delivery of the underlying asset at a disadvantageous price.
Over-the-counter options ("OTC options") differ from exchange traded options in
several respects. They are transacted directly with dealers and not with a
clearing corporation, and there is a risk of non-performance by the dealer as a
result of the insolvency of such dealer or otherwise, in which event the Fund
may experience material losses. However, in writing options, the premium is paid
in advance by the dealer. OTC options, which may not be continuously liquid, are
available for a greater variety of assets and with a wider range of expiration
dates and exercise prices, than are exchange traded options.
FUTURES AND OPTIONS ON FUTURES. The Fund may purchase and sell futures
contracts to accommodate cash flows into and out of the Fund's portfolio and to
hedge against the effects of changes in the value of portfolio securities due to
anticipated changes in interest rates and market conditions. Interest rate
futures contracts call for the delivery of particular debt instruments at a
certain time in the future. The seller of the contract agrees to make delivery
of the type of instrument called for in the contract, and the buyer agrees to
take delivery of the instrument at the specified future time.
Stock index futures contracts are based on indexes that reflect the market value
of common stock of the firms included in the indexes. An index futures contract
is an agreement pursuant to which two parties agree to take or make delivery of
an amount of cash equal to the differences between the value of the index at the
close of the last trading day of the contract and the price at which the index
contract was originally written. The Fund may utilize stock index futures to
handle cash flows into and out of the Fund and to potentially reduce
transactional costs.
The Fund may also write call options and purchase put options on futures
contracts as a hedge to attempt to protect its portfolio securities against
decreases in value. When the Fund writes a call option on a futures contract, it
is undertaking the obligation of selling a futures contract at a fixed
price at any time during a specified period if the option is exercised.
Conversely, as purchaser of a put option on a futures contract, the Fund is
entitled (but not obligated) to sell a futures contract at the fixed price
during the life of the option.
The Fund may not purchase or sell futures contracts or related options if
immediately thereafter the sum of the amount of margin deposits on the Fund's
existing futures positions and premiums paid for related options would exceed 5
percent of the market value of the Fund's total assets. When the Fund purchases
futures contracts, an amount of cash and cash equivalents, equal to the
underlying commodity value of the futures contracts (less any related margin
deposits), will be deposited in a segregated account with the custodian (or the
broker, if legally permitted) to collateralize the position and thereby insure
that the use of such futures contracts are unleveraged. When the Fund sells
futures contracts, it will either own or have the right to receive the
underlying future or security or will make deposits to collateralize the
position as discussed above.
RISKS. When the Fund uses futures and options on futures as hedging
devices, there is a risk that the prices of the securities subject to the
futures contracts may not correlate perfectly with the prices of the
securities in the Fund's portfolio. This may cause the futures contract and
any related options to react differently than the portfolio securities to
market changes. In addition, the investment adviser could be incorrect in
its expectations about the direction or extent of market factors such as
stock price movements. In these events, the Fund may lose money on the
futures contract or option.
It is not certain that a secondary market for positions in futures
contracts or for options will exist at all times. Although the investment
adviser will consider liquidity before entering into these transactions,
there is no assurance that a liquid secondary market on an exchange or
otherwise will exist for any particular futures contract or option at any
particular time. The Fund's ability to establish and close out futures and
options positions depends on this secondary market.
PORTFOLIO TURNOVER. Although the Fund does not intend to invest for the purpose
of seeking short-term profits, securities in its portfolio will be sold whenever
the Fund's adviser believes it is appropriate to do so in light of the Fund's
investment objective, without regard to the length of time a particular security
may have been held. The Fund's rate of portfolio turnover may exceed that of
certain other mutual funds with the same investment objective. A higher rate of
portfolio turnover involves correspondingly greater transaction expenses which
must be borne directly by the Fund and, thus indirectly by its shareholders. In
addition, a high rate of portfolio turnover may result in the realization of
larger amounts of capital gains which, when distributed to the Fund's
shareholders, are taxable to them. (Further information is contained in the
Fund's Statement of Additional Information within the sections "Brokerage
Transactions" and "Tax Status"). Nevertheless, transactions for the Fund's
portfolio will be based only upon investment considerations and will not be
limited by any other considerations when the Fund's adviser deems it appropriate
to make changes in the Fund's portfolio.
INVESTMENT LIMITATIONS
The Fund will not:
borrow money directly or through reverse repurchase agreements or pledge
securities except, under certain circumstances, the Fund may borrow up to
one-third of the value of its total assets and pledge up to 15 percent of
the value of those assets to secure such borrowings;
lend any securities except for portfolio securities; or
underwrite any issue of securities, except as it may be deemed to be an
underwriter under the Securities Act of 1933 in connection with the sale
of restricted securities which the Fund may purchase pursuant to its
investment objective, policies and limitations.
The above investment limitations cannot be changed without shareholder approval.
TRUST INFORMATION
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MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Trust's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. The Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Except as noted below with regard to the sub-adviser,
investment decisions for the Fund are made by Federated Management, the Fund's
investment adviser (the "Adviser"), subject to direction by the Trustees. The
Adviser continually conducts investment research and supervision for the Fund
and is responsible for the purchase or sale of portfolio instruments, for which
it receives an annual fee from the Fund.
ADVISORY FEES. The Adviser receives an annual investment advisory fee
equal to .75 of 1% of the Fund's average daily net assets. The fee paid by
the Fund, while higher than the advisory fee paid by other mutual funds in
general, is comparable to fees paid by other mutual funds with similar
objectives and policies. Under the advisory contract, which provides for
voluntary reimbursement of expenses by the Adviser, the Adviser may
voluntarily waive some or all of its fee. This does not include
reimbursement to the Fund of any expenses incurred by shareholders who use
the transfer agent's subaccounting facilities. The Adviser has also
undertaken to reimburse the Fund for operating expenses in excess of
limitations established by certain states.
ADVISER'S BACKGROUND. Federated Management, a Delaware business trust
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940.
SUB-ADVISER. Under the terms of the Sub-Advisory Agreement between the Adviser
and Federated Global Research Corp. (the "Sub-Adviser"), the Sub-Adviser will
provide the Adviser such investment advice, statistical and other factual
information as may, from time to time, be reasonably requested by the Adviser.
SUB-ADVISORY FEES. For its services under the Sub-Advisory Agreement, the
Sub-Adviser receives an allocable portion of the Fund's advisory fee. Such
allocation is based on the amount of foreign securities which the
Sub-Adviser manages for the Fund. This fee is paid by the Adviser out of
its resources and is not an incremental Fund expense.
SUB-ADVISER'S BACKGROUND. Federated Global Research Corp., incorporated in
Delaware on May 12, 1995, is a registered investment adviser under the
Investment Advisers Act of 1940. Prior to September 1995, the Sub-Adviser
had not served as an investment adviser to mutual funds.
The Adviser and Sub-Adviser are subsidiaries of Federated Investors. All of the
Class A (voting) shares of Federated Investors are owned by a trust, the
trustees of which are John F. Donahue, Chairman and Trustee of Federated
Investors, Mr. Donahue's wife, and Mr. Donahue's son, J. Christopher Donahue,
who is President and Trustee of Federated Investors.
Federated Management, Federated Global Research Corp. and other subsidiaries of
Federated Investors serve as investment advisers to a number of investment
companies and private accounts. Certain other subsidiaries also provide
administrative services to a number of investment companies. With over $80
billion invested across more than 250 funds under management and/or
administration by its subsidiaries, as of December 31, 1995, Federated Investors
is one of the largest mutual fund investment managers in the United States. With
more than 1,800 employees, Federated continues to be led by the management who
founded the company in 1955. Federated funds are presently at work in and
through 4,000 financial institutions nationwide. More than 100,000 investment
professionals have selected Federated funds for their clients.
The Trust, the Adviser, and the Sub-Adviser have adopted strict codes of ethics
governing the conduct of all employees who manage the Fund and its portfolio
securities. These codes recognize that such persons owe a fiduciary duty to the
Fund's shareholders and must place the interests of shareholders ahead of the
employees' own interest. Among other things, the codes: require preclearance and
periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered for
purchase or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less than sixty
days. Violations of these codes are subject to review by the Trustees, and could
result in severe penalties.
PORTFOLIO MANAGERS' BACKGROUNDS
Charles A. Ritter is the portfolio manager for the Fund and performs the
overall allocation of the assets of the Fund among the various asset
categories. He has performed these duties since the Fund's inception. In
allocating the Fund's assets, Mr. Ritter evaluates the market environment
and economic outlook, utilizing the services of the Adviser's economist and
strategist. Mr. Ritter joined Federated Investors in 1983 and has been a
Vice President of the Fund's Adviser since 1992. From 1988 until 1991, Mr.
Ritter acted as an Assistant Vice President. Mr. Ritter is a Chartered
Financial Analyst and received his M.B.A. in Finance from the University of
Chicago and his M.S. in Economics from Carnegie Mellon University.
The portfolio managers for each of the individual asset categories are as
follows:
Peter R. Anderson and Aash Shah are portfolio managers for the domestic
large company stocks asset category. Mr. Anderson has performed this duty
since the Fund's inception. Mr. Shah assumed his responsibilities in
December 1995. Mr. Anderson joined Federated Investors in 1972 and is
presently a Senior Vice President of the Fund's Adviser. Mr. Anderson is a
Chartered Financial Analyst and received his M.B.A. in Finance from the
University of Wisconsin. Mr. Shah joined Federated Investors in 1993 as an
Investment Analyst and has been an Assistant Vice President of the Fund's
Adviser since 1995. Mr. Shah was employed at Westinghouse Credit Corp. from
1990 to 1993 as an Investment Analyst. Mr. Shah received his M.S.I.A. from
Carnegie Mellon University with a concentration in finance and accounting.
Mr. Shah is a Chartered Financial Analyst.
James Grefenstette is the portfolio manager for the domestic small company
stocks asset category. He has served in this capacity since August 1994.
Mr. Grefenstette joined Federated Investors in 1992 and has been an
Assistant Vice President of the Fund's Adviser since 1994. From 1992 until
1994, Mr. Grefenstette acted as an investment analyst. Mr. Grefenstette was
a credit analyst at Westinghouse Credit Corp. from 1990 until 1992. Mr.
Grefenstette received his M.S.I.A. from Carnegie Mellon University.
Henry Frantzen, Drew Collins, Mark Kopinski, Frank Semack, and Alexandre de
Bethmann are portfolio managers for the foreign stocks asset category.
Henry A. Frantzen has been a portfolio manager of the Fund since November
1995. Mr. Frantzen joined Federated Investors in 1995 as an Executive Vice
President of the Fund's Sub-Adviser. Mr. Frantzen served as Chief
Investment Officer of international equities at Brown Brothers Harriman &
Co. from 1992 to 1995. He was the Executive Vice President and Director of
Equities at Oppenheimer Management Corporation from 1989 to 1991. Mr.
Frantzen received his B.S. in finance and marketing from the University of
North Dakota.
Drew J. Collins has been a portfolio manager of the Fund since November
1995. Mr. Collins joined Federated Investors in 1995 as a Senior Vice
President of the Fund's Sub-Adviser. Mr. Collins served as a Vice
President/Portfolio Manager of international equity portfolios at Arnhold
and S. Bleichroeder, Inc. from 1994 to 1995. He served as an Assistant Vice
President/ Portfolio Manager for international equities at the College
Retirement Equities Fund from 1986 to 1994. Mr. Collins is a Chartered
Financial Analyst and received his M.B.A. in finance from the University of
Pennsylvania.
Mark S. Kopinski has been a portfolio manager of the Fund since November
1995. Mr. Kopinski joined Federated Investors in 1995 as a Vice President
of the Fund's Sub-Adviser. Mr. Kopinski served as Vice President/Portfolio
Manager of international equity funds at Twentieth Century Mutual Funds
from 1990 to 1995. Mr. Kopinski received his M.B.A. in Asian Studies from
the University of Illinois.
Frank Semack has been a portfolio manager of the Fund since November 1995.
Mr. Semack joined Federated Investors in 1995 as a Vice President of the
Fund's Sub-Adviser. Mr. Semack served as an Investment Analyst at Omega
Advisers, Inc. from 1993 to 1994. He served as an
Associate Director/Portfolio Manager of Wardley Investment Services, Ltd.
from 1987 to 1993. Mr. Semack received his M.Sc. in economics from the
London School of Economics.
Alexandre de Bethmann has been a portfolio manager of the Fund since
November 1995. Mr. de Bethmann joined Federated Investors in 1995 as a Vice
President of the Fund's Sub-Adviser. Mr. de Bethmann served as Assistant
Vice President/Portfolio Manager for Japanese and Korean equities at the
College Retirement Equities Fund from 1994 to 1995. He served as an
International Equities Analyst and then as an Assistant Portfolio Manager
at the College Retirement Equities Fund between 1987 and 1994. Mr. de
Bethmann received his M.B.A. in Finance from Duke University.
Henry Frantzen, Drew Collins, and Robert Kowit are portfolio managers for
the foreign bonds asset category. They have performed these duties since
November 1995.
Robert M. Kowit joined Federated Investors in 1995 as a Vice President of
the Fund's Sub-Adviser. Mr. Kowit served as a Managing Partner of
Copernicus Global Asset Management from January 1995 through October 1995.
From 1990 to 1994, he served as Senior Vice President of International
Fixed Income and Foreign Exchange for John Hancock Advisers. Mr. Kowit
received his M.B.A. from Iona College with a concentration in finance.
Susan M. Nason and Joseph M. Balestrino are portfolio managers for the U.S.
Treasury securities asset category. Ms. Nason has performed this duty since
the Fund's inception. Mr. Balestrino assumed his responsibilities on March
1, 1995. Ms. Nason joined Federated Investors in 1987 and has been a Vice
President of the Fund's Adviser since 1993. Ms. Nason served as an
Assistant Vice President of the Adviser from 1990 until 1992. Ms. Nason is
a Chartered Financial Analyst and received her M.S.I.A. in Finance from
Carnegie Mellon University. Mr. Balestrino joined Federated Investors in
1986 and has been Vice President of the Fund's Adviser since 1995. Mr.
Balestrino served as an Assistant Vice President from 1991 until 1995, and
as an investment analyst of the Adviser from 1989 until 1991. Mr.
Balestrino is a Chartered Financial Analyst and received his M.A. in Urban
and Regional Planning from the University of Pittsburgh.
Thomas M. Franks is the portfolio manager for the equity reserves asset
category. He has performed these duties since the Fund's inception. Mr.
Franks joined Federated Investors in 1985 and has been a Vice President of
the Fund's Adviser since 1990. Mr. Franks is a Chartered Financial Analyst
and received his M.S.I.A. in Business Administration from Carnegie Mellon
University.
Kathleen M. Foody-Malus and James D. Roberge are portfolio managers for the
mortgage-backed securities asset category. Ms. Foody-Malus has performed
this duty since the Fund's inception. Mr. Roberge assumed his
responsibilities on March 1, 1995. Ms. Foody-Malus joined Federated
Investors in 1983 and has been a Vice President of the Fund's Adviser since
1993. Ms. Foody-Malus served as an Assistant Vice President of the Adviser
from 1990 until 1992. Ms. Foody-Malus received her M.B.A. in
Accounting/Finance from the University of Pittsburgh. Mr. Roberge joined
Federated Investors in 1990 and has been a Vice President of the Fund's
Adviser since October, 1994. Prior to this, Mr. Roberge served as an
Assistant Vice President of the Fund's Adviser. From 1990 until 1992, Mr.
Roberge acted as an
investment analyst. Mr. Roberge is a Chartered Financial Analyst and
received his M.B.A. in Finance from the University of Pennsylvania.
Joseph M. Balestrino and Susan M. Nason are portfolio managers for the
investment-grade corporate bonds asset category. They have performed these
duties since the Fund's inception.
Mark E. Durbiano is the portfolio manager for the high yield corporate
bonds asset category. He has performed these duties since the Fund's
inception. Mr. Durbiano joined Federated Investors in 1982 and has been a
Senior Vice President of the Fund's Adviser since January 1996. Mr.
Durbiano was a Vice President of the Fund's Adviser from 1988 through 1995.
Mr. Durbiano is a Chartered Financial Analyst and received his M.B.A. in
Finance from the University of Pittsburgh.
DISTRIBUTION OF SELECT SHARES
Federated Securities Corp. is the principal distributor for Shares. It is a
Pennsylvania corporation organized on November 14, 1969, and is the principal
distributor for a number of investment companies. Federated Securities Corp. is
a subsidiary of Federated Investors.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES. Under a distribution plan adopted
in accordance with Investment Company Act Rule 12b-1 (the "Distribution Plan"),
the distributor may be paid a fee in an amount computed at an annual rate of .75
of 1% of the average daily net assets of Select Shares to finance any activity
which is principally intended to result in the sale of Shares subject to the
Distribution Plan. The distributor may select financial institutions such as
banks, fiduciaries, custodians for public funds, investment advisers, and
broker/dealers to provide sales services or distribution-related support
services as agents for their clients or customers.
The Distribution Plan is a compensation-type plan. As such, the Fund makes no
payments to the distributor except as described above. Therefore, the Fund does
not pay separately for unreimbursed expenses of the distributor, including
amounts expended by the distributor in excess of amounts received by it from the
Fund, interest, carrying or other financing charges in connection with excess
amounts expended, or the distributor's overhead expenses. However, the
distributor may be able to recover such amount or may earn a profit from
payments made by the Fund under the Distribution Plan.
In addition, the Fund has entered into a Shareholder Services Agreement with
Federated Shareholder Services, a subsidiary of Federated Investors, under which
the Fund may make payments up to .25 of 1% of the average daily net asset value
of the Select Shares to obtain certain personal services for shareholders and
for the maintenance of shareholder accounts. Under the Shareholder Services
Agreement, Federated Shareholders Services will either perform shareholder
services directly or will select financial institutions to perform shareholder
services. Financial institutions will receive fees based upon shares owned by
their clients or customers. The schedules of such fees and the basis upon which
such fees will be paid will be determined from time to time by the Fund and
Federated Shareholder Services.
SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS. In addition to receiving the
payments under the Distribution Plan and Shareholder Services Agreement,
Federated Securities Corp. and Federated Shareholder Services, from their own
assets, may pay financial institutions supplemental fees
for the performance of substantial sales services, distribution-related support
services, or shareholder services. The support may include sponsoring sales,
educational and training seminars for their employees, providing sales
literature, and engineering computer software programs that emphasize the
attributes of the Fund. Such assistance will be predicated upon the amount of
Shares the financial institution sells or may sell, and/or upon the type and
nature of sales or marketing support furnished by the financial institution. Any
payments made by the distributor may be reimbursed by the Fund's Adviser or its
affiliates.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides administrative personnel and services (including
certain legal and financial reporting services) necessary to operate the Fund.
Federated Administrative Services provides these at an annual rate which relates
to the average aggregate daily net assets of all funds advised by subsidiaries
of Federated Investors ("Federated Funds") as specified below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE DAILY
ADMINISTRATIVE FEE NET ASSETS OF THE FEDERATED FUNDS
<S> <C>
0.15 of 1% on the first $250 million
0.125 of 1% on the next $250 million
0.10 of 1% on the next $250 million
0.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Administrative Services may choose voluntarily to waive a portion of
its fee.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the Adviser looks for prompt execution of the order at a favorable
price. In working with dealers, the Adviser will generally use those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. In selecting among firms
believed to meet these criteria, the Adviser may give consideration to those
firms which have sold or are selling shares of the Fund and other funds
distributed by Federated Securities Corp. The Adviser makes decisions on
portfolio transactions and selects brokers and dealers subject to review by the
Trustees.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund's net asset value per Share fluctuates. The net asset value for Shares
is determined by adding the interest of the Shares in the market value of all
securities and other assets of the Fund, subtracting the interest of the Shares
in the liabilities of the Fund and those attributable to Shares, and dividing
the remainder by the total number of Shares outstanding. The net asset value for
Institutional Shares may exceed that of Select Shares due to the variance in
daily net income
realized by each class. Such variance will reflect only accrued net income to
which the shareholders of a particular class are entitled.
INVESTING IN SELECT SHARES
- --------------------------------------------------------------------------------
SHARE PURCHASES
Shares are sold on days on which the New York Stock Exchange is open for
business. Shares may be purchased through a financial institution which has a
sales agreement with the distributor or by wire or mail.
To purchase Shares, open an account by calling Federated Securities Corp.
Information needed to establish an account will be taken over the telephone. The
Fund reserves the right to reject any purchase request.
THROUGH A FINANCIAL INSTITUTION. An investor may call his financial institution
(such as a bank or an investment dealer) to place an order to purchase Shares.
Orders through a financial institution are considered received when the Fund is
notified of the purchase order. Purchase orders through a registered
broker/dealer must be received by the broker before 4:00 p.m. (Eastern time) and
must be transmitted by the broker to the Fund before 5:00 p.m. (Eastern time) in
order for Shares to be purchased at that day's price. Purchase orders through
other financial institutions must be received by the financial institution and
transmitted to the Fund before 4:00 p.m. (Eastern time) in order for Shares to
be purchased at that day's price. It is the financial institution's
responsibility to transmit orders promptly.
BY WIRE. To purchase Shares by Federal Reserve wire, call the Fund before 4:00
p.m. (Eastern time) to place an order. The order is considered received
immediately. Payment by federal funds must be received before 3:00 p.m. (Eastern
time) on the next business day following the order. Federal funds should be
wired as follows: Federated Services Company, c/o State Street Bank and Trust
Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit to: Federated
Managed Aggressive Growth Fund--Select Shares; Fund Number (this number can be
found on the account statement or by contacting the Fund); Group Number or Wire
Order Number; Nominee or Institution Name; and ABA Number 011000028. Shares
cannot be purchased by wire on holidays when wire transfers are restricted.
Questions on wire purchases should be directed to your shareholder services
representative at the telephone number listed on your account statement.
BY MAIL. To purchase Shares by mail, send a check made payable to Federated
Managed Aggressive Growth Fund--Select Shares to Federated Services Company,
P.O. Box 8600, Boston, Massachusetts 02266-8600. Orders by mail are considered
received after payment by check is converted by State Street Bank into federal
funds. This is normally the next business day after State Street Bank receives
the check.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in Shares is $1,500. Accounts established through
a non-affiliated bank or broker may be subject to a smaller minimum investment.
WHAT SHARES COST
Shares are sold at their net asset value next determined after an order is
received. There is no sales charge imposed by the Fund. Investors who purchase
Shares through a non-affiliated bank or broker may be charged an additional
service fee by that bank or broker.
The net asset value is determined as of the close of trading (normally 4:00
p.m., Eastern time) on the New York Stock Exchange, Monday through Friday,
except on: (i) days on which there are not sufficient changes in the value of
the Fund's portfolio securities such that its net asset value might be
materially affected; (ii) days during which no Shares are tendered for
redemption and no orders to purchase Shares are received; and (iii) the
following holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
SUBACCOUNTING SERVICES
Institutions are encouraged to open single master accounts. However, certain
institutions may wish to use the transfer agent's subaccounting system to
minimize their internal recordkeeping requirements. The transfer agent may
charge a fee based on the level of subaccounting services rendered. Institutions
holding Shares in a fiduciary, agency, custodial, or similar capacity may charge
or pass through subaccounting fees as part of or in addition to normal trust or
agency account fees. They may also charge fees for other services provided which
may be related to the ownership of Shares. This prospectus should, therefore, be
read together with any agreement between the customer and the institution with
regard to the services provided, the fees charged for those services, and any
restrictions and limitations imposed. State securities laws may require certain
financial institutions such as depository institutions to register as dealers.
SYSTEMATIC INVESTMENT PROGRAM
Once a Fund account has been opened, shareholders may add to their investment on
a regular basis. Under this program, funds may be automatically withdrawn
periodically from the shareholder's checking account and invested in Shares at
the net asset value next determined after an order is received by the Fund. A
shareholder may apply for participation in this program through Federated
Securities Corp.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the Fund.
Detailed confirmations of each purchase or redemption are sent to each
shareholder. Quarterly confirmations are sent to report dividends paid during
the quarter.
DIVIDENDS
Dividends are declared and paid quarterly to all shareholders invested in the
Fund on the record date. Unless shareholders request cash payments by writing
the Fund, dividends are automatically reinvested in additional Shares of the
Fund on payment dates at the ex-dividend date net asset value without a sales
charge.
CAPITAL GAINS
Capital gains realized by the Fund, if any, will be distributed at least once
every 12 months.
REDEEMING SELECT SHARES
- --------------------------------------------------------------------------------
The Fund redeems Shares at their net asset value next determined after the Fund
receives the redemption request. Redemptions will be made on days on which the
Fund computes its net asset value. Redemption requests must be received in
proper form and can be made through a financial institution, by telephone
request or by written request.
THROUGH A FINANCIAL INSTITUTION
A shareholder may redeem Shares by calling his financial institution (such as a
bank or an investment dealer) to request the redemption. Shares will be redeemed
at the net asset value next determined after the Fund receives the redemption
request from the financial institution. Redemption requests through a registered
broker/dealer must be received by the broker before 4:00 p.m. (Eastern time) and
must be transmitted by the broker to the Fund before 5:00 p.m. (Eastern time) in
order for Shares to be redeemed at that day's net asset value. Redemption
requests through other financial institutions must be received by the financial
institution and transmitted to the Fund before 4:00 p.m. (Eastern time) in order
for Shares to be redeemed at that day's net asset value. The financial
institution is responsible for promptly submitting redemption requests and
providing proper written redemption instructions to the Fund. The financial
institution may charge customary fees and commissions for this service.
TELEPHONE REDEMPTION
Shareholders may redeem their Shares by telephoning the Fund before 4:00 p.m.
(Eastern time). All proceeds will normally be wire transferred the following
business day, but in no event more than seven days, to the shareholder's account
at a domestic commercial bank that is a member of the Federal Reserve System.
Proceeds from redemption requests received on holidays when wire transfers are
restricted will be wired the following business day. Questions about telephone
redemptions on days when wire transfers are restricted should be directed to
your shareholder services representative at the telephone number listed on your
account statement. If at any time, the Fund shall determine it necessary to
terminate or modify this method of redemption, shareholders would be promptly
notified.
An authorization form permitting the Fund to accept telephone requests must
first be completed. Authorization forms and information on this service are
available from Federated Securities Corp. Telephone redemption instructions may
be recorded. If reasonable procedures are not followed by the Fund, it may be
liable for losses due to unauthorized or fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "Written Requests," should be considered.
WRITTEN REQUESTS
Shares may also be redeemed by sending a written request to the Fund. Call the
Fund for specific instructions before redeeming by letter. The shareholder will
be asked to provide in the request his name, the Fund name and class of shares
name, his account number, and the Share or dollar amount requested. If Share
certificates have been issued, they should be sent unendorsed with the written
request by registered or certified mail to: Federated Services Company, P.O. Box
8600, Boston, MA 02266-8600.
SIGNATURES. Shareholders requesting a redemption of any amount to be sent to an
address other than that on record with the Fund, or a redemption payable other
than to the shareholder of record must have signatures on written redemption
requests guaranteed by:
a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund ("BIF"), which is administered by the Federal Deposit
Insurance Corporation ("FDIC");
a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;
a savings bank or savings association whose deposits are insured by the
Savings Association Insurance Fund ("SAIF"), which is administered by the
FDIC; or
any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.
RECEIVING PAYMENT. Normally, a check for the proceeds is mailed within one
business day, but in no event more than seven days, after receipt of a proper
written redemption request, provided the Fund or its agents have received
payment for Shares from the shareholder.
SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive payments of a predetermined amount may take
advantage of the Systematic Withdrawal Program. Under this program, Shares are
redeemed to provide for periodic withdrawal payments in an amount directed by
the shareholder. Depending upon the amount of the withdrawal payments, the
amount of dividends paid and capital gains distributions with respect to Shares,
and the fluctuation of the net asset value of Shares redeemed under this
program, redemptions may reduce, and eventually use up, the shareholder's
investment in the Fund. For this reason, payments under this program should not
be considered as yield or income on the shareholder's investment in the Fund. To
be eligible to participate in this program, a shareholder must have an account
value of at least $10,000. A shareholder may apply for participation in this
program through Federated Securities Corp.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem Shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required
minimum value of $1,500. This requirement does not apply, however, if the
balance falls below $1,500 because of changes in the Fund's net asset value.
Before Shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional Shares to meet the minimum
requirement.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights except that, in matters
affecting only a particular fund or class, only shares of that fund or class are
entitled to vote. As a Massachusetts business trust, the Trust is not required
to hold annual shareholder meetings. Shareholder approval will be sought only
for certain changes in the Trust's or the Fund's operation and for the election
of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust entitled to vote.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code applicable to regulated investment companies and to
receive the special tax treatment afforded to such companies.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional Shares.
STATE AND LOCAL TAXES
In the opinion of Houston, Houston & Donnelly, counsel to the Trust, Fund shares
may be subject to personal property taxes imposed by counties, municipalities,
and school districts in Pennsylvania to the extent that the portfolio securities
in the Fund would be subject to such taxes if owned directly by residents of
those jurisdictions.
Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its total return and yield for Shares.
Total return represents the change, over a specified period of time, in the
value of an investment in Shares after reinvesting all income and capital gain
distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
The yield of Shares is calculated by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by Shares
over a thirty-day period by the maximum offering price per share of Shares on
the last day of the period. This number is then annualized using semi-annual
compounding. The yield does not necessarily reflect income actually earned by
Shares and, therefore, may not correlate to the dividends or other distributions
paid to shareholders.
From time to time, advertisements for the Fund's Select Shares may refer to
ratings, rankings, and other information in certain financial publications
and/or compare the Fund's performance to certain indices.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
The Fund also offers another class of shares called Institutional Shares that
are sold at net asset value primarily to financial institutions acting in a
fiduciary or agency capacity and are subject to a minimum initial investment of
$25,000 over a 90-day period.
Institutional Shares are distributed with no 12b-1 Plan but are subject to
shareholder services fees.
Institutional Shares and Select Shares are subject to certain of the same
expenses. Expense differences, however, between Institutional Shares and Select
Shares may affect the performance of each class.
To obtain more information and a prospectus for Institutional Shares, investors
may call 1-800-235-4669.
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
(FORMERLY, INSTITUTIONAL SERVICE SHARES)
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 62.
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, NOVEMBER 30,
1995 1994(A)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.82 $ 10.00
- --------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------
Net investment income 0.35 0.17
- --------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments,
foreign currency, and futures contracts 1.77 (0.25)
- -------------------------------------------------------------------------- ------- -------
Total from investment operations 2.12 (0.08)
- -------------------------------------------------------------------------- ------- -------
LESS DISTRIBUTIONS
- --------------------------------------------------------------------------
Distributions from net investment income (0.33) (0.10)
- --------------------------------------------------------------------------
Distributions from net realized gain on investments,
foreign currency transactions, and futures contracts (0.02) --
- -------------------------------------------------------------------------- ------- -------
Total distributions (0.35) (0.10)
- -------------------------------------------------------------------------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 11.59 $ 9.82
- -------------------------------------------------------------------------- ------- -------
TOTAL RETURN (B) 21.96% (0.87%)
- --------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------------------------------------
Expenses 1.00% 0.89%*
- --------------------------------------------------------------------------
Net investment income 3.42% 3.42%*
- --------------------------------------------------------------------------
Expense waiver/reimbursement 1.71%(c) 1.72%*(d)
- --------------------------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------------------------
Net assets, end of period (000 omitted) $25,611 $15,696
- --------------------------------------------------------------------------
Portfolio turnover 139% 77%
- --------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 25, 1994 (date of initial
public investment) to November 30, 1994. For the period from January 27,
1994, the Fund had no investment activity.
(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.
(d) The Adviser waived $6,858 of the investment advisory fee, which represents
0.11% of average net assets, to comply with certain state expense
limitations. The remainder of the waiver/reimbursement was voluntary. This
expense decrease is reflected in both the expense and net investment income
ratios shown above.
(See Notes which are an integral part of the Financial Statements)
Further information about the Fund's performance is contained in the Fund's
annual report for the year ended November 30, 1995, which can be obtained free
of charge.
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
STOCKS--47.5%
- -------------------------------------------------------------------------------------------------
(A)(A)LARGE COMPANY STOCKS--13.5%
---------------------------------------------------------------------------------
BASIC INDUSTRY--1.6%
---------------------------------------------------------------------------------
3,600 Allegheny Ludlum Corp. $ 67,050
---------------------------------------------------------------------------------
1,600 Aluminum Co. of America 93,600
---------------------------------------------------------------------------------
1,400 Du Pont (E.I.) de Nemours & Co. 93,100
---------------------------------------------------------------------------------
1,100 Eastman Chemical Co. 72,187
---------------------------------------------------------------------------------
1,400 International Paper Co. 53,375
---------------------------------------------------------------------------------
2,000 Phelps Dodge Corp. 135,750
---------------------------------------------------------------------------------
2,800 Praxair, Inc. 81,550
--------------------------------------------------------------------------------- -------------
Total 596,612
--------------------------------------------------------------------------------- -------------
CONSUMER DURABLES--0.6%
---------------------------------------------------------------------------------
1,600 Eastman Kodak Co. 108,800
---------------------------------------------------------------------------------
2,700 Mattel, Inc. 75,600
---------------------------------------------------------------------------------
2,900 Volvo AB, ADR 60,900
--------------------------------------------------------------------------------- -------------
Total 245,300
--------------------------------------------------------------------------------- -------------
CONSUMER NON-DURABLES--1.2%
---------------------------------------------------------------------------------
1,000 Avon Products, Inc. 72,625
---------------------------------------------------------------------------------
2,200 IBP, Inc. 137,500
---------------------------------------------------------------------------------
1,600 Philip Morris Cos., Inc. 140,400
---------------------------------------------------------------------------------
12,400 RJR Nabisco Holdings Corp., Conv. Pfd., Series C, $0.6012 72,850
---------------------------------------------------------------------------------
1,900 Reebok International Ltd. 49,400
--------------------------------------------------------------------------------- -------------
Total 472,775
--------------------------------------------------------------------------------- -------------
ENERGY MINERALS--0.9%
---------------------------------------------------------------------------------
2,100 Chevron Corp. 103,687
---------------------------------------------------------------------------------
2,300 Occidental Petroleum Corp. 50,888
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
(A)(A)LARGE COMPANY STOCKS--CONTINUED
---------------------------------------------------------------------------------
ENERGY MINERALS--CONTINUED
---------------------------------------------------------------------------------
1,400 Texaco, Inc. $ 103,600
---------------------------------------------------------------------------------
3,400 USX-Marathon Group 62,475
--------------------------------------------------------------------------------- -------------
Total 320,650
--------------------------------------------------------------------------------- -------------
FINANCE--2.8%
---------------------------------------------------------------------------------
1,946 Allstate Corp. 79,786
---------------------------------------------------------------------------------
1,500 American Express Co. 63,750
---------------------------------------------------------------------------------
1,900 Bank of Boston Corp. 88,112
---------------------------------------------------------------------------------
900 CIGNA Corp. 99,000
---------------------------------------------------------------------------------
1,600 Chemical Banking Corp. 96,000
---------------------------------------------------------------------------------
1,700 Citicorp 120,275
---------------------------------------------------------------------------------
1,300 Dean Witter, Discover & Co. 66,300
---------------------------------------------------------------------------------
2,124 Mellon Bank Corp. 113,634
---------------------------------------------------------------------------------
1,500 Merrill Lynch & Co., Inc., STRYPES, $3.12 79,125
---------------------------------------------------------------------------------
1,400 Providian Corp. 56,175
---------------------------------------------------------------------------------
900 Sunamerica, Inc., Conv. Pfd., Series E, $3.10 60,300
---------------------------------------------------------------------------------
2,600 Travelers Group, Inc. 154,700
--------------------------------------------------------------------------------- -------------
Total 1,077,157
--------------------------------------------------------------------------------- -------------
FOOD & DRUG RETAILERS--0.0%
---------------------------------------------------------------------------------
883 Grand Union Co. 6,623
--------------------------------------------------------------------------------- -------------
HEALTH CARE--1.1%
---------------------------------------------------------------------------------
1,400 American Home Products Corp. 127,750
---------------------------------------------------------------------------------
1,400 Becton, Dickinson & Co. 97,650
---------------------------------------------------------------------------------
1,400 Bristol-Myers Squibb Co. 112,350
---------------------------------------------------------------------------------
1,300 Merck & Co., Inc. 80,438
--------------------------------------------------------------------------------- -------------
Total 418,188
--------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
(A)(A)LARGE COMPANY STOCKS--CONTINUED
---------------------------------------------------------------------------------
PRODUCER MANUFACTURING--1.5%
---------------------------------------------------------------------------------
1,300 (b)FMC Corp. $ 96,037
---------------------------------------------------------------------------------
1,100 General Electric Co. 73,975
---------------------------------------------------------------------------------
500 (b)ITT Corp. 61,312
---------------------------------------------------------------------------------
700 Loews Corp. 107,450
---------------------------------------------------------------------------------
1,800 Textron, Inc. 137,925
---------------------------------------------------------------------------------
6,400 (c)Westinghouse Electric Corp., PEPS, Series C, $1.30 105,600
--------------------------------------------------------------------------------- -------------
Total 582,299
--------------------------------------------------------------------------------- -------------
RETAIL TRADE--0.4%
---------------------------------------------------------------------------------
2,500 American Stores Co. 65,625
---------------------------------------------------------------------------------
2,100 Sears, Roebuck & Co. 82,688
--------------------------------------------------------------------------------- -------------
Total 148,313
--------------------------------------------------------------------------------- -------------
SERVICES--0.4%
---------------------------------------------------------------------------------
2,600 Baker Hughes, Inc. 52,975
---------------------------------------------------------------------------------
1,000 Gannett Co., Inc. 61,000
---------------------------------------------------------------------------------
900 (b)Western Atlas, Inc. 43,088
--------------------------------------------------------------------------------- -------------
Total 157,063
--------------------------------------------------------------------------------- -------------
TECHNOLOGY--1.9%
---------------------------------------------------------------------------------
2,300 General Motors Corp., Class E 116,150
---------------------------------------------------------------------------------
1,400 Hewlett-Packard Co. 116,025
---------------------------------------------------------------------------------
1,200 Intel Corp. 73,050
---------------------------------------------------------------------------------
600 International Business Machines Corp. 57,975
---------------------------------------------------------------------------------
1,200 (b)Litton Industries, Inc. 53,850
---------------------------------------------------------------------------------
1,900 Lockheed Martin Corp. 139,413
---------------------------------------------------------------------------------
1,600 Raytheon Co. 71,200
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
(A)(A)LARGE COMPANY STOCKS--CONTINUED
---------------------------------------------------------------------------------
1,600 Rockwell International Corp. $ 78,400
--------------------------------------------------------------------------------- -------------
Total 706,063
--------------------------------------------------------------------------------- -------------
TRANSPORTATION--0.2%
---------------------------------------------------------------------------------
1,300 Consolidated Rail Corp. 90,837
--------------------------------------------------------------------------------- -------------
(D) UTILITIES--0.9%
---------------------------------------------------------------------------------
1,700 AT&T Corp. 112,200
---------------------------------------------------------------------------------
800 (b)CMS Energy Corp. 21,800
---------------------------------------------------------------------------------
1,100 (b)Columbia Gas System, Inc. 47,575
---------------------------------------------------------------------------------
1,100 Enron Corp. 41,250
---------------------------------------------------------------------------------
800 FPL Group, Inc. 34,700
---------------------------------------------------------------------------------
2,500 MCI Communications Corp. 66,875
--------------------------------------------------------------------------------- -------------
Total 324,400
--------------------------------------------------------------------------------- -------------
TOTAL LARGE COMPANY STOCKS 5,146,280
--------------------------------------------------------------------------------- -------------
(A)SMALL COMPANY STOCKS--16.5%
---------------------------------------------------------------------------------
BASIC INDUSTRY--1.7%
---------------------------------------------------------------------------------
4,600 (b)Applied Extrusion Technologies, Inc. 58,075
---------------------------------------------------------------------------------
3,079 Brush Wellman, Inc. 53,882
---------------------------------------------------------------------------------
1,600 Cambrex Corp. 59,200
---------------------------------------------------------------------------------
1,500 Carpenter Technology Corp. 64,875
---------------------------------------------------------------------------------
2,100 Chesapeake Corp. 61,950
---------------------------------------------------------------------------------
1,000 (b)Cytec Industries, Inc. 64,000
---------------------------------------------------------------------------------
3,000 First Mississippi Corp. 76,500
---------------------------------------------------------------------------------
4,000 (b)Magma Copper Co. 85,000
---------------------------------------------------------------------------------
1,200 Springs Industries, Inc., Class A 50,400
---------------------------------------------------------------------------------
1,200 Texas Industries, Inc. 61,500
--------------------------------------------------------------------------------- -------------
Total 635,382
--------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
(A)SMALL COMPANY STOCKS--CONTINUED
---------------------------------------------------------------------------------
CONSUMER DURABLES--1.0%
---------------------------------------------------------------------------------
1,500 Barnes Group, Inc. $ 58,125
---------------------------------------------------------------------------------
2,400 (b)Champion Enterprises, Inc. 72,000
---------------------------------------------------------------------------------
3,400 Coachmen Industries, Inc. 65,875
---------------------------------------------------------------------------------
1,350 Harman International Industries, Inc. 59,231
---------------------------------------------------------------------------------
3,100 (b)Toll Brothers, Inc. 56,188
---------------------------------------------------------------------------------
1,900 Toro Co. 60,088
--------------------------------------------------------------------------------- -------------
Total 371,507
--------------------------------------------------------------------------------- -------------
CONSUMER NON-DURABLES--0.5%
---------------------------------------------------------------------------------
3,600 Hudson Foods, Inc., Class A 57,600
---------------------------------------------------------------------------------
3,500 (b)Mondavi Robert Corp., Class A 111,563
--------------------------------------------------------------------------------- -------------
Total 169,163
--------------------------------------------------------------------------------- -------------
ENERGY MINERALS--0.3%
---------------------------------------------------------------------------------
3,200 KCS Energy, Inc. 44,000
---------------------------------------------------------------------------------
7,900 (b)Tesoro Petroleum Corp. 66,163
--------------------------------------------------------------------------------- -------------
Total 110,163
--------------------------------------------------------------------------------- -------------
FINANCE--3.8%
---------------------------------------------------------------------------------
1,300 Alex Brown, Inc. 59,800
---------------------------------------------------------------------------------
1,700 Allied Group, Inc. 60,350
---------------------------------------------------------------------------------
1,500 American Bankers Insurance Group, Inc. 54,187
---------------------------------------------------------------------------------
2,000 (b)American Travellers Corp. 50,000
---------------------------------------------------------------------------------
1,200 Associated Banc Corp. 47,700
---------------------------------------------------------------------------------
2,523 Bankers First Corp. 69,067
---------------------------------------------------------------------------------
1,600 (b)Brooklyn Bancorp, Inc. 64,400
---------------------------------------------------------------------------------
3,700 CWM Mortgage Holdings, Inc. 55,962
---------------------------------------------------------------------------------
1,800 Centura Banks, Inc. 61,200
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
(A)SMALL COMPANY STOCKS--CONTINUED
---------------------------------------------------------------------------------
FINANCE--CONTINUED
---------------------------------------------------------------------------------
4,900 City National Corp. $ 67,375
---------------------------------------------------------------------------------
1,000 Cullen Frost Bankers, Inc. 50,750
---------------------------------------------------------------------------------
4,000 FirstBank Puerto Rico 75,500
---------------------------------------------------------------------------------
4,300 (b)Glendale Federal Bank 69,338
---------------------------------------------------------------------------------
6,200 Hibernia Corp., Class A 65,100
---------------------------------------------------------------------------------
1,600 Irwin Financial Corp. 63,200
---------------------------------------------------------------------------------
2,250 Money Stores, Inc. 106,313
---------------------------------------------------------------------------------
3,700 North Fork Bancorp, Inc. 86,025
---------------------------------------------------------------------------------
1,000 PHH Corp. 45,750
---------------------------------------------------------------------------------
3,000 Peoples Heritage Financial Group 63,000
---------------------------------------------------------------------------------
1,400 Queens County Bancorp, Inc. 56,350
---------------------------------------------------------------------------------
2,400 (b)St. Francis Capital Corp. 55,800
---------------------------------------------------------------------------------
1,700 Student Loan Corp. 60,138
---------------------------------------------------------------------------------
1,100 WestAmerica Bancorporation 45,375
--------------------------------------------------------------------------------- -------------
Total 1,432,680
--------------------------------------------------------------------------------- -------------
HEALTH CARE--1.5%
---------------------------------------------------------------------------------
3,800 Bindley Western Industries, Inc. 67,925
---------------------------------------------------------------------------------
1,900 (b)Bio Rad Laboratories, Inc., Class A 78,375
---------------------------------------------------------------------------------
2,600 (b)Foxmeyer Health Corp. 67,600
---------------------------------------------------------------------------------
3,200 ICN Pharmaceuticals, Inc. 64,800
---------------------------------------------------------------------------------
7,600 Kinetic Concepts, Inc. 86,450
---------------------------------------------------------------------------------
3,100 (b)Maxicare Health Plans, Inc. 67,813
---------------------------------------------------------------------------------
8,000 (b)North American Biologicals, Inc. 77,000
---------------------------------------------------------------------------------
7,000 (b)Oec-Medical Systems, Inc. 70,000
--------------------------------------------------------------------------------- -------------
Total 579,963
--------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
(A)SMALL COMPANY STOCKS--CONTINUED
---------------------------------------------------------------------------------
PRODUCER MANUFACTURING--1.1%
---------------------------------------------------------------------------------
1,300 AGCO Corp. $ 56,063
---------------------------------------------------------------------------------
1,950 Blount Intl, Inc., Class A 58,744
---------------------------------------------------------------------------------
2,100 Borg-Warner Automotive, Inc. 62,212
---------------------------------------------------------------------------------
4,100 Brenco, Inc. 43,050
---------------------------------------------------------------------------------
3,200 JLG Industries, Inc. 90,800
---------------------------------------------------------------------------------
1,100 NACCO Industries, Inc., Class A 62,700
---------------------------------------------------------------------------------
2,300 (b)NCI Building System, Inc. 52,900
--------------------------------------------------------------------------------- -------------
Total 426,469
--------------------------------------------------------------------------------- -------------
RETAIL TRADE--1.0%
---------------------------------------------------------------------------------
1,700 (b)CompUSA, Inc. 63,112
---------------------------------------------------------------------------------
1,100 (b)Eckerd Corp. 46,887
---------------------------------------------------------------------------------
3,200 Great Atlantic & Pacific Tea Co., Inc. 70,000
---------------------------------------------------------------------------------
5,300 (b)MacFrugal's Bargains CloseOuts, Inc. 69,563
---------------------------------------------------------------------------------
4,900 Pier 1 Imports, Inc. 53,288
---------------------------------------------------------------------------------
4,000 Ruddick Corp. 43,000
---------------------------------------------------------------------------------
2,200 (b)Waban, Inc. 40,700
--------------------------------------------------------------------------------- -------------
Total 386,550
--------------------------------------------------------------------------------- -------------
SERVICES--2.0%
---------------------------------------------------------------------------------
2,500 (b)American Buildings Co. 56,562
---------------------------------------------------------------------------------
1,600 Butler Manufacturing Co. 55,200
---------------------------------------------------------------------------------
3,100 Castle (A.M.) & Co. 75,950
---------------------------------------------------------------------------------
1,900 (b)Devon Group, Inc. 73,150
---------------------------------------------------------------------------------
1,800 Granite Construction, Inc. 49,950
---------------------------------------------------------------------------------
1,300 Plenum Publishing Corp. 47,125
---------------------------------------------------------------------------------
6,700 (b)Pride Petroleum Services, Inc. 65,325
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
(A)SMALL COMPANY STOCKS--CONTINUED
---------------------------------------------------------------------------------
SERVICES--CONTINUED
---------------------------------------------------------------------------------
2,299 Pulitzer Publishing Co. $ 105,754
---------------------------------------------------------------------------------
2,245 Richfood Holdings, Inc. 63,141
---------------------------------------------------------------------------------
1,655 (b)United Video Satellite Group, Inc., Class A 47,995
---------------------------------------------------------------------------------
5,600 (b)Westcott Communications 79,800
---------------------------------------------------------------------------------
3,000 (b)Western Waste Industries 55,125
--------------------------------------------------------------------------------- -------------
Total 775,077
--------------------------------------------------------------------------------- -------------
TECHNOLOGY--2.4%
---------------------------------------------------------------------------------
2,428 (b)Bell Industries, Inc. 55,237
---------------------------------------------------------------------------------
2,300 (b)Burr Brown Corp. 66,125
---------------------------------------------------------------------------------
6,600 (b)Computervision Corp. 82,500
---------------------------------------------------------------------------------
800 (b)Electronics for Imaging, Inc. 68,800
---------------------------------------------------------------------------------
1,200 (b)International Rectifier Corp. 59,550
---------------------------------------------------------------------------------
2,000 (b)Kemet Corp. 61,000
---------------------------------------------------------------------------------
1,700 (b)Marshall Industries 59,925
---------------------------------------------------------------------------------
2,400 (b)Network Equipment Technologies, Inc. 79,500
---------------------------------------------------------------------------------
3,900 (b)S3, Inc. 73,613
---------------------------------------------------------------------------------
1,600 (b)SCI Systems, Inc. 53,600
---------------------------------------------------------------------------------
2,000 (b)Tech-Sym Corp. 59,750
---------------------------------------------------------------------------------
1,800 (b)Tencor Instruments 67,950
---------------------------------------------------------------------------------
1,500 Watkins Johnson Co. 68,063
---------------------------------------------------------------------------------
1,200 Wyle Labs 47,250
--------------------------------------------------------------------------------- -------------
Total 902,863
--------------------------------------------------------------------------------- -------------
TRANSPORTATION--0.3%
---------------------------------------------------------------------------------
3,900 (b)America West Airlines, Inc., Class B 69,712
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
(A)SMALL COMPANY STOCKS--CONTINUED
---------------------------------------------------------------------------------
TRANSPORTATION--CONTINUED
---------------------------------------------------------------------------------
1,500 (b)Continental Airlines, Inc., Class B $ 58,687
--------------------------------------------------------------------------------- -------------
Total 128,399
--------------------------------------------------------------------------------- -------------
(D)UTILITIES--0.9%
---------------------------------------------------------------------------------
2,200 Central Hudson Gas & Electric Service 66,825
---------------------------------------------------------------------------------
1,900 Eastern Enterprises 61,750
---------------------------------------------------------------------------------
2,700 Oneok, Inc. 63,450
---------------------------------------------------------------------------------
4,300 (b)Public Service Co. New Mexico 75,788
---------------------------------------------------------------------------------
500 Tele Danmark 13,938
---------------------------------------------------------------------------------
1,700 Teppco Partners, L.P. 61,625
--------------------------------------------------------------------------------- -------------
Total 343,376
--------------------------------------------------------------------------------- -------------
TOTAL SMALL COMPANY STOCKS 6,261,592
--------------------------------------------------------------------------------- -------------
FOREIGN EQUITY--17.5%
---------------------------------------------------------------------------------
ARGENTINA--0.1%
---------------------------------------------------------------------------------
300 Banco Frances del Rio de la Plata S.A., ADR 7,837
---------------------------------------------------------------------------------
1,500 Compania Naviera Perez Companc SA, Class B 7,278
---------------------------------------------------------------------------------
303 IRSA Inversiones y Representaciones S.A., GDR 6,586
---------------------------------------------------------------------------------
400 YPF Sociedad Anonima, ADR 7,800
--------------------------------------------------------------------------------- -------------
Total 29,501
--------------------------------------------------------------------------------- -------------
AUSTRALIA--0.5%
---------------------------------------------------------------------------------
10,000 Mayne Nickless Ltd. 46,015
---------------------------------------------------------------------------------
10,000 News Corporation Ltd. 52,397
---------------------------------------------------------------------------------
10,500 Woodside Petroleum Ltd. 52,134
---------------------------------------------------------------------------------
19,500 Woolworth's Ltd. 45,588
--------------------------------------------------------------------------------- -------------
Total 196,134
--------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
---------------------------------------------------------------------------------
FINLAND--0.0%
---------------------------------------------------------------------------------
200 Nokia AB-A $ 10,974
--------------------------------------------------------------------------------- -------------
FRANCE--1.0%
---------------------------------------------------------------------------------
900 AXA 53,850
---------------------------------------------------------------------------------
395 Accor SA 47,965
---------------------------------------------------------------------------------
1,000 Compagnie Financiere de Paribas, Class A 55,525
---------------------------------------------------------------------------------
400 LVMH (Moet-Hennessy) 76,145
---------------------------------------------------------------------------------
670 LaFarge-Coppee 42,559
---------------------------------------------------------------------------------
2,600 Lagardere Groupe 50,588
---------------------------------------------------------------------------------
525 Lyonnaise des Eaux SA 50,286
--------------------------------------------------------------------------------- -------------
Total 376,918
--------------------------------------------------------------------------------- -------------
GERMANY, FEDERAL REPUBLIC OF--1.2%
---------------------------------------------------------------------------------
195 BASF AG 42,740
---------------------------------------------------------------------------------
220 Commerzbank AG, Frankfurt 50,882
---------------------------------------------------------------------------------
900 Deutsche Bank AG 42,222
---------------------------------------------------------------------------------
181 Gea AG, Pfd. 57,568
---------------------------------------------------------------------------------
115 Henkel KGaA--Vorzug, Pfd. 43,096
---------------------------------------------------------------------------------
121 Kaufhof Holding AG 36,644
---------------------------------------------------------------------------------
70 Linde AG 41,043
---------------------------------------------------------------------------------
140 Mannesmann AG 45,079
---------------------------------------------------------------------------------
100 Siemens AG 52,237
---------------------------------------------------------------------------------
55 Wella AG, Pfd. 25,859
--------------------------------------------------------------------------------- -------------
Total 437,370
--------------------------------------------------------------------------------- -------------
HONG KONG--0.6%
---------------------------------------------------------------------------------
39,000 Amoy Properties Ltd. 37,311
---------------------------------------------------------------------------------
300 Cheung Kong 1,707
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
---------------------------------------------------------------------------------
HONG KONG--CONTINUED
---------------------------------------------------------------------------------
2,429 HSBC Holdings PLC $ 35,803
---------------------------------------------------------------------------------
22,000 Hong Kong Telecom 37,402
---------------------------------------------------------------------------------
500 Hutchison Whampoa 2,825
---------------------------------------------------------------------------------
82,000 Manhattan Card Co., Ltd. 36,574
---------------------------------------------------------------------------------
5,000 Sun Hung Kai Properties 40,240
---------------------------------------------------------------------------------
10,000 Television Broadcasts Ltd. 37,751
--------------------------------------------------------------------------------- -------------
Total 229,613
--------------------------------------------------------------------------------- -------------
INDONESIA--0.3%
---------------------------------------------------------------------------------
17,000 Astra International 33,873
---------------------------------------------------------------------------------
11,000 Hero Supermarket 21,677
---------------------------------------------------------------------------------
6,000 Indocement 20,363
---------------------------------------------------------------------------------
10,000 Lippo Bank 14,670
---------------------------------------------------------------------------------
10,000 United Tractors 18,174
--------------------------------------------------------------------------------- -------------
Total 108,757
--------------------------------------------------------------------------------- -------------
ITALY--0.3%
---------------------------------------------------------------------------------
11,900 La Rinascente S.P.A. 66,675
---------------------------------------------------------------------------------
42,000 (b)Telecom Italia Mobile 67,760
--------------------------------------------------------------------------------- -------------
Total 134,435
--------------------------------------------------------------------------------- -------------
JAPAN--7.1%
---------------------------------------------------------------------------------
9,000 Asahi Chemical Industry Co. Ltd. 67,224
---------------------------------------------------------------------------------
4,000 Bridgestone Corp. 58,968
---------------------------------------------------------------------------------
2,000 Canon Inc. 35,184
---------------------------------------------------------------------------------
7 DDI Corp. 56,275
---------------------------------------------------------------------------------
3,000 Dai Nippon Printing Co. Ltd. 52,482
---------------------------------------------------------------------------------
11,000 Daimaru, Inc. 72,432
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
---------------------------------------------------------------------------------
JAPAN--CONTINUED
---------------------------------------------------------------------------------
16,000 Dainippon Ink and Chemical, Inc. $ 74,064
---------------------------------------------------------------------------------
5,000 Fujitsu Ltd. 58,968
---------------------------------------------------------------------------------
3,000 Hitachi Cable 21,317
---------------------------------------------------------------------------------
4,000 JUSCO Co. 95,921
---------------------------------------------------------------------------------
8,000 Jaccs 78,624
---------------------------------------------------------------------------------
10,000 (b)Japan Airlines Co. 63,980
---------------------------------------------------------------------------------
4,000 Kandenko Co., Ltd. 48,747
---------------------------------------------------------------------------------
15,000 Kawasaki Heavy Industries 68,256
---------------------------------------------------------------------------------
19,000 Kawasaki Steel 67,410
---------------------------------------------------------------------------------
3,000 Kokuyo Co. 64,570
---------------------------------------------------------------------------------
13,000 Kubota Corp. 85,474
---------------------------------------------------------------------------------
7,000 Kuraray Co. Ltd. 71,548
---------------------------------------------------------------------------------
1,000 Kurita Water Industries 27,813
---------------------------------------------------------------------------------
9,000 Kyowa Hakko Kogyo Co. 88,452
---------------------------------------------------------------------------------
8,000 Minebea Co. 66,516
---------------------------------------------------------------------------------
14,000 Mitsubishi Heavy Industries 111,587
---------------------------------------------------------------------------------
9,000 Mitsui Marine & Fire Insurance Co. 60,590
---------------------------------------------------------------------------------
5,000 NEC Corp. 63,882
---------------------------------------------------------------------------------
3,000 NGK Insulators 29,779
---------------------------------------------------------------------------------
28,000 (b)NKK Corp. 77,052
---------------------------------------------------------------------------------
10,000 Nagoya Railroad Co. Ltd. 49,140
---------------------------------------------------------------------------------
9,000 Nihon Cement Co., Ltd. 59,617
---------------------------------------------------------------------------------
3,000 Nippon Electric Glass Co., Ltd. 55,725
---------------------------------------------------------------------------------
7,000 Nippon Express Co. Ltd. 60,747
---------------------------------------------------------------------------------
11,000 Nippon Sheet Glass Co. 49,081
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
---------------------------------------------------------------------------------
JAPAN--CONTINUED
---------------------------------------------------------------------------------
4,000 Nishimatsu Construction $ 47,961
---------------------------------------------------------------------------------
7,000 Sakura Bank Ltd., Tokyo 75,676
---------------------------------------------------------------------------------
1,000 Secom Co. 67,518
---------------------------------------------------------------------------------
1,000 Sega Enterprises 54,054
---------------------------------------------------------------------------------
4,000 Sekisui House Ltd. 46,781
---------------------------------------------------------------------------------
5,000 Shionogi and Co. 43,096
---------------------------------------------------------------------------------
1,000 Sony Music Entertainment, Inc. 44,717
---------------------------------------------------------------------------------
12,000 Sumitomo Chemical Co. 59,676
---------------------------------------------------------------------------------
20,000 Sumitomo Heavy Industries 63,686
---------------------------------------------------------------------------------
3,000 Takeda Chemical Industries 44,816
---------------------------------------------------------------------------------
7,000 Tokio Marine & Fire 79,803
---------------------------------------------------------------------------------
1,000 Tostem Corp. 30,467
---------------------------------------------------------------------------------
3,000 Toto Ltd. 40,688
---------------------------------------------------------------------------------
3,000 Yamanouchi Pharmaceutical 64,570
--------------------------------------------------------------------------------- -------------
Total 2,704,934
--------------------------------------------------------------------------------- -------------
MALAYSIA--0.4%
---------------------------------------------------------------------------------
3,000 Malayan Banking Bhd 23,768
---------------------------------------------------------------------------------
31,000 Malayan United Industries Bhd 23,583
---------------------------------------------------------------------------------
13,000 Malayawata Steel Berhad 22,239
---------------------------------------------------------------------------------
10,000 Malaysian International Shipping Bhd 24,438
---------------------------------------------------------------------------------
7,000 (d)Tenaga Nasional Berhad 26,212
---------------------------------------------------------------------------------
10,000 UMW Holdings Bhd 23,453
--------------------------------------------------------------------------------- -------------
Total 143,693
--------------------------------------------------------------------------------- -------------
MEXICO--0.1%
---------------------------------------------------------------------------------
800 Cemex SA, Class B, ADR 5,350
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
---------------------------------------------------------------------------------
MEXICO--CONTINUED
---------------------------------------------------------------------------------
500 Empresas ICA Sociedad Controladora S.A., ADR $ 5,125
---------------------------------------------------------------------------------
900 Grupo Financiero Bancomer, S.A. de C.V., Class B, ADR 5,175
---------------------------------------------------------------------------------
200 Pan American Beverage, Class A 6,450
---------------------------------------------------------------------------------
700 Transportacion Maritima Mexicana SA , Class L, ADR 5,338
--------------------------------------------------------------------------------- -------------
Total 27,438
--------------------------------------------------------------------------------- -------------
NETHERLANDS--0.7%
---------------------------------------------------------------------------------
4,850 Elsevier NV 66,192
---------------------------------------------------------------------------------
970 Polygram NV 58,405
---------------------------------------------------------------------------------
2,400 Royal PTT Nederland NV 85,518
---------------------------------------------------------------------------------
500 Unilever NV-Cert 66,078
--------------------------------------------------------------------------------- -------------
Total 276,193
--------------------------------------------------------------------------------- -------------
NEW ZEALAND--0.1%
---------------------------------------------------------------------------------
10,000 Fletcher Challenge Ltd. 24,809
---------------------------------------------------------------------------------
1,419 Fletcher Challenge Ltd.--Forestry Shares 2,001
--------------------------------------------------------------------------------- -------------
Total 26,810
--------------------------------------------------------------------------------- -------------
SINGAPORE--0.4%
---------------------------------------------------------------------------------
9,000 First Capital Corp., Ltd., Singapore 24,247
---------------------------------------------------------------------------------
2,000 Fraser and Neave Ltd. 23,821
---------------------------------------------------------------------------------
13,000 Haw Par Brothers International Ltd. 28,018
---------------------------------------------------------------------------------
3,000 Singapore Airlines Ltd. 28,075
---------------------------------------------------------------------------------
2,000 Singapore Press Holdings Ltd. 31,620
--------------------------------------------------------------------------------- -------------
Total 135,781
--------------------------------------------------------------------------------- -------------
SPAIN--0.3%
---------------------------------------------------------------------------------
235 Acerinox SA 23,547
---------------------------------------------------------------------------------
1,500 Repsol SA 47,280
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
---------------------------------------------------------------------------------
SPAIN--CONTINUED
---------------------------------------------------------------------------------
630 Zardoya-Otis SA $ 65,425
--------------------------------------------------------------------------------- -------------
Total 136,252
--------------------------------------------------------------------------------- -------------
SWEDEN--0.3%
---------------------------------------------------------------------------------
5,000 Stora Kopparbergs, Class A 62,924
---------------------------------------------------------------------------------
2,000 Svedala Industri AB Free 55,373
--------------------------------------------------------------------------------- -------------
Total 118,297
--------------------------------------------------------------------------------- -------------
SWITZERLAND--0.9%
---------------------------------------------------------------------------------
41 BBC Brown Boveri 47,086
---------------------------------------------------------------------------------
600 CS Holding 56,912
---------------------------------------------------------------------------------
50 Ciba-Giegy AG-R 44,577
---------------------------------------------------------------------------------
50 Nestle SA 53,296
---------------------------------------------------------------------------------
10 Roche Holdings AG Genusscheine 75,542
---------------------------------------------------------------------------------
165 Zurich Versicherungsgesellschaft 50,672
--------------------------------------------------------------------------------- -------------
Total 328,085
--------------------------------------------------------------------------------- -------------
UNITED KINGDOM, SCOTLAND & NORTH IRELAND--3.2%
---------------------------------------------------------------------------------
11,000 Associated British Ports Holdings PLC 47,658
---------------------------------------------------------------------------------
8,000 BTR PLC 40,968
---------------------------------------------------------------------------------
5,900 Boots Co. PLC 51,124
---------------------------------------------------------------------------------
12,000 (d)British Gas PLC 44,825
---------------------------------------------------------------------------------
17,600 British Steel PLC 45,536
---------------------------------------------------------------------------------
6,700 Cadbury Schweppes PLC 57,133
---------------------------------------------------------------------------------
15,100 Caradon PLC 45,425
---------------------------------------------------------------------------------
9,800 Chubb Security 48,535
---------------------------------------------------------------------------------
7,500 Compass Group 51,382
---------------------------------------------------------------------------------
8,000 Grand Metropolitan PLC 54,133
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
---------------------------------------------------------------------------------
UNITED KINGDOM, SCOTLAND & NORTH IRELAND--CONTINUED
---------------------------------------------------------------------------------
3,960 Imperial Chemical Industries PLC $ 46,075
---------------------------------------------------------------------------------
8,500 Marks & Spencer PLC 57,452
---------------------------------------------------------------------------------
5,000 (d)Midlands Electricity 70,959
---------------------------------------------------------------------------------
3,600 RMC Group PLC 57,180
---------------------------------------------------------------------------------
3,650 RTZ Corp. PLC 52,386
---------------------------------------------------------------------------------
7,700 Rank Organisation PLC 48,567
---------------------------------------------------------------------------------
4,900 Reckitt & Colman PLC 50,223
---------------------------------------------------------------------------------
31,600 Rugby Group PLC 51,764
---------------------------------------------------------------------------------
8,900 (d)Scottish Power PLC 51,367
---------------------------------------------------------------------------------
27,500 Sedgwick Group PLC 50,731
---------------------------------------------------------------------------------
8,400 Smith, W.H. Group PLC 55,683
---------------------------------------------------------------------------------
6,000 Thames Water PLC 50,750
---------------------------------------------------------------------------------
12,700 Tomkins PLC 51,329
---------------------------------------------------------------------------------
9,000 Williams Holdings PLC 45,675
--------------------------------------------------------------------------------- -------------
Total 1,226,860
--------------------------------------------------------------------------------- -------------
TOTAL FOREIGN EQUITY 6,648,045
--------------------------------------------------------------------------------- -------------
TOTAL STOCKS (IDENTIFIED COST $16,009,177) 18,055,917
--------------------------------------------------------------------------------- -------------
BONDS--25.7%
- -------------------------------------------------------------------------------------------------
TREASURY--9.1%
---------------------------------------------------------------------------------
$ 2,025,000 United States Treasury Note 6.50%, 05/15/2005 2,132,447
---------------------------------------------------------------------------------
860,000 United States Treasury Note 7.25%, 08/15/2004 945,811
---------------------------------------------------------------------------------
350,000 United States Treasury Note, 7.50% 02/15/2005 392,249
--------------------------------------------------------------------------------- -------------
TOTAL TREASURY 3,470,507
--------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES--5.0%
---------------------------------------------------------------------------------
GOVERNMENT AGENCY--5.0%
---------------------------------------------------------------------------------
$ 499,681 Federal Home Loan Mortgage Corp., 7.50%, 10/1/2025 $ 509,040
---------------------------------------------------------------------------------
197,052 Federal Home Loan Mortgage Corp., 7.00%, 4/1/2009 199,513
---------------------------------------------------------------------------------
97,635 Federal National Mortgage Association, 7.00%, 5/1/2001 99,159
---------------------------------------------------------------------------------
244,678 Federal National Mortgage Association, 8.00%, 7/1/2023 252,627
---------------------------------------------------------------------------------
307,666 Government National Mortgage Association, 7.50%, 1/15/2024 314,197
---------------------------------------------------------------------------------
505,454 Government National Mortgage Association, 8.00%, 7/15/2025 523,140
--------------------------------------------------------------------------------- -------------
TOTAL MORTGAGE-BACKED SECURITIES 1,897,676
--------------------------------------------------------------------------------- -------------
HIGH YIELD BONDS--4.5%
---------------------------------------------------------------------------------
AUTOMOTIVE--0.2%
---------------------------------------------------------------------------------
75,000 Exide Corp., Sr. Note, 10%, 0/12.75%, 4/15/2005 81,000
--------------------------------------------------------------------------------- -------------
BANKING--0.3%
---------------------------------------------------------------------------------
100,000 First Nationwide Holdings, Sr. Note, 12.25%, 5/15/2001 114,125
--------------------------------------------------------------------------------- -------------
BROADCAST RADIO & TV--0.4%
---------------------------------------------------------------------------------
50,000 Chancellor Broadcasting Co., Sr. Sub. Note, 12.50%, 10/1/2004 53,750
---------------------------------------------------------------------------------
50,000 SCI Television, Sr. Secd. Note, 11.00%, 6/30/2005 53,000
---------------------------------------------------------------------------------
50,000 Sinclair Broadcast Group, Sr. Sub. Note, 10.00%, 9/30/2005 51,375
--------------------------------------------------------------------------------- -------------
Total 158,125
--------------------------------------------------------------------------------- -------------
CABLE TELEVISION--0.4%
---------------------------------------------------------------------------------
25,000 CAI Wireless Systems, Sr. Note, 12.25%, 9/15/2002 26,469
---------------------------------------------------------------------------------
50,000 Continental Cablevision, Sr. Deb., 9.50%, 8/1/2013 52,750
---------------------------------------------------------------------------------
25,000 Fundy Cable Ltd./Ltee, Sr. Secd. 2nd Priority Note,
11.00%, 11/15/2005 25,563
---------------------------------------------------------------------------------
100,000 International Cabletel, Sr. Note, 0/12.75%, 4/15/2005 61,125
--------------------------------------------------------------------------------- -------------
Total 165,907
--------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
---------------------------------------------------------------------------------
CHEMICALS & PLASTICS--0.3%
---------------------------------------------------------------------------------
$ 50,000 Arcadian Partners Lp, Sr. Note, Series B, 10.75%, 5/1/2005 $ 55,000
---------------------------------------------------------------------------------
50,000 G-I Holdings, Sr. Disc. Note, 0%, 10/1/1998 37,937
--------------------------------------------------------------------------------- -------------
Total 92,937
--------------------------------------------------------------------------------- -------------
CLOTHING & TEXTILES--0.1%
---------------------------------------------------------------------------------
50,000 Westpoint Stevens, Inc., Sr. Sub. Deb., 9.375%, 12/15/2005 50,750
--------------------------------------------------------------------------------- -------------
CONGLOMERATES--0.1%
---------------------------------------------------------------------------------
50,000 Sherritt Gordon Ltd., Sr. Note, 9.75%, 4/1/2003 52,250
--------------------------------------------------------------------------------- -------------
CONSUMER PRODUCTS--0.3%
---------------------------------------------------------------------------------
50,000 (c)Herff Jones, Inc., Sr. Sub. Note, 11.00%, 8/15/2005 52,875
---------------------------------------------------------------------------------
50,000 Playtex Family Products Corp., Sr. Sub. Note, 9.00%, 12/15/2003 44,250
--------------------------------------------------------------------------------- -------------
Total 97,125
--------------------------------------------------------------------------------- -------------
CONTAINER & GLASS PRODUCTS--0.1%
---------------------------------------------------------------------------------
50,000 Owens Illinois, Inc., Sr. Sub. Note, 9.75%, 8/15/2004 52,125
--------------------------------------------------------------------------------- -------------
FOOD & DRUG RETAILERS--0.3%
---------------------------------------------------------------------------------
50,000 Pathmark Stores, Inc., Sr. Sub. Note, 9.625%, 5/1/2003 46,813
---------------------------------------------------------------------------------
50,000 Ralph's Grocery Co., Sr. Note, 10.45%, 6/15/2004 49,375
--------------------------------------------------------------------------------- -------------
Total 96,188
--------------------------------------------------------------------------------- -------------
FOOD PRODUCTS--0.2%
---------------------------------------------------------------------------------
50,000 Curtice-Burns Foods, Inc., Sr. Sub. Note, 12.25%, 2/1/2005 51,500
---------------------------------------------------------------------------------
25,000 (c)Van de Kamp's Inc., Sr. Sub. Note, 12.00%, 9/15/2005 25,813
--------------------------------------------------------------------------------- -------------
Total 77,313
--------------------------------------------------------------------------------- -------------
FOOD SERVICES--0.1%
---------------------------------------------------------------------------------
50,000 Flagstar Corp., Sr. Note, 10.875%, 12/1/2002 45,750
--------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
---------------------------------------------------------------------------------
FOREST PRODUCTS--0.3%
---------------------------------------------------------------------------------
$ 50,000 Repap New Brunswick, 2nd Priority Sr. Secd. Note,
10.625%, 4/15/2005 $ 49,688
---------------------------------------------------------------------------------
50,000 Stone Container Corp., Sr. Note, 9.875%, 2/1/2001 48,688
--------------------------------------------------------------------------------- -------------
Total 98,376
--------------------------------------------------------------------------------- -------------
HEALTHCARE--0.1%
---------------------------------------------------------------------------------
50,000 Tenet Healthcare, Sr. Sub. Note, 10.125%, 3/1/2005 54,438
--------------------------------------------------------------------------------- -------------
HOME PRODUCTS & FURNISHINGS--0.1%
---------------------------------------------------------------------------------
50,000 American Standard, Inc., Sr. Sub. Disc. Deb., 0/10.50%, 6/1/2005 42,250
--------------------------------------------------------------------------------- -------------
LEISURE & ENTERTAINMENT--0.1%
---------------------------------------------------------------------------------
50,000 (c)Six Flags Theme Parks, Sr. Sub. Disc. Note, 0/12.25%, 6/15/2005 39,125
--------------------------------------------------------------------------------- -------------
OIL & GAS--0.1%
---------------------------------------------------------------------------------
50,000 Falcon Drilling Company, Sr. Note, 9.75%, 1/15/2001 50,750
--------------------------------------------------------------------------------- -------------
RETAILERS--0.1%
---------------------------------------------------------------------------------
50,000 Brylane Capital Corp., Sr. Sub. Note, 10.00%, 9/1/2003 43,750
--------------------------------------------------------------------------------- -------------
SERVICES--0.1%
---------------------------------------------------------------------------------
25,000 (c)Coinmach Corporation, Sr. Note, 11.75%, 11/15/2005 25,312
--------------------------------------------------------------------------------- -------------
STEEL--0.3%
---------------------------------------------------------------------------------
50,000 GS Technologies Operating Co., Inc., Sr. Note, 12.00%, 9/1/2004 49,500
---------------------------------------------------------------------------------
50,000 Northwestern Steel & Wire, Sr. Note, 9.50%, 6/15/2001 49,500
--------------------------------------------------------------------------------- -------------
Total 99,000
--------------------------------------------------------------------------------- -------------
TELECOMMUNICATIONS & CELLULAR--0.4%
---------------------------------------------------------------------------------
25,000 (c)IXC Communications, Inc., Sr. Note, 12.50%, 10/1/2005 26,188
---------------------------------------------------------------------------------
25,000 MobileMedia Communication, Sr. Sub. Note, 9.375%, 11/1/2007 25,313
---------------------------------------------------------------------------------
50,000 Nextel Communications, Inc., Sr. Disc. Note, 0/11.50%, 9/1/2003 30,125
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
---------------------------------------------------------------------------------
TELECOMMUNICATIONS & CELLULAR--CONTINUED
---------------------------------------------------------------------------------
$ 50,000 Paging Network, Sr. Sub. Note, 10.125%, 8/1/2007 $ 53,375
--------------------------------------------------------------------------------- -------------
Total 135,001
--------------------------------------------------------------------------------- -------------
UTILITIES--0.1%
---------------------------------------------------------------------------------
50,000 California Energy Co., Sr. Disc. Note, 0/10.25%, 1/15/2004 46,500
--------------------------------------------------------------------------------- -------------
TOTAL HIGH YIELD BONDS 1,718,097
--------------------------------------------------------------------------------- -------------
FOREIGN
CURRENCY VALUE
PAR IN U.S.
AMOUNT DOLLARS
- -------------- --------------------------------------------------------------------------------- -------------
FOREIGN BONDS--7.1%
---------------------------------------------------------------------------------
AUSTRALIAN DOLLAR--0.1%
---------------------------------------------------------------------------------
60,000 State Bank of New South Wales, 12.25%, 2/26/2001 51,989
--------------------------------------------------------------------------------- -------------
BELGIUM FRANC--0.4%
---------------------------------------------------------------------------------
200,000 Belgian Gov't., Foreign Gov't. Guarantee, 10.00%, 4/5/1996 6,869
---------------------------------------------------------------------------------
4,000,000 Belgium Kingdom, 7.75%, 10/15/2004 143,774
--------------------------------------------------------------------------------- -------------
Total 150,643
--------------------------------------------------------------------------------- -------------
CANADIAN DOLLAR--0.4%
---------------------------------------------------------------------------------
155,000 Ontario Hydro, 9.00%, 6/24/2002 124,354
--------------------------------------------------------------------------------- -------------
DANISH KRONE--0.3%
---------------------------------------------------------------------------------
500,000 Denmark, 8.00%, 5/15/2003 93,904
--------------------------------------------------------------------------------- -------------
DEUTSCHE MARK--1.2%
---------------------------------------------------------------------------------
150,000 Bundesobligationen, Deb., 7.25%, 10/20/1997 109,656
---------------------------------------------------------------------------------
435,000 Treuhandanstalt, 7.75%, 10/1/2002 332,468
--------------------------------------------------------------------------------- -------------
Total 442,124
--------------------------------------------------------------------------------- -------------
FRENCH FRANC--0.9%
---------------------------------------------------------------------------------
950,000 France O.A.T., 8.50%, 11/25/2002 209,931
---------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN
CURRENCY VALUE
PAR IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN BONDS--CONTINUED
---------------------------------------------------------------------------------
FRENCH FRANC--CONTINUED
---------------------------------------------------------------------------------
600,000 KFW International Finance, 7.00%, 5/12/2000 $ 123,910
--------------------------------------------------------------------------------- -------------
Total 333,841
--------------------------------------------------------------------------------- -------------
ITALIAN LIRA--0.4%
---------------------------------------------------------------------------------
300,000,000 Buoni Poliennali Del Tes, 9.50%, 1/1/2005 169,382
--------------------------------------------------------------------------------- -------------
JAPANESE YEN--1.8%
---------------------------------------------------------------------------------
28,000,000 Export-import Bank Japan, 4.375%, 10/1/2003 308,550
---------------------------------------------------------------------------------
11,000,000 Interamerican Development, Deb., 7.25%, 5/15/2000 134,189
---------------------------------------------------------------------------------
20,000,000 KFW International Finance, 6.00%, 11/29/1999 231,941
--------------------------------------------------------------------------------- -------------
Total 674,680
--------------------------------------------------------------------------------- -------------
NETHERLANDS GUILDER--0.4%
---------------------------------------------------------------------------------
250,000 Netherlands Government, 5.75%, 1/15/2004 152,226
--------------------------------------------------------------------------------- -------------
SPANISH PESETA--0.3%
---------------------------------------------------------------------------------
16,000,000 Spanish Government, 10.00%, 2/28/2005 128,332
--------------------------------------------------------------------------------- -------------
SWEDISH KRONA--0.2%
---------------------------------------------------------------------------------
700,000 Sweden, 6.00%, 2/9/2005 89,068
--------------------------------------------------------------------------------- -------------
UNITED KINGDOM POUND--0.7%
---------------------------------------------------------------------------------
160,000 UK Conversion, 9.00%, 3/3/2000 263,625
--------------------------------------------------------------------------------- -------------
TOTAL FOREIGN BONDS 2,674,168
--------------------------------------------------------------------------------- -------------
TOTAL BONDS (IDENTIFIED COST $9,375,356) 9,760,448
--------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- --------------------------------------------------------------------------------- -------------
(A)CASH EQUIVALENTS--26.3%
- --------------------------------------------------------------------------------------------------
TREASURY SECURITIES--14.3%
---------------------------------------------------------------------------------
$ 5,500,000 United States Treasury Bill 3/14/1996 (identified cost $5,416,634) $ 5,417,720
--------------------------------------------------------------------------------- -------------
(E)REPURCHASE AGREEMENT--12.0%
---------------------------------------------------------------------------------
4,555,000 J.P. Morgan & Co., Inc., 5.930%, dated 10/31/1995, due 12/1/1995
(at amortized cost) 4,555,000
--------------------------------------------------------------------------------- -------------
TOTAL CASH EQUIVALENTS 9,972,720
--------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST $35,356,167)(F) $ 37,789,085
--------------------------------------------------------------------------------- -------------
</TABLE>
(a) The Fund purchases Index futures contracts to efficiently manage cash flows
resulting from shareholder purchases and redemptions, dividend and capital
gain payments to shareholders and corporate actions while maintaining
exposure to stocks and minimizing trading costs. The total market value of
open Index futures contracts is $4,945,475 at November 30, 1995, which
represents 13.0% of net assets. Taking into consideration these open Index
futures contracts, the Fund's effective, total exposure to stocks is 60.6%.
The Fund holds cash equivalents as collateral for thirteen S & P 500
Futures contracts with a market value of $3,960,875. Consequently, the
Fund's exposure to large cap stocks is 24.0% of the fund. The Fund holds
cash equivalents as collateral for the nine S & P Midcap futures contracts
with a market value of $984,600. Consequently, the Fund's exposure to small
cap stocks is 19.1% of the Fund.
(b) Non-income producing security.
(c) Denotes a restricted security which is subject to restrictions or resale
under Federal Securities laws. At the end of the period, these securities
amounted to $274,913 which represents 0.7% of net assets.
(d) The utility stocks are shown in the asset category in which they were
purchased. The Fund's total exposure to utility stocks is 2.3% of net
assets.
(e) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations. The investment in the repurchase agreement was through
participation in a joint account with other Federated funds.
(f) The cost of investments for federal tax purposes amounts to $35,390,388.
The net unrealized appreciation of investments on a federal tax basis
amounts to $2,398,697 which is comprised of $2,825,166 appreciation and
$426,469 depreciation at November 30, 1995.
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
Note: The categories of investments are shown as a percentage of net assets
($37,953,490) at November 30, 1995.
The following acronym(s) are used throughout this portfolio:
ADR--American Depository Receipt
GDR--Global Depository Receipts
LP--Limited Partnership
PEPS--Participating Equity Preferred Stock
PLC--Public Limited Company
STRYPES--Structured Yield Product Exchangeable for Stock
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ----------------------------------------------------------------------------------------------------
Investment in repurchase agreement $ 4,555,000
- ---------------------------------------------------------------------------------------
Investments in securities 33,234,085
- --------------------------------------------------------------------------------------- -----------
Total investments in securities, at value (identified cost: $35,356,167 and tax cost: $35,390,388) $ 37,789,085
- ----------------------------------------------------------------------------------------------------
Cash denominated in foreign currencies (identified cost, $58,627) 58,117
- ----------------------------------------------------------------------------------------------------
Income receivable 186,093
- ----------------------------------------------------------------------------------------------------
Receivable for investments sold 196,344
- ----------------------------------------------------------------------------------------------------
Receivable for shares sold 111,753
- ----------------------------------------------------------------------------------------------------
Receivable for foreign currency sold 135,369
- ----------------------------------------------------------------------------------------------------
Deferred expenses 30,822
- ---------------------------------------------------------------------------------------------------- ------------
Total assets 38,507,583
- ----------------------------------------------------------------------------------------------------
LIABILITIES:
- ----------------------------------------------------------------------------------------------------
Payable for investments purchased $ 282,297
- ---------------------------------------------------------------------------------------
Payable for shares redeemed 57,536
- ---------------------------------------------------------------------------------------
Payable to Bank 22,902
- ---------------------------------------------------------------------------------------
Payable for taxes withheld 2,694
- ---------------------------------------------------------------------------------------
Payable for daily variation margin 3,150
- ---------------------------------------------------------------------------------------
Payable for foreign currency purchased 135,369
- ---------------------------------------------------------------------------------------
Accrued expenses 50,145
- --------------------------------------------------------------------------------------- -----------
Total liabilities 554,093
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSETS for 3,274,929 shares outstanding $ 37,953,490
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSETS CONSIST OF:
- ----------------------------------------------------------------------------------------------------
Paid in capital $ 34,324,214
- ----------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments, translation
of assets and liabilities in foreign currency, and futures contracts 2,678,031
- ----------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments, foreign currency transactions, and futures contracts 608,988
- ----------------------------------------------------------------------------------------------------
Undistributed net investment income 342,257
- ---------------------------------------------------------------------------------------------------- ------------
Total Net Assets $ 37,953,490
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PROCEEDS PER SHARE:
- ----------------------------------------------------------------------------------------------------
Institutional Shares: $25,611,107 / 2,209,617 shares outstanding $11.59
- ---------------------------------------------------------------------------------------------------- ------------
Select Shares: $12,342,383 / 1,065,312 shares outstanding $11.59
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ------------------------------------------------------------------------------------------------------
Dividends (net of foreign taxes withheld of $10,962) $ 239,488
- ------------------------------------------------------------------------------------------------------
Interest (net of foreign taxes withheld of $662) 841,801
- ------------------------------------------------------------------------------------------------------ ---------
Total income 1,081,289
- ------------------------------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------------------
Investment advisory fee $ 183,693
- -------------------------------------------------------------------------------------------
Administrative personnel and services fee 155,000
- -------------------------------------------------------------------------------------------
Custodian fees 91,401
- -------------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 50,845
- -------------------------------------------------------------------------------------------
Directors'/Trustees' fees 2,173
- -------------------------------------------------------------------------------------------
Auditing fees 12,407
- -------------------------------------------------------------------------------------------
Legal fees 3,809
- -------------------------------------------------------------------------------------------
Portfolio accounting fees 31,136
- -------------------------------------------------------------------------------------------
Distribution services fee--Select Shares 40,751
- -------------------------------------------------------------------------------------------
Shareholder services fee--Institutional Shares 47,647
- -------------------------------------------------------------------------------------------
Shareholder services fee--Select Shares 13,584
- -------------------------------------------------------------------------------------------
Share registration costs 19,542
- -------------------------------------------------------------------------------------------
Printing and postage 34,745
- -------------------------------------------------------------------------------------------
Insurance premiums 3,852
- -------------------------------------------------------------------------------------------
Miscellaneous 13,664
- ------------------------------------------------------------------------------------------- ---------
Total expenses 704,249
- -------------------------------------------------------------------------------------------
Waivers and reimbursements--
- -------------------------------------------------------------------------------------------
Waiver of investment advisory fee $(183,693)
- --------------------------------------------------------------------------------
Waiver of distribution services fee--Select Shares (13,584)
- --------------------------------------------------------------------------------
Waiver of shareholder services fee--Institutional Shares (47,647)
- --------------------------------------------------------------------------------
Reimbursement of other operating expenses (172,998)
- -------------------------------------------------------------------------------- ---------
Total waivers and reimbursements (417,922)
- ------------------------------------------------------------------------------------------- ---------
Net expenses 286,327
- ------------------------------------------------------------------------------------------------------ ---------
Net investment income 794,962
- ------------------------------------------------------------------------------------------------------ ---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FOREIGN CURRENCY, AND FUTURES CONTRACTS:
- ------------------------------------------------------------------------------------------------------
Net realized gain on investments, foreign currency transactions, and futures contracts 651,763
- ------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments,
translation of assets and liabilities in foreign currency, and futures contracts 3,244,417
- ------------------------------------------------------------------------------------------------------ ---------
Net realized and unrealized gain on investments, foreign currency, and futures contracts 3,896,180
- ------------------------------------------------------------------------------------------------------ ---------
Change in net assets resulting from operations $4,691,142
- ------------------------------------------------------------------------------------------------------ ---------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, 1995 NOVEMBER 30, 1994*
<S> <C> <C>
- ---------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
- ---------------------------------------------------------------
OPERATIONS--
- ---------------------------------------------------------------
Net investment income $ 794,962 $ 225,576
- ---------------------------------------------------------------
Net realized gain (loss) on investments, foreign
currency transactions, and futures contracts ($888,863 and
$31,171 net gains respectively, as computed for federal tax
purposes) 651,763 75,474
- ---------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of
investments, translation of assets and liabilities in foreign
currency, and futures contracts 3,244,417 (566,386)
- --------------------------------------------------------------- ---------------------- ------------------------
Change in net assets resulting from operations 4,691,142 (265,336)
- --------------------------------------------------------------- ---------------------- ------------------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ---------------------------------------------------------------
Distributions from net investment income:
- ---------------------------------------------------------------
Institutional Shares (547,698) (107,045)
- ---------------------------------------------------------------
Select Shares (101,587) (9,749)
- ---------------------------------------------------------------
Distributions from net realized gains on investments, foreign
currency transactions, and futures contracts:
- ---------------------------------------------------------------
Institutional Shares (28,086) --
- ---------------------------------------------------------------
Select Shares (3,092) --
- --------------------------------------------------------------- ---------------------- ------------------------
Change in net assets resulting
from distributions to shareholders (680,463) (116,794)
- --------------------------------------------------------------- ---------------------- ------------------------
SHARE TRANSACTIONS--
- ---------------------------------------------------------------
Proceeds from sale of shares 24,745,587 18,841,563
- ---------------------------------------------------------------
Net asset value of shares issued to shareholders
in payment of distributions declared 492,403 54,330
- ---------------------------------------------------------------
Cost of shares redeemed (8,663,934) (1,145,008)
- --------------------------------------------------------------- ---------------------- ------------------------
Change in net assets resulting from share transactions 16,574,056 17,750,885
- --------------------------------------------------------------- ---------------------- ------------------------
Change in net assets 20,584,735 17,368,755
- ---------------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------------
Beginning of period 17,368,755 --
- --------------------------------------------------------------- ---------------------- ------------------------
End of period (including undistributed net investment income of
$342,257 and $120,335 respectively) $ 37,953,490 $ 17,368,755
- --------------------------------------------------------------- ---------------------- ------------------------
</TABLE>
*For the period from January 27, 1994 (start of business) to November 30, 1994.
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Managed Series Trust (the "Trust") is registered under the Investment Company
Act of 1940, as amended (the "Act") as an open-end, management investment
company. The Trust consists of four diversified portfolios. The financial
statements included herein are only those of Federated Managed Aggressive Growth
Fund (the "Fund"). The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held.
The Fund offers two classes of shares: Institutional Shares (formerly,
Institutional Service Shares) and Select Shares. The Institutional Service
Shares changed its name to Institutional Shares effective June 30, 1995.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Short-term securities with remaining maturities of
sixty days or less at the time of purchase may be valued at amortized cost,
which approximates fair market value. All other securities are valued at
prices provided by an independent pricing service.
REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral
securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
Revenue Code, as amended (the "Code"). Dividend income and distributions to
shareholders are recorded on the ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
foreign currency transactions, and futures transactions. As a result of
these differences, the following required reclassifications have been made
to the current year financial statements.
<TABLE>
<CAPTION>
INCREASE (DECREASE)
<S> <C> <C>
ACCUMULATED
NET REALIZED UNDISTRIBUTED NET
PAID-IN CAPITAL GAIN/LOSS INVESTMENT INCOME
($740) ($ 75,505) $ 76,245
</TABLE>
Net investment income, net realized gains/losses, and net assets were not
affected by this reclassification.
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.
However, federal taxes may be imposed on the Fund upon the disposition of
certain investments in passive foreign investment companies. Withholding
taxes on foreign dividends have been provided for in accordance with the
Fund's understanding of the applicable country's tax rules and rates.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized using the straight-line method over a period of five years from
the Fund's commencement date.
CONCENTRATION OF CREDIT RISK--The Fund invests in securities of non-U.S.
issuers. Although the Fund maintains a diversified investment portfolio,
the political or economic developments within a particular country or
region may have an adverse effect on the ability of domiciled issuers to
meet their obligations. Additionally, political or economic developments
may have an effect on the liquidity and volatility of portfolio securities
and currency holdings.
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
At November 30, 1995, the industry diversification of foreign securities
was as follows:
<TABLE>
<CAPTION>
% OF
INDUSTRY NET ASSETS
<S> <C>
Agency 2.1
Automobiles 0.1
Banking 0.9
Beverages & Tobacco 0.2
Broadcasting & Publishing 0.5
Building Materials & Components 1.0
Business & Public Services 0.9
Chemicals 1.0
Construction & Housing 0.4
Data Processing & Reproduction 0.3
Electrical & Electronics 0.4
Energy Sources 0.3
Financial Services 0.4
Food & Household Products 0.9
Forest Products & Paper 0.2
Health & Personal Care 0.9
Industrial Components 0.8
<CAPTION>
% OF
INDUSTRY NET ASSETS
<S> <C>
Insurance 0.8
Leisure & Tourism 0.4
Machinery & Engineering 1.7
Merchandising 1.2
Metals 0.7
Miscellaneous Materials & Commodities 0.3
Multi-Industry 0.7
Real Estate 0.3
Recreation, Other Consumer Goods 0.4
Sovereign 4.5
State/Provincial 0.1
Supranational 0.4
Telecommunications 0.7
Transportation 0.8
Utilities--Electrical & Gas 0.5
</TABLE>
FUTURES CONTRACTS--The Fund may purchase and sell futures contracts to
accommodate cash flows into and out of the Fund's portfolio and to hedge
against the effects of changes in the value of portfolio securities due to
anticipated changes in interest rates and market conditions. Upon entering
into a stock futures contract with a broker, the Fund is required to
deposit in a segregated account a specified amount of cash or U.S.
government securities. Futures contracts are valued daily and unrealized
gains or losses are recorded in a "variation margin" account. Daily, the
Fund receives from or pays to the broker a specified amount of cash based
upon changes in the variation margin account. When a contract is closed,
the Fund recognizes a realized gain or loss. Futures contracts have market
risks, including the risk that the change in the value of the contract may
not correlate with changes in the value of the underlying securities. For
the period ended November 30, 1995, the Fund had realized gains of $414,584
on futures contracts.
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
At November 30, 1995, the Fund had outstanding futures contracts as set
forth below:
<TABLE>
<CAPTION>
Unrealized
TOTAL FACE Appreciation
EXPIRATION DATE CONTRACTS TO DELIVER/RECEIVE VALUE Position (Depreciation)
<S> <C> <C> <C> <C>
December 1995 9 S&P Midcap 949,750 Long $ 34,850
December 1995 8 S&P 500 2,262,150 Long 166,850
March 1996 5 S&P 500 1,487,200 Long 44,675
----------
Net Unrealized Appreciation (Depreciation) on Futures Contracts $ 246,375
-----------------
</TABLE>
FOREIGN CURRENCY COMMITMENTS--The Fund may enter into foreign currency
commitments for the delayed delivery of securities or foreign currency
exchange transactions. Risks may arise upon entering these transactions
from the potential inability of counterparties to meet the terms of their
commitments and from unanticipated movements in security prices or foreign
exchange rates. The foreign currency transactions are adjusted by the daily
exchange rate of the underlying currency and any gains or losses are
recorded for financial statement purpose as unrealized until the settlement
date. At November 30, 1995, the Fund had outstanding foreign currency
commitments as set forth below:
<TABLE>
<CAPTION>
UNREALIZED
APPRECIATION
SETTLEMENT DATE CONTRACTS TO DELIVER/RECEIVE IN EXCHANGE FOR (DEPRECIATION)
<S> <C> <C> <C>
CONTRACTS PURCHASED:
December 1, 1995 3,779 Argentine Peso $ 3,780 $ --
December 1, 1995 211,338 Hong Kong Dollar $ 27,326 (4)
December 5, 1995 38,825 Pound Sterling $ 59,189 249
CONTRACTS SOLD:
December 5, 1995 29,566 Pound Sterling $ 45,073 (190)
------
Net Unrealized Appreciation (Depreciation) on Foreign Currency Commitments
$ 55
------
</TABLE>
FOREIGN CURRENCY TRANSLATION--The accounting records of the Fund are
maintained in U.S. dollars. All assets and liabilities denominated in
foreign currencies ("FC") are translated into U.S. dollars based on the
rate of exchange of such currencies against U.S. dollars on the date of
valuation. Purchases and sales of securities, income and expenses are
translated at the rate of exchange quoted on the respective date that such
transactions are recorded. Differences between income and expense amounts
recorded and collected or paid are adjusted when reported by the custodian
bank. The Fund does not isolate that portion of the results of
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
operations resulting from changes in foreign exchange rates on investments
from the fluctuations arising from changes in market prices of securities
held. Such fluctuations are included with the net realized and unrealized
gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from, sales of
portfolio securities, sales and maturities of short-term securities, sales
of FCs, currency gains or losses realized between the trade and settlement
dates on securities transactions, the difference between the amounts of
dividends, interest, and foreign withholding taxes recorded on the Fund's
books, and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes
in the value of assets and liabilities other than investments in securities
at fiscal year end, resulting from changes in the exchange rate.
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 Board of Trustees. 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 November 30,
1995 is as follows:
<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE ACQUISITION COST
<S> <C> <C>
Coinmach Corporation, Sr. Note 11/14/95 $ 25,000
Herff Jones, Inc., Sr. Sub Note 9/14/95 51,750
IXC Communications, Inc., Sr. Note 9/25/95 24,320
Six Flags Theme Parks, Sr. Sub Disc. Note 7/17/95 39,262
Van De Kamp's Inc., Sr. Sub Note 9/14/95 25,000
Westinghouse Electric Corp., PEPS 9/27/95-9/28/95 97,600
</TABLE>
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares.
Transactions in capital stock were as follows:
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, 1995 NOVEMBER 30, 1994(A)
<S> <C> <C> <C> <C>
INSTITUTIONAL SHARES SHARES AMOUNT SHARES AMOUNT
Shares sold 1,317,111 $ 14,153,127 1,703,344 $ 17,093,888
- ---------------------------------------------------------
Shares issued to shareholders in
payment of distributions declared 39,301 411,923 4,919 49,959
- ---------------------------------------------------------
Shares redeemed (744,515) (7,759,093) (110,543) (1,106,095)
- --------------------------------------------------------- ---------- ------------- ---------- -------------
Net change resulting from
Institutional share transactions 611,897 $ 6,805,957 1,597,720 $ 16,037,752
- --------------------------------------------------------- ---------- ------------- ---------- -------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, 1995 NOVEMBER 30, 1994(A)
<S> <C> <C> <C> <C>
SELECT SHARES SHARES AMOUNT SHARES AMOUNT
Shares sold 970,853 $ 10,592,460 174,124 $ 1,747,675
- ---------------------------------------------------------
Shares issued to shareholders in
payment of distributions declared 7,409 80,480 431 4,371
- ---------------------------------------------------------
Shares redeemed (83,687) (904,841) (3,818) (38,913)
- --------------------------------------------------------- ---------- ------------- ---------- -------------
Net change resulting from
Select share transactions 894,575 $ 9,768,099 170,737 $ 1,713,133
- --------------------------------------------------------- ---------- ------------- ---------- -------------
Net change resulting from
share transactions 1,506,472 $ 16,574,056 1,768,457 $ 17,750,885
- --------------------------------------------------------- ---------- ------------- ---------- -------------
</TABLE>
(a) For the period from January 27, 1994 (start of business) to November 30,
1994.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser,
(the "Adviser"), receives for its services an annual investment advisory fee
equal to .75 of 1% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive any portion of its fee and/or reimburse certain
operating expenses of the Fund. The Adviser can modify or terminate this
voluntary waiver and/or reimbursement at any time at its sole discretion.
Under the terms of a sub-advisory agreement between the Adviser and Federated
Global Research Corp., Federated Global Research Corp. receives an allocable
portion of the Fund's advisory fee. Such allocation is based on the amount of
foreign securities which the Sub-Adviser manages for the Fund. This fee is paid
by the Adviser out of its resources and is not an incremental Fund expense.
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. This fee 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 Select shares. The Plan provides that the Fund may incur
distribution expenses of up to .75 of 1% of average net assets of Select shares
,annually, to compensate FSC. The distributor may voluntarily choose to waive
any portion of its fee. The distributor can modify or terminate this voluntary
waiver at any time at its sole discretion.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of
1% of average daily net assets of the Fund for the period. This fee is to obtain
certain services for shareholders and to maintain shareholder accounts. FSS may
voluntarily choose to waive any portion of its fee. FSS can modify or terminate
this voluntary waiver at any time at its sole discretion. For the fiscal year
ended November 30, 1995, the Institutional Shares fully waived its shareholder
services fee.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Fund. This
fee is based on the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses ($36,187) and start-up
administrative service expenses of ($39,069) were borne initially by Adviser.
The Fund has agreed to reimburse Adviser for the organizational and start-up
administrative expenses during the five year period following effective date.
For the period ended November 30, 1995, the Fund paid $7,834 and $5,001 pursuant
to this agreement.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended November 30, 1995, were as follows:
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------------
PURCHASES $ 43,920,779
- --------------------------------------------------------------------------------------------------- -------------
SALES $ 29,976,038
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
MANAGED SERIES TRUST:
(Federated Managed Aggressive Growth Fund):
We have audited the accompanying statement of assets and liabilities of
Federated Managed Aggressive Growth Fund (an investment portfolio of Managed
Series Trust, a Massachusetts business trust), including the schedule of
portfolio investments, as of November 30, 1995, the related statement of
operations for the year then ended, and the statement of changes in net assets
and the financial highlights (see pages 2 and 27 of the prospectus) for the
periods presented. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Federated Managed Aggressive Growth Fund (an investment portfolio of Managed
Series Trust) as of November 30, 1995, and the results of its operations for the
year then ended, and the changes in its net assets and its financial highlights
for the periods presented, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
January 18, 1996
APPENDIX
- --------------------------------------------------------------------------------
STANDARD AND POOR'S RATINGS GROUP LONG-TERM DEBT RATINGS
AAA--Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.
A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB--Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB-rating.
B--Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or
BB-rating.
CCC--Debt rated CCC has currently identifiable vulnerability to default and is
dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B-rating.
CC--The rating CC typically is applied to debt subordinated to senior debt that
is assigned an actual or implied CCC debt rating.
C--The rating C typically is applied to debt subordinated to senior debt which
is assigned an actual or implied CCC debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.
CI--The rating CI is reserved for income bonds on which no interest is being
paid.
D--Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D
rating also will be used upon the filing of a bankruptcy petition if debt
service payments are jeopardized.
MOODY'S INVESTORS SERVICE, INC., CORPORATE BOND RATINGS
Aaa--Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment some time in the future.
Baa--Bonds which are rated Baa are considered as medium-grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well.
Ba--Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca--Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C--Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
FITCH INVESTORS SERVICE, INC., LONG-TERM DEBT RATINGS
AAA--Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA--Bonds considered to be investment grade and of very high quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F-1+.
A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB--Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds and, therefore, impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.
BB--Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.
B--Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.
CCC--Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.
CC--Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C--Bonds are in imminent default in payment of interest or principal.
DDD, DD, AND D--Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. DDD
represents the highest potential for recovery on these bonds, and D represents
the lowest potential for recovery.
NR--NR indicates that Fitch does not rate the specific issue.
PLUS (+) OR MINUS (-): Plus or minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the AAA category.
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Federated Managed Aggressive Growth Fund
Select Shares Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Sub-Adviser
Federated Global 175 Water Street
Research Corp. New York, NY 10038-4965
- ---------------------------------------------------------------------------------------------------------------------
Custodian
State Street Bank and P.O. Box 8600
Trust Company Boston, Massachusetts 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company P.O. Box 8600
Boston, Massachusetts 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED
AGGRESSIVE GROWTH FUND
SELECT SHARES
PROSPECTUS
A Diversified Portfolio of
Managed Series Trust,
an Open-End Management
Investment Company
Prospectus dated January 31, 1996
[LOGO] FEDERATED SECURITIES CORP.
---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
Cusip 56166K800
3122008A-SEL (1/96)
Lifecycle Investing
MANAGED SERIES TRUST
From Federated Investors
(LOGO)
FEDERATED MANAGED GROWTH FUND
Lifecycle Investing
MANAGED SERIES TRUST
INSTITUTIONAL SHARES
Federated Managed Growth Fund is part of Managed Series Trust, a lifecycle
investing program from Federated Investors.
Other Funds available in Managed Series Trust are Federated Managed Income Fund,
Federated Managed Growth and Income Fund, and Federated Managed Aggressive
Growth Fund.
(LOGO)
FEDERATED SECURITIES CORP.
Distributor
A subsidiary of Federated Investors
(LOGO)
FEDERATED MANAGED GROWTH FUND
(A PORTFOLIO OF MANAGED SERIES TRUST)
INSTITUTIONAL SHARES
PROSPECTUS
The Institutional Shares of Federated Managed Growth Fund (the "Fund") offered
by this prospectus represent interests in the Fund, which is a diversified
investment portfolio of Managed Series Trust (the "Trust"). The Trust is an
open-end management investment company (a mutual fund).
The investment objective of the Fund is to seek capital appreciation. In
pursuing its objective, the Fund will consider the current income of the
investments it selects. The Fund invests in both bonds and stocks. Institutional
Shares are sold at net asset value.
THE INSTITUTIONAL SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR
OBLIGATIONS OF ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD,
OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE INSTITUTIONAL SHARES
INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
This prospectus contains the information you should read and know before you
invest in Institutional Shares of the Fund. Keep this prospectus for future
reference.
The Fund has also filed a Statement of Additional Information for Institutional
Shares and Select Shares of all portfolios of the Trust dated January 31, 1996,
with the Securities and Exchange Commission. The information contained in the
Statement of Additional Information is incorporated by reference into this
prospectus. You may request a copy of the Statement of Additional Information,
or a paper copy of this prospectus, if you have received your prospectus
electronically, free of charge by calling 1-800-235-4669. To obtain other
information or to make inquiries about the Fund, contact the Fund at the address
listed in the back of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus dated January 31, 1996
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS-
INSTITUTIONAL SHARES 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Investment Limitations 15
TRUST INFORMATION 15
- ------------------------------------------------------
Management of the Trust 15
Distribution of Institutional Shares 19
Administration of the Fund 19
Brokerage Transactions 20
NET ASSET VALUE 21
- ------------------------------------------------------
INVESTING IN INSTITUTIONAL SHARES 21
- ------------------------------------------------------
Share Purchases 21
Minimum Investment Required 22
What Shares Cost 22
Subaccounting Services 22
Systematic Investment Program 22
Certificates and Confirmations 23
Dividends 23
Capital Gains 23
REDEEMING INSTITUTIONAL SHARES 23
- ------------------------------------------------------
Through a Financial Institution 23
Telephone Redemption 23
Written Requests 24
Systematic Withdrawal Program 24
Accounts with Low Balances 25
SHAREHOLDER INFORMATION 25
- ------------------------------------------------------
Voting Rights 25
TAX INFORMATION 25
- ------------------------------------------------------
Federal Income Tax 25
State and Local Taxes 26
PERFORMANCE INFORMATION 26
- ------------------------------------------------------
OTHER CLASSES OF SHARES 26
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--SELECT SHARES 27
- ------------------------------------------------------
FINANCIAL STATEMENTS 28
- ------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 67
- ------------------------------------------------------
APPENDIX 68
- ------------------------------------------------------
ADDRESSES 71
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price)............................ None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price).................................................................... None
Contingent Deferred Sales Charge (as a percentage of original purchase
price or redemption proceeds, as applicable)........................................................... None
Redemption Fee (as a percentage of amount redeemed, if applicable)....................................... None
Exchange Fee............................................................................................. None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver) (1)........................................................................ 0.24%
12b-1 Fee................................................................................................ None
Total Other Expenses..................................................................................... 0.76%
Shareholder Services Fee (after waiver) (2).............................................. 0.00%
Total Operating Expenses (3)................................................................... 1.00%
</TABLE>
- ------------
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.75%.
(2) The maximum shareholder services fee is 0.25%.
(3) The total operating expenses would have been 1.76% absent the voluntary
waivers of a portion of the management fee and shareholder services fee.
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of Institutional Shares of the
Fund will bear, either directly or indirectly. For more complete descriptions of
the various costs and expenses, see "Investing in Institutional Shares" and
"Trust Information." Wire-transferred redemptions of less than $5,000 may be
subject to additional fees.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment assuming
(1) 5% annual return and (2) redemption at the end of each time
period................................................................ $10 $32 $55 $122
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
FEDERATED MANAGED GROWTH FUND
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
(FORMERLY, INSTITUTIONAL SERVICE SHARES)
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 67.
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, NOVEMBER 30,
1995 1994(A)
- ---------------------------------------------------------------------------- ----------------- -----------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.82 $ 10.00
- ----------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------
Net investment income 0.40 0.20
- ----------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments,
foreign currency, and futures contracts 1.70 (0.26)
- ---------------------------------------------------------------------------- ------- -------
Total from investment operations 2.10 (0.06)
- ----------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------------
Distributions from net investment income (0.40) (0.12)
- ---------------------------------------------------------------------------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 11.52 $ 9.82
- ---------------------------------------------------------------------------- ------- -------
TOTAL RETURN (B) 21.79% (0.59%)
- ----------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------
Expenses 1.00% 0.89%*
- ----------------------------------------------------------------------------
Net investment income 4.29% 4.28%*
- ----------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.76% 0.90%*
- ----------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------
Net assets, end of period (000 omitted) $68,313 $28,973
- ----------------------------------------------------------------------------
Portfolio turnover 106% 71%
- ----------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 25, 1994 (date of initial
public investment) to November 30, 1994. For the period from January 27,
1994 (start of business) to May 24, 1994 the Fund had no investment
activity.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
Further information about the Fund's performance is contained in the Fund's
annual report for the year ended November 30, 1995, which can be obtained free
of charge.
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated November 15, 1993. The Declaration of Trust permits the Trust to
offer separate series of shares of beneficial interest representing interest in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. As of the date of this prospectus, the Board of
Trustees ("Trustees") have established two classes of shares of the Fund, known
as Institutional Shares and Select Shares. This prospectus relates only to
Institutional Shares.
Institutional Shares ("Shares") of the Fund are designed to give institutions,
individuals, and financial institutions acting in a fiduciary or agency capacity
a convenient means of accumulating an interest in a professionally managed,
diversified investment portfolio. A minimum initial investment of $25,000 over a
90-day period is required.
Shares are currently sold and redeemed at net asset value without a sales charge
imposed by the Fund.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is to seek capital appreciation. In
pursuing its objective, the Fund will consider the current income of the
investments it selects. There can be, of course, no assurance that the Fund will
achieve its investment objective. The Fund's investment objective cannot be
changed without the approval of shareholders. Unless otherwise noted, the Fund's
investment policies may be changed by the Trustees without shareholder approval.
INVESTMENT POLICIES
ASSET ALLOCATION. The Fund will primarily invest in two types of assets:
equities and bonds. The Fund's investment approach is based on the conviction
that, over time, the choice of investment asset categories and their relative
long-term weightings within the portfolio will have the primary impact on its
investment performance. Of secondary importance to the Fund's performance are
the shifting of money among asset categories and the selection of securities
within asset categories. Therefore, the Fund will pursue its investment
objective in the following manner: (1) by setting long-term ranges for each
asset category; (2) by moving money among asset categories within those defined
ranges; and (3) by actively selecting securities within each of the asset
categories. The Fund attempts to minimize risk by allocating its assets in such
a fashion.
Within each of these types of investments, the Fund has designated asset
categories. As a matter of investment policy, ranges have been set for each
asset category's portfolio commitment.
The Fund will invest between 50 and 70 percent of its assets in equities. The
equities asset categories are large company stocks, utility stocks, small
company stocks, foreign stocks and equity reserves.
The Fund will invest between 30 and 50 percent of its assets in bonds. The
Fund's adviser believes that bonds offer opportunities for growth of capital or
otherwise may be desirable under prevailing market or economic conditions. The
bond asset categories are U.S. Treasury securities, mortgage-backed securities,
investment-grade corporate bonds, high yield corporate bonds and foreign bonds.
The following is a summary of the asset categories and the amount of the Fund's
total assets which may be invested in each asset category:
<TABLE>
<CAPTION>
ASSET CATEGORY RANGE
<S> <C>
EQUITIES 50-70%
Large Company Stocks 0-70%
Utility Stocks 0-7.5%
Small Company Stocks 0-21%
Foreign Stocks 0-21%
Equity Reserves 0-15%
BONDS 30-50%
U.S. Treasury Securities 0-45%
Mortgage-Backed Securities 0-15%
Investment-Grade Corporate Bonds 0-15%
High Yield Corporate Bonds 0-15%
Foreign Bonds 0-15%
</TABLE>
The Fund's adviser will regularly review the Fund's allocation among the asset
categories and make any changes, within the ranges established for each asset
category, that it believes will provide the most favorable outlook for achieving
the Fund's investment objective. The Fund's adviser will attempt to exploit
inefficiencies among the various asset categories. If, for example, foreign
stocks are judged to be unusually attractive relative to other asset categories,
the allocation for foreign stocks may be moved to its upper limit. At other
times, when foreign stocks appear to be overvalued, the commitment may be moved
down to a lesser allocation. There is no assurance, however, that the adviser's
attempts to pursue this strategy will result in a benefit to the Fund.
Each asset category within the Fund will be a managed portfolio. The Fund will
seek superior investment performance through security selection in addition to
determining the percentage of its assets to allocate to each of the asset
categories.
EQUITY ASSET CATEGORIES. The portion of the Fund's assets which is invested in
equities will be allocated among the following asset categories within the
ranges specified:
LARGE COMPANY STOCKS. Large company stocks are common stocks and
securities convertible into or exchangeable for common stocks, such as
rights and warrants, of high-quality companies selected by the Fund's
adviser. Ordinarily, these companies will be in the top 25 percent of their
industries with regard to revenues and have a market capitalization of
$500,000,000 or more. However, other factors, such as a company's product
position, market share, current earnings and/or dividend and earnings
growth prospects, will be considered by the Fund's
adviser and may outweigh revenues. The Fund may invest up to 70 percent of
its total assets in large company stocks.
UTILITY STOCKS. Utility stocks are common stocks and securities
convertible into or exchangeable for common stocks, such as rights and
warrants, of utility companies. The Fund may invest up to 7.5 percent of
its total assets in utility stocks. Common stocks of utilities are
generally characterized by higher dividend yields and lower growth rates
than common stocks of industrial companies. Under normal market conditions,
the higher income stream from utility stocks tends to make them less
volatile than stocks of industrial companies.
SMALL COMPANY STOCKS. Small company stocks are common stocks and
securities convertible into or exchangeable for common stocks, such as
rights and warrants, of companies with a market capitalization (market
price x number of shares outstanding) below the top 1,000 stocks that
comprise the large and mid-range capitalization sector of the United States
equity market. These stocks are comparable to, but not limited to, the
stocks comprising the Russell 2000 Index, an index of small capitalization
stocks. The Fund may invest up to 21 percent of its total assets in small
company stocks.
INVESTMENT RISKS. Stocks in the small capitalization sector of the
United States equity market have historically been more volatile in
price than larger capitalization stocks, such as those included in the
Standard & Poor's Ratings Group 500 Index. This is because, among other
things, small companies have less certain growth prospects than larger
companies; have a lower degree of liquidity in the equity market; and
tend to have a greater sensitivity to changing economic conditions.
Further, in addition to exhibiting greater volatility, the stocks of
small companies may, to some degree, fluctuate independently of the
stocks of large companies; that is, small company stocks may decline in
price as large company stocks rise in price or vice versa.
FOREIGN STOCKS. Foreign stocks are equity securities of established
companies in economically developed countries other than the United States.
These securities may be either dollar-denominated or denominated in foreign
currencies. American Depository Receipts ("ADRs"), including dollar
denominated ADRs which are issued by domestic banks and traded in the
United States on exchanges or over-the-counter, are treated as foreign
stocks for purposes of the asset category ranges. The Fund may invest up to
21 percent of its total assets in foreign stocks.
EQUITY RESERVES. When the adviser believes that a temporary defensive
position is desirable, the Fund may invest in equity reserves. Equity
reserves will be used to adjust the risk level of the equity portion of the
Fund in response to market conditions. Equity reserves will consist of U.S.
and foreign short-term money market instruments such as commercial paper
rated A-1 by Standard and Poor's Ratings Group ("Standard & Poor's"),
Prime-1 by Moody's Investors Service, Inc. ("Moody's"), or F-1 by Fitch
Investors Service, Inc. ("Fitch"). The Fund may invest up to 15 percent of
its total assets in equity reserves.
BOND ASSET CATEGORIES. The portion of the Fund's assets which is invested in
bonds ("Bond Assets") will be allocated among the following asset categories
within the ranges specified. The prices of fixed income securities fluctuate
inversely to the direction of interest rates. Generally, the
Fund will invest in Bond Assets which are believed to offer opportunities for
growth of capital when the adviser believes interest rates will decline and,
therefore, the value of the debt securities will increase, or the market value
of bonds will increase due to factors affecting certain types of bonds or
particular issuers, such as improvement in credit quality due to company
fundamentals or economic conditions or assumptions on changes in trends in
prepayment rates with respect to mortgage-backed securities. The average
duration of the Fund's Bond Assets will be not less than three nor more than
seven years. Duration is a commonly used measure of the potential volatility of
the price of a debt security, or the aggregate market value of a portfolio of
debt securities, prior to maturity. Securities with shorter durations generally
have less volatile prices than securities of comparable quality with longer
durations. The Fund should be expected to maintain a higher average duration
during periods of lower expected market volatility, and a lower average duration
during periods of higher expected market volatility.
U.S. TREASURY SECURITIES. U.S. Treasury securities are direct obligations
of the U.S. Treasury, such as U.S. Treasury bills, notes, and bonds. The
Fund may invest up to 45 percent of its total assets in U.S. Treasury
securities. The Fund may invest in other U.S. government securities if, in
the judgment of the adviser, other U.S. government securities are more
attractive than U.S. Treasury securities.
MORTGAGE-BACKED SECURITIES. Mortgage-backed securities represent an
undivided interest in a pool of residential mortgages or may be
collateralized by a pool of residential mortgages. Mortgage-backed
securities are generally either issued or guaranteed by the Government
National Mortgage Association ("GNMA"), Federal National Mortgage
Association ("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC") or
other U.S. government agencies or instrumentalities. Mortgage-backed
securities may also be issued by single-purpose, stand-alone finance
subsidiaries or trusts of financial institutions, government agencies,
investment bankers, or companies related to the construction industry. The
Fund may invest up to 15 percent of its total assets in mortgage-backed
securities.
INVESTMENT-GRADE CORPORATE BONDS. Investment-grade corporate bonds are
corporate debt obligations having fixed or floating rates of interest and
which are rated BBB or higher by a nationally recognized statistical rating
organization ("NRSRO"). The Fund may invest up to 15 percent of its total
assets in investment-grade corporate bonds. In certain cases, the Fund's
adviser may choose bonds which are unrated if it determines that such bonds
are of comparable quality or have similar characteristics to the
investment-grade bonds described above. Yankee bonds, which are U.S.
dollar-denominated bonds issued and traded in the United States by foreign
issuers, are treated as investment-grade corporate bonds for purposes of
the asset category ranges.
HIGH YIELD CORPORATE BONDS. High yield corporate bonds are corporate debt
obligations having fixed or floating rates of interest and which are rated
BB or lower by NRSROs (commonly known as junk bonds). The Fund may invest
up to 15 percent of its total assets in high yield corporate bonds. There
is no minimal acceptable rating for a security to be purchased or held in
the Fund's portfolio, and the Fund may, from time to time, purchase or hold
securities rated in the lowest rating category. (See "Appendix.") In
certain cases the Fund's adviser may
choose bonds which are unrated if it determines that such bonds are of
comparable quality or have similar characteristics to the high yield bonds
described above.
INVESTMENT RISKS. Lower-rated securities will usually offer higher
yields than higher-rated securities. However, there is more risk
associated with these investments. This is because of reduced
creditworthiness and increased risk of default. Lower-rated securities
generally tend to reflect short-term corporate and market developments
to a greater extent than higher-rated securities which react primarily
to fluctuations in the general level of interest rates. Short-term
corporate and market developments affecting the price or liquidity of
lower-rated securities could include adverse news affecting major
issuers, underwriters, or dealers of lower-rated corporate debt
obligations. In addition, since there are fewer investors in
lower-rated securities, it may be harder to sell the securities at an
optimum time. As a result of these factors, lower-rated securities tend
to have more price volatility and carry more risk to principal than
higher-rated securities.
Many corporate debt obligations, including many lower-rated bonds,
permit the issuers to call the security and thereby redeem their
obligations earlier than the stated maturity dates. Issuers are more
likely to call bonds during periods of declining interest rates. In
these cases, if the Fund owns a bond which is called, the Fund will
receive its return of principal earlier than expected and would likely
be required to reinvest the proceeds at lower interest rates, thus
reducing income to the Fund.
FOREIGN BONDS. Foreign bonds are high-quality debt securities of countries
other than the United States. The Fund's portfolio of foreign bonds will be
comprised mainly of foreign government, foreign governmental agency or
supranational institution bonds. The Fund will also invest in high-quality
debt securities issued by corporations in countries other than the United
States and subject to the Fund's credit limitations for foreign bonds. The
Fund may invest up to 15 percent of its total assets in foreign bonds.
ACCEPTABLE INVESTMENTS
EQUITY SECURITIES. Common stocks represent ownership interest in a
corporation. Unlike bonds, which are debt securities, common stocks have
neither fixed maturity dates nor fixed schedules of promised payments.
Utility stocks are common stocks of utility companies, including water
companies, companies that produce, transmit, or distribute gas and electric
energy and those companies that provide communications facilities, such as
telephone and telegraph companies. Foreign stocks are equity securities of
foreign issuers.
FOREIGN SECURITIES. The foreign bonds in which the Fund invests are rated
within the four highest ratings for bonds by Moody's (Aaa, Aa, A or Baa) or
by Standard & Poor's (AAA, AA, A or BBB) or are unrated if determined to be
of equivalent quality by the Fund's adviser.
INVESTMENT RISKS. Investments in foreign securities involve special
risks that differ from those associated with investments in domestic
securities. The risks associated with investments in foreign securities
apply to securities issued by foreign corporations and sovereign
governments. These risks relate to political and economic developments
abroad, as well as those that result from the differences between the
regulation of
domestic securities and issuers and foreign securities and issuers.
These risks may include, but are not limited to, expropriation,
confiscatory taxation, currency fluctuations, withholding taxes on
interest, limitations on the use or transfer of Fund assets, political
or social instability and adverse diplomatic developments. It may also
be more difficult to enforce contractual obligations or obtain court
judgments abroad than would be the case in the United States because of
differences in the legal systems. If the issuer of the debt or the
governmental authorities that control the repayment of the debt may be
unable or unwilling to repay principal or interest when due in
accordance with the terms of such debt, the Fund may have limited legal
recourse in the event of default. Moreover, individual foreign
economies may differ favorably or unfavorably from the domestic economy
in such respects as growth of gross national product, the rate of
inflation, capital reinvestment, resource self-sufficiency and balance
of payments position.
Additional differences exist between investing in foreign and domestic
securities. Examples of such differences include: less publicly
available information about foreign issuers; credit risks associated
with certain foreign governments; the lack of uniform financial
accounting standards applicable to foreign issuers; less readily
available market quotations on foreign issuers; the likelihood that
securities of foreign issuers may be less liquid or more volatile;
generally higher foreign brokerage commissions; and unreliable mail
service between countries.
EQUITY RESERVES. The Fund's equity reserves may be cash received from the
sale of Fund shares, reserves for temporary defensive purposes or to take
advantage of market opportunities.
REPURCHASE AGREEMENTS. Repurchase agreements are arrangements in which
banks, broker/dealers, and other recognized financial institutions sell
securities to the Fund and agree at the time of sale to repurchase them
at a mutually agreed upon time and price. To the extent that the
original seller does not repurchase the securities from the Fund, the
Fund could receive less than the repurchase price on any sale of such
securities.
CONVERTIBLE SECURITIES. Convertible securities are fixed-income securities
which may be exchanged or converted into a predetermined number of the
issuer's underlying common stock at the option of the holder during a
specified time period. Convertible securities may take the form of
convertible preferred stock, convertible bonds or debentures, units
consisting of "usable" bonds and warrants or a combination of the features
of several of these securities. The investment characteristics of each
convertible security vary widely, which allows convertible securities to be
employed for different investment objectives. The adviser may treat
convertible securities as large company stocks, small company stocks, or
high yield bonds for purposes of the asset category ranges, depending upon
current market conditions, including the relationship of the then-current
price to the conversion price. The convertible securities in which the Fund
invests may be rated "high yield" or of comparable quality at the time of
purchase.
U.S. TREASURY AND OTHER U.S. GOVERNMENT SECURITIES. The U.S. Treasury and
other U.S. government securities in which the Fund invests are either
issued or guaranteed by the U.S.
government, its agencies or instrumentalities. The U.S. government
securities in which the Fund may invest are limited to:
direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds; and
obligations issued by U.S. government agencies or instrumentalities,
including securities that are supported by the full faith and credit of
the U.S. Treasury (such as GNMA certificates); securities that are
supported by the right of the issuer to borrow from the U.S. Treasury
(such as securities of Federal Home Loan Banks); and securities that are
supported by the credit of an agency or instrumentality (such as FNMA and
FHLMC bonds).
MORTGAGE-BACKED SECURITIES. Mortgage-backed securities are securities
collateralized by residential mortgages. The mortgage-backed securities in
which the Fund may invest may be:
issued by an agency of the U.S. government, typically GNMA, FNMA or
FHLMC;
privately issued securities which are collateralized by pools of
mortgages in which each mortgage is guaranteed as to payment of principal
and interest by an agency or instrumentality of the U.S. government;
privately issued securities which are collateralized by pools of
mortgages in which payment of principal and interest are guaranteed by
the issuer and such guarantee is collateralized by U.S. government
securities; and
other privately issued securities in which the proceeds of the issuance
are invested in mortgage-backed securities and payment of the principal
and interest are supported by the credit of an agency or instrumentality
of the U.S. government.
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"). CMOs are bonds issued by
single-purpose, stand-alone finance subsidiaries or trusts of financial
institutions, government agencies, investment bankers, or companies
related to the construction industry. Most of the CMOs in which the
Fund would invest use the same basic structure:
Several classes of securities are issued against a pool of mortgage
collateral. The most common structure contains four classes of
securities. The first three (A, B, and C bonds) pay interest at
their stated rates beginning with the issue date; the final class
(or Z bond) typically receives the residual income from the
underlying investments after payments are made to the other
classes.
The cash flows from the underlying mortgages are applied first to
pay interest and then to retire securities.
The classes of securities are retired sequentially. All principal
payments are directed first to the shortest-maturity class (or A
bonds). When those securities are completely retired, all principal
payments are then directed to the next-shortest maturity security
(or B bond). This process continues until all of the classes have
been paid off.
Because the cash flow is distributed sequentially instead of pro
rata as with pass-through securities, the cash flows and average
lives of CMOs are more predictable, and there is a period of time
during which the investors in the longer-maturity classes receive
no principal paydowns. The interest portion of these payments is
distributed by the Fund as income and the capital portion is
reinvested.
The Fund will invest only in CMOs which are rated AAA or Aaa by an
NRSRO.
REAL ESTATE MORTGAGE INVESTMENT CONDUITS ("REMICS"). REMICs are
offerings of multiple class real estate mortgage-backed securities
which qualify and elect treatment as such under provisions of the
Internal Revenue Code. Issuers of REMICs may take several forms, such
as trusts, partnerships, corporations, associations or a segregated
pool of mortgages. Once REMIC status is elected and obtained, the
entity is not subject to federal income taxation. Instead, income is
passed through the entity and is taxed to the person or persons who
hold interests in the REMIC. A REMIC interest must consist of one or
more classes of "regular interests," some of which may offer adjustable
rates, and a single class of "residual interests." To qualify as a
REMIC, substantially all of the assets of the entity must be in assets
directly or indirectly secured principally by real property.
CHARACTERISTICS OF MORTGAGE-BACKED SECURITIES. Mortgage-backed
securities have yield and maturity characteristics corresponding to the
underlying mortgages. Distributions to holders of mortgage-backed
securities include both interest and principal payments. Principal
payments represent the amortization of the principal of the underlying
mortgages and any prepayments of principal due to prepayment,
refinancing, or foreclosure of the underlying mortgages. Although
maturities of the underlying mortgage loans may range up to 30 years,
amortization and prepayments substantially shorten the effective
maturities of mortgage-backed securities. Due to these features,
mortgage-backed securities are less effective as a means of "locking
in" attractive long-term interest rates than fixed-income securities
which pay only a stated amount of interest until maturity, when the
entire principal amount is returned. This is caused by the need to
reinvest at lower interest rates both distributions of principal
generally and significant prepayments which become more likely as
mortgage interest rates decline. Since comparatively high interest
rates cannot be effectively "locked in," mortgage-backed securities may
have less potential for capital appreciation during periods of
declining interest rates than other non-callable, fixed-income
government securities of comparable stated maturities. However,
mortgage-backed securities may experience less pronounced declines in
value during periods of rising interest rates.
In addition, some of the CMOs purchased by the Fund may represent an
interest solely in the principal repayments or solely in the interest
payments on mortgage-backed securities (stripped mortgage-backed
securities or "SMBSs"). Due to the possibility of prepayments on the
underlying mortgages, SMBSs may be more interest-rate sensitive than
other securities purchased by the Fund. If prevailing interest rates
fall below the level at which SMBSs were issued, there may be
substantial prepayments on the underlying mortgages, leading to the
relatively early prepayments of principal-only SMBSs and a reduction in
the amount of payments made to holders of interest-only SMBSs. It is
possible that the Fund might not recover its original investment in
interest-only SMBSs if there are substantial prepayments on the
underlying mortgages. Therefore, interest-only SMBSs generally increase
in value as interest rates rise and decrease in value as interest rates
fall, counter to changes in value experienced by most fixed income
securities. The Fund's adviser intends to use this characteristic of
interest-only SMBSs to reduce the
effects of interest rate changes on the value of the Fund's portfolio,
while continuing to pursue the Fund's investment objective.
CORPORATE BONDS. The investment-grade corporate bonds in which the Fund
invests are:
rated within the four highest ratings for corporate bonds by Moody's
(Aaa, Aa, A, or Baa), Standard & Poor's (AAA, AA, A, or BBB), or Fitch
(AAA, AA, A, or BBB);
unrated if other long-term debt securities of that issuer are rated, at
the time of purchase, Baa or better by Moody's or BBB or better by
Standard & Poor's or Fitch; or
unrated if determined to be of equivalent quality to one of the foregoing
rating categories by the Fund's adviser.
Securities which are rated BBB by Standard & Poor's or Fitch or Baa by
Moody's have speculative characteristics. Changes in economic conditions or
other circumstances are more likely to lead to weakened capacity to make
principal and interest payments than higher rated bonds. If a security's
rating is reduced below the required minimum after the Fund has purchased
it, the Fund is not required to sell the security, but may consider doing
so.
The high yield corporate bonds in which the Fund invests are rated Ba or
lower by Moody's or BB or lower by Standard & Poor's or Fitch (commonly
known as junk bonds). A description of the rating categories is contained
in the Appendix to this prospectus.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Fund may invest in
the securities of other investment companies, but it will not own more than 3
percent of the total outstanding voting stock of any such investment company,
invest more than 5 percent of its total assets in any one such investment
company, or invest more than 10 percent of its total assets in such other
investment companies in general. To the extent that the Fund invests in
securities issued by other investment companies, the Fund will indirectly bear
its proportionate share of any fees and expenses paid by such companies in
addition to the fees and expenses payable directly by the Fund.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies but which are
subject to restrictions on resale under federal securities law. However, the
Fund will limit investments in illiquid securities, including certain restricted
securities not determined by the Trustees to be liquid, over-the-counter
options, and repurchase agreements providing for settlement in more than seven
days after notice, to 15 percent of its net assets.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
Accordingly, the Fund may pay more or less than the market value of the
securities on the settlement date.
The Fund may dispose of a commitment prior to settlement if the adviser deems it
appropriate to do so. In addition, the Fund may enter into transactions to sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar
securities at later dates. The Fund may realize short-term profits or losses
upon the sale of such commitments.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend its portfolio securities on a short-term or long-term basis up to
one-third of the value of its total assets to broker/dealers, banks, or other
institutional borrowers of securities. The Fund will only enter into loan
arrangements with broker/dealers, banks, or other institutions which the adviser
has determined are creditworthy under guidelines established by the Trustees and
will receive collateral in the form of cash or U.S. government securities equal
to at least 100 percent of the value of the securities loaned.
There is the risk that when lending portfolio securities, the securities may not
be available to the Fund on a timely basis and the Fund may, therefore, lose the
opportunity to sell the securities at a desirable price. In addition, in the
event that a borrower of securities would file for bankruptcy or become
insolvent, disposition of the securities may be delayed pending court action.
FOREIGN CURRENCY TRANSACTIONS. The Fund will enter into foreign currency
transactions to obtain the necessary currencies to settle securities
transactions. Currency transactions may be conducted either on a spot or cash
basis at prevailing rates or through forward foreign currency exchange
contracts.
The Fund may also enter into foreign currency transactions to protect Fund
assets against adverse changes in foreign currency exchange rates or exchange
control regulations. Such changes could unfavorably affect the value of Fund
assets which are denominated in foreign currencies, such as foreign securities
or funds deposited in foreign banks, as measured in U.S. dollars. Although
foreign currency exchanges may be used by the Fund to protect against a decline
in the value of one or more currencies, such efforts may also limit any
potential gain that might result from a relative increase in the value of such
currencies and might, in certain cases, result in losses to the Fund.
CURRENCY RISKS. To the extent that debt securities purchased by the Fund
are denominated in currencies other than the U.S. dollar, changes in
foreign currency exchange rates will affect the Fund's net asset value; the
value of interest earned; gains and losses realized on the sale of
securities; and net investment income and capital gain, if any, to be
distributed to shareholders by the Fund. If the value of a foreign currency
rises against the U.S. dollar, the value of the Fund's assets denominated
in that currency will increase; correspondingly, if the value of a foreign
currency declines against the U.S. dollar, the value of the Fund's assets
denominated in that currency will decrease.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward foreign currency
exchange contract ("forward contract") is an obligation to purchase or sell an
amount of a particular currency at a specific price and on a future date agreed
upon by the parties.
Generally, no commission charges or deposits are involved. At the time the Fund
enters into a forward contract, Fund assets with a value equal to the Fund's
obligation under the forward contract are segregated and are maintained until
the contract has been settled. The Fund will not enter into a forward contract
with a term of more than one year.
The Fund will generally enter into a forward contract to provide the proper
currency to settle a securities transaction at the time the transaction occurs
("trade date"). The period between trade date and settlement date will vary
between 24 hours and 30 days, depending upon local custom.
The Fund may also protect against the decline of a particular foreign currency
by entering into a forward contract to sell an amount of that currency
approximating the value of all or a portion of the Fund's assets denominated in
that currency ("hedging"). The success of this type of short-term hedging
strategy is highly uncertain due to the difficulties of predicting short-term
currency market movements and of precisely matching forward contract amounts and
the constantly changing value of the securities involved. Although the adviser
will consider the likelihood of changes in currency values when making
investment decisions, the adviser believes that it is important to be able to
enter into forward contracts when it believes the interests of the Fund will be
served. The Fund will not enter into forward contracts for hedging purposes in a
particular currency in an amount in excess of the Fund's assets denominated in
that currency. The Fund will not invest more than 21% of its total assets in
forward foreign currency exchange contracts.
OPTIONS. The Fund may deal in options on foreign currencies, foreign currency
futures, securities, and securities indices, which options may be listed for
trading on a national securities exchange or traded over-the-counter. The Fund
will use options only to manage interest rate and currency risks. The Fund may
write covered call options to generate income. The Fund may write covered call
options and secured put options on up to 25 percent of its net assets and may
purchase put and call options provided that no more than 5 percent of the fair
market value of its net assets may be invested in premiums on such options.
A call option gives the purchaser the right to buy, and the writer the
obligation to sell, the underlying currency, security or other asset at the
exercise price during the option period. A put option gives the purchaser the
right to sell, and the writer the obligation to buy, the underlying currency,
security or other asset at the exercise price during the option period. The
writer of a covered call owns assets that are acceptable for escrow, and the
writer of a secured put invests an amount not less than the exercise price in
eligible assets to the extent that it is obligated as a writer. If a call
written by the Fund is exercised, the Fund foregoes any possible profit from an
increase in the market price of the underlying asset over the exercise price
plus the premium received. In writing puts, there is a risk that the Fund may be
required to take delivery of the underlying asset at a disadvantageous price.
Over-the-counter options ("OTC options") differ from exchange traded options in
several respects. They are transacted directly with dealers and not with a
clearing corporation, and there is a risk of non-performance by the dealer as a
result of the insolvency of such dealer or otherwise, in which event the Fund
may experience material losses. However, in writing options, the premium is paid
in advance by the dealer. OTC options, which may not be continuously liquid, are
available for a
greater variety of assets and with a wider range of expiration dates and
exercise prices, than are exchange traded options.
FUTURES AND OPTIONS ON FUTURES. The Fund may purchase and sell futures
contracts to accommodate cash flows into and out of the Fund's portfolio and to
hedge against the effects of changes in the value of portfolio securities due to
anticipated changes in interest rates and market conditions.
Interest rate futures contracts call for the delivery of particular debt
instruments at a certain time in the future. The seller of the contract agrees
to make delivery of the type of instrument called for in the contract, and the
buyer agrees to take delivery of the instrument at the specified future time.
Stock index futures contracts are based on indexes that reflect the market value
of common stock of the firms included in the indexes. An index futures contract
is an agreement pursuant to which two parties agree to take or make delivery of
an amount of cash equal to the differences between the value of the index at the
close of the last trading day of the contract and the price at which the index
contract was originally written. The Fund may utilize stock index futures to
handle cash flows into and out of the Fund and to potentially reduce
transactional costs.
The Fund may also write call options and purchase put options on futures
contracts as a hedge to attempt to protect its portfolio securities against
decreases in value. When the Fund writes a call option on a futures contract, it
is undertaking the obligation of selling a futures contract at a fixed price at
any time during a specified period if the option is exercised. Conversely, as
purchaser of a put option on a futures contract, the Fund is entitled (but not
obligated) to sell a futures contract at the fixed price during the life of the
option.
The Fund may not purchase or sell futures contracts or related options if
immediately thereafter the sum of the amount of margin deposits on the Fund's
existing futures positions and premiums paid for related options would exceed 5
percent of the market value of the Fund's total assets. When the Fund purchases
futures contracts, an amount of cash and cash equivalents, equal to the
underlying commodity value of the futures contracts (less any related margin
deposits), will be deposited in a segregated account with the custodian (or the
broker, if legally permitted) to collateralize the position and thereby insure
that the use of such futures contracts are unleveraged. When the Fund sells
futures contracts, it will either own or have the right to receive the
underlying future or security or will make deposits to collateralize the
position as discussed above.
RISKS. When the Fund uses futures and options on futures as hedging
devices, there is a risk that the prices of the securities subject to the
futures contracts may not correlate perfectly with the prices of the
securities in the Fund's portfolio. This may cause the futures contract and
any related options to react differently than the portfolio securities to
market changes. In addition, the investment adviser could be incorrect in
its expectations about the direction or extent of market factors such as
stock price movements. In these events, the Fund may lose money on the
futures contract or option.
It is not certain that a secondary market for positions in futures
contracts or for options will exist at all times. Although the investment
adviser will consider liquidity before entering into these transactions,
there is no assurance that a liquid secondary market on an exchange or
otherwise will exist for any particular futures contract or option at any
particular time. The Fund's ability to establish and close out futures and
options positions depends on this secondary market.
PORTFOLIO TURNOVER. Although the Fund does not intend to invest for the purpose
of seeking short-term profits, securities in its portfolio will be sold whenever
the Fund's adviser believes it is appropriate to do so in light of the Fund's
investment objective, without regard to the length of time a particular security
may have been held. The Fund's rate of portfolio turnover may exceed that of
certain other mutual funds with the same investment objective. A higher rate of
portfolio turnover involves correspondingly greater transaction expenses which
must be borne directly by the Fund, and, thus, indirectly by its shareholders.
In addition, a high rate of portfolio turnover may result in the realization of
larger amounts of capital gains which, when distributed to the Fund's
shareholders, are taxable to them. (Further information is contained in the
Fund's Statement of Additional Information within the sections "Brokerage
Transactions" and "Tax Status".) Nevertheless, transactions for the Fund's
portfolio will be based only upon investment considerations and will not be
limited by any other considerations when the Fund's adviser deems it appropriate
to make changes in the Fund's portfolio.
INVESTMENT LIMITATIONS
The Fund will not:
borrow money directly or through reverse repurchase agreements or pledge
securities except, under certain circumstances, the Fund may borrow up to
one-third of the value of its total assets and pledge up to 15 percent of
the value of those assets to secure such borrowings;
lend any securities except for portfolio securities; or
underwrite any issue of securities, except as it may be deemed to be an
underwriter under the Securities Act of 1933 in connection with the sale
of restricted securities which the Fund may purchase pursuant to its
investment objective, policies and limitations.
The above investment limitations cannot be changed without shareholder approval.
TRUST INFORMATION
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MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Trust's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. The Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Except as noted below with regard to the sub-adviser,
investment decisions for the Fund are made by Federated Management, the Fund's
investment adviser (the "Adviser"), subject to direction by the Trustees. The
adviser continually conducts investment research and supervision for the Fund
and is responsible for the purchase or sale of portfolio instruments, for which
it receives an annual fee from the Fund.
ADVISORY FEES. The Fund's adviser receives an annual investment advisory
fee equal to .75 of 1% of the Fund's average daily net assets. The fee paid
by the Fund, while higher than the advisory fee paid by other mutual funds
in general, is comparable to fees paid by other mutual funds with similar
objectives and policies. Under the advisory contract, which provides for
voluntary reimbursement of expenses by the adviser, the adviser may
voluntarily waive some or all of its fee. This does not include
reimbursement to the Fund of any expenses incurred by
shareholders who use the transfer agent's subaccounting facilities. The
adviser has also undertaken to reimburse the Fund for operating expenses in
excess of limitations established by certain states.
ADVISER'S BACKGROUND. Federated Management, a Delaware business trust
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940.
SUB-ADVISER. Under the terms of the Sub-Advisory Agreement between the Adviser
and Federated Global Research Corp. (the "Sub-Adviser"), the Sub-Adviser will
provide the Adviser such investment advice, statistical and other factual
information as may, from time to time, be reasonably requested by the Adviser.
SUB-ADVISORY FEES. For its services under the Sub-Advisory Agreement, the
Sub-Adviser receives an allocable portion of the Fund's advisory fee. Such
allocation is based on the amount of foreign securities which the
Sub-Adviser manages for the Fund. This fee is paid by the Adviser out of
its resources and is not an incremental Fund expense.
SUB-ADVISER'S BACKGROUND. Federated Global Research Corp., incorporated in
Delaware on May 12, 1995, is a registered investment adviser under the
Investment Advisers Act of 1940. Prior to September 1995, the Sub-Adviser
had not served as an investment adviser to mutual funds.
The Adviser and Sub-Adviser are subsidiaries of Federated Investors. All of the
Class A (voting) shares of Federated Investors are owned by a trust, the
trustees of which are John F. Donahue, Chairman and Trustee of Federated
Investors, Mr. Donahue's wife, and Mr. Donahue's son, J. Christopher Donahue,
who is President and Trustee of Federated Investors.
Federated Management, Federated Global Research Corp. and other subsidiaries of
Federated Investors serve as investment advisers to a number of investment
companies and private accounts. Certain other subsidiaries also provide
administrative services to a number of investment companies. With over $80
billion invested across more than 250 funds under management and/or
administration by its subsidiaries, as of December 31, 1995, Federated Investors
is one of the largest mutual fund investment managers in the United States. With
more than 1,800 employees, Federated continues to be led by the management who
founded the company in 1955. Federated funds are presently at work in and
through 4,000 financial institutions nationwide. More than 100,000 investment
professionals have selected Federated funds for their clients.
The Trust, the Adviser, and the Sub-Adviser have adopted strict codes of ethics
governing the conduct of all employees who manage the Fund and its portfolio
securities. These codes recognize that such persons owe a fiduciary duty to the
Fund's shareholders and must place the interests of shareholders ahead of the
employees' own interest. Among other things, the codes: require preclearance and
periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered for
purchase or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less than sixty
days. Violations of these codes are subject to review by the Trustees, and could
result in severe penalties.
PORTFOLIO MANAGERS' BACKGROUNDS.
Charles A. Ritter is the portfolio
manager for the Fund and performs the overall allocation of the assets of
the Fund among the various asset categories. He has performed these duties
since the Fund's inception. In allocating the Fund's assets, Mr. Ritter
evaluates the market environment and economic outlook, utilizing the
services of the Adviser's economist and strategist. Mr. Ritter joined
Federated Investors in 1983 and has been a Vice President of the Fund's
Adviser since 1992. From 1988 until 1991, Mr. Ritter acted as an Assistant
Vice President. Mr. Ritter is a Chartered Financial Analyst and received
his M.B.A. in Finance from the University of Chicago and his M.S. in
Economics from Carnegie Mellon University.
The portfolio managers for each of the individual asset categories are as
follows:
Peter R. Anderson and Aash Shah are portfolio managers for the domestic
large company stocks asset category. Mr. Anderson has performed this duty
since the Fund's inception. Mr. Shah assumed his responsibilities in
December 1995. Mr. Anderson joined Federated Investors in 1972 and is
presently a Senior Vice President of the Fund's Adviser. Mr. Anderson is a
Chartered Financial Analyst and received his M.B.A. in Finance from the
University of Wisconsin. Mr. Shah joined Federated Investors in 1993 as an
Investment Analyst and has been an Assistant Vice President of the Fund's
Adviser since 1995. Mr. Shah was employed at Westinghouse Credit Corp. from
1990 to 1993 as an Investment Analyst. Mr. Shah received his M.S.I.A. from
Carnegie Mellon University with a concentration in finance and accounting.
Mr. Shah is a Chartered Financial Analyst.
James Grefenstette is the portfolio manager for the domestic small company
stocks asset category. He has served in this capacity since August 1994.
Mr. Grefenstette joined Federated Investors in 1992 and has been an
Assistant Vice President of the Fund's Adviser since 1994. From 1992 until
1994, Mr. Grefenstette acted as an investment analyst. Mr. Grefenstette was
a credit analyst at Westinghouse Credit Corp. from 1990 until 1992. Mr.
Grefenstette received his M.S.I.A. from Carnegie Mellon University.
Christopher H. Wiles is the portfolio manager for the utility stocks asset
category of all the portfolios of Managed Series Trust except for Federated
Managed Aggressive Growth Fund, and has been one of the Fund's portfolio
managers since its inception. Mr. Wiles joined Federated Investors in 1990
and has been a Vice President of the Fund's Adviser since 1992. Mr. Wiles
served as Assistant Vice President of the Fund's Adviser from 1990 until
1992. Mr. Wiles is a Chartered Financial Analyst and received his M.B.A. in
Finance from Cleveland State University.
Henry Frantzen, Drew Collins, Mark Kopinski, Frank Semack, and Alexandre de
Bethmann are portfolio managers for the foreign stocks asset category.
Henry A. Frantzen has been a portfolio manager of the Fund since November
1995. Mr. Frantzen joined Federated Investors in 1995 as an Executive Vice
President of the Fund's Sub-Adviser. Mr. Frantzen served as Chief
Investment Officer of international equities at Brown Brothers Harriman &
Co. from 1992 to 1995. He was the Executive Vice President and Director of
Equities at Oppenheimer Management Corporation from 1989 to 1991. Mr.
Frantzen received his B.S. in finance and marketing from the University of
North Dakota.
Drew J. Collins has been a portfolio manager of the Fund since November
1995. Mr. Collins joined Federated Investors in 1995 as a Senior Vice
President of the Fund's Sub-Adviser.
Mr. Collins served as a Vice President/Portfolio Manager of international
equity portfolios at Arnhold and S. Bleichroeder, Inc. from 1994 to 1995.
He served as an Assistant Vice President/ Portfolio Manager for
international equities at the College Retirement Equities Fund from 1986 to
1994. Mr. Collins is a Chartered Financial Analyst and received his M.B.A.
in finance from the University of Pennsylvania.
Mark S. Kopinski has been a portfolio manager of the Fund since November
1995. Mr. Kopinski joined Federated Investors in 1995 as a Vice President
of the Fund's Sub-Adviser. Mr. Kopinski served as Vice President/Portfolio
Manager of international equity funds at Twentieth Century Mutual Funds
from 1990 to 1995. Mr. Kopinski received his M.B.A. in Asian Studies from
the University of Illinois.
Frank Semack has been a portfolio manager of the Fund since November 1995.
Mr. Semack joined Federated Investors in 1995 as a Vice President of the
Fund's Sub-Adviser. Mr. Semack served as an Investment Analyst at Omega
Advisers, Inc. from 1993 to 1994. He served as an Associate
Director/Portfolio Manager of Wardley Investment Services, Ltd. from 1987
to 1993. Mr. Semack received his M.Sc. in economics from the London School
of Economics.
Alexandre de Bethmann has been a portfolio manager of the Fund since
November 1995. Mr. de Bethmann joined Federated Investors in 1995 as a Vice
President of the Fund's Sub-Adviser. Mr. de Bethmann served as Assistant
Vice President/Portfolio Manager for Japanese and Korean equities at the
College Retirement Equities Fund from 1994 to 1995. He served as an
International Equities Analyst and then as an Assistant Portfolio Manager
at the College Retirement Equities Fund between 1987 and 1994. Mr. de
Bethmann received his M.B.A. in Finance from Duke University.
Henry Frantzen, Drew Collins, and Robert Kowit are portfolio managers for
the foreign bonds asset category. They have performed these duties since
November 1995.
Robert M. Kowit joined Federated Investors in 1995 as a Vice President of
the Fund's Sub-Adviser. Mr. Kowit served as a Managing Partner of
Copernicus Global Asset Management from January 1995 through October 1995.
From 1990 to 1994, he served as Senior Vice President of International
Fixed Income and Foreign Exchange for John Hancock Advisers. Mr. Kowit
received his M.B.A. from Iona College with a concentration in finance.
Susan M. Nason and Joseph M. Balestrino are portfolio managers for the U.S.
Treasury securities asset category. Ms. Nason has performed this duty since
the Fund's inception. Mr. Balestrino assumed his responsibilities on March
1, 1995. Ms. Nason joined Federated Investors in 1987 and has been a Vice
President of the Fund's Adviser since 1993. Ms. Nason served as an
Assistant Vice President of the Adviser from 1990 until 1992. Ms. Nason is
a Chartered Financial Analyst and received her M.S.I.A. in Finance from
Carnegie Mellon University. Mr. Balestrino joined Federated Investors in
1986 and has been Vice President of the Fund's Adviser since 1995. Mr.
Balestrino served as an Assistant Vice President from 1991 until 1995, and
as an investment analyst of the Adviser from 1989 until 1991. Mr.
Balestrino is a Chartered
Financial Analyst and received his M.A. in Urban and Regional Planning from
the University of Pittsburgh.
Thomas M. Franks is the portfolio manager for the equity reserves asset
category. He has performed these duties since the Fund's inception. Mr.
Franks joined Federated Investors in 1985 and has been a Vice President of
the Fund's Adviser since 1990. Mr. Franks is a Chartered Financial Analyst
and received his M.S.I.A. in Business Administration from Carnegie Mellon
University.
Kathleen M. Foody-Malus and James D. Roberge are portfolio managers for the
mortgage-backed securities asset category. Ms. Foody-Malus has performed
this duty since the Fund's inception. Mr. Roberge assumed his
responsibilities on March 1, 1995. Ms. Foody-Malus joined Federated
Investors in 1983 and has been a Vice President of the Fund's Adviser since
1993. Ms. Foody-Malus served as an Assistant Vice President of the Adviser
from 1990 until 1992. Ms. Foody-Malus received her M.B.A. in
Accounting/Finance from the University of Pittsburgh. Mr. Roberge joined
Federated Investors in 1990 and has been a Vice President of the Fund's
Adviser since October, 1994. Prior to this, Mr. Roberge served as an
Assistant Vice President of the Fund's Adviser. From 1990 until 1992, Mr.
Roberge acted as an investment analyst. Mr. Roberge is a Chartered
Financial Analyst and received his M.B.A. in Finance from the University of
Pennsylvania.
Joseph M. Balestrino and Susan M. Nason are portfolio managers for the
investment-grade corporate bonds asset category. They have performed these
duties since the Fund's inception.
Mark E. Durbiano is the portfolio manager for the high yield corporate
bonds asset category. He has performed these duties since the Fund's
inception. Mr. Durbiano joined Federated Investors in 1982 and has been a
Senior Vice President of the Fund's Adviser since January 1996. Mr.
Durbiano was a Vice President of the Fund's Adviser from 1988 through 1995.
Mr. Durbiano is a Chartered Financial Analyst and received his M.B.A. in
Finance from the University of Pittsburgh.
DISTRIBUTION OF INSTITUTIONAL SHARES
Federated Securities Corp. is the principal distributor for Shares. It is a
Pennsylvania corporation organized on November 14, 1969, and is the principal
distributor for a number of investment companies. Federated Securities Corp. is
a subsidiary of Federated Investors.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides administrative personnel and services (including
certain legal and financial reporting services) necessary to operate the Fund.
Federated Administrative Services provides these at an annual rate which relates
to the average aggregate daily net assets of all funds advised by subsidiaries
of Federated Investors ("Federated Funds") as specified below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE DAILY
ADMINISTRATIVE FEE NET ASSETS OF THE FEDERATED FUNDS
<S> <C>
0.15 of 1% on the first $250 million
0.125 of 1% on the next $250 million
0.10 of 1% on the next $250 million
0.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Administrative Services may choose voluntarily to waive a portion of
its fee.
SHAREHOLDER SERVICES. The Fund has entered into a Shareholder Services
Agreement with Federated Shareholder Services, a subsidiary of Federated
Investors, under which the Fund may make payments up to .25 of 1% of the average
daily net asset value of the Institutional Shares, computed at an annual rate,
to obtain certain personal services for shareholders and provide maintenance of
shareholder accounts ("shareholder services"). From time to time and for such
periods as deemed appropriate, the amount stated above may be reduced
voluntarily.
Under the Shareholder Services Agreement, Federated Shareholder Services will
either perform shareholder services directly or will select financial
institutions to perform shareholder services. Financial institutions will
receive fees based upon shares owned by their clients or customers. The
schedules of such fees and the basis upon which such fees will be paid will be
determined from time to time by the Fund and Federated Shareholder Services.
SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS. In addition to receiving the
payments under the Shareholder Services Agreement, Federated Securities Corp.
and Federated Shareholder Services, from their own assets, may pay financial
institutions supplemental fees for the performance of substantial sales
services, distribution-related support services, or shareholder services. The
support may include sponsoring sales, educational and training seminars for
their employees, providing sales literature, and engineering computer software
programs that emphasize the attributes of the Fund. Such assistance will be
predicated upon the amount of Shares the financial institution sells or may
sell, and/or upon the type and nature of sales or marketing support furnished by
the financial institution. Any payments made by the distributor may be
reimbursed by the Fund's Adviser or its affiliates.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the Adviser looks for prompt execution of the order at a favorable
price. In working with dealers, the Adviser will generally use those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. In selecting among firms
believed to meet these criteria, the Adviser may give consideration to those
firms which have sold or are selling shares of the Fund and other funds
distributed by Federated Securities Corp. The Adviser makes decisions on
portfolio transactions and selects brokers and dealers subject to review by the
Trustees.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund's net asset value per Share fluctuates. The net asset value for Shares
is determined by adding the interest of the Shares in the market value of all
securities and other assets of the Fund, subtracting the interest of the Shares
in the liabilities of the Fund and those attributable to Shares, and dividing
the remainder by the total number of Shares outstanding. The net asset value for
Institutional Shares may exceed that of Select Shares due to the variance in
daily net income realized by each class. Such variance will reflect only accrued
net income to which the shareholders of a particular class are entitled.
INVESTING IN INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
SHARE PURCHASES
Shares are sold on days on which the New York Stock Exchange is open for
business. Shares may be purchased through a financial institution which has a
sales agreement with the distributor or by wire or mail.
To purchase Shares, open an account by calling Federated Securities Corp.
Information needed to establish an account will be taken over the telephone. The
Fund reserves the right to reject any purchase request.
THROUGH A FINANCIAL INSTITUTION. An investor may call his financial institution
(such as a bank or an investment dealer) to place an order to purchase Shares.
Orders through a financial institution are considered received when the Fund is
notified of the purchase order. Purchase orders through a registered
broker/dealer must be received by the broker before 4:00 p.m. (Eastern time) and
must be transmitted by the broker to the Fund before 5:00 p.m. (Eastern time) in
order for Shares to be purchased at that day's price. Purchase orders through
other financial institutions must be received by the financial institution and
transmitted to the Fund before 4:00 p.m. (Eastern time) in order for Shares to
be purchased at that day's price. It is the financial institution's
responsibility to transmit orders promptly.
BY WIRE. To purchase Shares by Federal Reserve wire, call the Fund before 4:00
p.m. (Eastern time) to place an order. The order is considered received
immediately. Payment by federal funds must be received before 3:00 p.m. (Eastern
time) on the next business day following the order. Federal funds should be
wired as follows: Federated Services Company, c/o State Street Bank and Trust
Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit to: Federated
Managed Growth Fund-- Institutional Shares; Fund Number (this number can be
found on the account statement or by contacting the Fund); Group Number or Wire
Order Number; Nominee or Institution Name; and ABA Number 011000028. Shares
cannot be purchased by wire on holidays when wire transfers are restricted.
Questions on wire purchases should be directed to your shareholder services
representative at the telephone number listed on your account statement.
BY MAIL. To purchase Shares by mail, send a check made payable to Federated
Managed Growth Fund--Institutional Shares to Federated Services Company, P.O.
Box 8600, Boston, Massachusetts
02266-8600. Orders by mail are considered received after payment by check is
converted by State Street Bank into federal funds. This is normally the next
business day after State Street Bank receives the check.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in Shares is $25,000. However, an account may be
opened with a smaller amount as long as the $25,000 minimum is reached within 90
days. An institutional investor's minimum investment will be calculated by
combining all accounts it maintains with the Fund. Accounts established through
a non-affiliated bank or broker may be subject to a smaller minimum investment.
WHAT SHARES COST
Shares are sold at their net asset value next determined after an order is
received. There is no sales charge imposed by the Fund. Investors who purchase
Shares through a non-affiliated bank or broker may be charged an additional
service fee by that bank or broker.
The net asset value is determined as of the close of trading (normally 4:00
p.m., Eastern time) on the New York Stock Exchange, Monday through Friday,
except on (i) days on which there are not sufficient changes in the value of the
Fund's portfolio securities such that its net asset value might be materially
affected; (ii) days during which no Shares are tendered for redemption and no
orders to purchase Shares are received; and (iii) the following holidays: New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day.
SUBACCOUNTING SERVICES
Institutions are encouraged to open single master accounts. However, certain
institutions may wish to use the transfer agent's subaccounting system to
minimize their internal recordkeeping requirements. The transfer agent may
charge a fee based on the level of subaccounting services rendered. Institutions
holding Shares in a fiduciary, agency, custodial, or similar capacity may charge
or pass through subaccounting fees as part of or in addition to normal trust or
agency account fees. They may also charge fees for other services provided which
may be related to the ownership of Shares. This prospectus should, therefore, be
read together with any agreement between the customer and the institution with
regard to the services provided, the fees charged for those services, and any
restrictions and limitations imposed. State securities laws may require certain
financial institutions such as depository institutions to register as dealers.
SYSTEMATIC INVESTMENT PROGRAM
Once a Fund account had been opened, shareholders may add to their investment on
a regular basis. Under this program, funds may be automatically withdrawn
periodically from the shareholder's checking account and invested in Shares at
the net asset value next determined after an order is received by the Fund. A
shareholder may apply for participation in this program through Federated
Securities Corp.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the Fund.
Detailed confirmations of each purchase or redemption are sent to each
shareholder. Quarterly confirmations are sent to report dividends paid during
that quarter.
DIVIDENDS
Dividends are declared and paid quarterly to all shareholders invested in the
Fund on the record date. Unless shareholders request cash payments by writing
the Fund, dividends are automatically reinvested in additional Shares of the
Fund on payment dates at the ex-dividend date net asset value without a sales
charge.
CAPITAL GAINS
Capital gains realized by the Fund, if any, will be distributed at least once
every 12 months.
REDEEMING INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
The Fund redeems Shares at their net asset value next determined after the Fund
receives the redemption request. Redemptions will be made on days on which the
Fund computes its net asset value. Redemption requests must be received in
proper form and can be made through a financial institution, by telephone
request or by written request.
THROUGH A FINANCIAL INSTITUTION
A shareholder may redeem Shares by calling his financial institution (such as a
bank or an investment dealer) to request the redemption. Shares will be redeemed
at the net asset value next determined after the Fund receives the redemption
request from the financial institution. Redemption requests through a registered
broker/dealer must be received by the broker before 4:00 p.m. (Eastern time) and
must be transmitted by the broker to the Fund before 5:00 p.m. (Eastern time) in
order for Shares to be redeemed at that day's net asset value. Redemption
requests through other financial institutions must be received by the financial
institution and transmitted to the Fund before 4:00 p.m. (Eastern time) in order
for Shares to be redeemed at that day's net asset value. The financial
institution is responsible for promptly submitting redemption requests and
providing proper written instructions to the Fund. The financial institution may
charge customary fees and commissions for this service.
TELEPHONE REDEMPTION
Shareholders may redeem their Shares by telephoning the Fund before 4:00 p.m.
(Eastern time). All proceeds will normally be wire transferred the following
business day, but in no event more than seven days, to the shareholder's account
at a domestic commercial bank that is a member of the Federal Reserve System.
Proceeds from redemption requests received on holidays when wire transfers are
restricted will be wired the following business day. Questions about telephone
redemptions on days when wire transfers are restricted should be directed to
your shareholder
services representative at the telephone number listed on your account
statement. If at any time, the Fund shall determine it necessary to terminate or
modify this method of redemption, shareholders would be promptly notified.
An authorization form permitting the Fund to accept telephone requests must
first be completed. Authorization forms and information on this service are
available from Federated Securities Corp. Telephone redemption instructions may
be recorded. If reasonable procedures are not followed by the Fund, it may be
liable for losses due to unauthorized or fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "Written Requests," should be considered.
WRITTEN REQUESTS
Shares may also be redeemed by sending a written request to the Fund. Call the
Fund for specific instructions before redeeming by letter. The shareholder will
be asked to provide in the request his name, the Fund name and class of shares
name, his account number, and the Share or dollar amount requested. If Share
certificates have been issued, they should be sent unendorsed with the written
request by registered or certified mail to: Federated Services Company, P.O. Box
8600, Boston, MA 02266-8600.
SIGNATURES. Shareholders requesting a redemption of any amount to be sent to an
address other than that on record with the Fund, or a redemption payable other
than to the shareholder of record must have signatures on written redemption
requests guaranteed by:
a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund ("BIF"), which is administered by the Federal Deposit
Insurance Corporation ("FDIC");
a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;
a savings bank or savings association whose deposits are insured by the
Savings Association Insurance Fund ("SAIF"), which is administered by the
FDIC; or
any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.
RECEIVING PAYMENT. Normally, a check for the proceeds is mailed within one
business day, but in no event more than seven days, after receipt of a proper
written redemption request, provided the Fund or its agents have received
payment for Shares from the shareholder.
SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive payments of a predetermined amount may take
advantage of the Systematic Withdrawal Program. Under this program, Shares are
redeemed to provide for periodic withdrawal payments in an amount directed by
the shareholder. Depending upon the
amount of the withdrawal payments, the amount of dividends paid and capital
gains distributions with respect to Shares, and the fluctuation of the net asset
value of Shares redeemed under this program, redemptions may reduce, and
eventually use up, the shareholder's investment in the Fund. For this reason,
payments under this program should not be considered as yield or income on the
shareholder's investment in the Fund. To be eligible to participate in this
program, a shareholder must have an account value of at least $25,000. A
shareholder may apply for participation in this program through Federated
Securities Corp.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem Shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $25,000. This
requirement does not apply, however, if the balance falls below $25,000 because
of changes in the Fund's net asset value. Before Shares are redeemed to close an
account, the shareholder is notified in writing and allowed 30 days to purchase
additional Shares to meet the minimum requirement.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights except that, in matters
affecting only a particular fund or class, only shares of that fund or class are
entitled to vote. As a Massachusetts business trust, the Trust is not required
to hold annual shareholder meetings. Shareholder approval will be sought only
for certain changes in the Trust's or the Fund's operation and for the election
of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust entitled to vote.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code applicable to regulated investment companies and to
receive the special tax treatment afforded to such companies.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional Shares.
STATE AND LOCAL TAXES
In the opinion of Houston, Houston & Donnelly, counsel to the Trust, Fund shares
may be subject to personal property taxes imposed by counties, municipalities,
and school districts in Pennsylvania to the extent that the portfolio securities
in the Fund would be subject to such taxes if owned directly by residents of
those jurisdictions.
Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its total return and yield for Shares.
Total return represents the change, over a specified period of time, in the
value of an investment in Shares after reinvesting all income and capital gain
distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
The yield of Shares is calculated by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by Shares
over a thirty-day period by the maximum offering price per share of Shares on
the last day of the period. This number is then annualized using semi-annual
compounding. The yield does not necessarily reflect income actually earned by
Shares and, therefore, may not correlate to the dividends or other distributions
paid to shareholders.
From time to time, advertisements for the Fund's Institutional Shares may refer
to ratings, rankings, and other information in certain financial publications
and/or compare the Fund's performance to certain indices.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
The Fund also offers another class of shares called Select Shares that are sold
at net asset value primarily to retail and private banking customers of
financial institutions and are subject to a minimum initial investment of
$1,500.
Select Shares are distributed under a 12b-1 Plan adopted by the Fund and also
are subject to shareholder services fees.
Select Shares and Institutional Shares are subject to certain of the same
expenses. Expense differences, however, between Select Shares and Institutional
Shares may affect the performance of each class.
To obtain more information and a prospectus for Select Shares, investors may
call 1-800-235-4669.
FEDERATED MANAGED GROWTH FUND
FINANCIAL HIGHLIGHTS--SELECT SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 67.
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, NOVEMBER 30,
1995 1994(A)
- ---------------------------------------------------------------------------- ----------------- -----------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.81 $ 10.00
- ----------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------
Net investment income 0.23 0.15
- ----------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments,
foreign currency, and futures contracts 1.79 (0.24)
- ---------------------------------------------------------------------------- ------- -------
Total from investment operations 2.02 (0.09)
- ----------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------------
Distributions from net investment income (0.33) (0.10)
- ---------------------------------------------------------------------------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 11.50 $ 9.81
- ---------------------------------------------------------------------------- ------- -------
TOTAL RETURN (B) 20.95% (0.90%)
- ----------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------
Expenses 1.75% 1.70%*
- ----------------------------------------------------------------------------
Net investment income 3.48% 3.53%*
- ----------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.76% 1.15%*
- ----------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------
Net assets, end of period (000 omitted) $27,358 $2,952
- ----------------------------------------------------------------------------
Portfolio turnover rate 106% 71%
- ----------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 25, 1994 (date of initial
public investment) to November 30, 1994. For the period from January 27,
1994 (start of business) to May 24, 1994 the Fund had no investment
activity.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
Further information about the Fund's performance is contained in the Fund's
annual report for the year ended November 30, 1995, which can be obtained free
of charge.
FEDERATED MANAGED GROWTH FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--37.0%
- ---------------------------------------------------------------------------------------------------
(A) LARGE COMPANY--13.3%
----------------------------------------------------------------------------------
BASIC INDUSTRY--1.6%
----------------------------------------------------------------------------------
9,100 Allegheny Ludlum Corp. $ 169,487
----------------------------------------------------------------------------------
3,500 Aluminum Co. of America 204,750
----------------------------------------------------------------------------------
3,400 Du Pont (E.I.) de Nemours & Co. 226,100
----------------------------------------------------------------------------------
3,200 Eastman Chemical Co. 210,000
----------------------------------------------------------------------------------
3,500 International Paper Co. 133,437
----------------------------------------------------------------------------------
4,900 Phelps Dodge Corp. 332,588
----------------------------------------------------------------------------------
7,000 Praxair, Inc. 203,875
---------------------------------------------------------------------------------- -------------
Total 1,480,237
---------------------------------------------------------------------------------- -------------
CONSUMER DURABLES--0.6%
----------------------------------------------------------------------------------
4,000 Eastman Kodak Co. 272,000
----------------------------------------------------------------------------------
6,900 Mattel, Inc. 193,200
----------------------------------------------------------------------------------
7,100 Volvo AB, ADR 149,100
---------------------------------------------------------------------------------- -------------
Total 614,300
---------------------------------------------------------------------------------- -------------
CONSUMER NON-DURABLES--1.4%
----------------------------------------------------------------------------------
2,500 Avon Products, Inc. 181,562
----------------------------------------------------------------------------------
8,500 IBP, Inc. 531,250
----------------------------------------------------------------------------------
4,000 Philip Morris Cos., Inc. 351,000
----------------------------------------------------------------------------------
4,900 Reebok International Ltd. 127,400
----------------------------------------------------------------------------------
31,100 RJR Nabisco Holdings Corp., Conv. Pfd., Series C, $0.6012 182,713
---------------------------------------------------------------------------------- -------------
Total 1,373,925
---------------------------------------------------------------------------------- -------------
ENERGY MINERALS--0.8%
----------------------------------------------------------------------------------
5,300 Chevron Corp. 261,687
----------------------------------------------------------------------------------
5,700 Occidental Petroleum Corp. 126,113
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
(A) LARGE COMPANY--CONTINUED
----------------------------------------------------------------------------------
ENERGY MINERALS--CONTINUED
----------------------------------------------------------------------------------
3,200 Texaco, Inc. $ 236,800
----------------------------------------------------------------------------------
8,500 USX-Marathon Group 156,188
---------------------------------------------------------------------------------- -------------
Total 780,788
---------------------------------------------------------------------------------- -------------
FINANCE--2.8%
----------------------------------------------------------------------------------
4,913 Allstate Corp. 201,433
----------------------------------------------------------------------------------
2,700 American Express Co. 114,750
----------------------------------------------------------------------------------
4,700 Bank of Boston Corp. 217,962
----------------------------------------------------------------------------------
3,600 Chemical Banking Corp. 216,000
----------------------------------------------------------------------------------
2,200 CIGNA Corp. 242,000
----------------------------------------------------------------------------------
4,400 Citicorp 311,300
----------------------------------------------------------------------------------
3,200 Dean Witter, Discover & Co. 163,200
----------------------------------------------------------------------------------
5,302 Mellon Bank Corp. 283,657
----------------------------------------------------------------------------------
3,000 Merrill Lynch & Co., Inc., STRYPES, $3.12 158,250
----------------------------------------------------------------------------------
4,400 Providian Corp. 176,550
----------------------------------------------------------------------------------
2,200 Sunamerica, Inc., Conv. Pfd., Series E, $3.10 147,400
----------------------------------------------------------------------------------
6,600 Travelers Group, Inc. 392,700
---------------------------------------------------------------------------------- -------------
Total 2,625,202
---------------------------------------------------------------------------------- -------------
FOOD & DRUG RETAILERS--0.0%
----------------------------------------------------------------------------------
1,325 Grand Union Co. 9,937
---------------------------------------------------------------------------------- -------------
HEALTH CARE--1.1%
----------------------------------------------------------------------------------
3,550 American Home Products Corp. 323,937
----------------------------------------------------------------------------------
3,200 Becton, Dickinson & Co. 223,200
----------------------------------------------------------------------------------
3,200 Bristol-Myers Squibb Co. 256,800
----------------------------------------------------------------------------------
3,200 Merck & Co., Inc. 198,000
---------------------------------------------------------------------------------- -------------
Total 1,001,937
---------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
(A) LARGE COMPANY--CONTINUED
----------------------------------------------------------------------------------
PRODUCER MANUFACTURING--1.5%
----------------------------------------------------------------------------------
3,200 (b)FMC Corp. $ 236,400
----------------------------------------------------------------------------------
2,800 General Electric Co. 188,300
----------------------------------------------------------------------------------
1,500 ITT Corp. 183,937
----------------------------------------------------------------------------------
1,500 Loews Corp. 230,250
----------------------------------------------------------------------------------
4,500 Textron, Inc. 344,813
----------------------------------------------------------------------------------
16,100 (c)Westinghouse Electric Corp., PEPs, Series C, $1.30 265,650
---------------------------------------------------------------------------------- -------------
Total 1,449,350
---------------------------------------------------------------------------------- -------------
RETAIL TRADE--0.4%
----------------------------------------------------------------------------------
6,400 American Stores Co. 168,000
----------------------------------------------------------------------------------
5,300 Sears, Roebuck & Co. 208,688
---------------------------------------------------------------------------------- -------------
Total 376,688
---------------------------------------------------------------------------------- -------------
SERVICES--0.4%
----------------------------------------------------------------------------------
6,400 Baker Hughes, Inc. 130,400
----------------------------------------------------------------------------------
2,700 Gannett Co., Inc. 164,700
----------------------------------------------------------------------------------
2,300 (b)Western Atlas, Inc. 110,113
---------------------------------------------------------------------------------- -------------
Total 405,213
---------------------------------------------------------------------------------- -------------
TECHNOLOGY--1.8%
----------------------------------------------------------------------------------
5,800 General Motors Corp., Class E 292,900
----------------------------------------------------------------------------------
3,100 Hewlett-Packard Co. 256,912
----------------------------------------------------------------------------------
3,000 Intel Corp. 182,625
----------------------------------------------------------------------------------
1,500 International Business Machines Corp. 144,937
----------------------------------------------------------------------------------
3,000 (b)Litton Industries, Inc. 134,625
----------------------------------------------------------------------------------
4,900 Lockheed Martin Corp. 359,538
----------------------------------------------------------------------------------
3,600 Raytheon Co. 160,200
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
(A) LARGE COMPANY--CONTINUED
----------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
----------------------------------------------------------------------------------
3,600 Rockwell International Corp. $ 176,400
---------------------------------------------------------------------------------- -------------
Total 1,708,137
---------------------------------------------------------------------------------- -------------
TRANSPORTATION--0.2%
----------------------------------------------------------------------------------
3,100 Consolidated Rail Corp. 216,612
---------------------------------------------------------------------------------- -------------
(D) UTILITIES--0.7%
----------------------------------------------------------------------------------
4,700 AT&T Corp. 310,200
----------------------------------------------------------------------------------
700 CMS Energy Corp. 19,075
----------------------------------------------------------------------------------
1,000 (b)Columbia Gas System, Inc. 43,250
----------------------------------------------------------------------------------
2,800 Enron Corp. 105,000
----------------------------------------------------------------------------------
700 FPL Group, Inc. 30,363
----------------------------------------------------------------------------------
6,300 MCI Communications Corp. 168,525
---------------------------------------------------------------------------------- -------------
Total 676,413
---------------------------------------------------------------------------------- -------------
TOTAL LARGE COMPANY 12,718,739
---------------------------------------------------------------------------------- -------------
(A) SMALL COMPANY--7.6%
----------------------------------------------------------------------------------
BASIC INDUSTRY--0.7%
----------------------------------------------------------------------------------
5,300 (b)Applied Extrusion Technologies, Inc. 66,912
----------------------------------------------------------------------------------
2,747 Brush Wellman, Inc. 48,072
----------------------------------------------------------------------------------
1,800 Cambrex Corp. 66,600
----------------------------------------------------------------------------------
1,800 Carpenter Technology Corp. 77,850
----------------------------------------------------------------------------------
1,800 Chesapeake Corp. 53,100
----------------------------------------------------------------------------------
1,400 (b)Cytec Industries, Inc. 89,600
----------------------------------------------------------------------------------
2,300 First Mississippi Corp. 58,650
----------------------------------------------------------------------------------
3,900 (b)Magma Copper Co. 82,875
----------------------------------------------------------------------------------
1,200 Springs Industries, Inc., Class A 50,400
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
(A) SMALL COMPANY--CONTINUED
----------------------------------------------------------------------------------
BASIC INDUSTRY--CONTINUED
----------------------------------------------------------------------------------
1,200 Texas Industries, Inc. $ 61,500
---------------------------------------------------------------------------------- -------------
Total 655,559
---------------------------------------------------------------------------------- -------------
CONSUMER DURABLES--0.4%
----------------------------------------------------------------------------------
1,400 Barnes Group, Inc. 54,250
----------------------------------------------------------------------------------
3,400 (b)Champion Enterprises, Inc. 102,000
----------------------------------------------------------------------------------
3,200 Coachmen Industries, Inc. 62,000
----------------------------------------------------------------------------------
1,455 Harman International Industries, Inc. 63,838
----------------------------------------------------------------------------------
4,200 (b)Toll Brothers, Inc. 76,125
----------------------------------------------------------------------------------
2,200 Toro Co. 69,575
---------------------------------------------------------------------------------- -------------
Total 427,788
---------------------------------------------------------------------------------- -------------
CONSUMER NON-DURABLES--0.2%
----------------------------------------------------------------------------------
2,500 Hudson Foods, Inc., Class A 40,000
----------------------------------------------------------------------------------
3,600 (b)Mondavi, Robert Corp., Class A 114,750
---------------------------------------------------------------------------------- -------------
Total 154,750
---------------------------------------------------------------------------------- -------------
ENERGY MINERALS--0.1%
----------------------------------------------------------------------------------
2,000 KCS Energy, Inc. 27,500
----------------------------------------------------------------------------------
10,100 (b)Tesoro Petroleum Corp. 84,588
---------------------------------------------------------------------------------- -------------
Total 112,088
---------------------------------------------------------------------------------- -------------
FINANCE--1.7%
----------------------------------------------------------------------------------
1,500 Alex Brown, Inc. 69,000
----------------------------------------------------------------------------------
1,900 Allied Group, Inc. 67,450
----------------------------------------------------------------------------------
1,800 American Bankers Insurance Group, Inc. 65,025
----------------------------------------------------------------------------------
2,400 (b)American Travellers Corp. 60,000
----------------------------------------------------------------------------------
1,575 Associated Banc Corp. 62,606
----------------------------------------------------------------------------------
2,423 Bankers First Corp. 66,330
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
(A) SMALL COMPANY--CONTINUED
----------------------------------------------------------------------------------
FINANCE--CONTINUED
----------------------------------------------------------------------------------
2,000 (b)Brooklyn Bancorp, Inc. $ 80,500
----------------------------------------------------------------------------------
1,900 Centura Banks, Inc. 64,600
----------------------------------------------------------------------------------
4,300 City National Corp. 59,125
----------------------------------------------------------------------------------
1,400 Cullen Frost Bankers, Inc. 71,050
----------------------------------------------------------------------------------
4,800 CWM Mortgage Holdings, Inc. 72,600
----------------------------------------------------------------------------------
3,100 FirstBank Puerto Rico 58,512
----------------------------------------------------------------------------------
5,100 (b)Glendale Federal Bank 82,237
----------------------------------------------------------------------------------
6,400 Hibernia Corp., Class A 67,200
----------------------------------------------------------------------------------
1,600 Irwin Financial Corp. 63,200
----------------------------------------------------------------------------------
3,000 Money Stores, Inc. 141,750
----------------------------------------------------------------------------------
2,500 North Fork Bancorp, Inc. 58,125
----------------------------------------------------------------------------------
3,600 Peoples Heritage Financial Group 75,600
----------------------------------------------------------------------------------
1,400 PHH Corp. 64,050
----------------------------------------------------------------------------------
1,800 Queens County Bancorp, Inc. 72,450
----------------------------------------------------------------------------------
3,100 (b)St. Francis Capital Corp. 72,075
----------------------------------------------------------------------------------
1,600 Student Loan Corp. 56,600
----------------------------------------------------------------------------------
1,700 WestAmerica Bancorporation 70,125
---------------------------------------------------------------------------------- -------------
Total 1,620,210
---------------------------------------------------------------------------------- -------------
HEALTH CARE--0.7%
----------------------------------------------------------------------------------
4,400 Bindley Western Industries, Inc. 78,650
----------------------------------------------------------------------------------
2,100 (b)Bio Rad Laboratories, Inc., Class A 86,625
----------------------------------------------------------------------------------
2,500 (b)Foxmeyer Health Corp. 65,000
----------------------------------------------------------------------------------
3,900 ICN Pharmaceuticals, Inc. 78,975
----------------------------------------------------------------------------------
8,800 Kinetic Concepts, Inc. 100,100
----------------------------------------------------------------------------------
4,200 (b)Maxicare Health Plans, Inc. 91,875
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
(A) SMALL COMPANY--CONTINUED
----------------------------------------------------------------------------------
HEALTH CARE--CONTINUED
----------------------------------------------------------------------------------
9,500 (b)North American Biologicals, Inc. $ 91,438
----------------------------------------------------------------------------------
8,100 (b)Oec-Medical Systems, Inc. 81,000
---------------------------------------------------------------------------------- -------------
Total 673,663
---------------------------------------------------------------------------------- -------------
PRODUCER MANUFACTURING--0.5%
----------------------------------------------------------------------------------
1,550 AGCO Corp. 66,844
----------------------------------------------------------------------------------
2,100 Blount Intl, Inc., Class A 63,262
----------------------------------------------------------------------------------
1,600 Borg-Warner Automotive, Inc. 47,400
----------------------------------------------------------------------------------
5,300 Brenco, Inc. 55,650
----------------------------------------------------------------------------------
4,800 JLG Industries, Inc. 136,200
----------------------------------------------------------------------------------
1,100 NACCO Industries, Inc., Class A 62,700
----------------------------------------------------------------------------------
2,800 (b)NCI Building System, Inc. 64,400
---------------------------------------------------------------------------------- -------------
Total 496,456
---------------------------------------------------------------------------------- -------------
RETAIL TRADE--0.5%
----------------------------------------------------------------------------------
1,900 (b)CompUSA, Inc. 70,537
----------------------------------------------------------------------------------
1,500 (b)Eckerd Corp. 63,937
----------------------------------------------------------------------------------
3,800 Great Atlantic & Pacific Tea Co., Inc. 83,125
----------------------------------------------------------------------------------
6,300 (b)MacFrugal's Bargains CloseOuts, Inc. 82,688
----------------------------------------------------------------------------------
6,600 Pier 1 Imports, Inc. 71,775
----------------------------------------------------------------------------------
5,400 Ruddick Corp. 58,050
----------------------------------------------------------------------------------
3,500 (b)Waban, Inc. 64,750
---------------------------------------------------------------------------------- -------------
Total 494,862
---------------------------------------------------------------------------------- -------------
SERVICES--1.0%
----------------------------------------------------------------------------------
3,000 (b)American Buildings Co. 67,875
----------------------------------------------------------------------------------
1,900 Butler Manufacturing Co. 65,550
----------------------------------------------------------------------------------
4,300 Castle (A.M.) & Co. 105,350
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
(A) SMALL COMPANY--CONTINUED
----------------------------------------------------------------------------------
SERVICES--CONTINUED
----------------------------------------------------------------------------------
2,000 (b)Devon Group, Inc. $ 77,000
----------------------------------------------------------------------------------
2,500 Granite Construction, Inc. 69,375
----------------------------------------------------------------------------------
2,000 Plenum Publishing Corp. 72,500
----------------------------------------------------------------------------------
7,800 (b)Pride Petroleum Services, Inc. 76,050
----------------------------------------------------------------------------------
2,400 Pulitzer Publishing Co. 110,400
----------------------------------------------------------------------------------
3,367 Richfood Holdings, Inc. 94,697
----------------------------------------------------------------------------------
1,701 (b)United Video Satellite Group, Inc., Class A 49,329
----------------------------------------------------------------------------------
8,000 (b)Westcott Communications 114,000
----------------------------------------------------------------------------------
3,200 (b)Western Waste Industries 58,800
---------------------------------------------------------------------------------- -------------
Total 960,926
---------------------------------------------------------------------------------- -------------
TECHNOLOGY--1.2%
----------------------------------------------------------------------------------
2,793 (b)Bell Industries, Inc. 63,541
----------------------------------------------------------------------------------
3,150 (b)Burr Brown Corp. 90,562
----------------------------------------------------------------------------------
8,200 (b)Computervision Corp. 102,500
----------------------------------------------------------------------------------
1,400 (b)Electronics for Imaging, Inc. 120,400
----------------------------------------------------------------------------------
1,600 (b)International Rectifier Corp. 79,400
----------------------------------------------------------------------------------
3,400 (b)Kemet Corp. 103,700
----------------------------------------------------------------------------------
2,000 (b)Marshall Industries 70,500
----------------------------------------------------------------------------------
1,900 (b)Network Equipment Technologies, Inc. 62,938
----------------------------------------------------------------------------------
4,600 (b)S3, Inc. 86,825
----------------------------------------------------------------------------------
2,300 (b)SCI Systems, Inc. 77,050
----------------------------------------------------------------------------------
1,900 (b)Tech-Sym Corp. 56,763
----------------------------------------------------------------------------------
2,200 (b)Tencor Instruments 83,050
----------------------------------------------------------------------------------
1,500 Watkins Johnson Co. 68,063
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
(A) SMALL COMPANY--CONTINUED
----------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
----------------------------------------------------------------------------------
1,700 Wyle Labs $ 66,938
---------------------------------------------------------------------------------- -------------
Total 1,132,230
---------------------------------------------------------------------------------- -------------
TRANSPORTATION--0.2%
----------------------------------------------------------------------------------
4,100 (b)America West Airlines, Inc., Class B 73,287
----------------------------------------------------------------------------------
1,800 (b)Continental Airlines, Inc., Class B 70,425
---------------------------------------------------------------------------------- -------------
Total 143,712
---------------------------------------------------------------------------------- -------------
(D) UTILITIES--0.4%
----------------------------------------------------------------------------------
2,400 Central Hudson Gas & Electric Service 72,900
----------------------------------------------------------------------------------
2,200 Eastern Enterprises 71,500
----------------------------------------------------------------------------------
2,800 Oneok, Inc. 65,800
----------------------------------------------------------------------------------
4,800 (b)Public Service Co. New Mexico 84,600
----------------------------------------------------------------------------------
600 Tele Danmark 16,725
----------------------------------------------------------------------------------
2,000 Teppco Partners, L.P. 72,500
---------------------------------------------------------------------------------- -------------
Total 384,025
---------------------------------------------------------------------------------- -------------
TOTAL SMALL COMPANY 7,256,269
---------------------------------------------------------------------------------- -------------
(D) UTILITY--5.2%
----------------------------------------------------------------------------------
ELECTRIC UTILITIES--2.0%
----------------------------------------------------------------------------------
4,000 Baltimore Gas & Electric Co. 106,500
----------------------------------------------------------------------------------
3,739 Cinergy Corp. 110,301
----------------------------------------------------------------------------------
3,300 CMS Energy Corp. 89,925
----------------------------------------------------------------------------------
4,400 DPL, Inc. 105,600
----------------------------------------------------------------------------------
3,750 DQE, Inc. 108,281
----------------------------------------------------------------------------------
2,400 Duke Power Co. 107,700
----------------------------------------------------------------------------------
3,100 Florida Progress Corp. 106,562
----------------------------------------------------------------------------------
1,900 FPL Group, Inc. 82,413
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
(D) UTILITY--CONTINUED
----------------------------------------------------------------------------------
ELECTRIC UTILITIES--CONTINUED
----------------------------------------------------------------------------------
3,400 General Public Utilities $ 107,525
----------------------------------------------------------------------------------
3,700 Illinova Corp. 104,987
----------------------------------------------------------------------------------
2,900 NIPSCO Industries, Inc. 107,300
----------------------------------------------------------------------------------
5,600 Pacificorp 109,900
----------------------------------------------------------------------------------
3,700 Peco Energy Co. 107,300
----------------------------------------------------------------------------------
3,900 Pinnacle West Capital Corp. 106,275
----------------------------------------------------------------------------------
5,700 SCE Corp. 89,063
----------------------------------------------------------------------------------
4,500 Southern Co. 102,938
----------------------------------------------------------------------------------
2,800 Texas Utilities Co. 107,800
----------------------------------------------------------------------------------
3,700 Utilicorp United, Inc. 103,138
----------------------------------------------------------------------------------
3,200 Western Resources, Inc. 106,000
---------------------------------------------------------------------------------- -------------
Total 1,969,508
---------------------------------------------------------------------------------- -------------
NATURAL GAS DISTRIBUTION--0.2%
----------------------------------------------------------------------------------
3,700 MCN Corp. 80,475
----------------------------------------------------------------------------------
3,000 Pacific Enterprises 80,250
---------------------------------------------------------------------------------- -------------
Total 160,725
---------------------------------------------------------------------------------- -------------
OIL/GAS TRANSMISSION--0.3%
----------------------------------------------------------------------------------
2,900 Panhandle Eastern Corp. 82,288
----------------------------------------------------------------------------------
2,500 Sonat, Inc. 80,625
----------------------------------------------------------------------------------
2,100 Williams Companies, Inc. 88,200
---------------------------------------------------------------------------------- -------------
Total 251,113
---------------------------------------------------------------------------------- -------------
SERVICES--0.0%
----------------------------------------------------------------------------------
600 (b)U.S. West Media Group 10,800
---------------------------------------------------------------------------------- -------------
TELECOMMUNICATIONS--2.7%
----------------------------------------------------------------------------------
5,800 Ameritech Corp. 319,000
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
(D) UTILITY--CONTINUED
----------------------------------------------------------------------------------
TELECOMMUNICATIONS--CONTINUED
----------------------------------------------------------------------------------
700 AT&T Corp. $ 46,200
----------------------------------------------------------------------------------
4,900 Bell Atlantic Corp. 308,700
----------------------------------------------------------------------------------
8,200 BellSouth Corp. 318,775
----------------------------------------------------------------------------------
7,600 GTE Corp. 323,950
----------------------------------------------------------------------------------
11,200 MCI Communications Corp. 299,600
----------------------------------------------------------------------------------
6,500 NYNEX Corp. 322,563
----------------------------------------------------------------------------------
5,900 SBC Communications, Inc. 318,600
----------------------------------------------------------------------------------
10,000 U.S. West Communications Group 312,500
---------------------------------------------------------------------------------- -------------
Total 2,569,888
---------------------------------------------------------------------------------- -------------
TOTAL UTILITY 4,962,034
---------------------------------------------------------------------------------- -------------
FOREIGN EQUITY--10.9%
----------------------------------------------------------------------------------
ARGENTINA--0.1%
----------------------------------------------------------------------------------
200 Banco Frances del Rio de la Plata SA, ADR 5,225
----------------------------------------------------------------------------------
2,200 Compania Naviera Perez Companc SA, Class B 10,674
----------------------------------------------------------------------------------
606 IRSA Inversiones y Representaciones SA, GDR 13,172
----------------------------------------------------------------------------------
600 YPF Sociedad Anonima, ADR 11,700
---------------------------------------------------------------------------------- -------------
Total 40,771
---------------------------------------------------------------------------------- -------------
AUSTRALIA--0.3%
----------------------------------------------------------------------------------
11,000 Mayne Nickless Ltd. 50,616
----------------------------------------------------------------------------------
17,000 News Corporation Ltd. 89,075
----------------------------------------------------------------------------------
17,500 Woodside Petroleum Ltd. 86,890
----------------------------------------------------------------------------------
32,000 Woolworth's Ltd. 74,811
---------------------------------------------------------------------------------- -------------
Total 301,392
---------------------------------------------------------------------------------- -------------
FINLAND--0.0%
----------------------------------------------------------------------------------
400 Nokia AB-A 21,947
---------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
----------------------------------------------------------------------------------
FRANCE--0.6%
----------------------------------------------------------------------------------
605 Accor SA $ 73,466
----------------------------------------------------------------------------------
1,400 AXA 83,767
----------------------------------------------------------------------------------
1,500 Compagnie Financiere de Paribas, Class A 83,288
----------------------------------------------------------------------------------
1,080 LaFarge-Coppee 68,602
----------------------------------------------------------------------------------
4,300 Lagardere Groupe 83,665
----------------------------------------------------------------------------------
600 LVMH (Moet-Hennessy) 114,217
----------------------------------------------------------------------------------
805 Lyonnaise des Eaux SA 77,104
---------------------------------------------------------------------------------- -------------
Total 584,109
---------------------------------------------------------------------------------- -------------
GERMANY--0.7%
----------------------------------------------------------------------------------
300 BASF AG 65,754
----------------------------------------------------------------------------------
355 Commerzbank AG, Frankfurt 82,104
----------------------------------------------------------------------------------
1,380 Deutsche Bank Ag 64,740
----------------------------------------------------------------------------------
270 Gea AG, Pfd. 85,874
----------------------------------------------------------------------------------
175 Henkel KGaA--Vorzug, Pfd. 65,581
----------------------------------------------------------------------------------
185 Kaufhof Holding AG 56,026
----------------------------------------------------------------------------------
105 Linde AG 61,564
----------------------------------------------------------------------------------
200 Mannesmann AG 64,399
----------------------------------------------------------------------------------
200 Siemens AG 104,473
----------------------------------------------------------------------------------
85 Wella AG, Pfd. 39,964
---------------------------------------------------------------------------------- -------------
Total 690,479
---------------------------------------------------------------------------------- -------------
HONG KONG--0.4%
----------------------------------------------------------------------------------
64,000 Amoy Properties Ltd. 61,229
----------------------------------------------------------------------------------
800 Cheung Kong 4,551
----------------------------------------------------------------------------------
35,000 Hong Kong Telecom 59,503
----------------------------------------------------------------------------------
3,751 HSBC Holdings PLC 55,284
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
----------------------------------------------------------------------------------
HONG KONG--CONTINUED
----------------------------------------------------------------------------------
134,000 Manhattan Card Co., Ltd. $ 59,768
----------------------------------------------------------------------------------
8,000 Sun Hung Kai Properties 64,383
----------------------------------------------------------------------------------
16,000 Television Broadcasts Ltd. 60,402
---------------------------------------------------------------------------------- -------------
Total 365,120
---------------------------------------------------------------------------------- -------------
INDONESIA--0.2%
----------------------------------------------------------------------------------
29,000 Astra International 57,784
----------------------------------------------------------------------------------
18,000 Hero Supermarket 35,472
----------------------------------------------------------------------------------
9,000 Indocement Tungal 30,545
----------------------------------------------------------------------------------
15,000 Lippo Bank 22,006
----------------------------------------------------------------------------------
16,000 United Tractors 29,078
---------------------------------------------------------------------------------- -------------
Total 174,885
---------------------------------------------------------------------------------- -------------
ITALY--0.2%
----------------------------------------------------------------------------------
17,800 La Rinascente S.P.A. 99,732
----------------------------------------------------------------------------------
63,000 (b)Telecom Italia Mobile 101,640
---------------------------------------------------------------------------------- -------------
Total 201,372
---------------------------------------------------------------------------------- -------------
JAPAN--4.4%
----------------------------------------------------------------------------------
15,000 Asahi Chemical Industry Co. Ltd. 112,039
----------------------------------------------------------------------------------
6,000 Bridgestone Corp. 88,452
----------------------------------------------------------------------------------
3,000 Canon, Inc. 52,776
----------------------------------------------------------------------------------
6,000 Dai Nippon Printing Co. Ltd. 104,963
----------------------------------------------------------------------------------
18,000 Daimaru, Inc. 118,526
----------------------------------------------------------------------------------
28,000 Dainippon Ink and Chemical, Inc. 129,612
----------------------------------------------------------------------------------
11 DDI Corp. 88,432
----------------------------------------------------------------------------------
11,000 Fujitsu Ltd. 129,730
----------------------------------------------------------------------------------
6,000 Hitachi Cable 42,634
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
----------------------------------------------------------------------------------
JAPAN--CONTINUED
----------------------------------------------------------------------------------
11,000 Jaccs $ 108,108
----------------------------------------------------------------------------------
17,000 (b)Japan Airlines Co. 108,767
----------------------------------------------------------------------------------
4,000 JUSCO Co. 95,921
----------------------------------------------------------------------------------
6,000 Kandenko Co., Ltd. 73,120
----------------------------------------------------------------------------------
22,000 Kawasaki Heavy Industries 100,108
----------------------------------------------------------------------------------
33,000 Kawasaki Steel 117,081
----------------------------------------------------------------------------------
4,000 Kokuyo Co. 86,093
----------------------------------------------------------------------------------
19,000 Kubota Corp. 124,924
----------------------------------------------------------------------------------
10,000 Kuraray Co. Ltd. 102,211
----------------------------------------------------------------------------------
2,000 Kurita Water Industries 55,627
----------------------------------------------------------------------------------
11,000 Kyowa Hakko Kogyo Co. 108,108
----------------------------------------------------------------------------------
13,000 Minebea Co. 108,088
----------------------------------------------------------------------------------
23,000 Mitsubishi Heavy Industries 183,322
----------------------------------------------------------------------------------
15,000 Mitsui Marine & Fire Insurance Co. 100,983
----------------------------------------------------------------------------------
15,000 Nagoya Railroad Co. Ltd. 73,710
----------------------------------------------------------------------------------
8,000 NEC Corp. 102,211
----------------------------------------------------------------------------------
5,000 NGK Insulators 49,631
----------------------------------------------------------------------------------
14,000 Nihon Cement Co., Ltd. 92,737
----------------------------------------------------------------------------------
5,000 Nippon Electric Glass Co., Ltd. 92,875
----------------------------------------------------------------------------------
12,000 Nippon Express Co. Ltd. 104,138
----------------------------------------------------------------------------------
17,000 Nippon Sheet Glass Co. 75,853
----------------------------------------------------------------------------------
6,000 Nishimatsu Construction 71,941
----------------------------------------------------------------------------------
46,000 (b)NKK Corp. 126,585
----------------------------------------------------------------------------------
10,000 Sakura Bank Ltd., Tokyo 108,108
----------------------------------------------------------------------------------
1,000 Secom Co. 67,518
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
----------------------------------------------------------------------------------
JAPAN--CONTINUED
----------------------------------------------------------------------------------
2,000 Sega Enterprises $ 108,108
----------------------------------------------------------------------------------
6,000 Sekisui House Ltd. 70,172
----------------------------------------------------------------------------------
8,000 Shionogi and Co. 68,953
----------------------------------------------------------------------------------
2,000 Sony Music Entertainment, Inc. 89,435
----------------------------------------------------------------------------------
20,000 Sumitomo Chemical Co. 99,459
----------------------------------------------------------------------------------
33,000 Sumitomo Heavy Industries 105,081
----------------------------------------------------------------------------------
4,000 Takeda Chemical Industries 59,754
----------------------------------------------------------------------------------
10,000 Tokio Marine & Fire 114,005
----------------------------------------------------------------------------------
1,000 Tostem Corp. 30,467
----------------------------------------------------------------------------------
5,000 Toto Ltd. 67,813
----------------------------------------------------------------------------------
4,000 Yamanouchi Pharmaceutical 86,093
---------------------------------------------------------------------------------- -------------
Total 4,204,272
---------------------------------------------------------------------------------- -------------
MALAYSIA--0.2%
----------------------------------------------------------------------------------
5,000 Malayan Banking Bhd 39,614
----------------------------------------------------------------------------------
47,000 Malayan United Industries Bhd 35,755
----------------------------------------------------------------------------------
20,000 Malayawata Steel Berhad 34,214
----------------------------------------------------------------------------------
16,000 Malaysian International Shipping Bhd 39,101
----------------------------------------------------------------------------------
11,000 (d)Tenaga Nasional Berhad 41,190
----------------------------------------------------------------------------------
15,000 UMW Holdings Bhd 35,179
---------------------------------------------------------------------------------- -------------
Total 225,053
---------------------------------------------------------------------------------- -------------
MEXICO--0.1%
----------------------------------------------------------------------------------
1,200 Cemex SA, Class B, ADR 8,025
----------------------------------------------------------------------------------
800 Empresas ICA Sociedad Controladora S.A., ADR 8,200
----------------------------------------------------------------------------------
1,500 Grupo Financiero Bancomer, S.A. de C.V., Class B, ADR 8,625
----------------------------------------------------------------------------------
300 Pan American Beverage, Class A 9,675
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
----------------------------------------------------------------------------------
MEXICO--CONTINUED
----------------------------------------------------------------------------------
1,000 Transportacion Maritima Mexicana SA , Class L, ADR $ 7,625
---------------------------------------------------------------------------------- -------------
Total 42,150
---------------------------------------------------------------------------------- -------------
NETHERLANDS--0.4%
----------------------------------------------------------------------------------
7,500 Elsevier NV 102,359
----------------------------------------------------------------------------------
1,500 Polygram NV 90,317
----------------------------------------------------------------------------------
3,850 Royal PTT Nederland NV 137,186
----------------------------------------------------------------------------------
700 Unilever NV-Cert 92,509
---------------------------------------------------------------------------------- -------------
Total 422,371
---------------------------------------------------------------------------------- -------------
NEW ZEALAND--0.0%
----------------------------------------------------------------------------------
12,000 Fletcher Challenge Ltd. 29,771
----------------------------------------------------------------------------------
1,703 Fletcher Challenge Ltd.--Forestry Shares 2,402
---------------------------------------------------------------------------------- -------------
Total 32,173
---------------------------------------------------------------------------------- -------------
SINGAPORE--0.2%
----------------------------------------------------------------------------------
14,000 First Capital Corp., Ltd., Singapore 37,717
----------------------------------------------------------------------------------
3,000 Fraser and Neave Ltd. 35,732
----------------------------------------------------------------------------------
20,000 Haw Par Brothers International Ltd. 43,105
----------------------------------------------------------------------------------
4,000 Singapore Airlines Ltd. 37,434
----------------------------------------------------------------------------------
3,000 Singapore Press Holdings Ltd. 47,430
---------------------------------------------------------------------------------- -------------
Total 201,418
---------------------------------------------------------------------------------- -------------
SPAIN--0.3%
----------------------------------------------------------------------------------
360 Acerinox SA 36,072
----------------------------------------------------------------------------------
3,000 Repsol SA 94,560
----------------------------------------------------------------------------------
1,000 Zardoya-Otis SA 103,850
---------------------------------------------------------------------------------- -------------
Total 234,482
---------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
----------------------------------------------------------------------------------
SWEDEN--0.2%
----------------------------------------------------------------------------------
7,950 Stora Kopparbergs, Class A $ 100,050
----------------------------------------------------------------------------------
3,400 Svedala Industri AB Free 94,135
---------------------------------------------------------------------------------- -------------
Total 194,185
---------------------------------------------------------------------------------- -------------
SWITZERLAND--0.7%
----------------------------------------------------------------------------------
63 BBC Brown Boveri 72,352
----------------------------------------------------------------------------------
50 Ciba-Giegy AG-R 44,577
----------------------------------------------------------------------------------
800 CS Holding 75,883
----------------------------------------------------------------------------------
420 Merkur Holding AG 90,038
----------------------------------------------------------------------------------
100 Nestle SA 106,593
----------------------------------------------------------------------------------
25 Roche Holdings AG Genusscheine 188,856
----------------------------------------------------------------------------------
253 Zurich Versicherungsgesellschaft 77,697
---------------------------------------------------------------------------------- -------------
Total 655,996
---------------------------------------------------------------------------------- -------------
UNITED KINGDOM--1.9%
----------------------------------------------------------------------------------
16,900 Associated British Ports Holdings PLC 73,220
----------------------------------------------------------------------------------
9,100 Boots Co. PLC 78,852
----------------------------------------------------------------------------------
19,000 (d)British Gas PLC 70,974
----------------------------------------------------------------------------------
27,000 British Steel PLC 69,856
----------------------------------------------------------------------------------
15,000 BTR PLC 76,814
----------------------------------------------------------------------------------
10,400 Cadbury Schweppes PLC 88,683
----------------------------------------------------------------------------------
23,200 Caradon PLC 69,792
----------------------------------------------------------------------------------
15,000 Chubb Security 74,288
----------------------------------------------------------------------------------
11,500 Compass Group 78,785
----------------------------------------------------------------------------------
12,300 Grand Metropolitan PLC 83,230
----------------------------------------------------------------------------------
6,100 Imperial Chemical Industries PLC 70,974
----------------------------------------------------------------------------------
13,500 Marks & Spencer PLC 91,247
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
----------------------------------------------------------------------------------
UNITED KINGDOM--CONTINUED
----------------------------------------------------------------------------------
6,000 (d)Midlands Electricity $ 85,150
----------------------------------------------------------------------------------
11,900 Rank Organisation PLC 75,058
----------------------------------------------------------------------------------
7,500 Reckitt & Colman PLC 76,872
----------------------------------------------------------------------------------
5,200 RMC Group PLC 82,593
----------------------------------------------------------------------------------
5,600 RTZ Corp. PLC 80,374
----------------------------------------------------------------------------------
48,600 Rugby Group PLC 79,611
----------------------------------------------------------------------------------
13,700 (d)Scottish Power PLC 79,071
----------------------------------------------------------------------------------
42,200 Sedgwick Group PLC 77,849
----------------------------------------------------------------------------------
12,600 Smith, W.H. Group PLC 83,524
----------------------------------------------------------------------------------
9,000 Thames Water PLC 76,125
----------------------------------------------------------------------------------
19,300 Tomkins PLC 78,004
----------------------------------------------------------------------------------
11,000 Williams Holdings PLC 55,825
---------------------------------------------------------------------------------- -------------
Total 1,856,771
---------------------------------------------------------------------------------- -------------
TOTAL FOREIGN EQUITY 10,448,946
---------------------------------------------------------------------------------- -------------
TOTAL STOCKS (IDENTIFIED COST $31,160,132) 35,385,988
---------------------------------------------------------------------------------- -------------
PRINCIPAL
AMOUNT
- ---------------
BONDS--45.1%
- ---------------------------------------------------------------------------------------------------
TREASURY--23.0%
----------------------------------------------------------------------------------
$ 10,790,000 United States Treasury Note 6.50%, 4/30/1997 $ 10,954,224
----------------------------------------------------------------------------------
7,525,000 United States Treasury Note 7.25%, 8/15/2004 8,275,845
----------------------------------------------------------------------------------
1,350,000 United States Treasury Note 7.50% 2/15/2005 1,512,959
----------------------------------------------------------------------------------
475,000 United States Treasury Note 7.50%, 1/31/1997 486,177
----------------------------------------------------------------------------------
600,000 United States Treasury Note 7.875%, 11/15/2004 686,676
---------------------------------------------------------------------------------- -------------
Total Treasury 21,915,881
---------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- ---------------------------------------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES--7.8%
----------------------------------------------------------------------------------
GOVERNMENT AGENCY--7.8%
----------------------------------------------------------------------------------
$ 288,483 Federal Home Loan Mortgage Corp., 7.50%, 5/01/2024 $ 292,083
----------------------------------------------------------------------------------
499,681 Federal Home Loan Mortgage Corp., 7.50%, 10/1/2025 509,040
----------------------------------------------------------------------------------
980,000 Federal Home Loan Mortgage Corp., 7.50%, 11/1/2025 998,355
----------------------------------------------------------------------------------
983,961 Federal National Mortgage Association, 7.50%, 7/1/2025 1,001,476
----------------------------------------------------------------------------------
331,963 Federal National Mortgage Association, 7.00%, 5/1/2001 337,145
----------------------------------------------------------------------------------
233,622 Federal National Mortgage Association, 7.00%, 9/1/2009 236,392
----------------------------------------------------------------------------------
845,150 Federal National Mortgage Association, 8.50%, 3/1/2025 878,154
----------------------------------------------------------------------------------
244,721 Federal National Mortgage Association 8.00%, 11/1/2024 252,060
----------------------------------------------------------------------------------
208,768 Federal National Mortgage Association, 8.50%, 3/1/2025 216,921
----------------------------------------------------------------------------------
504,810 Federal National Mortgage Association, 7.00%, 9/1/2010 510,798
----------------------------------------------------------------------------------
1,199,046 Federal National Mortgage Association, 6.50%, 10/1/2025 1,173,926
----------------------------------------------------------------------------------
483,782 Government National Mortgage Association, 8.00%, 8/15/2025 500,709
----------------------------------------------------------------------------------
257,034 Government National Mortgage Association, 7.00%, 5/15/2024 257,754
----------------------------------------------------------------------------------
311,141 Government National Mortgage Association, 8.00%, 11/15/2024 322,027
---------------------------------------------------------------------------------- -------------
TOTAL MORTGAGE-BACKED SECURITIES 7,486,840
---------------------------------------------------------------------------------- -------------
HIGH YIELD--4.5%
----------------------------------------------------------------------------------
AEROSPACE & DEFENSE--0.1%
----------------------------------------------------------------------------------
25,000 (c)Howmet Corporation, Sr. Sub. Note, 10.00%, 12/1/2003 25,812
----------------------------------------------------------------------------------
50,000 Tracor, Inc., Sr. Sub. Note, 10.875%, 8/15/2001 51,875
---------------------------------------------------------------------------------- -------------
Total 77,687
---------------------------------------------------------------------------------- -------------
AUTOMOTIVE--0.1%
----------------------------------------------------------------------------------
50,000 Aftermarket Technology Co., Sr. Sub. Note, 12.00%, 8/1/2004 52,375
----------------------------------------------------------------------------------
75,000 Exide Corp., Sr. Note, 10%, 4/15/2005 81,000
---------------------------------------------------------------------------------- -------------
Total 133,375
---------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- ---------------------------------------------------------------------------------------------------
HIGH YIELD--CONTINUED
----------------------------------------------------------------------------------
BANKING--0.1%
----------------------------------------------------------------------------------
$ 125,000 First Nationwide Holdings, Sr. Note, 12.25%, 5/15/2001 $ 142,656
---------------------------------------------------------------------------------- -------------
BROADCAST RADIO & TV--0.4%
----------------------------------------------------------------------------------
50,000 Allbritton Communication Co., Sr. Sub. Note, 11.50%, 8/15/2004 52,500
----------------------------------------------------------------------------------
50,000 Argyle Television, Inc., Sr. Sub., 9.75%, 11/1/2005 49,312
----------------------------------------------------------------------------------
50,000 Chancellor Broadcasting Co., Sr. Sub. Note, 12.50%, 10/1/2004 53,750
----------------------------------------------------------------------------------
75,000 SCI Television, Sr. Secd. Note, 11.00%, 6/30/2005 79,500
----------------------------------------------------------------------------------
50,000 Sinclair Broadcast Group, Sr. Sub. Note, 10.00%, 9/30/2005 51,375
----------------------------------------------------------------------------------
50,000 Young Broadcasting Corp., Sr. Sub. Note, 10.125%, 2/15/2005 52,875
---------------------------------------------------------------------------------- -------------
Total 339,312
---------------------------------------------------------------------------------- -------------
BUSINESS EQUIPMENT & SERVICES--0.1%
----------------------------------------------------------------------------------
50,000 United Stationers Supply, Sr. Sub. Note, 12.75%, 5/1/2005 54,500
---------------------------------------------------------------------------------- -------------
CABLE TELEVISION--0.4%
----------------------------------------------------------------------------------
50,000 CAI Wireless Systems, Sr. Note, 12.25%, 9/15/2002 52,937
----------------------------------------------------------------------------------
50,000 CF Cable TV, Inc., Sr. Secd. 2nd Priority Note, 11.625%, 2/15/2005 54,562
----------------------------------------------------------------------------------
75,000 Continental Cablevision, Sr. Deb., 9.50%, 8/1/2013 79,125
----------------------------------------------------------------------------------
100,000 International Cabletel, Sr. Note, 0/12.75%, 4/15/2005 61,125
----------------------------------------------------------------------------------
50,000 Rogers Cablesystems Ltd., Sr. Secd. 2nd Priority Note, 10.00%,
3/15/2005 52,625
----------------------------------------------------------------------------------
100,000 TeleWest PLC, Sr. Disc. Deb., 0/11.00%, 10/1/2007 58,625
---------------------------------------------------------------------------------- -------------
Total 358,999
---------------------------------------------------------------------------------- -------------
CHEMICALS & PLASTICS--0.5%
----------------------------------------------------------------------------------
75,000 Arcadian Partners L.P., Sr. Note, Series B, 10.75%, 5/1/2005 82,500
----------------------------------------------------------------------------------
50,000 (c)Crain Industries, Inc., Sr. Sub. Note, 13.5%, 8/15/2005 50,875
----------------------------------------------------------------------------------
50,000 Foamex L.P., Sr. Note, 11.25%, 10/1/2002 50,250
----------------------------------------------------------------------------------
150,000 G-I Holdings, Sr. Disc. Note, 0%, 10/1/1998 113,812
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- ---------------------------------------------------------------------------------------------------
HIGH YIELD--CONTINUED
----------------------------------------------------------------------------------
CHEMICALS & PLASTICS--CONTINUED
----------------------------------------------------------------------------------
$ 50,000 Harris Chemical, Sr. Secd. Disc. Note, 0/10.25%, 7/15/2001 $ 46,750
----------------------------------------------------------------------------------
125,000 Polymer Group, Sr. Note, 12.25%, 7/15/2002 129,375
----------------------------------------------------------------------------------
50,000 (c)RBX Corp., Sr. Sub. Note, 11.25%, 10/15/2005 49,875
---------------------------------------------------------------------------------- -------------
Total 523,437
---------------------------------------------------------------------------------- -------------
CLOTHING & TEXTILES--0.1%
----------------------------------------------------------------------------------
75,000 Westpoint Stevens, Inc., Sr. Sub. Deb., 9.375%, 12/15/2005 76,125
---------------------------------------------------------------------------------- -------------
CONGLOMERATES--0.1%
----------------------------------------------------------------------------------
75,000 Sherritt Gordon Ltd., Sr. Note, 9.75%, 4/1/2003 78,375
---------------------------------------------------------------------------------- -------------
CONSUMER PRODUCTS--0.2%
----------------------------------------------------------------------------------
75,000 (c)Herff Jones, Inc., Sr. Sub. Note, 11.00%, 8/15/2005 79,312
----------------------------------------------------------------------------------
50,000 Hosiery Corp. Of America, Sr. Sub. Note, 13.75%, 8/1/2002 54,750
----------------------------------------------------------------------------------
50,000 Playtex Family Products Corp., Sr. Sub. Note, 9.00%, 12/15/2003 44,250
---------------------------------------------------------------------------------- -------------
Total 178,312
---------------------------------------------------------------------------------- -------------
CONTAINER & GLASS PRODUCTS--0.2%
----------------------------------------------------------------------------------
100,000 Owens Illinois, Inc., Sr. Sub. Note, 10.50%, 6/15/2002 106,000
----------------------------------------------------------------------------------
50,000 Owens Illinois, Inc., Sr. Sub. Note, 9.75%, 8/15/2004 52,125
----------------------------------------------------------------------------------
50,000 Portola Packaging, Inc., Sr. Note, 10.75%, 10/1/2005 51,625
---------------------------------------------------------------------------------- -------------
Total 209,750
---------------------------------------------------------------------------------- -------------
FOOD & DRUG RETAILERS--0.1%
----------------------------------------------------------------------------------
25,000 (c)Carr-Gottstein Foods, Sr. Sub. Note, 12.00%, 11/15/2005 25,062
----------------------------------------------------------------------------------
50,000 Pathmark Stores, Inc., Sr. Sub. Note, 9.625%, 5/1/2003 46,813
----------------------------------------------------------------------------------
50,000 Ralph's Grocery Co., Sr. Note, 10.45%, 6/15/2004 49,375
---------------------------------------------------------------------------------- -------------
Total 121,250
---------------------------------------------------------------------------------- -------------
FOOD PRODUCTS--0.2%
----------------------------------------------------------------------------------
100,000 Curtice-Burns Foods, Inc., Sr. Sub. Note, 12.25%, 2/1/2005 103,000
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- ---------------------------------------------------------------------------------------------------
HIGH YIELD--CONTINUED
----------------------------------------------------------------------------------
FOOD PRODUCTS--CONTINUED
----------------------------------------------------------------------------------
$ 50,000 Specialty Foods Corp., Sr. Note, 11.125%, 10/1/2002 $ 47,500
----------------------------------------------------------------------------------
50,000 (c)Van de Kamp's, Inc., Sr. Sub. Note, 12.00%, 9/15/2005 51,625
---------------------------------------------------------------------------------- -------------
Total 202,125
---------------------------------------------------------------------------------- -------------
FOOD SERVICES--0.1%
----------------------------------------------------------------------------------
75,000 Flagstar Corp., Sr. Note, 10.875%, 12/1/2002 68,625
---------------------------------------------------------------------------------- -------------
FOREST PRODUCTS--0.1%
----------------------------------------------------------------------------------
50,000 Repap New Brunswick, 2nd Priority Sr. Secd. Note, 10.625%,
4/15/2005 49,688
----------------------------------------------------------------------------------
75,000 Stone Container Corp., Sr. Note, 9.875%, 2/1/2001 73,031
---------------------------------------------------------------------------------- -------------
Total 122,719
---------------------------------------------------------------------------------- -------------
HEALTHCARE--0.2%
----------------------------------------------------------------------------------
50,000 Amerisource Health Corp., Sr. Deb., 11.25%, 7/15/2005 54,750
----------------------------------------------------------------------------------
100,000 Tenet Healthcare, Sr. Sub. Note, 10.125%, 3/1/2005 108,875
---------------------------------------------------------------------------------- -------------
Total 163,625
---------------------------------------------------------------------------------- -------------
HOME PRODUCTS & FURNISHINGS--0.1%
----------------------------------------------------------------------------------
75,000 American Standard, Inc., Sr. Sub. Disc. Deb., 0/10.50%, 6/1/2005 63,375
---------------------------------------------------------------------------------- -------------
INDUSTRIAL PRODUCTS & EQUIPMENT--0.1%
----------------------------------------------------------------------------------
50,000 Cabot Safety Acquisition Corp., Sr. Sub. Note, 12.50%, 7/15/2005 53,000
---------------------------------------------------------------------------------- -------------
LEISURE & ENTERTAINMENT--0.1%
----------------------------------------------------------------------------------
50,000 Alliance Entertainment , Sr. Sub. Note, 11.25%, 7/15/2005 50,000
----------------------------------------------------------------------------------
100,000 (c)Six Flags Theme Parks, Sr. Sub. Disc. Note, 0/12.25%, 6/15/2005 78,250
---------------------------------------------------------------------------------- -------------
Total 128,250
---------------------------------------------------------------------------------- -------------
MACHINERY & EQUIPMENT--0.1%
----------------------------------------------------------------------------------
100,000 Primeco, Inc., Sr. Sub. Note, 12.75%, 3/1/2005 104,250
---------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- ---------------------------------------------------------------------------------------------------
HIGH YIELD--CONTINUED
----------------------------------------------------------------------------------
OIL & GAS--0.1%
----------------------------------------------------------------------------------
$ 50,000 Falcon Drilling Company, Sr. Note, 9.75%, 1/15/2001 $ 50,750
----------------------------------------------------------------------------------
50,000 United Meridian Corp., Sr. Sub. Note, 10.375%, 10/15/2005 51,125
---------------------------------------------------------------------------------- -------------
Total 101,875
---------------------------------------------------------------------------------- -------------
PRINTING & PUBLISHING--0.1%
----------------------------------------------------------------------------------
50,000 Garden State Newspapers, Inc., Sr. Sub. Note, 12.00%, 7/1/2004 50,250
---------------------------------------------------------------------------------- -------------
RETAILERS--0.1%
----------------------------------------------------------------------------------
125,000 Brylane Capital Corp., Sr. Sub. Note, 10.00%, 9/1/2003 109,375
---------------------------------------------------------------------------------- -------------
SERVICES--0.0%
----------------------------------------------------------------------------------
25,000 (c)Coinmach Corporation, Sr. Note, 11.75%, 11/15/2005 25,312
---------------------------------------------------------------------------------- -------------
STEEL--0.2%
----------------------------------------------------------------------------------
125,000 GS Technologies Operating Co., Inc., Sr. Note, 12.00%, 9/1/2004 123,750
----------------------------------------------------------------------------------
75,000 Northwestern Steel & Wire, Sr. Note, 9.50%, 6/15/2001 74,250
---------------------------------------------------------------------------------- -------------
Total 198,000
---------------------------------------------------------------------------------- -------------
SURFACE TRANSPORTATION--0.2%
----------------------------------------------------------------------------------
50,000 Gearbulk Holding Limited, Sr. Note, 11.25%, 12/1/2004 53,125
----------------------------------------------------------------------------------
25,000 Great Dane Holdings, Sr. Sub. Deb., 12.75%, 8/1/2001 22,625
----------------------------------------------------------------------------------
50,000 Sea Containers, Sr. Note, 9.50% 7/1/2003 49,125
----------------------------------------------------------------------------------
100,000 Trism, Inc., Sr. Sub. Note, 10.75%, 12/15/2000 98,000
---------------------------------------------------------------------------------- -------------
Total 222,875
---------------------------------------------------------------------------------- -------------
TELECOMMUNICATIONS & CELLULAR--0.3%
----------------------------------------------------------------------------------
50,000 (c)IXC Communications, Inc., Sr. Note, 12.50%, 10/1/2005 52,375
----------------------------------------------------------------------------------
50,000 MetroCall, Inc., Sr. Sub. Note, 10.375%, 10/1/2007 51,750
----------------------------------------------------------------------------------
25,000 MobileMedia Communication, Sr. Sub. Note, 9.375%, 11/1/2007 25,313
----------------------------------------------------------------------------------
75,000 Nextel Communications, Inc., Sr. Disc. Note, 0/11.50%, 9/1/2003 45,188
----------------------------------------------------------------------------------
50,000 Paging Network, Sr. Sub. Note, 10.125%, 8/1/2007 53,375
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- ---------------------------------------------------------------------------------------------------
HIGH YIELD--CONTINUED
----------------------------------------------------------------------------------
TELECOMMUNICATIONS & CELLULAR--CONTINUED
----------------------------------------------------------------------------------
$ 75,000 Panamsat, L.P., Sr. Sub. Disc. Note, 0/11.375%, 8/1/2003 $ 61,125
---------------------------------------------------------------------------------- -------------
Total 289,126
---------------------------------------------------------------------------------- -------------
UTILITIES--0.1%
----------------------------------------------------------------------------------
125,000 California Energy Co., Sr. Disc. Note, 0/10.25%, 1/15/2004 116,250
---------------------------------------------------------------------------------- -------------
Total High Yield 4,312,810
---------------------------------------------------------------------------------- -------------
INVESTMENT GRADE--2.7%
----------------------------------------------------------------------------------
BEVERAGE & TOBACCO--0.3%
----------------------------------------------------------------------------------
300,000 Philip Morris Cos., Inc., Deb., 6.00%, 7/15/2001 295,560
---------------------------------------------------------------------------------- -------------
CONGLOMERATES--0.3%
----------------------------------------------------------------------------------
250,000 Leucadia National Corp., Sr. Sub., 10.375%, 6/15/2002 271,875
---------------------------------------------------------------------------------- -------------
FINANCIAL INTERMEDIARIES--0.5%
----------------------------------------------------------------------------------
200,000 Equitable Cos., Inc., Sr. Note, 9%, 12/15/2004 233,220
----------------------------------------------------------------------------------
250,000 Greentree Financial Corp, Sr. Sub. Note, 10.25%, 6/1/2002 301,950
---------------------------------------------------------------------------------- -------------
Total 535,170
---------------------------------------------------------------------------------- -------------
INDUSTRIAL PRODUCTS & EQUIPMENT--0.3%
----------------------------------------------------------------------------------
250,000 Joy Technologies Inc, Sr. Note, 10.25%, 9/1/2003 282,453
---------------------------------------------------------------------------------- -------------
INSURANCE--0.3%
----------------------------------------------------------------------------------
250,000 Sunamerica, Inc., Medium Term Note, 7.34%, 8/30/2005 262,984
---------------------------------------------------------------------------------- -------------
OIL & GAS--0.1%
----------------------------------------------------------------------------------
100,000 Occidental Petroleum Corp., Sr. Note, 11.75%, 3/15/2011 106,673
---------------------------------------------------------------------------------- -------------
PRINTING & PUBLISHING--0.3%
----------------------------------------------------------------------------------
250,000 News America Holdings, Sr. Note, 7.50%, 3/1/2000 262,038
---------------------------------------------------------------------------------- -------------
RETAILERS--0.3%
----------------------------------------------------------------------------------
250,000 Penney (J.C.) Co., Inc., Deb., 9.45%, 7/15/2002 283,935
---------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- ---------------------------------------------------------------------------------------------------
INVESTMENT GRADE--CONTINUED
----------------------------------------------------------------------------------
SOVEREIGN GOVERNMENT--0.3%
----------------------------------------------------------------------------------
$ 250,000 (c)Freeport Terminal (Malta), GTD. Global Note, 7.50%, 3/29/2004 $ 264,407
---------------------------------------------------------------------------------- -------------
TOTAL INVESTMENT GRADE 2,565,095
---------------------------------------------------------------------------------- -------------
FOREIGN
CURRENCY
PAR
AMOUNT
- --------------- ----------------------------------------------------------------------------------
FOREIGN--7.1%
----------------------------------------------------------------------------------
AUSTRALIAN DOLLAR--0.1%
----------------------------------------------------------------------------------
150,000 State Bank of New South Wales, 12.25%, 2/26/2001 129,973
---------------------------------------------------------------------------------- -------------
BELGIAN FRANC--0.4%
----------------------------------------------------------------------------------
1,500,000 Belgian Gov't., Foreign Gov't. Guarantee, 10.00%, 4/5/1996 51,519
----------------------------------------------------------------------------------
9,000,000 Belgium Kingdom, 7.75%, 10/15/2004 323,491
---------------------------------------------------------------------------------- -------------
Total 375,010
---------------------------------------------------------------------------------- -------------
CANADIAN DOLLAR--0.3%
----------------------------------------------------------------------------------
400,000 Ontario Hydro, 9.00%, 6/24/2002 320,913
---------------------------------------------------------------------------------- -------------
DANISH KRONE--0.2%
----------------------------------------------------------------------------------
1,200,000 Denmark, 8.00%, 5/15/2003 225,369
---------------------------------------------------------------------------------- -------------
DEUTSCHE MARK--1.1%
----------------------------------------------------------------------------------
400,000 Bundesobligationen, Deb., 7.25%, 10/20/1997 292,415
----------------------------------------------------------------------------------
1,050,000 Treuhandanstalt, 7.75%, 10/1/2002 802,510
---------------------------------------------------------------------------------- -------------
Total 1,094,925
---------------------------------------------------------------------------------- -------------
FRENCH FRANC--0.9%
----------------------------------------------------------------------------------
3,100,000 France O.A.T., 8.50%, 11/25/2002 685,038
----------------------------------------------------------------------------------
800,000 KFW International Finance, 7.00%, 5/12/2000 165,214
---------------------------------------------------------------------------------- -------------
Total 850,252
---------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN
CURRENCY VALUE
PAR IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- ---------------------------------------------------------------------------------------------------
FOREIGN--CONTINUED
----------------------------------------------------------------------------------
ITALIAN LIRA--0.6%
----------------------------------------------------------------------------------
950,000,000 Buoni Poliennali Del Tes, 9.50%, 1/1/2005 $ 536,375
---------------------------------------------------------------------------------- -------------
JAPANESE YEN--1.8%
----------------------------------------------------------------------------------
100,000,000 Export-Import Bank Japan, 4.375%, 10/1/2003 1,101,966
----------------------------------------------------------------------------------
10,000,000 Interamerican Development Bank, Deb., 7.25%, 5/15/2000 121,990
----------------------------------------------------------------------------------
42,000,000 KFW International Finance, 6.00%, 11/29/1999 487,076
---------------------------------------------------------------------------------- -------------
Total 1,711,032
---------------------------------------------------------------------------------- -------------
NETHERLANDS GUILDER--0.4%
----------------------------------------------------------------------------------
650,000 Netherlands Government, 5.75%, 1/15/2004 395,788
---------------------------------------------------------------------------------- -------------
SPANISH PESETA--0.3%
----------------------------------------------------------------------------------
40,000,000 Spanish Government, 10.00%, 2/28/2005 320,830
---------------------------------------------------------------------------------- -------------
SWEDISH KRONA--0.3%
----------------------------------------------------------------------------------
1,900,000 Sweden, 6.00%, 2/9/2005 241,755
---------------------------------------------------------------------------------- -------------
UNITED KINGDOM POUND--0.7%
----------------------------------------------------------------------------------
375,000 UK Conversion, 9.00%, 3/3/2000 617,872
---------------------------------------------------------------------------------- -------------
TOTAL FOREIGN 6,820,094
---------------------------------------------------------------------------------- -------------
TOTAL BONDS (IDENTIFIED COST $41,784,046) 43,100,720
---------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
(A)CASH EQUIVALENTS--17.3%
- ---------------------------------------------------------------------------------------------------
TREASURY SECURITY--11.9%
----------------------------------------------------------------------------------
$ 11,500,000 United States Treasury Bill, 3/14/1996 (identified cost $11,325,331) $ 11,327,960
----------------------------------------------------------------------------------
(E)REPURCHASE AGREEMENT--5.4%
----------------------------------------------------------------------------------
5,200,000 J.P. Morgan Securities, Inc., 5.930%, dated 11/30/1995, due 12/1/1995 (at
amortized cost) 5,200,000
---------------------------------------------------------------------------------- -------------
TOTAL CASH EQUIVALENTS 16,527,960
---------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST $89,469,509)(F) $ 95,014,668
---------------------------------------------------------------------------------- -------------
</TABLE>
(a) The Fund purchases Index futures contracts to efficiently manage cash flows
resulting from shareholder purchases and redemptions, dividend and capital
gain payments to shareholders and corporate actions while maintaining
exposure to stocks and minimizing trading costs. The total market value of
open Index futures contracts is $9,748,125 at November 30, 1995, which
represents 10.2% of net assets. Taking into consideration these open Index
futures contracts, the Fund's effective, total exposure to stocks is 47.2%.
The Fund holds cash equivalents as collateral for the twenty three S & P
500 futures contracts with a market value of $7,008,125. Consequently, the
Fund's exposure to large cap stocks is 20.6% of the fund. The Fund holds
cash equivalents as collateral for the twenty five S & P Midcap futures
contracts with a market value of $2,740,000. Consequently, the Fund's
exposure to small cap stocks is 10.4% of the Fund.
(b) Non-income producing security.
(c) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. At the end of the period, these securities
amounted to $968,555 which represents 1.0% of net assets.
(d) The utility stocks are shown in the asset category in which they were
purchased. The Fund's total exposure to utility stocks is 6.6% of net
assets.
(e) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations. The investment in the repurchase agreement was through
participation in a joint account with other Federated funds.
(f) The cost of investments for federal tax purposes amounts to $89,514,976.
The net unrealized appreciation of investments on a federal tax basis
amounts to $5,499,692 which is comprised of $6,231,054 appreciation and
$731,362 depreciation at November 30, 1995.
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
Note: The categories of investments are shown as a percentage of net assets
($95,670,615) at November 30, 1995.
The following acronyms are used throughout this portfolio:
ADR--American Depository Receipt
GDR--Global Depository Receipts
GTD--Guaranty
L.P.--Limited Partnership
PEPs--Participating Equity Preferred Stock
PLC--Public Limited Company
STRYPES--Structured Yield Product Exchangeable for Stock
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ----------------------------------------------------------------------------------------------------
Total investments in securities, at value (identified cost: $89,469,509 and tax cost $89,514,976) $ 95,014,668
- ----------------------------------------------------------------------------------------------------
Cash denominated in foreign currencies (identified cost $99,994) 98,712
- ----------------------------------------------------------------------------------------------------
Income receivable 736,588
- ----------------------------------------------------------------------------------------------------
Receivable for investments sold 129,755
- ----------------------------------------------------------------------------------------------------
Receivable for shares sold 479,073
- ----------------------------------------------------------------------------------------------------
Receivable for foreign currency sold 279,184
- ----------------------------------------------------------------------------------------------------
Deferred expenses 36,476
- ---------------------------------------------------------------------------------------------------- ------------
Total assets 96,774,456
- ----------------------------------------------------------------------------------------------------
LIABILITIES:
- ----------------------------------------------------------------------------------------------------
Payable for investments purchased $ 466,002
- -----------------------------------------------------------------------------------------
Payable for shares redeemed 5,100
- -----------------------------------------------------------------------------------------
Payable to Bank 272,494
- -----------------------------------------------------------------------------------------
Payable for taxes withheld 5,478
- -----------------------------------------------------------------------------------------
Payable for daily variation margin 3,550
- -----------------------------------------------------------------------------------------
Payable for foreign currency purchased 279,184
- -----------------------------------------------------------------------------------------
Accrued expenses 72,033
- ----------------------------------------------------------------------------------------- ---------
Total liabilities 1,103,841
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSETS for 8,309,115 shares outstanding $ 95,670,615
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSETS CONSIST OF:
- ----------------------------------------------------------------------------------------------------
Paid in capital $ 87,285,933
- ----------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments, translation of assets and liabilities in
foreign currency, and futures contracts 5,921,914
- ----------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments, foreign currency transactions, and
futures contracts 1,577,280
- ----------------------------------------------------------------------------------------------------
Undistributed net investment income 885,488
- ---------------------------------------------------------------------------------------------------- ------------
Total Net Assets $ 95,670,615
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ----------------------------------------------------------------------------------------------------
Institutional Shares $68,312,920 / 5,929,677 shares outstanding $11.52
- ---------------------------------------------------------------------------------------------------- ------------
Select Shares $27,357,695 / 2,379,438 shares outstanding $11.50
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED GROWTH FUND
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Dividends (net of foreign taxes withheld of $15,790) $ 515,991
- ----------------------------------------------------------------------------------------------------
Interest (net of foreign taxes withheld of $4,502) 2,541,077
- ---------------------------------------------------------------------------------------------------- ----------
Total income 3,057,068
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------------------------
Investment advisory fee $ 434,181
- -----------------------------------------------------------------------------------------
Administrative personnel and services fee 155,000
- -----------------------------------------------------------------------------------------
Custodian fees 92,761
- -----------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 56,115
- -----------------------------------------------------------------------------------------
Directors'/Trustees' fees 1,855
- -----------------------------------------------------------------------------------------
Auditing fees 12,407
- -----------------------------------------------------------------------------------------
Legal fees 3,920
- -----------------------------------------------------------------------------------------
Portfolio accounting fees 32,512
- -----------------------------------------------------------------------------------------
Distribution services fee--Select Shares 87,921
- -----------------------------------------------------------------------------------------
Shareholder services fee--Institutional Shares 115,420
- -----------------------------------------------------------------------------------------
Shareholder services fee--Select Shares 29,307
- -----------------------------------------------------------------------------------------
Share registration costs 32,562
- -----------------------------------------------------------------------------------------
Printing and postage 33,620
- -----------------------------------------------------------------------------------------
Insurance premiums 4,700
- -----------------------------------------------------------------------------------------
Miscellaneous 15,278
- ----------------------------------------------------------------------------------------- ---------
Total expenses 1,107,559
- -----------------------------------------------------------------------------------------
Waivers--
- -----------------------------------------------------------------------------------------
Waiver of investment advisory fee $(294,373)
- ------------------------------------------------------------------------------
Waiver of distribution services fee--Select Shares (29,307)
- ------------------------------------------------------------------------------
Waiver of shareholder services fee--Institutional Shares (115,420)
- ------------------------------------------------------------------------------ ---------
Total waivers (439,100)
- ----------------------------------------------------------------------------------------- ---------
Net expenses 668,459
- ---------------------------------------------------------------------------------------------------- ----------
Net investment income 2,388,609
- ---------------------------------------------------------------------------------------------------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FOREIGN CURRENCY AND FUTURES CONTRACTS
- ----------------------------------------------------------------------------------------------------
Net realized gain on investments, foreign currency transactions, and futures contracts 1,792,344
- ----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments, translation
of assets and liabilities in foreign currency, and futures contracts 6,797,361
- ---------------------------------------------------------------------------------------------------- ----------
Net realized and unrealized gain on investments, foreign currency, and futures contracts 8,589,705
- ---------------------------------------------------------------------------------------------------- ----------
Change in net assets resulting from operations $10,978,314
- ---------------------------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, 1995 NOVEMBER 30, 1994*
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ---------------------------------------------------------------
OPERATIONS--
- ---------------------------------------------------------------
Net investment income $ 2,388,609 $ 547,410
- ---------------------------------------------------------------
Net realized gain (loss) on investments, foreign
currency transactions, and futures contracts
($2,146,546 net gain and $146,501 net loss respectively,
as computed for federal tax purposes) 1,792,344 (55,426)
- ---------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of
investments, translation of assets and liabilities in foreign
currency, and futures contracts 6,797,361 (875,447)
- --------------------------------------------------------------- ---------------------- ------------------------
Change in net assets resulting from operations 10,978,314 (383,463)
- --------------------------------------------------------------- ---------------------- ------------------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ---------------------------------------------------------------
Distributions from net investment income
- ---------------------------------------------------------------
Institutional Shares (1,589,524) (281,776)
- ---------------------------------------------------------------
Select Shares (320,621) (19,872)
- --------------------------------------------------------------- ---------------------- ------------------------
Change in net assets resulting from
distributions to shareholders (1,910,145) (301,648)
- --------------------------------------------------------------- ---------------------- ------------------------
SHARE TRANSACTIONS--
- ---------------------------------------------------------------
Proceeds from sale of shares 63,762,378 34,167,264
- ---------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 1,014,253 142,853
- ---------------------------------------------------------------
Cost of shares redeemed (10,099,348) (1,699,843)
- --------------------------------------------------------------- ---------------------- ------------------------
Change in net assets resulting from share
transactions 54,677,283 32,610,274
- --------------------------------------------------------------- ---------------------- ------------------------
Change in net assets 63,745,452 31,925,163
- ---------------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------------
Beginning of period 31,925,163 --
- --------------------------------------------------------------- ---------------------- ------------------------
End of period (including undistributed net investment income of
$885,488 and $252,009, respectively) $ 95,670,615 $ 31,925,163
- --------------------------------------------------------------- ---------------------- ------------------------
</TABLE>
* For the period from January 27, 1994 (start of business) to November 30, 1994.
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Managed Series Trust (the "Trust") is registered under the Investment Company
Act of 1940, as amended (the "Act") as an open-end, management investment
company. The Trust consists of four diversified portfolios. The financial
statements included herein are only those of Federated Managed Growth Fund (the
"Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held.
The Fund offers two classes of shares: Institutional Shares (formerly,
Institutional Service Shares) and Select Shares. The Institutional Service
Shares changed its name to Institutional Shares effective June 30, 1995.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Short-term securities with remaining maturities of
sixty days or less at the time of purchase may be valued at amortized cost,
which approximates fair market value.Listed equity securities are valued at
the last sale price reported on national security exchanges. All other
securities are valued at prices provided by an independent pricing service.
REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral
securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
Revenue Code, as amended (the "Code"). Dividend income and distributions to
shareholders are recorded on the ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
foreign currency and futures transactions.
As a result of differences, the following required reclassifications have
been made to the current year financial statements.
<TABLE>
<CAPTION>
INCREASE (DECREASE)
<S> <C> <C>
ACCUMULATED UNDISTRIBUTED NET
NET REALIZED INVESTMENT
PAID-IN CAPITAL GAIN/LOSS INCOME
($ 1,647) ($ 153,367) $ 155,014
</TABLE>
Net investment income, net realized gains/losses, and net assets were not
affected by this change.
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.
However, federal taxes may be imposed on the Fund upon the disposition of
certain investments in passive foreign investment companies. Withholding
taxes on foreign dividends have been provided for in accordance with the
Fund's understanding of the applicable country's tax rules and rates.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized using the straight-line method over a period of five years from
the Fund's commencement date.
CONCENTRATION OF CREDIT RISK--The Fund invests in securities of non-U.S.
issuers. Although the Fund maintains a diversified investment portfolio,
the political or economic developments within a particular country or
region may have an adverse effect on the ability of domiciled issuers to
meet their obligations. Additionally, political or economic developments
may have an effect on the liquidity and volatility of portfolio securities
and currency holdings.
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
At November 30, 1995, the industry diversification of the foreign
securities was as follows:
<TABLE>
<CAPTION>
% OF % OF
INDUSTRY NET ASSETS INDUSTRY NET AASSETS
<S> <C> <C> <C>
Agency 2.2 Industrial Components 0.4
Automobiles 0.1 Insurance 0.5
Banking 0.6 Leisure & Tourism 0.2
Beverages & Tobacco 0.2 Machinery & Engineering 1.1
Broadcasting & Publishing 0.3 Merchandising 0.8
Building Materials & Components 0.5 Metals 0.5
Business & Public Services 0.5 Miscellaneous Materials & Commodities 0.2
Chemicals 0.7 Multi-Industry 0.4
Construction & Housing 0.2 Real Estate 0.2
Data Processing & Reproduction 0.2 Recreation, Other Consumer Goods 0.3
Electrical & Electronics 0.3 Retail Trade 0.1
Energy Sources 0.2 Sovereign 4.7
Financial Services 0.2 State/Provincial 0.1
Food & Household Products 0.5 Supranational 0.1
Forest Products & Paper 0.1 Telecommunications 0.4
Health & Personal Care 0.6 Transportation 0.4
Utilities--Electrical & Gas 0.3
</TABLE>
FUTURES CONTRACTS--The Fund may purchase and sell futures contracts to
accommodate cash flows into and out of the Fund's portfolio and to hedge
against the effects of changes in the value of portfolio securities due to
anticipated changes in interest rates and market conditions. Upon entering
into a stock futures contract with a broker, the Fund is required to
deposit in a segregated account a specified amount of cash or U.S.
government securities. Futures contracts are valued daily and unrealized
gains or losses are recorded in a "variation margin" account. Daily, the
Fund receives from or pays to the broker a specified amount of cash based
upon changes in the variation margin account. When a contract is closed,
the Fund recognizes a realized gain or loss. Futures contracts have market
risks, including the risk that the change in the value of the contract may
not correlate with changes in the value of the underlying securities. For
the period ended November 30, 1995, the Fund had realized losses of
$1,116,967 on futures contracts. At November 30, 1995, the Fund had
outstanding futures contracts as set forth below:
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNREALIZED
CONTRACTS TO TOTAL FACE APPRECIATION
EXPIRATION DATE DELIVER/RECEIVE VALUE POSITION (DEPRECIATION)
<S> <C> <C> <C> <C>
December 1995 14 S&P 500 4,019,050 Long $ 231,700
December 1995 21 S&P Mid Cap 2,232,171 Long 65,229
March 1996 4 S&P Mid Cap 429,500 Long 13,100
March 1996 9 S&P 500 2,688,600 Long 68,775
-----------------
Net Unrealized Appreciation/(Depreciation) on Futures Contracts $ 378,804
</TABLE>
DOLLAR ROLL TRANSACTIONS--The Fund enters into dollar roll transactions,
with respect to mortgage securities issued by GNMA, FNMA and FHLMC, in
which the Fund loans mortgage securities to financial institutions and
simultaneously agrees to accept substantially similar (same type, coupon
and maturity) securities at a later date at an agreed upon price. Dollar
roll transactions are short-term financining arrangements which will not
exceed twelve months. The Fund will use the proceeds generated from the
transactions to invest in short-term investments, which may enhance the
Fund's current yield and total return.
FOREIGN CURRENCY COMMITMENTS--The Fund may enter into foreign currency
commitments for the delayed delivery of securities or foreign currency
exchange transactions. Risks may arise upon entering these transactions
from the potential inability of counterparties to meet the terms of their
commitments and from unanticipated movements in security prices or foreign
exchange rates. The foreign currency transactions are adjusted by the daily
exchange rate of the underlying currency and any gains or losses are
recorded for financial statement purpose as unrealized until the settlement
date. At November 30, 1995, the Fund had outstanding foreign currency
commitments as set forth below:
<TABLE>
<CAPTION>
UNREALIZED
CONTRACTS TO APPRECIATION
SETTLEMENT DATE DELIVER/RECEIVE IN EXCHANGE FOR (DEPRECIATION)
<S> <C> <C> <C>
CONTRACTS PURCHASED:
December 1, 1995 275,178 Hong Kong Dollar $ 35,581 (5)
December 1, 1995 4,724 Argentine Peso $ 4,725 --
December 4, 1995 4,574,474 Japanese Yen $ 45,202 (244)
December 5, 1995 61,663 Pound Sterling $ 94,005 396
CONTRACTS SOLD:
December 4, 1995 5,443,173 Japanese Yen $ 45,073 291
December 4, 1995 2,520,000 Japanese Yen $ 24,662 (104)
December 6, 1995 24,999 Swiss Franc $ 21,222 (46)
-----
Net Unrealized Appreciation/(Depreciation) on Foreign Currency
Commitments 288
-----
-----
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
FOREIGN CURRENCY TRANSLATION--The accounting records of the Fund are
maintained in U.S. dollars. All assets and liabilities denominated in
foreign currencies ("FC") are translated into U.S. dollars based on the
rate of exchange of such currencies against U.S. dollars on the date of
valuation. Purchases and sales of securities, income and expenses are
translated at the rate of exchange quoted on the respective date that such
transactions are recorded. Differences between income and expense amounts
recorded and collected or paid are adjusted when reported by the custodian
bank. The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of FCs, currency gains or losses
realized between the trade and settlement dates on securities transactions,
the difference between the amounts of dividends, interest, and foreign
withholding taxes recorded on the Fund's books, and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in the value of assets and
liabilities other than investments in securities at fiscal year end,
resulting from changes in the exchange rate.
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 Board of Trustees. 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 November 30,
1995 is as follows:
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FUND
SECURITY ACQUISITION DATE ACQUISITION COST
<S> <C> <C>
Carr-Goldstein Foods Sr. Sub Note 11/9/95 $ 25,000
Coinmach Corporation, Sr. Note 11/14/95 25,000
Crain Industries, Inc., Sr. Sub Note 9/22/95 51,375
Freeport Terminal (Malta), Gtd. Global Note 5/12/95 247,740
Herff Jones, Inc., Sr. Sub Note 9/14/95 77,625
Howmet Corporation, Sr. Sub Note 11/22/95 25,000
IXC Communications, Inc., Sr. Note 9/25/95 48,623
RBX Corp., Sr. Sub Note 10/6/95 50,000
Six Flags Theme Parks, Sr. Sub Disc. Note 6/16/95 73,975
Van De Kamp's Inc., Sr. Sub Note 9/14/95 50,000
Westinghouse Electric Corp., PEPS 9/27/95-9/28/95 245,525
</TABLE>
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, 1995 NOVEMBER 30, 1994(A)
<S> <C> <C> <C> <C>
INSTITUTIONAL SHARES SHARES AMOUNT SHARES AMOUNT
Shares sold 3,678,939 $ 39,452,689 3,096,651 $ 31,041,322
- ---------------------------------------------------
Shares issued to shareholders in
payment of distributions declared 72,763 769,585 12,494 125,915
- ---------------------------------------------------
Shares redeemed (772,807) (8,225,144) (158,363) (1,579,515)
- --------------------------------------------------- ---------- ------------- ---------- -------------
Net change resulting from Institutional Share
transactions 2,978,895 $ 31,997,130 2,950,782 $ 29,587,722
- --------------------------------------------------- ---------- ------------- ---------- -------------
</TABLE>
(a) For the period from January 27, 1994 (start of business) to November 30,
1994.
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, 1995 NOVEMBER 30, 1994(A)
<S> <C> <C> <C> <C>
SELECT SHARES SHARES AMOUNT SHARES AMOUNT
Shares sold 2,233,281 $ 24,309,689 311,261 $ 3,125,942
- ---------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 22,609 244,668 1,680 16,938
- ---------------------------------------------------
Shares redeemed (177,462) (1,874,204) (11,931) (120,328)
- --------------------------------------------------- ---------- ------------- ---------- -------------
Net change resulting from Select Share
transactions 2,078,428 $ 22,680,153 301,010 $ 3,022,552
- --------------------------------------------------- ---------- ------------- ---------- -------------
Total net change resulting from Share
transactions 5,057,323 $ 54,677,283 3,251,792 $ 32,610,274
- --------------------------------------------------- ---------- ------------- ---------- -------------
</TABLE>
(a) For the period from January 27, 1994 (start of business) to November 30,
1994.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser
(the "Adviser"), receives for its services an annual investment advisory fee
equal to .75 of 1% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive any portion of its fee and/or reimburse certain
operating expenses of the Fund. The Adviser can modify or terminate this
voluntary waiver and/or reimbursement at any time at its sole discretion.
Under the terms of a sub-advisory agreement between the Adviser and Federated
Global Research Corp., Federated Global Research Corp. receives an allocable
portion of the Fund's advisory fee. Such allocation is based on the amount of
foreign securities which the Sub-Adviser manages for the Fund. This fee is paid
by the Adviser out of its resources and is not an incremental Fund expense.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. This fee 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 Select shares. The Plan provides that the Fund may incur
distribution expenses of up to .75 of 1% of average net assets, annually, to
compensate FSC. The distributor may voluntarily choose to waive any portion of
its fee. The distributor can modify or terminate this voluntary waiver at any
time at its sole discretion.
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of
1% of average daily net assets of the Fund for the period. This fee is to obtain
certain services for shareholders and to maintain shareholder accounts. FSS may
voluntarily choose to waive any portion of its fee. FSS can modify or terminate
this voluntary waiver at any time at its sole discretion. For the fiscal year
ended November 30, 1995, the Institutional Shares fully waived its shareholder
service fee.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Fund. This
fee is based on the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses ($35,959) and start-up
administrative service expenses of ($39,068) were borne initially by Adviser.
The Fund has agreed to reimburse Adviser for the organizational and start-up
administrative expenses during the five year period following effective date.
For the period ended November 30, 1995, the Fund paid $7,896 and $5,001,
respectively, pursuant to this agreement.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended November 30, 1995, were as follows:
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------------------------
PURCHASES $ 110,105,897
- -------------------------------------------------------------------------------------------------- --------------
SALES $ 57,736,580
- -------------------------------------------------------------------------------------------------- --------------
</TABLE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
MANAGED SERIES TRUST
(Federated Managed Growth Fund):
We have audited the accompanying statement of assets and liabilities of
Federated Managed Growth Fund (an investment portfolio of Managed Series Trust,
a Massachusetts business trust), including the schedule of portfolio
investments, as of November 30, 1995, the related statement of operations for
the year then ended, and the statement of changes in net assets and the
financial highlights (see pages 2 and 27 of the prospectus) for the periods
presented. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Federated Managed Growth Fund (an investment portfolio of Managed Series Trust)
as of November 30, 1995, and the results of its operations for the year then
ended, and the changes in its net assets and its financial highlights for the
periods presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
January 18, 1996
APPENDIX
- --------------------------------------------------------------------------------
STANDARD AND POOR'S RATINGS GROUP LONG-TERM DEBT RATINGS
AAA--Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.
A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB--Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.
B--Debt rated B has greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or
BB- rating.
CCC--Debt rated CCC has currently identifiable vulnerability to default and is
dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating.
CC--The rating CC typically is applied to debt subordinated to senior debt that
is assigned an actual or implied CCC debt rating.
C--The rating C typically is applied to debt subordinated to senior debt which
is assigned an actual or implied CCC debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.
CI--The rating CI is reserved for income bonds on which no interest is being
paid.
D--Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D
rating also will be used upon the filing of a bankruptcy petition if debt
service payments are jeopardized.
MOODY'S INVESTORS SERVICE, INC., CORPORATE BOND RATINGS
Aaa--Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment some time in the future.
Baa--Bonds which are rated Baa are considered as medium-grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well.
Ba--Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca--Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C--Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
FITCH INVESTORS SERVICE, INC., LONG-TERM DEBT RATINGS
AAA--Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA--Bonds considered to be investment grade and of very high quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F-1+.
A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB--Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds and, therefore, impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.
BB--Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.
B--Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.
CCC--Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.
CC--Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C--Bonds are in imminent default in payment of interest or principal.
DDD, DD, AND D--Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. DDD
represents the highest potential for recovery on these bonds, and D represents
the lowest potential for recovery.
NR--NR indicates that Fitch does not rate the specific issue.
PLUS (+) OR MINUS (-): Plus or minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the AAA category.
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Federated Managed Growth Fund
Institutional Shares Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Sub-Adviser
Federated Global 175 Water Street
Research Corp. New York, NY 10038-4965
- ---------------------------------------------------------------------------------------------------------------------
Custodian
State Street Bank and P.O. Box 8600
Trust Company Boston, Massachusetts 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company P.O. Box 8600
Boston, Massachusetts 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED
GROWTH FUND
INSTITUTIONAL SHARES
PROSPECTUS
A Diversified Portfolio
of Managed Series Trust,
an Open-End Management
Investment Company
Prospectus dated January 31, 1996
[LOGO] FEDERATED SECURITIES CORP.
---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Cusip 56166K503
3122010A-SS (1/96)
Lifecycle Investing
MANAGED SERIES TRUST
From Federated Investors
(LOGO)
FEDERATED MANAGED GROWTH FUND
Lifecycle Investing
MANAGED SERIES TRUST
SELECT SHARES
Federated Managed Growth Fund is part of Managed Series Trust, a lifecycle
investing program from Federated Investors.
Other Funds available in Managed Series Trust are Federated Managed Income Fund,
Federated Managed Growth and Income Fund, and Federated Managed Aggressive
Growth Fund.
(LOGO)
FEDERATED SECURITIES CORP.
Distributor
A subsidiary of Federated Investors
(LOGO)
FEDERATED MANAGED GROWTH FUND
(A PORTFOLIO OF MANAGED SERIES TRUST)
SELECT SHARES
PROSPECTUS
The Select Shares of Federated Managed Growth Fund (the "Fund") offered by this
prospectus represent interests in the Fund, which is a diversified investment
portfolio of Managed Series Trust (the "Trust"). The Trust is an open-end
management investment company (a mutual fund).
The investment objective of the Fund is to seek capital appreciation. In
pursuing its objective, the Fund will consider the current income of the
investments it selects. The Fund invests in both bonds and stocks. Select Shares
are sold at net asset value.
THE SELECT SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF
ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THESE SELECT SHARES INVOLVES INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
This prospectus contains the information you should read and know before you
invest in Select Shares of the Fund. Keep this prospectus for future reference.
The Fund has also filed a Statement of Additional Information for Select Shares
and Institutional Shares of all portfolios of the Trust dated January 31, 1996,
with the Securities and Exchange Commission. The information contained in the
Statement of Additional Information is incorporated by reference into this
prospectus. You may request a copy of the Statement of Additional Information,
or a paper copy of this prospectus, if you have received your prospectus
electronically, free of charge by calling 1-800-235-4669. To obtain other
information or to make inquiries about the Fund, contact the Fund at the address
listed in the back of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus dated January 31, 1996
TABLE OF CONTENTS
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SUMMARY OF FUND EXPENSES 1
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FINANCIAL HIGHLIGHTS--SELECT SHARES 2
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GENERAL INFORMATION 3
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INVESTMENT INFORMATION 3
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Investment Objective 3
Investment Policies 3
Investment Limitations 15
TRUST INFORMATION 15
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Management of the Trust 15
Distribution of Select Shares 19
Administration of the Fund 20
Brokerage Transactions 21
NET ASSET VALUE 21
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INVESTING IN SELECT SHARES 21
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Share Purchases 21
Minimum Investment Required 22
What Shares Cost 22
Subaccounting Services 22
Systematic Investment Program 23
Certificates and Confirmations 23
Dividends 23
Capital Gains 23
REDEEMING SELECT SHARES 23
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Through a Financial Institution 23
Telephone Redemption 24
Written Requests 24
Systematic Withdrawal Program 25
Accounts with Low Balances 25
SHAREHOLDER INFORMATION 25
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Voting Rights 25
TAX INFORMATION 26
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Federal Income Tax 26
State and Local Taxes 26
PERFORMANCE INFORMATION 26
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OTHER CLASSES OF SHARES 27
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FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES 28
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FINANCIAL STATEMENTS 29
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 68
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APPENDIX 69
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ADDRESSES 72
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SELECT SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)................................................................... None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price)................................................................... None
Contingent Deferred Sales Charge (as a percentage of original purchase
price or redemption proceeds, as applicable).......................................................... None
Redemption Fee (as a percentage of amount redeemed, if applicable)...................................... None
Exchange Fee............................................................................................ None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver) (1)....................................................................... 0.24%
12b-1 Fee (after waiver) (2)............................................................................ 0.50%
Total Other Expenses.................................................................................... 1.01%
Shareholder Services Fee................................................................ 0.25%
Total Operating Expenses (3).................................................................. 1.75%
</TABLE>
- ------------
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.75%.
(2) The maximum 12b-1 fee is 0.75%.
(3) The total operating expenses would have been 2.51% absent the voluntary
waivers of a portion of the management fee and the 12b-1 fee.
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Select Shares of the Fund
will bear, either directly or indirectly. For more complete descriptions of the
various costs and expenses, see "Investing in Select Shares" and "Trust
Information." Wire-transferred redemptions of less than $5,000 may be subject to
additional fees.
<TABLE>
<S> <C> <C> <C> <C>
EXAMPLE 1 year 3 years 5 years 10 years
You would pay the following expenses on a $1,000 investment assuming
(1) 5% annual return and (2) redemption at the end of each time
period................................................................ $18 $55 $95 $206
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
FEDERATED MANAGED GROWTH FUND
FINANCIAL HIGHLIGHTS--SELECT SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 68.
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, NOVEMBER 30,
1995 1994(A)
<S> <C> <C>
- ---------------------------------------------------------------------------- ------- -------
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.81 $ 10.00
- ----------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------
Net investment income 0.23 0.15
- ----------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments,
foreign currency, and futures contracts 1.79 (0.24)
- ---------------------------------------------------------------------------- ------- -------
Total from investment operations 2.02 (0.09)
- ---------------------------------------------------------------------------- ------- -------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------------
Distributions from net investment income (0.33) (0.10)
- ---------------------------------------------------------------------------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 11.50 $ 9.81
- ---------------------------------------------------------------------------- ------- -------
TOTAL RETURN (B) 20.95% (0.90%)
- ----------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------
Expenses 1.75% 1.70%*
- ----------------------------------------------------------------------------
Net investment income 3.48% 3.53%*
- ----------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.76% 1.15%*
- ----------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------
Net assets, end of period (000 omitted) $27,358 $2,952
- ----------------------------------------------------------------------------
Portfolio turnover 106% 71%
- ----------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 25, 1994 (date of initial
public investment) to November 30, 1994. For the period from January 27,
1994 (start of business) to May 24, 1994 the Fund had no investment
activity.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
Further information about the Fund's performance is contained in the Fund's
annual report for the year ended November 30, 1995, which can be obtained free
of charge.
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated November 15, 1993. The Declaration of Trust permits the Trust to
offer separate series of shares of beneficial interest representing interests in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. As of the date of this prospectus, the Board of
Trustees ("Trustees") have established two classes of shares of the Fund, known
as Select Shares and Institutional Shares. This prospectus relates only to
Select Shares.
Select Shares ("Shares") of the Fund are designed primarily for retail and
private banking customers of financial institutions as a convenient means of
accumulating an interest in a professionally managed, diversified portfolio of
bonds and equities. A minimum initial investment of $1,500 is required.
Shares are currently sold and redeemed at net asset value without a sales charge
imposed by the Fund.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is to seek capital appreciation. In
pursuing its objective, the Fund will consider the current income of the
investments it selects. There can be, of course, no assurance that the Fund will
achieve its investment objective. The Fund's investment objective cannot be
changed without the approval of shareholders. Unless otherwise noted, the Fund's
investment policies may be changed by the Trustees without shareholder approval.
INVESTMENT POLICIES
ASSET ALLOCATION. The Fund will primarily invest in two types of assets:
equities and bonds. The Fund's investment approach is based on the conviction
that, over time, the choice of investment asset categories and their relative
long-term weightings within the portfolio will have the primary impact on its
investment performance. Of secondary importance to the Fund's performance are
the shifting of money among asset categories and the selection of securities
within asset categories. Therefore, the Fund will pursue its investment
objective in the following manner: (1) by setting long-term ranges for each
asset category; (2) by moving money among asset categories within those defined
ranges; and (3) by actively selecting securities within each of the asset
categories. The Fund attempts to minimize risk by allocating its assets in such
a fashion.
Within each of these types of investments, the Fund has designated asset
categories. As a matter of investment policy, ranges have been set for each
asset category's portfolio commitment.
The Fund will invest between 50 and 70 percent of its assets in equities. The
equities asset categories are large company stocks, utility stocks, small
company stocks, foreign stocks and equity reserves.
The Fund will invest between 30 and 50 percent of its assets in bonds. The
Fund's adviser believes that bonds offer opportunities for growth of capital or
otherwise may be desirable under prevailing market or economic conditions. The
bond asset categories are U.S. Treasury securities, mortgage-backed securities,
investment-grade corporate bonds, high yield corporate bonds and foreign bonds.
The following is a summary of the asset categories and the amount of the Fund's
total assets which may be invested in each asset category:
<TABLE>
<CAPTION>
ASSET CATEGORY RANGE
<S> <C>
EQUITIES 50-70%
Large Company Stocks 0-70%
Utility Stocks 0-7.5%
Small Company Stocks 0-21%
Foreign Stocks 0-21%
Equity Reserves 0-15%
BONDS 30-50%
U.S. Treasury Securities 0-45%
Mortgage-Backed Securities 0-15%
Investment-Grade Corporate Bonds 0-15%
High Yield Corporate Bonds 0-15%
Foreign Bonds 0-15%
</TABLE>
The Fund's adviser will regularly review the Fund's allocation among the asset
categories and make any changes, within the ranges established for each asset
category, that it believes will provide the most favorable outlook for achieving
the Fund's investment objective. The Fund's adviser will attempt to exploit
inefficiencies among the various asset categories. If, for example, foreign
stocks are judged to be unusually attractive relative to other asset categories,
the allocation for foreign stocks may be moved to its upper limit. At other
times, when foreign stocks appear to be overvalued, the commitment may be moved
down to a lesser allocation. There is no assurance, however, that the adviser's
attempts to pursue this strategy will result in a benefit to the Fund.
Each asset category within the Fund will be a managed portfolio. The Fund will
seek superior investment performance through security selection in addition to
determining the percentage of its assets to allocate to each of the asset
categories.
EQUITY ASSET CATEGORIES. The portion of the Fund's assets which is invested in
equities will be allocated among the following asset categories within the
ranges specified:
LARGE COMPANY STOCKS. Large company stocks are common stocks and securities
convertible into or exchangeable for common stocks, such as rights and
warrants, of high-quality companies selected by the Fund's adviser.
Ordinarily, these companies will be in the top 25 percent of their
industries with regard to revenues and have a market capitalization of
$500,000,000 or more. However, other factors, such as a company's product
position, market share, current earnings and/or dividend and earnings
growth prospects, will be considered by the Fund's
adviser and may outweigh revenues. The Fund may invest up to 70 percent of
its total assets in large company stocks.
UTILITY STOCKS. Utility stocks are common stocks and securities
convertible into or exchangeable for common stocks, such as rights and
warrants, of utility companies. The Fund may invest up to 7.5 percent of
its total assets in utility stocks. Common stocks of utilities are
generally characterized by higher dividend yields and lower growth rates
than common stocks of industrial companies. Under normal market conditions,
the higher income stream from utility stocks tends to make them less
volatile than stocks of industrial companies.
SMALL COMPANY STOCKS. Small company stocks are common stocks and
securities convertible into or exchangeable for common stocks, such as
rights and warrants, of companies with a market capitalization (market
price x number of shares outstanding) below the top 1,000 stocks that
comprise the large and mid-range capitalization sector of the United States
equity market. These stocks are comparable to, but not limited to, the
stocks comprising the Russell 2000 Index, an index of small capitalization
stocks. The Fund may invest up to 21 percent of its total assets in small
company stocks.
INVESTMENT RISKS. Stocks in the small capitalization sector of the
United States equity market have historically been more volatile in
price than larger capitalization stocks, such as those included in the
Standard & Poor's Ratings Group 500 Index. This is because, among other
things, small companies have less certain growth prospects than larger
companies; have a lower degree of liquidity in the equity market; and
tend to have a greater sensitivity to changing economic conditions.
Further, in addition to exhibiting greater volatility, the stocks of
small companies may, to some degree, fluctuate independently of the
stocks of large companies; that is, small company stocks may decline in
price as large company stocks rise in price or vice versa.
FOREIGN STOCKS. Foreign stocks are equity securities of established
companies in economically developed countries other than the United States.
These securities may be either dollar-denominated or denominated in foreign
currencies. American Depository Receipts ("ADRs"), including dollar
denominated ADRs which are issued by domestic banks and traded in the
United States on exchanges or over-the-counter, are treated as foreign
stocks for purposes of the asset category ranges. The Fund may invest up to
21 percent of its total assets in foreign stocks.
EQUITY RESERVES. When the adviser believes that a temporary defensive
position is desirable, the Fund may invest in equity reserves. Equity
reserves will be used to adjust the risk level of the equity portion of the
Fund in response to market conditions. Equity reserves will consist of U.S.
and foreign short-term money market instruments such as commercial paper
rated A-1 by Standard and Poor's Ratings Group ("Standard & Poor's"),
Prime-1 by Moody's Investors Service, Inc. ("Moody's"), or F-1 by Fitch
Investors Service, Inc. ("Fitch"). The Fund may invest up to 15 percent of
its total assets in equity reserves.
BOND ASSET CATEGORIES. The portion of the Fund's assets which is invested in
bonds ("Bond Assets") will be allocated among the following asset categories
within the ranges specified. The prices of fixed income securities fluctuate
inversely to the direction of interest rates. Generally, the
Fund will invest in Bond Assets which are believed to offer opportunities for
growth of capital when the adviser believes interest rates will decline and,
therefore, the value of the debt securities will increase, or the market value
of bonds will increase due to factors affecting certain types of bonds or
particular issuers, such as improvement in credit quality due to company
fundamentals or economic conditions or assumptions on changes in trends in
prepayment rates with respect to mortgage-backed securities. The average
duration of the Fund's Bond Assets will be not less than three nor more than
seven years. Duration is a commonly used measure of the potential volatility of
the price of a debt security, or the aggregate market value of a portfolio of
debt securities, prior to maturity. Securities with shorter durations generally
have less volatile prices than securities of comparable quality with longer
durations. The Fund should be expected to maintain a higher average duration
during periods of lower expected market volatility, and a lower average duration
during periods of higher expected market volatility.
U.S. TREASURY SECURITIES. U.S. Treasury securities are direct obligations
of the U.S. Treasury, such as U.S. Treasury bills, notes, and bonds. The
Fund may invest up to 45 percent of its total assets in U.S. Treasury
securities. The Fund may invest in other U.S. government securities if, in
the judgment of the adviser, other U.S. government securities are more
attractive than U.S. Treasury securities.
MORTGAGE-BACKED SECURITIES. Mortgage-backed securities represent an
undivided interest in a pool of residential mortgages or may be
collateralized by a pool of residential mortgages. Mortgage-backed
securities are generally either issued or guaranteed by the Government
National Mortgage Association ("GNMA"), Federal National Mortgage
Association ("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC") or
other U.S. government agencies or instrumentalities. Mortgage-backed
securities may also be issued by single-purpose, stand-alone finance
subsidiaries or trusts of financial institutions, government agencies,
investment bankers, or companies related to the construction industry. The
Fund may invest up to 15 percent of its total assets in mortgage-backed
securities.
INVESTMENT-GRADE CORPORATE BONDS. Investment-grade corporate bonds are
corporate debt obligations having fixed or floating rates of interest and
which are rated BBB or higher by a nationally recognized statistical rating
organization ("NRSRO"). The Fund may invest up to 15 percent of its total
assets in investment-grade corporate bonds. In certain cases, the Fund's
adviser may choose bonds which are unrated if it determines that such bonds
are of comparable quality or have similar characteristics to the
investment-grade bonds described above. Yankee bonds, which are U.S.
dollar-denominated bonds issued and traded in the United States by foreign
issuers, are treated as investment-grade corporate bonds for purposes of
the asset category ranges.
HIGH YIELD CORPORATE BONDS. High yield corporate bonds are corporate debt
obligations having fixed or floating rates of interest and which are rated
BB or lower by NRSROs (commonly known as junk bonds). The Fund may invest
up to 15 percent of its total assets in high yield corporate bonds. There
is no minimal acceptable rating for a security to be purchased or held in
the Fund's portfolio, and the Fund may, from time to time, purchase or hold
securities rated in the lowest rating category. (See "Appendix.") In
certain cases the Fund's adviser may
choose bonds which are unrated if it determines that such bonds are of
comparable quality or have similar characteristics to the high yield bonds
described above.
INVESTMENT RISKS. Lower-rated securities will usually offer higher
yields than higher-rated securities. However, there is more risk
associated with these investments. This is because of reduced
creditworthiness and increased risk of default. Lower-rated securities
generally tend to reflect short-term corporate and market developments
to a greater extent than higher-rated securities which react primarily
to fluctuations in the general level of interest rates. Short-term
corporate and market developments affecting the price or liquidity of
lower-rated securities could include adverse news affecting major
issuers, underwriters, or dealers of lower-rated corporate debt
obligations. In addition, since there are fewer investors in
lower-rated securities, it may be harder to sell the securities at an
optimum time. As a result of these factors, lower-rated securities tend
to have more price volatility and carry more risk to principal than
higher-rated securities.
Many corporate debt obligations, including many lower-rated bonds,
permit the issuers to call the security and thereby redeem their
obligations earlier than the stated maturity dates. Issuers are more
likely to call bonds during periods of declining interest rates. In
these cases, if the Fund owns a bond which is called, the Fund will
receive its return of principal earlier than expected and would likely
be required to reinvest the proceeds at lower interest rates, thus
reducing income to the Fund.
FOREIGN BONDS. Foreign bonds are high-quality debt securities of countries
other than the United States. The Fund's portfolio of foreign bonds will be
comprised mainly of foreign government, foreign governmental agency or
supranational institution bonds. The Fund will also invest in high-quality
debt securities issued by corporations in countries other than the United
States and subject to the Fund's credit limitations for foreign bonds. The
Fund may invest up to 15 percent of its total assets in foreign bonds.
ACCEPTABLE INVESTMENTS
EQUITY SECURITIES. Common stocks represent ownership interest in a
corporation. Unlike bonds, which are debt securities, common stocks have
neither fixed maturity dates nor fixed schedules of promised payments.
Utility stocks are common stocks of utility companies, including water
companies, companies that produce, transmit, or distribute gas and electric
energy and those companies that provide communications facilities, such as
telephone and telegraph companies. Foreign stocks are equity securities of
foreign issuers.
FOREIGN SECURITIES. The foreign bonds in which the Fund invests are rated
within the four highest ratings for bonds by Moody's (Aaa, Aa, A or Baa) or
by Standard & Poor's (AAA, AA, A or BBB) or are unrated if determined to be
of equivalent quality by the Fund's adviser.
INVESTMENT RISKS. Investments in foreign securities involve special
risks that differ from those associated with investments in domestic
securities. The risks associated with investments in foreign securities
apply to securities issued by foreign corporations and sovereign
governments. These risks relate to political and economic developments
abroad, as well as those that result from the differences between the
regulation of
domestic securities and issuers and foreign securities and issuers.
These risks may include, but are not limited to, expropriation,
confiscatory taxation, currency fluctuations, withholding taxes on
interest, limitations on the use or transfer of Fund assets, political
or social instability and adverse diplomatic developments. It may also
be more difficult to enforce contractual obligations or obtain court
judgments abroad than would be the case in the United States because of
differences in the legal systems. If the issuer of the debt or the
governmental authorities that control the repayment of the debt may be
unable or unwilling to repay principal or interest when due in
accordance with the terms of such debt, the Fund may have limited legal
recourse in the event of default. Moreover, individual foreign
economies may differ favorably or unfavorably from the domestic economy
in such respects as growth of gross national product, the rate of
inflation, capital reinvestment, resource self-sufficiency and balance
of payments position.
Additional differences exist between investing in foreign and domestic
securities. Examples of such differences include: less publicly
available information about foreign issuers; credit risks associated
with certain foreign governments; the lack of uniform financial
accounting standards applicable to foreign issuers; less readily
available market quotations on foreign issuers; the likelihood that
securities of foreign issuers may be less liquid or more volatile;
generally higher foreign brokerage commissions; and unreliable mail
service between countries.
EQUITY RESERVES. The Fund's equity reserves may be cash received from the
sale of Fund shares, reserves for temporary defensive purposes or to take
advantage of market opportunities.
REPURCHASE AGREEMENTS. Repurchase agreements are arrangements in which
banks, broker/dealers, and other recognized financial institutions sell
securities to the Fund and agree at the time of sale to repurchase them
at a mutually agreed upon time and price. To the extent that the
original seller does not repurchase the securities from the Fund, the
Fund could receive less than the repurchase price on any sale of such
securities.
CONVERTIBLE SECURITIES. Convertible securities are fixed-income securities
which may be exchanged or converted into a predetermined number of the
issuer's underlying common stock at the option of the holder during a
specified time period. Convertible securities may take the form of
convertible preferred stock, convertible bonds or debentures, units
consisting of "usable" bonds and warrants or a combination of the features
of several of these securities. The investment characteristics of each
convertible security vary widely, which allows convertible securities to be
employed for different investment objectives. The adviser may treat
convertible securities as large company stocks, small company stocks, or
high yield bonds for purposes of the asset category ranges, depending upon
current market conditions, including the relationship of the then-current
price to the conversion price. The convertible securities in which the Fund
invests may be rated "high yield" or of comparable quality at the time of
purchase.
U.S. TREASURY AND OTHER U.S. GOVERNMENT SECURITIES. The U.S. Treasury and
other U.S. government securities in which the Fund invests are either
issued or guaranteed by the U.S.
government, its agencies or instrumentalities. The U.S. government
securities in which the Fund may invest are limited to:
direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds; and
obligations issued by U.S. government agencies or instrumentalities,
including securities that are supported by the full faith and credit of
the U.S. Treasury (such as GNMA certificates); securities that are
supported by the right of the issuer to borrow from the U.S. Treasury
(such as securities of Federal Home Loan Banks); and securities that are
supported by the credit of an agency or instrumentality (such as FNMA and
FHLMC bonds).
MORTGAGE-BACKED SECURITIES. Mortgage-backed securities are securities
collateralized by residential mortgages. The mortgage-backed securities in
which the Fund may invest may be:
issued by an agency of the U.S. government, typically GNMA, FNMA or
FHLMC;
privately issued securities which are collateralized by pools of
mortgages in which each mortgage is guaranteed as to payment of principal
and interest by an agency or instrumentality of the U.S. government;
privately issued securities which are collateralized by pools of
mortgages in which payment of principal and interest are guaranteed by
the issuer and such guarantee is collateralized by U.S. government
securities; and
other privately issued securities in which the proceeds of the issuance
are invested in mortgage-backed securities and payment of the principal
and interest are supported by the credit of an agency or instrumentality
of the U.S. government.
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"). CMOs are bonds issued by
single-purpose, stand-alone finance subsidiaries or trusts of financial
institutions, government agencies, investment bankers, or companies
related to the construction industry. Most of the CMOs in which the
Fund would invest use the same basic structure:
Several classes of securities are issued against a pool of mortgage
collateral. The most common structure contains four classes of
securities. The first three (A, B, and C bonds) pay interest at
their stated rates beginning with the issue date; the final class
(or Z bond) typically receives the residual income from the
underlying investments after payments are made to the other
classes.
The cash flows from the underlying mortgages are applied first to
pay interest and then to retire securities.
The classes of securities are retired sequentially. All principal
payments are directed first to the shortest-maturity class (or A
bonds). When those securities are completely retired, all principal
payments are then directed to the next-shortest maturity security
(or B bond). This process continues until all of the classes have
been paid off.
Because the cash flow is distributed sequentially instead of pro rata
as with pass-through securities, the cash flows and average lives of
CMOs are more predictable, and there is a period of time during which
the investors in the longer-maturity classes receive no
principal paydowns. The interest portion of these payments is
distributed by the Fund as income and the capital portion is
reinvested.
The Fund will invest only in CMOs which are rated AAA or Aaa by an
NRSRO.
REAL ESTATE MORTGAGE INVESTMENT CONDUITS ("REMICS"). REMICs are
offerings of multiple class real estate mortgage-backed securities
which qualify and elect treatment as such under provisions of the
Internal Revenue Code. Issuers of REMICs may take several forms, such
as trusts, partnerships, corporations, associations or a segregated
pool of mortgages. Once REMIC status is elected and obtained, the
entity is not subject to federal income taxation. Instead, income is
passed through the entity and is taxed to the person or persons who
hold interests in the REMIC. A REMIC interest must consist of one or
more classes of "regular interests," some of which may offer adjustable
rates, and a single class of "residual interests." To qualify as a
REMIC, substantially all of the assets of the entity must be in assets
directly or indirectly secured principally by real property.
CHARACTERISTICS OF MORTGAGE-BACKED SECURITIES. Mortgage-backed
securities have yield and maturity characteristics corresponding to the
underlying mortgages. Distributions to holders of mortgage-backed
securities include both interest and principal payments. Principal
payments represent the amortization of the principal of the underlying
mortgages and any prepayments of principal due to prepayment,
refinancing, or foreclosure of the underlying mortgages. Although
maturities of the underlying mortgage loans may range up to 30 years,
amortization and prepayments substantially shorten the effective
maturities of mortgage-backed securities. Due to these features,
mortgage-backed securities are less effective as a means of "locking
in" attractive long-term interest rates than fixed-income securities
which pay only a stated amount of interest until maturity, when the
entire principal amount is returned. This is caused by the need to
reinvest at lower interest rates both distributions of principal
generally and significant prepayments which become more likely as
mortgage interest rates decline. Since comparatively high interest
rates cannot be effectively "locked in," mortgage-backed securities may
have less potential for capital appreciation during periods of
declining interest rates than other non-callable, fixed-income
government securities of comparable stated maturities. However,
mortgage-backed securities may experience less pronounced declines in
value during periods of rising interest rates.
In addition, some of the CMOs purchased by the Fund may represent an
interest solely in the principal repayments or solely in the interest
payments on mortgage-backed securities (stripped mortgage-backed
securities or "SMBSs"). Due to the possibility of prepayments on the
underlying mortgages, SMBSs may be more interest-rate sensitive than
other securities purchased by the Fund. If prevailing interest rates
fall below the level at which SMBSs were issued, there may be
substantial prepayments on the underlying mortgages, leading to the
relatively early prepayments of principal-only SMBSs and a reduction in
the amount of payments made to holders of interest-only SMBSs. It is
possible that the Fund might not recover its original investment in
interest-only SMBSs if there are substantial prepayments on the
underlying mortgages. Therefore, interest-only SMBSs generally increase
in value as interest rates rise and decrease in value as interest
rates fall, counter to changes in value experienced by most fixed
income securities. The Fund's adviser intends to use this
characteristic of interest-only SMBSs to reduce the effects of interest
rate changes on the value of the Fund's portfolio, while continuing to
pursue the Fund's investment objective.
CORPORATE BONDS. The investment-grade corporate bonds in which the Fund
invests are:
rated within the four highest ratings for corporate bonds by Moody's
(Aaa, Aa, A, or Baa), Standard & Poor's (AAA, AA, A, or BBB), or Fitch
(AAA, AA, A, or BBB);
unrated if other long-term debt securities of that issuer are rated, at
the time of purchase, Baa or better by Moody's or BBB or better by
Standard & Poor's or Fitch; or
unrated if determined to be of equivalent quality to one of the foregoing
rating categories by the Fund's adviser.
Securities which are rated BBB by Standard & Poor's or Fitch or Baa by
Moody's have speculative characteristics. Changes in economic conditions or
other circumstances are more likely to lead to weakened capacity to make
principal and interest payments than higher rated bonds. If a security's
rating is reduced below the required minimum after the Fund has purchased
it, the Fund is not required to sell the security, but may consider doing
so.
The high yield corporate bonds in which the Fund invests are rated Ba or
lower by Moody's or BB or lower by Standard & Poor's or Fitch (commonly
known as junk bonds). A description of the rating categories is contained
in the Appendix to this prospectus.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Fund may invest in
the securities of other investment companies, but it will not own more than 3
percent of the total outstanding voting stock of any such investment company,
invest more than 5 percent of its total assets in any one such investment
company, or invest more than 10 percent of its total assets in such other
investment companies in general. To the extent that the Fund invests in
securities issued by other investment companies, the Fund will indirectly bear
its proportionate share of any fees and expenses paid by such companies in
addition to the fees and expenses payable directly by the Fund.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies but which are
subject to restrictions on resale under federal securities law. However, the
Fund will limit investments in illiquid securities, including certain restricted
securities not determined by the Trustees to be liquid, over-the-counter
options, and repurchase agreements providing for settlement in more than seven
days after notice, to 15 percent of its net assets.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
Accordingly, the Fund may pay more or less than the market value of the
securities on the settlement date.
The Fund may dispose of a commitment prior to settlement if the adviser deems it
appropriate to do so. In addition, the Fund may enter into transactions to sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Fund may realize short-term profits or losses upon the sale of such
commitments.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend its portfolio securities on a short-term or long-term basis up to
one-third of the value of its total assets to broker/dealers, banks, or other
institutional borrowers of securities. The Fund will only enter into loan
arrangements with broker/dealers, banks, or other institutions which the adviser
has determined are creditworthy under guidelines established by the Trustees and
will receive collateral in the form of cash or U.S. government securities equal
to at least 100 percent of the value of the securities loaned.
There is the risk that when lending portfolio securities, the securities may not
be available to the Fund on a timely basis and the Fund may, therefore, lose the
opportunity to sell the securities at a desirable price. In addition, in the
event that a borrower of securities would file for bankruptcy or become
insolvent, disposition of the securities may be delayed pending court action.
FOREIGN CURRENCY TRANSACTIONS. The Fund will enter into foreign currency
transactions to obtain the necessary currencies to settle securities
transactions. Currency transactions may be conducted either on a spot or cash
basis at prevailing rates or through forward foreign currency exchange
contracts.
The Fund may also enter into foreign currency transactions to protect Fund
assets against adverse changes in foreign currency exchange rates or exchange
control regulations. Such changes could unfavorably affect the value of Fund
assets which are denominated in foreign currencies, such as foreign securities
or funds deposited in foreign banks, as measured in U.S. dollars. Although
foreign currency exchanges may be used by the Fund to protect against a decline
in the value of one or more currencies, such efforts may also limit any
potential gain that might result from a relative increase in the value of such
currencies and might, in certain cases, result in losses to the Fund.
CURRENCY RISKS. To the extent that debt securities purchased by the Fund
are denominated in currencies other than the U.S. dollar, changes in
foreign currency exchange rates will affect the Fund's net asset value; the
value of interest earned; gains and losses realized on the sale of
securities; and net investment income and capital gain, if any, to be
distributed to shareholders by the Fund. If the value of a foreign currency
rises against the U.S. dollar, the value of the Fund's assets denominated
in that currency will increase; correspondingly, if the value of a foreign
currency declines against the U.S. dollar, the value of the Fund's assets
denominated in that currency will decrease.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward foreign currency
exchange contract ("forward contract") is an obligation to purchase or sell an
amount of a particular currency at a specific price and on a future date agreed
upon by the parties.
Generally, no commission charges or deposits are involved. At the time the Fund
enters into a forward contract, Fund assets with a value equal to the Fund's
obligation under the forward contract
are segregated and are maintained until the contract has been settled. The Fund
will not enter into a forward contract with a term of more than one year.
The Fund will generally enter into a forward contract to provide the proper
currency to settle a securities transaction at the time the transaction occurs
("trade date"). The period between trade date and settlement date will vary
between 24 hours and 30 days, depending upon local custom.
The Fund may also protect against the decline of a particular foreign currency
by entering into a forward contract to sell an amount of that currency
approximating the value of all or a portion of the Fund's assets denominated in
that currency ("hedging"). The success of this type of short-term hedging
strategy is highly uncertain due to the difficulties of predicting short-term
currency market movements and of precisely matching forward contract amounts and
the constantly changing value of the securities involved. Although the adviser
will consider the likelihood of changes in currency values when making
investment decisions, the adviser believes that it is important to be able to
enter into forward contracts when it believes the interests of the Fund will be
served. The Fund will not enter into forward contracts for hedging purposes in a
particular currency in an amount in excess of the Fund's assets denominated in
that currency. The Fund will not invest more than 21% of its total assets in
forward foreign currency exchange contracts.
OPTIONS. The Fund may deal in options on foreign currencies, foreign currency
futures, securities, and securities indices, which options may be listed for
trading on a national securities exchange or traded over-the-counter. The Fund
will use options only to manage interest rate and currency risks. The Fund may
write covered call options to generate income. The Fund may write covered call
options and secured put options on up to 25 percent of its net assets and may
purchase put and call options provided that no more than 5 percent of the fair
market value of its net assets may be invested in premiums on such options.
A call option gives the purchaser the right to buy, and the writer the
obligation to sell, the underlying currency, security or other asset at the
exercise price during the option period. A put option gives the purchaser the
right to sell, and the writer the obligation to buy, the underlying currency,
security or other asset at the exercise price during the option period. The
writer of a covered call owns assets that are acceptable for escrow, and the
writer of a secured put invests an amount not less than the exercise price in
eligible assets to the extent that it is obligated as a writer. If a call
written by the Fund is exercised, the Fund foregoes any possible profit from an
increase in the market price of the underlying asset over the exercise price
plus the premium received. In writing puts, there is a risk that the Fund may be
required to take delivery of the underlying asset at a disadvantageous price.
Over-the-counter options ("OTC options") differ from exchange traded options in
several respects. They are transacted directly with dealers and not with a
clearing corporation, and there is a risk of non-performance by the dealer as a
result of the insolvency of such dealer or otherwise, in which event the Fund
may experience material losses. However, in writing options, the premium is paid
in advance by the dealer. OTC options, which may not be continuously liquid, are
available for a greater variety of assets and with a wider range of expiration
dates and exercise prices, than are exchange traded options.
FUTURES AND OPTIONS ON FUTURES. The Fund may purchase and sell futures
contracts to accommodate cash flows into and out of the Fund's portfolio and to
hedge against the effects of changes in the value of portfolio securities due to
anticipated changes in interest rates and market conditions. Interest rate
futures contracts call for the delivery of particular debt instruments at a
certain time in the future. The seller of the contract agrees to make delivery
of the type of instrument called for in the contract, and the buyer agrees to
take delivery of the instrument at the specified future time.
Stock index futures contracts are based on indexes that reflect the market value
of common stock of the firms included in the indexes. An index futures contract
is an agreement pursuant to which two parties agree to take or make delivery of
an amount of cash equal to the differences between the value of the index at the
close of the last trading day of the contract and the price at which the index
contract was originally written. The Fund may utilize stock index futures to
handle cash flows into and out of the Fund and to potentially reduce
transactional costs.
The Fund may also write call options and purchase put options on futures
contracts as a hedge to attempt to protect its portfolio securities against
decreases in value. When the Fund writes a call option on a futures contract, it
is undertaking the obligation of selling a futures contract at a fixed price at
any time during a specified period if the option is exercised. Conversely, as
purchaser of a put option on a futures contract, the Fund is entitled (but not
obligated) to sell a futures contract at the fixed price during the life of the
option.
The Fund may not purchase or sell futures contracts or related options if
immediately thereafter the sum of the amount of margin deposits on the Fund's
existing futures positions and premiums paid for related options would exceed 5
percent of the market value of the Fund's total assets. When the Fund purchases
futures contracts, an amount of cash and cash equivalents, equal to the
underlying commodity value of the futures contracts (less any related margin
deposits), will be deposited in a segregated account with the custodian (or the
broker, if legally permitted) to collateralize the position and thereby insure
that the use of such futures contracts are unleveraged. When the Fund sells
futures contracts, it will either own or have the right to receive the
underlying future or security or will make deposits to collateralize the
position as discussed above.
RISKS. When the Fund uses futures and options on futures as hedging
devices, there is a risk that the prices of the securities subject to the
futures contracts may not correlate perfectly with the prices of the
securities in the Fund's portfolio. This may cause the futures contract and
any related options to react differently than the portfolio securities to
market changes. In addition, the investment adviser could be incorrect in
its expectations about the direction or extent of market factors such as
stock price movements. In these events, the Fund may lose money on the
futures contract or option.
It is not certain that a secondary market for positions in futures
contracts or for options will exist at all times. Although the investment
adviser will consider liquidity before entering into these transactions,
there is no assurance that a liquid secondary market on an exchange or
otherwise will exist for any particular futures contract or option at any
particular time. The Fund's ability to establish and close out futures and
options positions depends on this secondary market.
PORTFOLIO TURNOVER. Although the Fund does not intend to invest for the purpose
of seeking short-term profits, securities in its portfolio will be sold whenever
the Fund's adviser believes it is appropriate to do so in light of the Fund's
investment objective, without regard to the length of time a particular security
may have been held. The Fund's rate of portfolio turnover may exceed that of
certain other mutual funds with the same investment objective. A higher rate of
portfolio turnover involves correspondingly greater transaction expenses which
must be borne directly by the Fund and, thus, indirectly by its shareholders. In
addition, a high rate of portfolio turnover may result in the realization of
larger amounts of capital gains which, when distributed to the Fund's
shareholders, are taxable to them. (Further information is contained in the
Fund's Statement of Additional Information within the sections "Brokerage
Transactions" and "Tax Status"). Nevertheless, transactions for the Fund's
portfolio will be based only upon investment considerations and will not be
limited by any other considerations when the Fund's adviser deems it appropriate
to make changes in the Fund's portfolio.
INVESTMENT LIMITATIONS
The Fund will not:
borrow money directly or through reverse repurchase agreements or pledge
securities except, under certain circumstances, the Fund may borrow up to
one-third of the value of its total assets and pledge up to 15 percent of
the value of those assets to secure such borrowings;
lend any securities except for portfolio securities; or
underwrite any issue of securities, except as it may be deemed to be an
underwriter under the Securities Act of 1933 in connection with the sale
of restricted securities which the Fund may purchase pursuant to its
investment objective, policies and limitations.
The above investment limitations cannot be changed without shareholder approval.
TRUST INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Trust's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. The Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Except as noted below with regard to the sub-adviser,
investment decisions for the Fund are made by Federated Management, the Fund's
investment adviser (the "Adviser"), subject to direction by the Trustees. The
Adviser continually conducts investment research and supervision for the Fund
and is responsible for the purchase or sale of portfolio instruments, for which
it receives an annual fee from the Fund.
ADVISORY FEES. The Adviser receives an annual investment advisory fee
equal to .75 of 1% of the Fund's average daily net assets. The fee paid by
the Fund, while higher than the advisory fee paid by other mutual funds in
general, is comparable to fees paid by other mutual funds
with similar objectives and policies. Under the advisory contract, which
provides for voluntary reimbursement of expenses by the Adviser, the
Adviser may voluntarily waive some or all of its fee. This does not include
reimbursement to the Fund of any expenses incurred by shareholders who use
the transfer agent's subaccounting facilities. The Adviser has also
undertaken to reimburse the Fund for operating expenses in excess of
limitations established by certain states.
ADVISER'S BACKGROUND. Federated Management, a Delaware business trust
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940.
SUB-ADVISER. Under the terms of the Sub-Advisory Agreement between the Adviser
and Federated Global Research Corp. (the "Sub-Adviser"), the Sub-Adviser will
provide the Adviser such investment advice, statistical and other factual
information as may, from time to time, be reasonably requested by the Adviser.
SUB-ADVISORY FEES. For its services under the Sub-Advisory Agreement, the
Sub-Adviser receives an allocable portion of the Fund's advisory fee. Such
allocation is based on the amount of foreign securities which the
Sub-Adviser manages for the Fund. This fee is paid by the Adviser out of
its resources and is not an incremental Fund expense.
SUB-ADVISER'S BACKGROUND. Federated Global Research Corp., incorporated in
Delaware on May 12, 1995, is a registered investment adviser under the
Investment Advisers Act of 1940. Prior to September 1995, the Sub-Adviser
had not served as an investment adviser to mutual funds.
The Adviser and Sub-Adviser are subsidiaries of Federated Investors. All of the
Class A (voting) shares of Federated Investors are owned by a trust, the
trustees of which are John F. Donahue, Chairman and Trustee of Federated
Investors, Mr. Donahue's wife, and Mr. Donahue's son,
J. Christopher Donahue, who is President and Trustee of Federated Investors.
Federated Management, Federated Global Research Corp. and other subsidiaries of
Federated Investors serve as investment advisers to a number of investment
companies and private accounts. Certain other subsidiaries also provide
administrative services to a number of investment companies. With over $80
billion invested across more than 250 funds under management and/or
administration by its subsidiaries, as of December 31, 1995, Federated Investors
is one of the largest mutual fund investment managers in the United States. With
more than 1,800 employees, Federated continues to be led by the management who
founded the company in 1955. Federated funds are presently at work in and
through 4,000 financial institutions nationwide. More than 100,000 investment
professionals have selected Federated funds for their clients.
The Trust, the Adviser, and the Sub-Adviser have adopted strict codes of ethics
governing the conduct of all employees who manage the Fund and its portfolio
securities. These codes recognize that such persons owe a fiduciary duty to the
Fund's shareholders and must place the interests of shareholders ahead of the
employees' own interest. Among other things, the codes: require preclearance and
periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered for
purchase or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities
held for less than sixty days. Violations of these codes are subject to review
by the Trustees, and could result in severe penalties.
PORTFOLIO MANAGERS' BACKGROUNDS
Charles A. Ritter is the portfolio manager for the Fund and performs the
overall allocation of the assets of the Fund among the various asset
categories. He has performed these duties since the Fund's inception. In
allocating the Fund's assets, Mr. Ritter evaluates the market environment
and economic outlook, utilizing the services of the Adviser's economist and
strategist. Mr. Ritter joined Federated Investors in 1983 and has been a
Vice President of the Fund's Adviser since 1992. From 1988 until 1991, Mr.
Ritter acted as an Assistant Vice President.
Mr. Ritter is a Chartered Financial Analyst and received his M.B.A. in
Finance from the University of Chicago and his M.S. in Economics from
Carnegie Mellon University.
The portfolio managers for each of the individual asset categories are as
follows:
Peter R. Anderson and Aash Shah are portfolio managers for the domestic
large company stocks asset category. Mr. Anderson has performed this duty
since the Fund's inception. Mr. Shah assumed his responsibilities in
December 1995. Mr. Anderson joined Federated Investors in 1972 and is
presently a Senior Vice President of the Fund's Adviser. Mr. Anderson is a
Chartered Financial Analyst and received his M.B.A. in Finance from the
University of Wisconsin. Mr. Shah joined Federated Investors in 1993 as an
Investment Analyst and has been an Assistant Vice President of the Fund's
Adviser since 1995. Mr. Shah was employed at Westinghouse Credit Corp. from
1990 to 1993 as an Investment Analyst. Mr. Shah received his M.S.I.A. from
Carnegie Mellon University with a concentration in finance and accounting.
Mr. Shah is a Chartered Financial Analyst.
James Grefenstette is the portfolio manager for the domestic small company
stocks asset category. He has served in this capacity since August 1994.
Mr. Grefenstette joined Federated Investors in 1992 and has been an
Assistant Vice President of the Fund's Adviser since 1994. From 1992 until
1994, Mr. Grefenstette acted as an investment analyst. Mr. Grefenstette was
a credit analyst at Westinghouse Credit Corp. from 1990 until 1992. Mr.
Grefenstette received his M.S.I.A. from Carnegie Mellon University.
Christopher H. Wiles is the portfolio manager for the utility stocks asset
category, and has been one of the Fund's portfolio managers since its
inception. Mr. Wiles joined Federated Investors in 1990 and has been a Vice
President of the Fund's Adviser since 1992. Mr. Wiles served as Assistant
Vice President of the Fund's Adviser from 1990 until 1992. Mr. Wiles is a
Chartered Financial Analyst and received his M.B.A. in Finance from
Cleveland State University.
Henry Frantzen, Drew Collins, Mark Kopinski, Frank Semack, and Alexandre de
Bethmann are portfolio managers for the foreign stocks asset category.
Henry A. Frantzen has been a portfolio manager of the Fund since November
1995. Mr. Frantzen joined Federated Investors in 1995 as an Executive Vice
President of the Fund's Sub-Adviser. Mr. Frantzen served as Chief
Investment Officer of international equities at Brown Brothers Harriman &
Co. from 1992 to 1995. He was the Executive Vice President and
Director of Equities at Oppenheimer Management Corporation from 1989 to
1991. Mr. Frantzen received his B.S. in finance and marketing from the
University of North Dakota.
Drew J. Collins has been a portfolio manager of the Fund since November
1995. Mr. Collins joined Federated Investors in 1995 as a Senior Vice
President of the Fund's Sub-Adviser. Mr. Collins served as a Vice
President/Portfolio Manager of international equity portfolios at Arnhold
and S. Bleichroeder, Inc. from 1994 to 1995. He served as an Assistant Vice
President/ Portfolio Manager for international equities at the College
Retirement Equities Fund from 1986 to 1994. Mr. Collins is a Chartered
Financial Analyst and received his M.B.A. in finance from the University of
Pennsylvania.
Mark S. Kopinski has been a portfolio manager of the Fund since November
1995. Mr. Kopinski joined Federated Investors in 1995 as a Vice President
of the Fund's Sub-Adviser. Mr. Kopinski served as Vice President/Portfolio
Manager of international equity funds at Twentieth Century Mutual Funds
from 1990 to 1995. Mr. Kopinski received his M.B.A. in Asian Studies from
the University of Illinois.
Frank Semack has been a portfolio manager of the Fund since November 1995.
Mr. Semack joined Federated Investors in 1995 as a Vice President of the
Fund's Sub-Adviser. Mr. Semack served as an Investment Analyst at Omega
Advisers, Inc. from 1993 to 1994. He served as an Associate
Director/Portfolio Manager of Wardley Investment Services, Ltd. from 1987
to 1993. Mr. Semack received his M.Sc. in economics from the London School
of Economics.
Alexandre de Bethmann has been a portfolio manager of the Fund since
November 1995. Mr. de Bethmann joined Federated Investors in 1995 as a Vice
President of the Fund's Sub-Adviser. Mr. de Bethmann served as Assistant
Vice President/Portfolio Manager for Japanese and Korean equities at the
College Retirement Equities Fund from 1994 to 1995. He served as an
International Equities Analyst and then as an Assistant Portfolio Manager
at the College Retirement Equities Fund between 1987 and 1994. Mr. de
Bethmann received his M.B.A. in Finance from Duke University.
Henry Frantzen, Drew Collins, and Robert Kowit are portfolio managers for
the foreign bonds asset category. They have performed these duties since
November 1995.
Robert M. Kowit joined Federated Investors in 1995 as a Vice President of
the Fund's Sub-Adviser. Mr. Kowit served as a Managing Partner of
Copernicus Global Asset Management from January 1995 through October 1995.
From 1990 to 1994, he served as Senior Vice President of International
Fixed Income and Foreign Exchange for John Hancock Advisers. Mr. Kowit
received his M.B.A. from Iona College with a concentration in finance.
Susan M. Nason and Joseph M. Balestrino are portfolio managers for the U.S.
Treasury securities asset category. Ms. Nason has performed this duty since
the Fund's inception. Mr. Balestrino assumed his responsibilities on March
1, 1995. Ms. Nason joined Federated Investors in 1987 and has been a Vice
President of the Fund's Adviser since 1993. Ms. Nason served as an
Assistant Vice President of the Adviser from 1990 until 1992. Ms. Nason is
a Chartered Financial Analyst and received her M.S.I.A. in Finance from
Carnegie Mellon University.
Mr. Balestrino joined Federated Investors in 1986 and has been Vice
President of the Fund's
Adviser since 1995. Mr. Balestrino served as an Assistant Vice President
from 1991 until 1995, and as an investment analyst of the Adviser from 1989
until 1991. Mr. Balestrino is a Chartered Financial Analyst and received
his M.A. in Urban and Regional Planning from the University of Pittsburgh.
Thomas M. Franks is the portfolio manager for the equity reserves asset
category. He has performed these duties since the Fund's inception. Mr.
Franks joined Federated Investors in 1985 and has been a Vice President of
the Fund's Adviser since 1990. Mr. Franks is a Chartered Financial Analyst
and received his M.S.I.A. in Business Administration from Carnegie Mellon
University.
Kathleen M. Foody-Malus and James D. Roberge are portfolio managers for the
mortgage-backed securities asset category. Ms. Foody-Malus has performed
this duty since the Fund's inception. Mr. Roberge assumed his
responsibilities on March 1, 1995. Ms. Foody-Malus joined Federated
Investors in 1983 and has been a Vice President of the Fund's Adviser since
1993. Ms. Foody-Malus served as an Assistant Vice President of the Adviser
from 1990 until 1992. Ms. Foody-Malus received her M.B.A. in
Accounting/Finance from the University of Pittsburgh. Mr. Roberge joined
Federated Investors in 1990 and has been a Vice President of the Fund's
Adviser since October, 1994. Prior to this, Mr. Roberge served as an
Assistant Vice President of the Fund's Adviser. From 1990 until 1992, Mr.
Roberge acted as an investment analyst. Mr. Roberge is a Chartered
Financial Analyst and received his M.B.A. in Finance from the University of
Pennsylvania.
Joseph M. Balestrino and Susan M. Nason are portfolio managers for the
investment-grade corporate bonds asset category. They have performed these
duties since the Fund's inception.
Mark E. Durbiano is the portfolio manager for the high yield corporate
bonds asset category. He has performed these duties since the Fund's
inception. Mr. Durbiano joined Federated Investors in 1982 and has been a
Senior Vice President of the Fund's Adviser since January 1996. Mr.
Durbiano was a Vice President of the Fund's Adviser from 1988 through 1995.
Mr. Durbiano is a Chartered Financial Analyst and received his M.B.A. in
Finance from the University of Pittsburgh.
DISTRIBUTION OF SELECT SHARES
Federated Securities Corp. is the principal distributor for Shares. It is a
Pennsylvania corporation organized on November 14, 1969, and is the principal
distributor for a number of investment companies. Federated Securities Corp. is
a subsidiary of Federated Investors.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES. Under a distribution plan adopted
in accordance with Investment Company Act Rule 12b-1 (the "Distribution Plan"),
the distributor may be paid a fee in an amount computed at an annual rate of .75
of 1% of the average daily net assets of Select Shares to finance any activity
which is principally intended to result in the sale of Shares subject to the
Distribution Plan. The distributor may select financial institutions such as
banks, fiduciaries, custodians for public funds, investment advisers, and
broker/dealers to provide sales services or distribution-related support
services as agents for their clients or customers.
The Distribution Plan is a compensation-type plan. As such, the Fund makes no
payments to the distributor except as described above. Therefore, the Fund does
not pay separately for unreimbursed expenses of the distributor, including
amounts expended by the distributor in excess of amounts received by it from the
Fund, interest, carrying or other financing charges in connection with excess
amounts expended, or the distributor's overhead expenses. However, the
distributor may be able to recover such amount or may earn a profit from
payments made by the Fund under the Distribution Plan.
In addition, the Fund has entered into a Shareholder Services Agreement with
Federated Shareholder Services, a subsidiary of Federated Investors, under which
the Fund may make payments up to .25 of 1% of the average daily net asset value
of the Select Shares to obtain certain personal services for shareholders and
for the maintenance of shareholder accounts. Under the Shareholder Services
Agreement, Federated Shareholders Services will either perform shareholder
services directly or will select financial institutions to perform shareholder
services. Financial institutions will receive fees based upon shares owned by
their clients or customers. The schedules of such fees and the basis upon which
such fees will be paid will be determined from time to time by the Fund and
Federated Shareholder Services.
SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS. In addition to receiving the
payments under the Distribution Plan and Shareholder Services Agreement,
Federated Securities Corp. and Federated Shareholder Services, from their own
assets, may pay financial institutions supplemental fees for the performance of
substantial sales services, distribution-related support services, or
shareholder services. The support may include sponsoring sales, educational and
training seminars for their employees, providing sales literature, and
engineering computer software programs that emphasize the attributes of the
Fund. Such assistance will be predicated upon the amount of Shares the financial
institution sells or may sell, and/or upon the type and nature of sales or
marketing support furnished by the financial institution. Any payments made by
the distributor may be reimbursed by the Fund's Adviser or its affiliates.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides administrative personnel and services (including
certain legal and financial reporting services) necessary to operate the Fund.
Federated Administrative Services provides these at an annual rate which relates
to the average aggregate daily net assets of all funds advised by subsidiaries
of Federated Investors ("Federated Funds") as specified below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE DAILY
ADMINISTRATIVE FEE NET ASSETS OF THE FEDERATED FUNDS
<S> <C>
0.15 of 1% on the first $250 million
0.125 of 1% on the next $250 million
0.10 of 1% on the next $250 million
0.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Administrative Services may choose voluntarily to waive a portion of
its fee.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the Adviser looks for prompt execution of the order at a favorable
price. In working with dealers, the Adviser will generally use those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. In selecting among firms
believed to meet these criteria, the Adviser may give consideration to those
firms which have sold or are selling shares of the Fund and other funds
distributed by Federated Securities Corp. The Adviser makes decisions on
portfolio transactions and selects brokers and dealers subject to review by the
Trustees.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund's net asset value per Share fluctuates. The net asset value for Shares
is determined by adding the interest of the Shares in the market value of all
securities and other assets of the Fund, subtracting the interest of the Shares
in the liabilities of the Fund and those attributable to Shares, and dividing
the remainder by the total number of Shares outstanding. The net asset value for
Institutional Shares may exceed that of Select Shares due to the variance in
daily net income realized by each class. Such variance will reflect only accrued
net income to which the shareholders of a particular class are entitled.
INVESTING IN SELECT SHARES
- --------------------------------------------------------------------------------
SHARE PURCHASES
Shares are sold on days on which the New York Stock Exchange is open for
business. Shares may be purchased through a financial institution which has a
sales agreement with the distributor or by wire or mail.
To purchase Shares, open an account by calling Federated Securities Corp.
Information needed to establish an account will be taken over the telephone. The
Fund reserves the right to reject any purchase request.
THROUGH A FINANCIAL INSTITUTION. An investor may call his financial institution
(such as a bank or an investment dealer) to place an order to purchase Shares.
Orders through a financial institution are considered received when the Fund is
notified of the purchase order. Purchase orders through a registered
broker/dealer must be received by the broker before 4:00 p.m. (Eastern time) and
must be transmitted by the broker to the Fund before 5:00 p.m. (Eastern time) in
order for Shares to be purchased at that day's price. Purchase orders through
other financial institutions must be received by the financial institution and
transmitted to the Fund before 4:00 p.m. (Eastern time) in order for Shares to
be purchased at that day's price. It is the financial institution's
responsibility to transmit orders promptly.
BY WIRE. To purchase Shares by Federal Reserve wire, call the Fund before 4:00
p.m. (Eastern time) to place an order. The order is considered received
immediately. Payment by federal funds must be received before 3:00 p.m. (Eastern
time) on the next business day following the order. Federal funds should be
wired as follows: Federated Services Company, c/o State Street Bank and Trust
Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit to: Federated
Managed Growth Fund-- Select Shares; Fund Number (this number can be found on
the account statement or by contacting the Fund); Group Number or Wire Order
Number; Nominee or Institution Name; and ABA Number 011000028. Shares cannot be
purchased by wire on holidays when wire transfers are restricted. Questions on
wire purchases should be directed to your shareholder services representative at
the telephone number listed on your account statement.
BY MAIL. To purchase Shares by mail, send a check made payable to Federated
Managed Growth Fund--Select Shares to Federated Services Company, P.O. Box 8600,
Boston, Massachusetts 02266-8600. Orders by mail are considered received after
payment by check is converted by State Street Bank into federal funds. This is
normally the next business day after State Street Bank receives the check.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in Shares is $1,500. Accounts established through
a non-affiliated bank or broker may be subject to a smaller minimum investment.
WHAT SHARES COST
Shares are sold at their net asset value next determined after an order is
received. There is no sales charge imposed by the Fund. Investors who purchase
Shares through a non-affiliated bank or broker may be charged an additional
service fee by that bank or broker.
The net asset value is determined as of the close of trading (normally 4:00
p.m., Eastern time) on the New York Stock Exchange, Monday through Friday,
except on (i) days on which there are not sufficient changes in the value of the
Fund's portfolio securities such that its net asset value might be materially
affected; (ii) days during which no Shares are tendered for redemption and no
orders to purchase Shares are received; and (iii) the following holidays: New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day.
SUBACCOUNTING SERVICES
Institutions are encouraged to open single master accounts. However, certain
institutions may wish to use the transfer agent's subaccounting system to
minimize their internal recordkeeping requirements. The transfer agent may
charge a fee based on the level of subaccounting services rendered. Institutions
holding Shares in a fiduciary, agency, custodial, or similar capacity may charge
or pass through subaccounting fees as part of or in addition to normal trust or
agency account fees. They may also charge fees for other services provided which
may be related to the ownership of Shares. This prospectus should, therefore, be
read together with any agreement between the customer and the institution with
regard to the services provided, the fees charged for those services, and any
restrictions and limitations imposed. State securities laws may require certain
financial institutions such as depository institutions to register as dealers.
SYSTEMATIC INVESTMENT PROGRAM
Once a Fund account has been opened, shareholders may add to their investment on
a regular basis. Under this program, funds may be automatically withdrawn
periodically from the shareholder's checking account and invested in Shares at
the net asset value next determined after an order is received by the Fund. A
shareholder may apply for participation in this program through Federated
Securities Corp.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the Fund.
Detailed confirmations of each purchase or redemption are sent to each
shareholder. Quarterly confirmations are sent to report dividends paid during
the quarter.
DIVIDENDS
Dividends are declared and paid quarterly to all shareholders invested in the
Fund on the record date. Unless shareholders request cash payments by writing
the Fund, dividends are automatically reinvested in additional Shares of the
Fund on payment dates at the ex-dividend date net asset value without a sales
charge.
CAPITAL GAINS
Capital gains realized by the Fund, if any, will be distributed at least once
every 12 months.
REDEEMING SELECT SHARES
- --------------------------------------------------------------------------------
The Fund redeems Shares at their net asset value next determined after the Fund
receives the redemption request. Redemptions will be made on days on which the
Fund computes its net asset value. Redemption requests must be received in
proper form and can be made through a financial institution, by telephone
request or by written request.
THROUGH A FINANCIAL INSTITUTION
A shareholder may redeem Shares by calling his financial institution (such as a
bank or an investment dealer) to request the redemption. Shares will be redeemed
at the net asset value next determined after the Fund receives the redemption
request from the financial institution. Redemption requests through a registered
broker/dealer must be received by the broker before 4:00 p.m. (Eastern time) and
must be transmitted by the broker to the Fund before 5:00 p.m. (Eastern time) in
order for Shares to be redeemed at that day's net asset value. Redemption
requests through other financial institutions must be received by the financial
institution and transmitted to the Fund before 4:00 p.m. (Eastern time) in order
for Shares to be redeemed at that day's net asset value. The financial
institution is responsible for promptly submitting redemption requests and
providing proper written redemption instructions to the Fund. The financial
institution may charge customary fees and commissions for this service.
TELEPHONE REDEMPTION
Shareholders may redeem their Shares by telephoning the Fund before 4:00 p.m.
(Eastern time). All proceeds will normally be wire transferred the following
business day, but in no event more than seven days, to the shareholder's account
at a domestic commercial bank that is a member of the Federal Reserve System.
Proceeds from redemption requests received on holidays when wire transfers are
restricted will be wired the following business day. Questions about telephone
redemptions on days when wire transfers are restricted should be directed to
your shareholder services representative at the telephone number listed on your
account statement. If at any time, the Fund shall determine it necessary to
terminate or modify this method of redemption, shareholders would be promptly
notified.
An authorization form permitting the Fund to accept telephone requests must
first be completed. Authorization forms and information on this service are
available from Federated Securities Corp. Telephone redemption instructions may
be recorded. If reasonable procedures are not followed by the Fund, it may be
liable for losses due to unauthorized or fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "Written Requests," should be considered.
WRITTEN REQUESTS
Shares may also be redeemed by sending a written request to the Fund. Call the
Fund for specific instructions before redeeming by letter. The shareholder will
be asked to provide in the request his name, the Fund name and class of shares
name, his account number, and the Share or dollar amount requested. If Share
certificates have been issued, they should be sent unendorsed with the written
request by registered or certified mail to: Federated Services Company, P.O. Box
8600, Boston, MA 02266-8600.
SIGNATURES. Shareholders requesting a redemption of any amount to be sent to an
address other than that on record with the Fund, or a redemption payable other
than to the shareholder of record must have signatures on written redemption
requests guaranteed by:
a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund ("BIF"), which is administered by the Federal Deposit
Insurance Corporation ("FDIC");
a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;
a savings bank or savings association whose deposits are insured by the
Savings Association Insurance Fund ("SAIF"), which is administered by the
FDIC; or
any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.
RECEIVING PAYMENT. Normally, a check for the proceeds is mailed within one
business day, but in no event more than seven days, after receipt of a proper
written redemption request, provided the Fund or its agents have received
payment for Shares from the shareholder.
SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive payments of a predetermined amount may take
advantage of the Systematic Withdrawal Program. Under this program, Shares are
redeemed to provide for periodic withdrawal payments in an amount directed by
the shareholder. Depending upon the amount of the withdrawal payments, the
amount of dividends paid and capital gains distributions with respect to Shares,
and the fluctuation of the net asset value of Shares redeemed under this
program, redemptions may reduce, and eventually use up, the shareholder's
investment in the Fund. For this reason, payments under this program should not
be considered as yield or income on the shareholder's investment in the Fund. To
be eligible to participate in this program, a shareholder must have an account
value of at least $10,000. A shareholder may apply for participation in this
program through Federated Securities Corp.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem Shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $1,500. This requirement
does not apply, however, if the balance falls below $1,500 because of changes in
the Fund's net asset value. Before Shares are redeemed to close an account, the
shareholder is notified in writing and allowed 30 days to purchase additional
Shares to meet the minimum requirement.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights except that, in matters
affecting only a particular fund or class, only shares of that fund or class are
entitled to vote. As a Massachusetts business trust, the Trust is not required
to hold annual shareholder meetings. Shareholder approval will be sought only
for certain changes in the Trust's or the Fund's operation and for the election
of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust entitled to vote.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code applicable to regulated investment companies and to
receive the special tax treatment afforded to such companies.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional Shares.
STATE AND LOCAL TAXES
In the opinion of Houston, Houston & Donnelly, counsel to the Trust, Fund shares
may be subject to personal property taxes imposed by counties, municipalities,
and school districts in Pennsylvania to the extent that the portfolio securities
in the Fund would be subject to such taxes if owned directly by residents of
those jurisdictions.
Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its total return and yield for Shares.
Total return represents the change, over a specified period of time, in the
value of an investment in Shares after reinvesting all income and capital gain
distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
The yield of Shares is calculated by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by Shares
over a thirty-day period by the maximum offering price per share of Shares on
the last day of the period. This number is then annualized using semi-annual
compounding. The yield does not necessarily reflect income actually earned by
Shares and, therefore, may not correlate to the dividends or other distributions
paid to shareholders.
From time to time, advertisements for the Fund's Select Shares may refer to
ratings, rankings, and other information in certain financial publications
and/or compare the Fund's performance to certain indices.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
The Fund also offers another class of shares called Institutional Shares that
are sold at net asset value primarily to financial institutions acting in a
fiduciary or agency capacity and are subject to a minimum initial investment of
$25,000 over a 90-day period.
Institutional Shares are distributed with no 12b-1 Plan but are subject to
shareholder services fees.
Institutional Shares and Select Shares are subject to certain of the same
expenses. Expense differences, however, between Institutional Shares and Select
Shares may affect the performance of each class.
To obtain more information and a prospectus for Institutional Shares, investors
may call 1-800-235-4669.
FEDERATED MANAGED GROWTH FUND
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
(FORMERLY, INSTITUTIONAL SERVICE SHARES)
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 68.
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, NOVEMBER 30,
1995 1994(A)
<S> <C> <C>
- ---------------------------------------------------------------------------- ------- -------
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.82 $ 10.00
- ----------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------
Net investment income 0.40 0.20
- ----------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments,
foreign currency and futures contracts 1.70 (0.26)
- ---------------------------------------------------------------------------- ------- -------
Total from investment operations 2.10 (0.06)
- ---------------------------------------------------------------------------- ------- -------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------------
Distributions from net investment income (0.40) (0.12)
- ---------------------------------------------------------------------------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 11.52 $ 9.82
- ---------------------------------------------------------------------------- ------- -------
TOTAL RETURN (B) 21.79% (0.59%)
- ----------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------
Expenses 1.00% 0.89%*
- ----------------------------------------------------------------------------
Net investment income 4.29% 4.28%*
- ----------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.76% 0.90%*
- ----------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------
Net assets, end of period (000 omitted) $68,313 $28,973
- ----------------------------------------------------------------------------
Portfolio turnover 106% 71%
- ----------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 25, 1994 (date of initial
public investment) to November 30, 1994. For the period from January 27,
1994 (start of business) to May 24, 1994 the Fund had no investment
activity.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
Further information about the Fund's performance is contained in the Fund's
annual report for the year ended November 30, 1995, which can be obtained free
of charge.
FEDERATED MANAGED GROWTH FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--37.0%
- ---------------------------------------------------------------------------------------------------
(A)LARGE COMPANY--13.3%
----------------------------------------------------------------------------------
BASIC INDUSTRY--1.6%
----------------------------------------------------------------------------------
9,100 Allegheny Ludlum Corp. $ 169,487
----------------------------------------------------------------------------------
3,500 Aluminum Co. of America 204,750
----------------------------------------------------------------------------------
3,400 Du Pont (E.I.) de Nemours & Co. 226,100
----------------------------------------------------------------------------------
3,200 Eastman Chemical Co. 210,000
----------------------------------------------------------------------------------
3,500 International Paper Co. 133,437
----------------------------------------------------------------------------------
4,900 Phelps Dodge Corp. 332,588
----------------------------------------------------------------------------------
7,000 Praxair, Inc. 203,875
---------------------------------------------------------------------------------- -------------
Total 1,480,237
---------------------------------------------------------------------------------- -------------
CONSUMER DURABLES--0.6%
----------------------------------------------------------------------------------
4,000 Eastman Kodak Co. 272,000
----------------------------------------------------------------------------------
6,900 Mattel, Inc. 193,200
----------------------------------------------------------------------------------
7,100 Volvo AB, ADR 149,100
---------------------------------------------------------------------------------- -------------
Total 614,300
---------------------------------------------------------------------------------- -------------
CONSUMER NON-DURABLES--1.4%
----------------------------------------------------------------------------------
2,500 Avon Products, Inc. 181,562
----------------------------------------------------------------------------------
8,500 IBP, Inc. 531,250
----------------------------------------------------------------------------------
4,000 Philip Morris Cos., Inc. 351,000
----------------------------------------------------------------------------------
4,900 Reebok International Ltd. 127,400
----------------------------------------------------------------------------------
31,100 RJR Nabisco Holdings Corp., Conv. Pfd., Series C, $0.6012 182,713
---------------------------------------------------------------------------------- -------------
Total 1,373,925
---------------------------------------------------------------------------------- -------------
ENERGY MINERALS--0.8%
----------------------------------------------------------------------------------
5,300 Chevron Corp. 261,687
----------------------------------------------------------------------------------
5,700 Occidental Petroleum Corp. 126,113
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
(A)LARGE COMPANY--CONTINUED
----------------------------------------------------------------------------------
ENERGY MINERALS--CONTINUED
----------------------------------------------------------------------------------
3,200 Texaco, Inc. $ 236,800
----------------------------------------------------------------------------------
8,500 USX-Marathon Group 156,188
---------------------------------------------------------------------------------- -------------
Total 780,788
---------------------------------------------------------------------------------- -------------
FINANCE--2.8%
----------------------------------------------------------------------------------
4,913 Allstate Corp. 201,433
----------------------------------------------------------------------------------
2,700 American Express Co. 114,750
----------------------------------------------------------------------------------
4,700 Bank of Boston Corp. 217,962
----------------------------------------------------------------------------------
3,600 Chemical Banking Corp. 216,000
----------------------------------------------------------------------------------
2,200 CIGNA Corp. 242,000
----------------------------------------------------------------------------------
4,400 Citicorp 311,300
----------------------------------------------------------------------------------
3,200 Dean Witter, Discover & Co. 163,200
----------------------------------------------------------------------------------
5,302 Mellon Bank Corp. 283,657
----------------------------------------------------------------------------------
3,000 Merrill Lynch & Co., Inc., STRYPES, $3.12 158,250
----------------------------------------------------------------------------------
4,400 Providian Corp. 176,550
----------------------------------------------------------------------------------
2,200 Sunamerica, Inc., Conv. Pfd., Series E, $3.10 147,400
----------------------------------------------------------------------------------
6,600 Travelers Group, Inc. 392,700
---------------------------------------------------------------------------------- -------------
Total 2,625,202
---------------------------------------------------------------------------------- -------------
FOOD & DRUG RETAILERS--0.0%
----------------------------------------------------------------------------------
1,325 Grand Union Co. 9,937
---------------------------------------------------------------------------------- -------------
HEALTH CARE--1.1%
----------------------------------------------------------------------------------
3,550 American Home Products Corp. 323,937
----------------------------------------------------------------------------------
3,200 Becton, Dickinson & Co. 223,200
----------------------------------------------------------------------------------
3,200 Bristol-Myers Squibb Co. 256,800
----------------------------------------------------------------------------------
3,200 Merck & Co., Inc. 198,000
---------------------------------------------------------------------------------- -------------
Total 1,001,937
---------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
(A)LARGE COMPANY--CONTINUED
----------------------------------------------------------------------------------
PRODUCER MANUFACTURING--1.5%
----------------------------------------------------------------------------------
3,200 (b)FMC Corp. $ 236,400
----------------------------------------------------------------------------------
2,800 General Electric Co. 188,300
----------------------------------------------------------------------------------
1,500 (b)ITT Corp. 183,937
----------------------------------------------------------------------------------
1,500 Loews Corp. 230,250
----------------------------------------------------------------------------------
4,500 Textron, Inc. 344,813
----------------------------------------------------------------------------------
16,100 (c)Westinghouse Electric Corp., PEPs, Series C, $1.30 265,650
---------------------------------------------------------------------------------- -------------
Total 1,449,350
---------------------------------------------------------------------------------- -------------
RETAIL TRADE--0.4%
----------------------------------------------------------------------------------
6,400 American Stores Co. 168,000
----------------------------------------------------------------------------------
5,300 Sears, Roebuck & Co. 208,688
---------------------------------------------------------------------------------- -------------
Total 376,688
---------------------------------------------------------------------------------- -------------
SERVICES--0.4%
----------------------------------------------------------------------------------
6,400 Baker Hughes, Inc. 130,400
----------------------------------------------------------------------------------
2,700 Gannett Co., Inc. 164,700
----------------------------------------------------------------------------------
2,300 (b)Western Atlas, Inc. 110,113
---------------------------------------------------------------------------------- -------------
Total 405,213
---------------------------------------------------------------------------------- -------------
TECHNOLOGY--1.8%
----------------------------------------------------------------------------------
5,800 General Motors Corp., Class E 292,900
----------------------------------------------------------------------------------
3,100 Hewlett-Packard Co. 256,912
----------------------------------------------------------------------------------
3,000 Intel Corp. 182,625
----------------------------------------------------------------------------------
1,500 International Business Machines Corp. 144,937
----------------------------------------------------------------------------------
3,000 (b)Litton Industries, Inc. 134,625
----------------------------------------------------------------------------------
4,900 Lockheed Martin Corp. 359,538
----------------------------------------------------------------------------------
3,600 Raytheon Co. 160,200
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
(A)LARGE COMPANY--CONTINUED
----------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
----------------------------------------------------------------------------------
3,600 Rockwell International Corp. $ 176,400
---------------------------------------------------------------------------------- -------------
Total 1,708,137
---------------------------------------------------------------------------------- -------------
TRANSPORTATION--0.2%
----------------------------------------------------------------------------------
3,100 Consolidated Rail Corp. 216,612
---------------------------------------------------------------------------------- -------------
(D)UTILITIES--0.7%
----------------------------------------------------------------------------------
4,700 AT&T Corp. 310,200
----------------------------------------------------------------------------------
700 CMS Energy Corp. 19,075
----------------------------------------------------------------------------------
1,000 (b)Columbia Gas System, Inc. 43,250
----------------------------------------------------------------------------------
2,800 Enron Corp. 105,000
----------------------------------------------------------------------------------
700 FPL Group, Inc. 30,363
----------------------------------------------------------------------------------
6,300 MCI Communications Corp. 168,525
---------------------------------------------------------------------------------- -------------
Total 676,413
---------------------------------------------------------------------------------- -------------
TOTAL LARGE COMPANY 12,718,739
---------------------------------------------------------------------------------- -------------
(A)SMALL COMPANY--7.6%
----------------------------------------------------------------------------------
BASIC INDUSTRY--0.7%
----------------------------------------------------------------------------------
5,300 (b)Applied Extrusion Technologies, Inc. 66,912
----------------------------------------------------------------------------------
2,747 Brush Wellman, Inc. 48,072
----------------------------------------------------------------------------------
1,800 Cambrex Corp. 66,600
----------------------------------------------------------------------------------
1,800 Carpenter Technology Corp. 77,850
----------------------------------------------------------------------------------
1,800 Chesapeake Corp. 53,100
----------------------------------------------------------------------------------
1,400 (b)Cytec Industries, Inc. 89,600
----------------------------------------------------------------------------------
2,300 First Mississippi Corp. 58,650
----------------------------------------------------------------------------------
3,900 (b)Magma Copper Co. 82,875
----------------------------------------------------------------------------------
1,200 Springs Industries, Inc., Class A 50,400
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
(A)SMALL COMPANY--CONTINUED
----------------------------------------------------------------------------------
BASIC INDUSTRY--CONTINUED
----------------------------------------------------------------------------------
1,200 Texas Industries, Inc. $ 61,500
---------------------------------------------------------------------------------- -------------
Total 655,559
---------------------------------------------------------------------------------- -------------
CONSUMER DURABLES--0.4%
----------------------------------------------------------------------------------
1,400 Barnes Group, Inc. 54,250
----------------------------------------------------------------------------------
3,400 (b)Champion Enterprises, Inc. 102,000
----------------------------------------------------------------------------------
3,200 Coachmen Industries, Inc. 62,000
----------------------------------------------------------------------------------
1,455 Harman International Industries, Inc. 63,838
----------------------------------------------------------------------------------
4,200 (b)Toll Brothers, Inc. 76,125
----------------------------------------------------------------------------------
2,200 Toro Co. 69,575
---------------------------------------------------------------------------------- -------------
Total 427,788
---------------------------------------------------------------------------------- -------------
CONSUMER NON-DURABLES--0.2%
----------------------------------------------------------------------------------
2,500 Hudson Foods, Inc., Class A 40,000
----------------------------------------------------------------------------------
3,600 (b)Mondavi, Robert Corp., Class A 114,750
---------------------------------------------------------------------------------- -------------
Total 154,750
---------------------------------------------------------------------------------- -------------
ENERGY MINERALS--0.1%
----------------------------------------------------------------------------------
2,000 KCS Energy, Inc. 27,500
----------------------------------------------------------------------------------
10,100 (b)Tesoro Petroleum Corp. 84,588
---------------------------------------------------------------------------------- -------------
Total 112,088
---------------------------------------------------------------------------------- -------------
FINANCE--1.7%
----------------------------------------------------------------------------------
1,500 Alex Brown, Inc. 69,000
----------------------------------------------------------------------------------
1,900 Allied Group, Inc. 67,450
----------------------------------------------------------------------------------
1,800 American Bankers Insurance Group, Inc. 65,025
----------------------------------------------------------------------------------
2,400 (b)American Travellers Corp. 60,000
----------------------------------------------------------------------------------
1,575 Associated Banc Corp. 62,606
----------------------------------------------------------------------------------
2,423 Bankers First Corp. 66,330
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
(A)SMALL COMPANY--CONTINUED
----------------------------------------------------------------------------------
FINANCE--CONTINUED
----------------------------------------------------------------------------------
2,000 (b)Brooklyn Bancorp, Inc. $ 80,500
----------------------------------------------------------------------------------
1,900 Centura Banks, Inc. 64,600
----------------------------------------------------------------------------------
4,300 City National Corp. 59,125
----------------------------------------------------------------------------------
1,400 Cullen Frost Bankers, Inc. 71,050
----------------------------------------------------------------------------------
4,800 CWM Mortgage Holdings, Inc. 72,600
----------------------------------------------------------------------------------
3,100 FirstBank Puerto Rico 58,512
----------------------------------------------------------------------------------
5,100 (b)Glendale Federal Bank 82,237
----------------------------------------------------------------------------------
6,400 Hibernia Corp., Class A 67,200
----------------------------------------------------------------------------------
1,600 Irwin Financial Corp. 63,200
----------------------------------------------------------------------------------
3,000 Money Stores, Inc. 141,750
----------------------------------------------------------------------------------
2,500 North Fork Bancorp, Inc. 58,125
----------------------------------------------------------------------------------
3,600 Peoples Heritage Financial Group 75,600
----------------------------------------------------------------------------------
1,400 PHH Corp. 64,050
----------------------------------------------------------------------------------
1,800 Queens County Bancorp, Inc. 72,450
----------------------------------------------------------------------------------
3,100 (b)St. Francis Capital Corp. 72,075
----------------------------------------------------------------------------------
1,600 Student Loan Corp. 56,600
----------------------------------------------------------------------------------
1,700 WestAmerica Bancorporation 70,125
---------------------------------------------------------------------------------- -------------
Total 1,620,210
---------------------------------------------------------------------------------- -------------
HEALTH CARE--0.7%
----------------------------------------------------------------------------------
4,400 Bindley Western Industries, Inc. 78,650
----------------------------------------------------------------------------------
2,100 (b)Bio Rad Laboratories, Inc., Class A 86,625
----------------------------------------------------------------------------------
2,500 (b)Foxmeyer Health Corp. 65,000
----------------------------------------------------------------------------------
3,900 ICN Pharmaceuticals, Inc. 78,975
----------------------------------------------------------------------------------
8,800 Kinetic Concepts, Inc. 100,100
----------------------------------------------------------------------------------
4,200 (b)Maxicare Health Plans, Inc. 91,875
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
(A)SMALL COMPANY--CONTINUED
----------------------------------------------------------------------------------
HEALTH CARE--CONTINUED
----------------------------------------------------------------------------------
9,500 (b)North American Biologicals, Inc. $ 91,438
----------------------------------------------------------------------------------
8,100 (b)Oec-Medical Systems, Inc. 81,000
---------------------------------------------------------------------------------- -------------
Total 673,663
---------------------------------------------------------------------------------- -------------
PRODUCER MANUFACTURING--0.5%
----------------------------------------------------------------------------------
1,550 AGCO Corp. 66,844
----------------------------------------------------------------------------------
2,100 Blount Intl, Inc., Class A 63,262
----------------------------------------------------------------------------------
1,600 Borg-Warner Automotive, Inc. 47,400
----------------------------------------------------------------------------------
5,300 Brenco, Inc. 55,650
----------------------------------------------------------------------------------
4,800 JLG Industries, Inc. 136,200
----------------------------------------------------------------------------------
1,100 NACCO Industries, Inc., Class A 62,700
----------------------------------------------------------------------------------
2,800 (b)NCI Building System, Inc. 64,400
---------------------------------------------------------------------------------- -------------
Total 496,456
---------------------------------------------------------------------------------- -------------
RETAIL TRADE--0.5%
----------------------------------------------------------------------------------
1,900 (b)CompUSA, Inc. 70,537
----------------------------------------------------------------------------------
1,500 (b)Eckerd Corp. 63,937
----------------------------------------------------------------------------------
3,800 Great Atlantic & Pacific Tea Co., Inc. 83,125
----------------------------------------------------------------------------------
6,300 (b)MacFrugal's Bargains CloseOuts, Inc. 82,688
----------------------------------------------------------------------------------
6,600 Pier 1 Imports, Inc. 71,775
----------------------------------------------------------------------------------
5,400 Ruddick Corp. 58,050
----------------------------------------------------------------------------------
3,500 (b)Waban, Inc. 64,750
---------------------------------------------------------------------------------- -------------
Total 494,862
---------------------------------------------------------------------------------- -------------
SERVICES--1.0%
----------------------------------------------------------------------------------
3,000 (b)American Buildings Co. 67,875
----------------------------------------------------------------------------------
1,900 Butler Manufacturing Co. 65,550
----------------------------------------------------------------------------------
4,300 Castle (A.M.) & Co. 105,350
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
(A)SMALL COMPANY--CONTINUED
----------------------------------------------------------------------------------
SERVICES--CONTINUED
----------------------------------------------------------------------------------
2,000 (b)Devon Group, Inc. $ 77,000
----------------------------------------------------------------------------------
2,500 Granite Construction, Inc. 69,375
----------------------------------------------------------------------------------
2,000 Plenum Publishing Corp. 72,500
----------------------------------------------------------------------------------
7,800 (b)Pride Petroleum Services, Inc. 76,050
----------------------------------------------------------------------------------
2,400 Pulitzer Publishing Co. 110,400
----------------------------------------------------------------------------------
3,367 Richfood Holdings, Inc. 94,697
----------------------------------------------------------------------------------
1,701 (b)United Video Satellite Group, Inc., Class A 49,329
----------------------------------------------------------------------------------
8,000 (b)Westcott Communications 114,000
----------------------------------------------------------------------------------
3,200 (b)Western Waste Industries 58,800
---------------------------------------------------------------------------------- -------------
Total 960,926
---------------------------------------------------------------------------------- -------------
TECHNOLOGY--1.2%
----------------------------------------------------------------------------------
2,793 (b)Bell Industries, Inc. 63,541
----------------------------------------------------------------------------------
3,150 (b)Burr Brown Corp. 90,562
----------------------------------------------------------------------------------
8,200 (b)Computervision Corp. 102,500
----------------------------------------------------------------------------------
1,400 (b)Electronics for Imaging, Inc. 120,400
----------------------------------------------------------------------------------
1,600 (b)International Rectifier Corp. 79,400
----------------------------------------------------------------------------------
3,400 (b)Kemet Corp. 103,700
----------------------------------------------------------------------------------
2,000 (b)Marshall Industries 70,500
----------------------------------------------------------------------------------
1,900 (b)Network Equipment Technologies, Inc. 62,938
----------------------------------------------------------------------------------
4,600 (b)S3, Inc. 86,825
----------------------------------------------------------------------------------
2,300 (b)SCI Systems, Inc. 77,050
----------------------------------------------------------------------------------
1,900 (b)Tech-Sym Corp. 56,763
----------------------------------------------------------------------------------
2,200 (b)Tencor Instruments 83,050
----------------------------------------------------------------------------------
1,500 Watkins Johnson Co. 68,063
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
(A)SMALL COMPANY--CONTINUED
----------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
----------------------------------------------------------------------------------
1,700 Wyle Labs $ 66,938
---------------------------------------------------------------------------------- -------------
Total 1,132,230
---------------------------------------------------------------------------------- -------------
TRANSPORTATION--0.2%
----------------------------------------------------------------------------------
4,100 (b)America West Airlines, Inc., Class B 73,287
----------------------------------------------------------------------------------
1,800 (b)Continental Airlines, Inc., Class B 70,425
---------------------------------------------------------------------------------- -------------
Total 143,712
---------------------------------------------------------------------------------- -------------
(D)UTILITIES--0.4%
----------------------------------------------------------------------------------
2,400 Central Hudson Gas & Electric Service 72,900
----------------------------------------------------------------------------------
2,200 Eastern Enterprises 71,500
----------------------------------------------------------------------------------
2,800 Oneok, Inc. 65,800
----------------------------------------------------------------------------------
4,800 (b)Public Service Co. New Mexico 84,600
----------------------------------------------------------------------------------
600 Tele Danmark 16,725
----------------------------------------------------------------------------------
2,000 Teppco Partners, L.P. 72,500
---------------------------------------------------------------------------------- -------------
Total 384,025
---------------------------------------------------------------------------------- -------------
TOTAL SMALL COMPANY 7,256,269
---------------------------------------------------------------------------------- -------------
(D)UTILITY--5.2%
----------------------------------------------------------------------------------
ELECTRIC UTILITIES--2.0%
----------------------------------------------------------------------------------
4,000 Baltimore Gas & Electric Co. 106,500
----------------------------------------------------------------------------------
3,739 Cinergy Corp. 110,301
----------------------------------------------------------------------------------
3,300 CMS Energy Corp. 89,925
----------------------------------------------------------------------------------
4,400 DPL, Inc. 105,600
----------------------------------------------------------------------------------
3,750 DQE, Inc. 108,281
----------------------------------------------------------------------------------
2,400 Duke Power Co. 107,700
----------------------------------------------------------------------------------
3,100 Florida Progress Corp. 106,562
----------------------------------------------------------------------------------
1,900 FPL Group, Inc. 82,413
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
(D)UTILITY--CONTINUED
----------------------------------------------------------------------------------
ELECTRIC UTILITIES--CONTINUED
----------------------------------------------------------------------------------
3,400 General Public Utilities $ 107,525
----------------------------------------------------------------------------------
3,700 Illinova Corp. 104,987
----------------------------------------------------------------------------------
2,900 NIPSCO Industries, Inc. 107,300
----------------------------------------------------------------------------------
5,600 Pacificorp 109,900
----------------------------------------------------------------------------------
3,700 Peco Energy Co. 107,300
----------------------------------------------------------------------------------
3,900 Pinnacle West Capital Corp. 106,275
----------------------------------------------------------------------------------
5,700 SCE Corp. 89,063
----------------------------------------------------------------------------------
4,500 Southern Co. 102,938
----------------------------------------------------------------------------------
2,800 Texas Utilities Co. 107,800
----------------------------------------------------------------------------------
3,700 Utilicorp United, Inc. 103,138
----------------------------------------------------------------------------------
3,200 Western Resources, Inc. 106,000
---------------------------------------------------------------------------------- -------------
Total 1,969,508
---------------------------------------------------------------------------------- -------------
NATURAL GAS DISTRIBUTION--0.2%
----------------------------------------------------------------------------------
3,700 MCN Corp. 80,475
----------------------------------------------------------------------------------
3,000 Pacific Enterprises 80,250
---------------------------------------------------------------------------------- -------------
Total 160,725
---------------------------------------------------------------------------------- -------------
OIL/GAS TRANSMISSION--0.3%
----------------------------------------------------------------------------------
2,900 Panhandle Eastern Corp. 82,288
----------------------------------------------------------------------------------
2,500 Sonat, Inc. 80,625
----------------------------------------------------------------------------------
2,100 Williams Companies, Inc. 88,200
---------------------------------------------------------------------------------- -------------
Total 251,113
---------------------------------------------------------------------------------- -------------
SERVICES--0.0%
----------------------------------------------------------------------------------
600 (b)U.S. West Media Group 10,800
---------------------------------------------------------------------------------- -------------
TELECOMMUNICATIONS--2.7%
----------------------------------------------------------------------------------
5,800 Ameritech Corp. 319,000
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
(D)UTILITY--CONTINUED
----------------------------------------------------------------------------------
TELECOMMUNICATIONS--CONTINUED
----------------------------------------------------------------------------------
700 AT&T Corp. $ 46,200
----------------------------------------------------------------------------------
4,900 Bell Atlantic Corp. 308,700
----------------------------------------------------------------------------------
8,200 BellSouth Corp. 318,775
----------------------------------------------------------------------------------
7,600 GTE Corp. 323,950
----------------------------------------------------------------------------------
11,200 MCI Communications Corp. 299,600
----------------------------------------------------------------------------------
6,500 NYNEX Corp. 322,563
----------------------------------------------------------------------------------
5,900 SBC Communications, Inc. 318,600
----------------------------------------------------------------------------------
10,000 U.S. West Communications Group 312,500
---------------------------------------------------------------------------------- -------------
Total 2,569,888
---------------------------------------------------------------------------------- -------------
TOTAL UTILITY 4,962,034
---------------------------------------------------------------------------------- -------------
FOREIGN EQUITY--10.9%
----------------------------------------------------------------------------------
ARGENTINA--0.1%
----------------------------------------------------------------------------------
200 Banco Frances del Rio de la Plata SA, ADR 5,225
----------------------------------------------------------------------------------
2,200 Compania Naviera Perez Companc SA, Class B 10,674
----------------------------------------------------------------------------------
606 IRSA Inversiones y Representaciones SA, GDR 13,172
----------------------------------------------------------------------------------
600 YPF Sociedad Anonima, ADR 11,700
---------------------------------------------------------------------------------- -------------
Total 40,771
---------------------------------------------------------------------------------- -------------
AUSTRALIA--0.3%
----------------------------------------------------------------------------------
11,000 Mayne Nickless Ltd. 50,616
----------------------------------------------------------------------------------
17,000 News Corporation Ltd. 89,075
----------------------------------------------------------------------------------
17,500 Woodside Petroleum Ltd. 86,890
----------------------------------------------------------------------------------
32,000 Woolworth's Ltd. 74,811
---------------------------------------------------------------------------------- -------------
Total 301,392
---------------------------------------------------------------------------------- -------------
FINLAND--0.0%
----------------------------------------------------------------------------------
400 Nokia AB-A 21,947
---------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
----------------------------------------------------------------------------------
FRANCE--0.6%
----------------------------------------------------------------------------------
605 Accor SA $ 73,466
----------------------------------------------------------------------------------
1,400 AXA 83,767
----------------------------------------------------------------------------------
1,500 Compagnie Financiere de Paribas, Class A 83,288
----------------------------------------------------------------------------------
1,080 LaFarge-Coppee 68,602
----------------------------------------------------------------------------------
4,300 Lagardere Groupe 83,665
----------------------------------------------------------------------------------
600 LVMH (Moet-Hennessy) 114,217
----------------------------------------------------------------------------------
805 Lyonnaise des Eaux SA 77,104
---------------------------------------------------------------------------------- -------------
Total 584,109
---------------------------------------------------------------------------------- -------------
GERMANY--0.7%
----------------------------------------------------------------------------------
300 BASF AG 65,754
----------------------------------------------------------------------------------
355 Commerzbank AG, Frankfurt 82,104
----------------------------------------------------------------------------------
1,380 Deutsche Bank Ag 64,740
----------------------------------------------------------------------------------
270 Gea AG, Pfd. 85,874
----------------------------------------------------------------------------------
175 Henkel KGaA--Vorzug, Pfd. 65,581
----------------------------------------------------------------------------------
185 Kaufhof Holding AG 56,026
----------------------------------------------------------------------------------
105 Linde AG 61,564
----------------------------------------------------------------------------------
200 Mannesmann AG 64,399
----------------------------------------------------------------------------------
200 Siemens AG 104,473
----------------------------------------------------------------------------------
85 Wella AG, Pfd. 39,964
---------------------------------------------------------------------------------- -------------
Total 690,479
---------------------------------------------------------------------------------- -------------
HONG KONG--0.4%
----------------------------------------------------------------------------------
64,000 Amoy Properties Ltd. 61,229
----------------------------------------------------------------------------------
800 Cheung Kong 4,551
----------------------------------------------------------------------------------
35,000 Hong Kong Telecom 59,503
----------------------------------------------------------------------------------
3,751 HSBC Holdings PLC 55,284
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
----------------------------------------------------------------------------------
HONG KONG--CONTINUED
----------------------------------------------------------------------------------
134,000 Manhattan Card Co., Ltd. $ 59,768
----------------------------------------------------------------------------------
8,000 Sun Hung Kai Properties 64,383
----------------------------------------------------------------------------------
16,000 Television Broadcasts Ltd. 60,402
---------------------------------------------------------------------------------- -------------
Total 365,120
---------------------------------------------------------------------------------- -------------
INDONESIA--0.2%
----------------------------------------------------------------------------------
29,000 Astra International 57,784
----------------------------------------------------------------------------------
18,000 Hero Supermarket 35,472
----------------------------------------------------------------------------------
9,000 Indocement Tungal 30,545
----------------------------------------------------------------------------------
15,000 Lippo Bank 22,006
----------------------------------------------------------------------------------
16,000 United Tractors 29,078
---------------------------------------------------------------------------------- -------------
Total 174,885
---------------------------------------------------------------------------------- -------------
ITALY--0.2%
----------------------------------------------------------------------------------
17,800 La Rinascente S.P.A. 99,732
----------------------------------------------------------------------------------
63,000 (b)Telecom Italia Mobile 101,640
---------------------------------------------------------------------------------- -------------
Total 201,372
---------------------------------------------------------------------------------- -------------
JAPAN--4.4%
----------------------------------------------------------------------------------
15,000 Asahi Chemical Industry Co. Ltd. 112,039
----------------------------------------------------------------------------------
6,000 Bridgestone Corp. 88,452
----------------------------------------------------------------------------------
3,000 Canon, Inc. 52,776
----------------------------------------------------------------------------------
6,000 Dai Nippon Printing Co. Ltd. 104,963
----------------------------------------------------------------------------------
18,000 Daimaru, Inc. 118,526
----------------------------------------------------------------------------------
28,000 Dainippon Ink and Chemical, Inc. 129,612
----------------------------------------------------------------------------------
11 DDI Corp. 88,432
----------------------------------------------------------------------------------
11,000 Fujitsu Ltd. 129,730
----------------------------------------------------------------------------------
6,000 Hitachi Cable 42,634
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
----------------------------------------------------------------------------------
JAPAN--CONTINUED
----------------------------------------------------------------------------------
11,000 Jaccs $ 108,108
----------------------------------------------------------------------------------
17,000 (b)Japan Airlines Co. 108,767
----------------------------------------------------------------------------------
4,000 JUSCO Co. 95,921
----------------------------------------------------------------------------------
6,000 Kandenko Co., Ltd. 73,120
----------------------------------------------------------------------------------
22,000 Kawasaki Heavy Industries 100,108
----------------------------------------------------------------------------------
33,000 Kawasaki Steel 117,081
----------------------------------------------------------------------------------
4,000 Kokuyo Co. 86,093
----------------------------------------------------------------------------------
19,000 Kubota Corp. 124,924
----------------------------------------------------------------------------------
10,000 Kuraray Co. Ltd. 102,211
----------------------------------------------------------------------------------
2,000 Kurita Water Industries 55,627
----------------------------------------------------------------------------------
11,000 Kyowa Hakko Kogyo Co. 108,108
----------------------------------------------------------------------------------
13,000 Minebea Co. 108,088
----------------------------------------------------------------------------------
23,000 Mitsubishi Heavy Industries 183,322
----------------------------------------------------------------------------------
15,000 Mitsui Marine & Fire Insurance Co. 100,983
----------------------------------------------------------------------------------
15,000 Nagoya Railroad Co. Ltd. 73,710
----------------------------------------------------------------------------------
8,000 NEC Corp. 102,211
----------------------------------------------------------------------------------
5,000 NGK Insulators 49,631
----------------------------------------------------------------------------------
14,000 Nihon Cement Co., Ltd. 92,737
----------------------------------------------------------------------------------
5,000 Nippon Electric Glass Co., Ltd. 92,875
----------------------------------------------------------------------------------
12,000 Nippon Express Co. Ltd. 104,138
----------------------------------------------------------------------------------
17,000 Nippon Sheet Glass Co. 75,853
----------------------------------------------------------------------------------
6,000 Nishimatsu Construction 71,941
----------------------------------------------------------------------------------
46,000 (b)NKK Corp. 126,585
----------------------------------------------------------------------------------
10,000 Sakura Bank Ltd., Tokyo 108,108
----------------------------------------------------------------------------------
1,000 Secom Co. 67,518
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
----------------------------------------------------------------------------------
JAPAN--CONTINUED
----------------------------------------------------------------------------------
2,000 Sega Enterprises $ 108,108
----------------------------------------------------------------------------------
6,000 Sekisui House Ltd. 70,172
----------------------------------------------------------------------------------
8,000 Shionogi and Co. 68,953
----------------------------------------------------------------------------------
2,000 Sony Music Entertainment, Inc. 89,435
----------------------------------------------------------------------------------
20,000 Sumitomo Chemical Co. 99,459
----------------------------------------------------------------------------------
33,000 Sumitomo Heavy Industries 105,081
----------------------------------------------------------------------------------
4,000 Takeda Chemical Industries 59,754
----------------------------------------------------------------------------------
10,000 Tokio Marine & Fire 114,005
----------------------------------------------------------------------------------
1,000 Tostem Corp. 30,467
----------------------------------------------------------------------------------
5,000 Toto Ltd. 67,813
----------------------------------------------------------------------------------
4,000 Yamanouchi Pharmaceutical 86,093
---------------------------------------------------------------------------------- -------------
Total 4,204,272
---------------------------------------------------------------------------------- -------------
MALAYSIA--0.2%
----------------------------------------------------------------------------------
5,000 Malayan Banking Bhd 39,614
----------------------------------------------------------------------------------
47,000 Malayan United Industries Bhd 35,755
----------------------------------------------------------------------------------
20,000 Malayawata Steel Berhad 34,214
----------------------------------------------------------------------------------
16,000 Malaysian International Shipping Bhd 39,101
----------------------------------------------------------------------------------
11,000 (d)Tenaga Nasional Berhad 41,190
----------------------------------------------------------------------------------
15,000 UMW Holdings Bhd 35,179
---------------------------------------------------------------------------------- -------------
Total 225,053
---------------------------------------------------------------------------------- -------------
MEXICO--0.1%
----------------------------------------------------------------------------------
1,200 Cemex SA, Class B, ADR 8,025
----------------------------------------------------------------------------------
800 Empresas ICA Sociedad Controladora S.A., ADR 8,200
----------------------------------------------------------------------------------
1,500 Grupo Financiero Bancomer, S.A. de C.V., Class B, ADR 8,625
----------------------------------------------------------------------------------
300 Pan American Beverage, Class A 9,675
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
----------------------------------------------------------------------------------
MEXICO--CONTINUED
----------------------------------------------------------------------------------
1,000 Transportacion Maritima Mexicana SA , Class L, ADR $ 7,625
---------------------------------------------------------------------------------- -------------
Total 42,150
---------------------------------------------------------------------------------- -------------
NETHERLANDS--0.4%
----------------------------------------------------------------------------------
7,500 Elsevier NV 102,359
----------------------------------------------------------------------------------
1,500 Polygram NV 90,317
----------------------------------------------------------------------------------
3,850 Royal PTT Nederland NV 137,186
----------------------------------------------------------------------------------
700 Unilever NV-Cert 92,509
---------------------------------------------------------------------------------- -------------
Total 422,371
---------------------------------------------------------------------------------- -------------
NEW ZEALAND--0.0%
----------------------------------------------------------------------------------
12,000 Fletcher Challenge Ltd. 29,771
----------------------------------------------------------------------------------
1,703 Fletcher Challenge Ltd.--Forestry Shares 2,402
---------------------------------------------------------------------------------- -------------
Total 32,173
---------------------------------------------------------------------------------- -------------
SINGAPORE--0.2%
----------------------------------------------------------------------------------
14,000 First Capital Corp., Ltd., Singapore 37,717
----------------------------------------------------------------------------------
3,000 Fraser and Neave Ltd. 35,732
----------------------------------------------------------------------------------
20,000 Haw Par Brothers International Ltd. 43,105
----------------------------------------------------------------------------------
4,000 Singapore Airlines Ltd. 37,434
----------------------------------------------------------------------------------
3,000 Singapore Press Holdings Ltd. 47,430
---------------------------------------------------------------------------------- -------------
Total 201,418
---------------------------------------------------------------------------------- -------------
SPAIN--0.3%
----------------------------------------------------------------------------------
360 Acerinox SA 36,072
----------------------------------------------------------------------------------
3,000 Repsol SA 94,560
----------------------------------------------------------------------------------
1,000 Zardoya-Otis SA 103,850
---------------------------------------------------------------------------------- -------------
Total 234,482
---------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
----------------------------------------------------------------------------------
SWEDEN--0.2%
----------------------------------------------------------------------------------
7,950 Stora Kopparbergs, Class A $ 100,050
----------------------------------------------------------------------------------
3,400 Svedala Industri AB Free 94,135
---------------------------------------------------------------------------------- -------------
Total 194,185
---------------------------------------------------------------------------------- -------------
SWITZERLAND--0.7%
----------------------------------------------------------------------------------
63 BBC Brown Boveri 72,352
----------------------------------------------------------------------------------
50 Ciba-Giegy AG-R 44,577
----------------------------------------------------------------------------------
800 CS Holding 75,883
----------------------------------------------------------------------------------
420 Merkur Holding AG 90,038
----------------------------------------------------------------------------------
100 Nestle SA 106,593
----------------------------------------------------------------------------------
25 Roche Holdings AG Genusscheine 188,856
----------------------------------------------------------------------------------
253 Zurich Versicherungsgesellschaft 77,697
---------------------------------------------------------------------------------- -------------
Total 655,996
---------------------------------------------------------------------------------- -------------
UNITED KINGDOM--1.9%
----------------------------------------------------------------------------------
16,900 Associated British Ports Holdings PLC 73,220
----------------------------------------------------------------------------------
9,100 Boots Co. PLC 78,852
----------------------------------------------------------------------------------
19,000 (d)British Gas PLC 70,974
----------------------------------------------------------------------------------
27,000 British Steel PLC 69,856
----------------------------------------------------------------------------------
15,000 BTR PLC 76,814
----------------------------------------------------------------------------------
10,400 Cadbury Schweppes PLC 88,683
----------------------------------------------------------------------------------
23,200 Caradon PLC 69,792
----------------------------------------------------------------------------------
15,000 Chubb Security 74,288
----------------------------------------------------------------------------------
11,500 Compass Group 78,785
----------------------------------------------------------------------------------
12,300 Grand Metropolitan PLC 83,230
----------------------------------------------------------------------------------
6,100 Imperial Chemical Industries PLC 70,974
----------------------------------------------------------------------------------
13,500 Marks & Spencer PLC 91,247
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
----------------------------------------------------------------------------------
UNITED KINGDOM--CONTINUED
----------------------------------------------------------------------------------
6,000 (d)Midlands Electricity $ 85,150
----------------------------------------------------------------------------------
11,900 Rank Organisation PLC 75,058
----------------------------------------------------------------------------------
7,500 Reckitt & Colman PLC 76,872
----------------------------------------------------------------------------------
5,200 RMC Group PLC 82,593
----------------------------------------------------------------------------------
5,600 RTZ Corp. PLC 80,374
----------------------------------------------------------------------------------
48,600 Rugby Group PLC 79,611
----------------------------------------------------------------------------------
13,700 (d)Scottish Power PLC 79,071
----------------------------------------------------------------------------------
42,200 Sedgwick Group PLC 77,849
----------------------------------------------------------------------------------
12,600 Smith, W.H. Group PLC 83,524
----------------------------------------------------------------------------------
9,000 Thames Water PLC 76,125
----------------------------------------------------------------------------------
19,300 Tomkins PLC 78,004
----------------------------------------------------------------------------------
11,000 Williams Holdings PLC 55,825
---------------------------------------------------------------------------------- -------------
Total 1,856,771
---------------------------------------------------------------------------------- -------------
TOTAL FOREIGN EQUITY 10,448,946
---------------------------------------------------------------------------------- -------------
TOTAL STOCKS (IDENTIFIED COST $31,160,132) 35,385,988
---------------------------------------------------------------------------------- -------------
PRINCIPAL
AMOUNT
- ---------------
BONDS--45.1%
- ---------------------------------------------------------------------------------------------------
TREASURY--23.0%
----------------------------------------------------------------------------------
$ 10,790,000 United States Treasury Note 6.50%, 4/30/1997 10,954,224
----------------------------------------------------------------------------------
7,525,000 United States Treasury Note 7.25%, 8/15/2004 8,275,845
----------------------------------------------------------------------------------
1,350,000 United States Treasury Note 7.50% 2/15/2005 1,512,959
----------------------------------------------------------------------------------
475,000 United States Treasury Note 7.50%, 1/31/1997 486,177
----------------------------------------------------------------------------------
600,000 United States Treasury Note 7.875%, 11/15/2004 686,676
---------------------------------------------------------------------------------- -------------
Total Treasury 21,915,881
---------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- ---------------------------------------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES--7.8%
----------------------------------------------------------------------------------
GOVERNMENT AGENCY--7.8%
----------------------------------------------------------------------------------
$ 288,483 Federal Home Loan Mortgage Corp., 7.50%, 5/1/2024 $ 292,083
----------------------------------------------------------------------------------
499,681 Federal Home Loan Mortgage Corp., 7.50%, 10/1/2025 509,040
----------------------------------------------------------------------------------
980,000 Federal Home Loan Mortgage Corp., 7.50%, 11/1/2025 998,355
----------------------------------------------------------------------------------
983,961 Federal National Mortgage Association, 7.50%, 7/1/2025 1,001,476
----------------------------------------------------------------------------------
331,963 Federal National Mortgage Association, 7.00%, 5/1/2001 337,145
----------------------------------------------------------------------------------
233,622 Federal National Mortgage Association, 7.00%, 9/1/2009 236,392
----------------------------------------------------------------------------------
845,150 Federal National Mortgage Association, 8.50%, 3/1/2025 878,154
----------------------------------------------------------------------------------
244,721 Federal National Mortgage Association, 8.00%, 11/1/2024 252,060
----------------------------------------------------------------------------------
208,768 Federal National Mortgage Association, 8.50%, 3/1/2025 216,921
----------------------------------------------------------------------------------
504,810 Federal National Mortgage Association, 7.00%, 9/1/2010 510,798
----------------------------------------------------------------------------------
1,199,046 Federal National Mortgage Association, 6.50%, 10/1/2025 1,173,926
----------------------------------------------------------------------------------
483,782 General National Mortgage Association, 8.00%, 8/15/2025 500,709
----------------------------------------------------------------------------------
257,034 Government National Mortgage Association, 7.00%, 5/15/2024 257,754
----------------------------------------------------------------------------------
311,141 Government National Mortgage Association, 8.00%, 11/15/2024 322,027
---------------------------------------------------------------------------------- -------------
TOTAL MORTGAGE-BACKED SECURITIES 7,486,840
---------------------------------------------------------------------------------- -------------
HIGH YIELD--4.5%
----------------------------------------------------------------------------------
AEROSPACE & DEFENSE--0.1%
----------------------------------------------------------------------------------
25,000 (c)Howmet Corporation, Sr. Sub. Note, 10.00%, 12/1/2003 25,812
----------------------------------------------------------------------------------
50,000 Tracor, Inc., Sr. Sub. Note, 10.875%, 8/15/2001 51,875
---------------------------------------------------------------------------------- -------------
Total 77,687
---------------------------------------------------------------------------------- -------------
AUTOMOTIVE--0.1%
----------------------------------------------------------------------------------
50,000 Aftermarket Technology Co., Sr. Sub. Note, 12.00%, 8/1/2004 52,375
----------------------------------------------------------------------------------
75,000 Exide Corp., Sr. Note, 10%, 4/15/2005 81,000
---------------------------------------------------------------------------------- -------------
Total 133,375
---------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- ---------------------------------------------------------------------------------------------------
HIGH YIELD--CONTINUED
----------------------------------------------------------------------------------
BANKING--0.1%
----------------------------------------------------------------------------------
$ 125,000 First Nationwide Holdings, Sr. Note, 12.25%, 5/15/2001 $ 142,656
---------------------------------------------------------------------------------- -------------
BROADCAST RADIO & TV--0.4%
----------------------------------------------------------------------------------
50,000 Allbritton Communication Co., Sr. Sub. Note, 11.50%, 8/15/2004 52,500
----------------------------------------------------------------------------------
50,000 Argyle Television, Inc., Sr. Sub., 9.75%, 11/1/2005 49,312
----------------------------------------------------------------------------------
50,000 Chancellor Broadcasting Co., Sr. Sub. Note, 12.50%, 10/1/2004 53,750
----------------------------------------------------------------------------------
75,000 SCI Television, Sr. Secd. Note, 11.00%, 6/30/2005 79,500
----------------------------------------------------------------------------------
50,000 Sinclair Broadcast Group, Sr. Sub. Note, 10.00%, 9/30/2005 51,375
----------------------------------------------------------------------------------
50,000 Young Broadcasting Corp., Sr. Sub. Note, 10.125%, 2/15/2005 52,875
---------------------------------------------------------------------------------- -------------
Total 339,312
---------------------------------------------------------------------------------- -------------
BUSINESS EQUIPMENT & SERVICES--0.1%
----------------------------------------------------------------------------------
50,000 United Stationers Supply, Sr. Sub. Note, 12.75%, 5/1/2005 54,500
---------------------------------------------------------------------------------- -------------
CABLE TELEVISION--0.4%
----------------------------------------------------------------------------------
50,000 CAI Wireless Systems, Sr. Note, 12.25%, 9/15/2002 52,937
----------------------------------------------------------------------------------
50,000 CF Cable TV, Inc., Sr. Secd. 2nd Priority Note, 11.625%, 2/15/2005 54,562
----------------------------------------------------------------------------------
75,000 Continental Cablevision, Sr. Deb., 9.50%, 8/1/2013 79,125
----------------------------------------------------------------------------------
100,000 International Cabletel, Sr. Note, 0/12.75% 4/15/2005 61,125
----------------------------------------------------------------------------------
50,000 Rogers Cablesystems Ltd., Sr. Secd. 2nd Priority Note, 10.00%,
3/15/2005 52,625
----------------------------------------------------------------------------------
100,000 TeleWest PLC, Sr. Disc. Deb., 0/11.00%, 10/1/2007 58,625
---------------------------------------------------------------------------------- -------------
Total 358,999
---------------------------------------------------------------------------------- -------------
CHEMICALS & PLASTICS--0.5%
----------------------------------------------------------------------------------
75,000 Arcadian Partners L.P., Sr. Note, Series B, 10.75%, 5/1/2005 82,500
----------------------------------------------------------------------------------
50,000 (c)Crain Industries, Inc., Sr. Sub. Note, 13.5%, 8/15/2005 50,875
----------------------------------------------------------------------------------
50,000 Foamex L.P., Sr. Note, 11.25%, 10/1/2002 50,250
----------------------------------------------------------------------------------
150,000 G-I Holdings, Sr. Disc. Note, 0%, 10/1/1998 113,812
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- ---------------------------------------------------------------------------------------------------
HIGH YIELD--CONTINUED
----------------------------------------------------------------------------------
CHEMICALS & PLASTICS--CONTINUED
----------------------------------------------------------------------------------
$ 50,000 Harris Chemical, Sr. Secd. Disc. Note, 0/10.25%, 7/15/2001 $ 46,750
----------------------------------------------------------------------------------
125,000 Polymer Group, Sr. Note, 12.25%, 7/15/2002 129,375
----------------------------------------------------------------------------------
50,000 (c)RBX Corp., Sr. Sub. Note, 11.25%, 10/15/2005 49,875
---------------------------------------------------------------------------------- -------------
Total 523,437
---------------------------------------------------------------------------------- -------------
CLOTHING & TEXTILES--0.1%
----------------------------------------------------------------------------------
75,000 Westpoint Stevens, Inc., Sr. Sub. Deb., 9.375%, 12/15/2005 76,125
---------------------------------------------------------------------------------- -------------
CONGLOMERATES--0.1%
----------------------------------------------------------------------------------
75,000 Sherritt Gordon Ltd., Sr. Note, 9.75%, 4/1/2003 78,375
---------------------------------------------------------------------------------- -------------
CONSUMER PRODUCTS--0.2%
----------------------------------------------------------------------------------
75,000 (c)Herff Jones, Inc., Sr. Sub. Note, 11.00%, 8/15/2005 79,312
----------------------------------------------------------------------------------
50,000 Hosiery Corp. Of America, Sr. Sub. Note, 13.75%, 8/1/2002 54,750
----------------------------------------------------------------------------------
50,000 Playtex Family Products Corp., Sr. Sub. Note, 9.00%, 12/15/2003 44,250
---------------------------------------------------------------------------------- -------------
Total 178,312
---------------------------------------------------------------------------------- -------------
CONTAINER & GLASS PRODUCTS--0.2%
----------------------------------------------------------------------------------
100,000 Owens Illinois, Inc., Sr. Sub. Note, 10.50%, 6/15/2002 106,000
----------------------------------------------------------------------------------
50,000 Owens Illinois, Inc., Sr. Sub. Note, 9.75%, 8/15/2004 52,125
----------------------------------------------------------------------------------
50,000 Portola Packaging, Inc., Sr. Note, 10.75%, 10/1/2005 51,625
---------------------------------------------------------------------------------- -------------
Total 209,750
---------------------------------------------------------------------------------- -------------
FOOD & DRUG RETAILERS--0.1%
----------------------------------------------------------------------------------
25,000 (c)Carr-Gottstein Foods, Sr. Sub. Note, 12.00%, 11/15/2005 25,062
----------------------------------------------------------------------------------
50,000 Pathmark Stores, Inc., Sr. Sub. Note, 9.625%, 5/1/2003 46,813
----------------------------------------------------------------------------------
50,000 Ralph's Grocery Co., Sr. Note, 10.45%, 6/15/2004 49,375
---------------------------------------------------------------------------------- -------------
Total 121,250
---------------------------------------------------------------------------------- -------------
FOOD PRODUCTS--0.2%
----------------------------------------------------------------------------------
100,000 Curtice-Burns Foods, Inc., Sr. Sub. Note, 12.25%, 2/1/2005 103,000
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- ---------------------------------------------------------------------------------------------------
HIGH YIELD--CONTINUED
----------------------------------------------------------------------------------
FOOD PRODUCTS--CONTINUED
----------------------------------------------------------------------------------
$ 50,000 Specialty Foods Corp., Sr. Note, 11.125%, 10/1/2002 $ 47,500
----------------------------------------------------------------------------------
50,000 (c)Van de Kamp's, Inc., Sr. Sub. Note, 12.00%, 9/15/2005 51,625
---------------------------------------------------------------------------------- -------------
Total 202,125
---------------------------------------------------------------------------------- -------------
FOOD SERVICES--0.1%
----------------------------------------------------------------------------------
75,000 Flagstar Corp., Sr. Note, 10.875%, 12/1/2002 68,625
---------------------------------------------------------------------------------- -------------
FOREST PRODUCTS--0.1%
----------------------------------------------------------------------------------
50,000 Repap New Brunswick, 2nd Priority Sr. Secd. Note, 10.625%,
4/15/2005 49,688
----------------------------------------------------------------------------------
75,000 Stone Container Corp., Sr. Note, 9.875%, 2/1/2001 73,031
---------------------------------------------------------------------------------- -------------
Total 122,719
---------------------------------------------------------------------------------- -------------
HEALTHCARE--0.2%
----------------------------------------------------------------------------------
50,000 Amerisource Health Corp., Sr. Deb., 11.25%, 7/15/2005 54,750
----------------------------------------------------------------------------------
100,000 Tenet Healthcare, Sr. Sub. Note, 10.125%, 3/1/2005 108,875
---------------------------------------------------------------------------------- -------------
Total 163,625
---------------------------------------------------------------------------------- -------------
HOME PRODUCTS & FURNISHINGS--0.1%
----------------------------------------------------------------------------------
75,000 American Standard, Inc., Sr. Sub. Disc. Deb., 0/10.50%, 6/1/2005 63,375
---------------------------------------------------------------------------------- -------------
INDUSTRIAL PRODUCTS & EQUIPMENT--0.1%
----------------------------------------------------------------------------------
50,000 Cabot Safety Acquisition Corp., Sr. Sub. Note, 12.50%, 7/15/2005 53,000
---------------------------------------------------------------------------------- -------------
LEISURE & ENTERTAINMENT--0.1%
----------------------------------------------------------------------------------
50,000 Alliance Entertainment , Sr. Sub. Note, 11.25%, 7/15/2005 50,000
----------------------------------------------------------------------------------
100,000 (c)Six Flags Theme Parks, Sr. Sub. Disc. Note, 0/12.25%, 6/15/2005 78,250
---------------------------------------------------------------------------------- -------------
Total 128,250
---------------------------------------------------------------------------------- -------------
MACHINERY & EQUIPMENT--0.1%
----------------------------------------------------------------------------------
100,000 Primeco, Inc., Sr. Sub. Note, 12.75%, 3/1/2005 104,250
---------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- ---------------------------------------------------------------------------------------------------
HIGH YIELD--CONTINUED
----------------------------------------------------------------------------------
OIL & GAS--0.1%
----------------------------------------------------------------------------------
$ 50,000 Falcon Drilling Company, Sr. Note, 9.75%, 1/15/2001 $ 50,750
----------------------------------------------------------------------------------
50,000 United Meridian Corp., Sr. Sub. Note, 10.375%, 10/15/2005 51,125
---------------------------------------------------------------------------------- -------------
Total 101,875
---------------------------------------------------------------------------------- -------------
PRINTING & PUBLISHING--0.1%
----------------------------------------------------------------------------------
50,000 Garden State Newspapers, Inc., Sr. Sub. Note, 12.00%, 7/1/2004 50,250
---------------------------------------------------------------------------------- -------------
RETAILERS--0.1%
----------------------------------------------------------------------------------
125,000 Brylane Capital Corp., Sr. Sub. Note, 10.00%, 9/1/2003 109,375
---------------------------------------------------------------------------------- -------------
SERVICES--0.0%
----------------------------------------------------------------------------------
25,000 (c)Coinmach Corporation, Sr. Note, 11.75%, 11/15/2005 25,312
---------------------------------------------------------------------------------- -------------
STEEL--0.2%
----------------------------------------------------------------------------------
125,000 GS Technologies Operating Co., Inc., Sr. Note, 12.00%, 9/1/2004 123,750
----------------------------------------------------------------------------------
75,000 Northwestern Steel & Wire, Sr. Note, 9.50%, 6/15/2001 74,250
---------------------------------------------------------------------------------- -------------
Total 198,000
---------------------------------------------------------------------------------- -------------
SURFACE TRANSPORTATION--0.2%
----------------------------------------------------------------------------------
50,000 Gearbulk Holding Limited, Sr. Note, 11.25%, 12/1/2004 53,125
----------------------------------------------------------------------------------
25,000 Great Dane Holdings, Sr. Sub. Deb., 12.75%, 8/1/2001 22,625
----------------------------------------------------------------------------------
50,000 Sea Containers, Sr. Note, 9.50%, 7/1/2003 49,125
----------------------------------------------------------------------------------
100,000 Trism, Inc., Sr. Sub. Note, 10.75%, 12/15/2000 98,000
---------------------------------------------------------------------------------- -------------
Total 222,875
---------------------------------------------------------------------------------- -------------
TELECOMMUNICATIONS & CELLULAR--0.3%
----------------------------------------------------------------------------------
50,000 (c)IXC Communications, Inc., Sr. Note, 12.50%, 10/1/2005 52,375
----------------------------------------------------------------------------------
50,000 MetroCall, Inc., Sr. Sub. Note, 10.375%, 10/1/2007 51,750
----------------------------------------------------------------------------------
25,000 MobileMedia Communication, Sr. Sub. Note, 9.375%, 11/1/2007 25,313
----------------------------------------------------------------------------------
75,000 Nextel Communications, Inc., Sr. Disc. Note, 0/11.50%, 9/1/2003 45,188
----------------------------------------------------------------------------------
50,000 Paging Network, Sr. Sub. Note, 10.125%, 8/1/2007 53,375
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- ---------------------------------------------------------------------------------------------------
HIGH YIELD--CONTINUED
----------------------------------------------------------------------------------
TELECOMMUNICATIONS & CELLULAR--CONTINUED
----------------------------------------------------------------------------------
75,000 Panamsat, L.P., Sr. Sub. Disc. Note, 0/11.375%, 8/1/2003 61,125
---------------------------------------------------------------------------------- -------------
Total 289,126
---------------------------------------------------------------------------------- -------------
UTILITIES--0.1%
----------------------------------------------------------------------------------
125,000 California Energy Co., Sr. Disc. Note, 0/10.25% 1/15/2004 116,250
---------------------------------------------------------------------------------- -------------
Total High Yield 4,312,810
---------------------------------------------------------------------------------- -------------
INVESTMENT GRADE--2.7%
----------------------------------------------------------------------------------
BEVERAGE & TOBACCO--0.3%
----------------------------------------------------------------------------------
300,000 Philip Morris Cos., Inc., Deb., 6.00%, 7/15/2001 295,560
---------------------------------------------------------------------------------- -------------
]CONGLOMERATES--0.3%
----------------------------------------------------------------------------------
250,000 Leucadia National Corp., Sr. Sub., 10.375%, 6/15/2002 271,875
---------------------------------------------------------------------------------- -------------
FINANCIAL INTERMEDIARIES--0.5%
----------------------------------------------------------------------------------
200,000 Equitable Cos., Inc., Sr. Note, 9%, 12/15/2004 233,220
----------------------------------------------------------------------------------
250,000 Greentree Financial Corp, Sr. Sub. Note, 10.25%, 6/1/2002 301,950
---------------------------------------------------------------------------------- -------------
Total 535,170
---------------------------------------------------------------------------------- -------------
INDUSTRIAL PRODUCTS & EQUIPMENT--0.3%
----------------------------------------------------------------------------------
250,000 Joy Technologies Inc, Sr. Note, 10.25%, 9/1/2003 282,453
---------------------------------------------------------------------------------- -------------
INSURANCE--0.3%
----------------------------------------------------------------------------------
250,000 Sunamerica, Inc., Medium Term Note, 7.34%, 8/30/2005 262,984
---------------------------------------------------------------------------------- -------------
OIL & GAS--0.1%
----------------------------------------------------------------------------------
100,000 Occidental Petroleum Corp., Sr. Note, 11.75%, 3/15/2011 106,673
---------------------------------------------------------------------------------- -------------
PRINTING & PUBLISHING--0.3%
----------------------------------------------------------------------------------
250,000 News America Holdings, Sr. Note, 7.50%, 3/1/2000 262,038
---------------------------------------------------------------------------------- -------------
RETAILERS--0.3%
----------------------------------------------------------------------------------
250,000 Penney (J.C.) Co., Inc., Deb., 9.45%, 7/15/2002 283,935
---------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- ---------------------------------------------------------------------------------------------------
INVESTMENT GRADE--CONTINUED
----------------------------------------------------------------------------------
SOVEREIGN GOVERNMENT--0.3%
----------------------------------------------------------------------------------
$ 250,000 (c)Freeport Terminal (Malta), GTD. Global Note, 7.50%, 3/29/2004 $ 264,407
---------------------------------------------------------------------------------- -------------
Total Investment Grade 2,565,095
---------------------------------------------------------------------------------- -------------
FOREIGN
CURRENCY
PAR
AMOUNT
- --------------- ----------------------------------------------------------------------------------
FOREIGN--7.1%
----------------------------------------------------------------------------------
AUSTRALIAN DOLLAR--0.1%
----------------------------------------------------------------------------------
150,000 State Bank of New South Wales, 12.25%, 2/26/2001 129,973
---------------------------------------------------------------------------------- -------------
BELGIAN FRANC--0.4%
----------------------------------------------------------------------------------
1,500,000 Belgian Gov't., Foreign Gov't. Guarantee, 10.00%, 4/5/1996 51,519
----------------------------------------------------------------------------------
9,000,000 Belgium Kingdom, 7.75%, 10/15/2004 323,491
---------------------------------------------------------------------------------- -------------
Total 375,010
---------------------------------------------------------------------------------- -------------
CANADIAN DOLLAR--0.3%
----------------------------------------------------------------------------------
400,000 Ontario Hydro, 9.00%, 6/24/2002 320,913
---------------------------------------------------------------------------------- -------------
DANISH KRONE--0.2%
----------------------------------------------------------------------------------
1,200,000 Denmark, 8.00%, 5/15/2003 225,369
---------------------------------------------------------------------------------- -------------
DEUTSCHE MARK--1.1%
----------------------------------------------------------------------------------
400,000 Bundesobligationen, Deb., 7.25%, 10/20/1997 292,415
----------------------------------------------------------------------------------
1,050,000 Treuhandanstalt, 7.75%, 10/1/2002 802,510
---------------------------------------------------------------------------------- -------------
Total 1,094,925
---------------------------------------------------------------------------------- -------------
FRENCH FRANC--0.9%
----------------------------------------------------------------------------------
3,100,000 France O.A.T., 8.50%, 11/25/2002 685,038
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN
CURRENCY VALUE
PAR IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- ---------------------------------------------------------------------------------------------------
FOREIGN--CONTINUED
----------------------------------------------------------------------------------
FRENCH FRANC--CONTINUED
----------------------------------------------------------------------------------
800,000 KFW International Finance, 7.00%, 5/12/2000 $ 165,214
---------------------------------------------------------------------------------- -------------
Total 850,252
---------------------------------------------------------------------------------- -------------
ITALIAN LIRA--0.6%
----------------------------------------------------------------------------------
950,000,000 Buoni Poliennali Del Tes, 9.50%, 1/1/2005 536,375
---------------------------------------------------------------------------------- -------------
JAPANESE YEN--1.8%
----------------------------------------------------------------------------------
100,000,000 Export-Import Bank Japan, 4.375%, 10/1/2003 1,101,966
----------------------------------------------------------------------------------
10,000,000 Interamerican Development Bank, Deb., 7.25%, 5/15/2000 121,990
----------------------------------------------------------------------------------
42,000,000 KFW International Finance, 6.00%, 11/29/1999 487,076
---------------------------------------------------------------------------------- -------------
Total 1,711,032
---------------------------------------------------------------------------------- -------------
NETHERLANDS GUILDER--0.4%
----------------------------------------------------------------------------------
650,000 Netherlands Government, 5.75%, 1/15/2004 395,788
---------------------------------------------------------------------------------- -------------
SPANISH PESETA--0.3%
----------------------------------------------------------------------------------
40,000,000 Spanish Government, 10.00%, 2/28/2005 320,830
---------------------------------------------------------------------------------- -------------
SWEDISH KRONA--0.3%
----------------------------------------------------------------------------------
1,900,000 Sweden, 6.00%, 2/9/2005 241,755
---------------------------------------------------------------------------------- -------------
UNITED KINGDOM POUND--0.7%
----------------------------------------------------------------------------------
375,000 UK Conversion, 9.00%, 3/3/2000 617,872
---------------------------------------------------------------------------------- -------------
TOTAL FOREIGN 6,820,094
---------------------------------------------------------------------------------- -------------
TOTAL BONDS (IDENTIFIED COST $41,784,046) 43,100,720
---------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
(A)CASH EQUIVALENTS--17.3%
- ---------------------------------------------------------------------------------------------------
TREASURY SECURITY--11.9%
----------------------------------------------------------------------------------
$ 11,500,000 United States Treasury Bill, 3/14/1996 (identified cost $11,325,331) $ 11,327,960
----------------------------------------------------------------------------------
(E)REPURCHASE AGREEMENT--5.4%
----------------------------------------------------------------------------------
5,200,000 J.P. Morgan Securities, Inc., 5.930%, dated 11/30/1995, due 12/1/1995 (at
amortized cost) 5,200,000
---------------------------------------------------------------------------------- -------------
TOTAL CASH EQUIVALENTS 16,527,960
---------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST $89,469,509)(F) $ 95,014,668
---------------------------------------------------------------------------------- -------------
</TABLE>
(a) The Fund purchases Index futures contracts to efficiently manage cash flows
resulting from shareholder purchases and redemptions, dividend and capital
gain payments to shareholders and corporate actions while maintaining
exposure to stocks and minimizing trading costs. The total market value of
open Index futures contracts is $9,748,125 at November 30, 1995, which
represents 10.2% of net assets. Taking into consideration these open Index
futures contracts, the Fund's effective, total exposure to stocks is 47.2%.
The Fund holds cash equivalents as collateral for the twenty three S & P
500 futures contracts with a market value of $7,008,125. Consequently, the
Fund's exposure to large cap stocks is 20.6% of the fund. The Fund holds
cash equivalents as collateral for the twenty five S & P Midcap futures
contracts with a market value of $2,740,000. Consequently, the Fund's
exposure to small cap stocks is 10.4% of the Fund.
(b) Non-income producing security.
(c) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. At the end of the period, these securities
amounted to $968,555 which represents 1.0% of net assets.
(d) The utility stocks are shown in the asset category in which they were
purchased. The Fund's total exposure to utility stocks is 6.6% of net
assets.
(e) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations. The investment in the repurchase agreement was through
participation in a joint account with other Federated funds.
(f) The cost of investments for federal tax purposes amounts to $89,514,976.
The net unrealized appreciation of investments on a federal tax basis
amounts to $5,499,692 which is comprised of $6,231,054 appreciation and
$731,362 depreciation at November 30, 1995.
Note: The categories of investments are shown as a percentage of net assets
($95,670,615) at November 30, 1995.
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
The following acronyms are used throughout this portfolio:
ADR--American Depository Receipt
GDR--Global Depository Receipts
GTD--Guaranty
L.P.--Limited Partnership
PEPs--Participating Equity Preferred Stock
PLC--Public Limited Company
STRYPES--Structured Yield Product Exchangeable for Stock
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ----------------------------------------------------------------------------------------------------
Total investments in securities, at value (identified cost: $89,469,509 and tax cost: $89,514,976) $ 95,014,668
- ----------------------------------------------------------------------------------------------------
Cash denominated in foreign currencies (identified cost: $99,994) 98,712
- ----------------------------------------------------------------------------------------------------
Income receivable 736,588
- ----------------------------------------------------------------------------------------------------
Receivable for investments sold 129,755
- ----------------------------------------------------------------------------------------------------
Receivable for shares sold 479,073
- ----------------------------------------------------------------------------------------------------
Receivable for foreign currency sold 279,184
- ----------------------------------------------------------------------------------------------------
Deferred expenses 36,476
- ---------------------------------------------------------------------------------------------------- ------------
Total assets 96,774,456
- ----------------------------------------------------------------------------------------------------
LIABILITIES:
- ----------------------------------------------------------------------------------------------------
Payable for investments purchased $ 466,002
- -----------------------------------------------------------------------------------------
Payable for shares redeemed 5,100
- -----------------------------------------------------------------------------------------
Payable to Bank 272,494
- -----------------------------------------------------------------------------------------
Payable for taxes withheld 5,478
- -----------------------------------------------------------------------------------------
Payable for daily variation margin 3,550
- -----------------------------------------------------------------------------------------
Payable for foreign currency purchased 279,184
- -----------------------------------------------------------------------------------------
Accrued expenses 72,033
- ----------------------------------------------------------------------------------------- ---------
Total liabilities 1,103,841
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSETS for 8,309,115 shares outstanding $ 95,670,615
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSETS CONSIST OF:
- ----------------------------------------------------------------------------------------------------
Paid in capital $ 87,285,933
- ----------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments, translation of assets and liabilities in
foreign currency, and futures contracts 5,921,914
- ----------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments, foreign currency transactions, and
futures contracts 1,577,280
- ----------------------------------------------------------------------------------------------------
Undistributed net investment income 885,488
- ---------------------------------------------------------------------------------------------------- ------------
Total Net Assets $ 95,670,615
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ----------------------------------------------------------------------------------------------------
Institutional Shares $68,312,920 / 5,929,677 shares outstanding $11.52
- ---------------------------------------------------------------------------------------------------- ------------
Select Shares $27,357,695 / 2,379,438 shares outstanding $11.50
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED GROWTH FUND
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Dividends (net of foreign taxes withheld of $15,790) $ 515,991
- ----------------------------------------------------------------------------------------------------
Interest (net of foreign taxes withheld of $4,502) 2,541,077
- ---------------------------------------------------------------------------------------------------- ----------
Total income 3,057,068
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------------------------
Investment advisory fee $ 434,181
- -----------------------------------------------------------------------------------------
Administrative personnel and services fee 155,000
- -----------------------------------------------------------------------------------------
Custodian fees 92,761
- -----------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 56,115
- -----------------------------------------------------------------------------------------
Directors'/Trustees' fees 1,855
- -----------------------------------------------------------------------------------------
Auditing fees 12,407
- -----------------------------------------------------------------------------------------
Legal fees 3,920
- -----------------------------------------------------------------------------------------
Portfolio accounting fees 32,512
- -----------------------------------------------------------------------------------------
Distribution services fee--Select Shares 87,921
- -----------------------------------------------------------------------------------------
Shareholder services fee--Institutional Shares 115,420
- -----------------------------------------------------------------------------------------
Shareholder services fee--Select Shares 29,307
- -----------------------------------------------------------------------------------------
Share registration costs 32,562
- -----------------------------------------------------------------------------------------
Printing and postage 33,620
- -----------------------------------------------------------------------------------------
Insurance premiums 4,700
- -----------------------------------------------------------------------------------------
Miscellaneous 15,278
- ----------------------------------------------------------------------------------------- ---------
Total expenses 1,107,559
- -----------------------------------------------------------------------------------------
Waivers--
- -----------------------------------------------------------------------------------------
Waiver of investment advisory fee $(294,373)
- ------------------------------------------------------------------------------
Waiver of distribution services fee--Select Shares (29,307)
- ------------------------------------------------------------------------------
Waiver of shareholder services fee--Institutional Shares (115,420)
- ------------------------------------------------------------------------------ ---------
Total waivers (439,100)
- ----------------------------------------------------------------------------------------- ---------
Net expenses 668,459
- ---------------------------------------------------------------------------------------------------- ----------
Net investment income 2,388,609
- ---------------------------------------------------------------------------------------------------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FOREIGN CURRENCY, AND FUTURES CONTRACTS:
- ----------------------------------------------------------------------------------------------------
Net realized gain on investments, foreign currency transactions, and futures contracts 1,792,344
- ----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments, translation
of assets and liabilities in foreign currency, and futures contracts 6,797,361
- ---------------------------------------------------------------------------------------------------- ----------
Net realized and unrealized gain on investments, foreign currency, and futures contracts 8,589,705
- ---------------------------------------------------------------------------------------------------- ----------
Change in net assets resulting from operations $10,978,314
- ---------------------------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, 1995 NOVEMBER 30, 1994*
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ---------------------------------------------------------------
OPERATIONS--
- ---------------------------------------------------------------
Net investment income $ 2,388,609 $ 547,410
- ---------------------------------------------------------------
Net realized gain (loss) on investments, foreign
currency transactions, and futures contracts,
($2,146,546 net gain and $146,501 net loss,
respectively, as computed for federal tax purposes) 1,792,344 (55,426)
- ---------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of
investments, translation of assets and liabilities in foreign
currency, and futures contracts 6,797,361 (875,447)
- --------------------------------------------------------------- ---------------------- ------------------------
Change in net assets resulting from operations 10,978,314 (383,463)
- --------------------------------------------------------------- ---------------------- ------------------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ---------------------------------------------------------------
Distributions from net investment income
- ---------------------------------------------------------------
Institutional Shares (1,589,524) (281,776)
- ---------------------------------------------------------------
Select Shares (320,621) (19,872)
- --------------------------------------------------------------- ---------------------- ------------------------
Change in net assets resulting from
distributions to shareholders (1,910,145) (301,648)
- --------------------------------------------------------------- ---------------------- ------------------------
SHARE TRANSACTIONS--
- ---------------------------------------------------------------
Proceeds from sale of shares 63,762,378 34,167,264
- ---------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 1,014,253 142,853
- ---------------------------------------------------------------
Cost of shares redeemed (10,099,348) (1,699,843)
- --------------------------------------------------------------- ---------------------- ------------------------
Change in net assets resulting from share
transactions 54,677,283 32,610,274
- --------------------------------------------------------------- ---------------------- ------------------------
Change in net assets 63,745,452 31,925,163
- ---------------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------------
Beginning of period 31,925,163 --
- --------------------------------------------------------------- ---------------------- ------------------------
End of period (including undistributed net investment income of
$885,488 and $252,009, respectively) $ 95,670,615 $ 31,925,163
- --------------------------------------------------------------- ---------------------- ------------------------
</TABLE>
* For the period from January 27, 1994 (start of business) to November 30, 1994.
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Managed Series Trust (the "Trust") is registered under the Investment Company
Act of 1940, as amended (the "Act") as an open-end, management investment
company. The Trust consists of four diversified portfolios. The financial
statements included herein are only those of Federated Managed Growth Fund (the
"Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held.
The Fund offers two classes of shares: Institutional Shares (formerly,
Institutional Service Shares) and Select Shares. The Institutional Service
Shares changed its name to Institutional Shares effective June 30, 1995.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Short-term securities with remaining maturities of
sixty days or less at the time of purchase may be valued at amortized cost,
which approximates fair market value. Listed equity securities are valued
at the last sale price reported on national security exchanges. All other
securities are valued at prices provided by an independent pricing service.
REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral
securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
Revenue Code, as amended (the "Code"). Dividend income and distributions to
shareholders are recorded on the ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
foreign currency and futures transactions. As a result of these
differences, the following required reclassifications have been made to the
current year financial statements.
<TABLE>
<CAPTION>
INCREASE (DECREASE)
<S> <C> <C>
ACCUMULATED UNDISTRIBUTED NET
NET REALIZED INVESTMENT
PAID-IN CAPITAL GAIN/LOSS INCOME
($ 1,647) ($ 153,367) $ 155,014
</TABLE>
>
Net investment income, net realized gains/losses, and net assets were not
affected by this reclassification.
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.
However, federal taxes may be imposed on the Fund upon the disposition of
certain investments in passive foreign investment companies. Withholding
taxes on foreign dividends have been provided for in accordance with the
Fund's understanding of the applicable country's tax rules and rates.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized using the straight-line method over a period of five years from
the Fund's commencement date.
CONCENTRATION OF CREDIT RISK--The Fund invests in securities of non-U.S.
issuers. Although the Fund maintains a diversified investment portfolio,
the political or economic developments within a particular country or
region may have an adverse effect on the ability of domiciled issuers to
meet their obligations. Additionally, political or economic developments
may have an effect on the liquidity and volatility of portfolio securities
and currency holdings.
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
At November 30, 1995, the industry diversification of the foreign
securities was as follows:
<TABLE>
<CAPTION>
% OF
INDUSTRY NET ASSETS
<S> <C>
Agency 2.2
Automobiles 0.1
Banking 0.6
Beverages & Tobacco 0.2
Broadcasting & Publishing 0.3
Building Materials & Components 0.5
Business & Public Services 0.5
Chemicals 0.7
Construction & Housing 0.2
Data Processing & Reproduction 0.2
Electrical & Electronics 0.3
Energy Sources 0.2
Financial Services 0.2
Food & Household Products 0.5
Forest Products & Paper 0.1
Health & Personal Care 0.6
Industrial Components 0.4
<CAPTION>
% OF
INDUSTRY NET ASSETS
<S> <C>
Insurance 0.5
Leisure & Tourism 0.2
Machinery & Engineering 1.1
Merchandising 0.8
Metals 0.5
Miscellaneous Materials & Commodities 0.2
Multi-Industry 0.4
Real Estate 0.2
Recreation, Other Consumer Goods 0.3
Retail Trade 0.1
Sovereign 4.7
State/Provincial 0.1
Supranational 0.1
Telecommunications 0.4
Transportion 0.4
Utilities--Electrical & Gas 0.3
</TABLE>
FUTURES CONTRACTS--The Fund may purchase and sell futures contracts to
accommodate cash flows into and out of the Fund's portfolio and to hedge
against the effects of changes in the value of portfolio securities due to
anticipated changes in interest rates and market conditions. Upon entering
into a stock futures contract with a broker, the Fund is required to
deposit in a segregated account a specified amount of cash or U.S.
government securities. Futures contracts are valued daily and unrealized
gains or losses are recorded in a "variation margin" account. Daily, the
Fund receives from or pays to the broker a specified amount of cash based
upon changes in the variation margin account. When a contract is closed,
the Fund recognizes a realized gain or loss. Futures contracts have market
risks, including the risk that the change in the value of the contract may
not correlate with changes in the value of the underlying securities. For
the period ended November 30, 1995, the Fund had realized losses of
$1,116,967 on futures contracts. At November 30, 1995, the Fund had
outstanding futures contracts as set forth below:
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNREALIZED
CONTRACTS TO TOTAL FACE APPRECIATION
EXPIRATION DATE DELIVER/RECEIVE VALUE POSITION (DEPRECIATION)
<S> <C> <C> <C> <C>
December 1995 14 S&P 500 4,019,050 Long $ 231,700
December 1995 21 S&P Mid Cap 2,232,171 Long 65,229
March 1996 4 S&P Mid Cap 429,500 Long 13,100
March 1996 9 S&P 500 2,688,600 Long 68,775
-----------------
Net Unrealized Appreciation/(Depreciation) on Futures Contracts $ 378,804
</TABLE>
DOLLAR ROLL TRANSACTIONS--The Fund enters into dollar roll transactions,
with respect to mortgage securities issued by GNMA, FNMA, and FHLMC, in
which the Fund loans mortgage securities to financial institutions and
simultaneously agrees to accept substantially similar (same type, coupon
and maturity) securities at a later date at an agreed upon price. Dollar
roll transactions are short-term financing arrangements which will not
exceed twelve months. The Fund will use the proceeds generated from the
transactions to invest in short-term investments, which may enhance the
Fund's current yield and total return.
FOREIGN CURRENCY COMMITMENTS--The Fund may enter into foreign currency
commitments for the delayed delivery of securities or foreign currency
exchange transactions. Risks may arise upon entering these transactions
from the potential inability of counterparties to meet the terms of their
commitments and from unanticipated movements in security prices or foreign
exchange rates. The foreign currency transactions are adjusted by the daily
exchange rate of the underlying currency and any gains or losses are
recorded for financial statement purpose as unrealized until the settlement
date. At November 30, 1995, the Fund had outstanding foreign currency
commitments as set forth below:
<TABLE>
<CAPTION>
UNREALIZED
CONTRACTS TO APPRECIATION
SETTLEMENT DATE DELIVER/RECEIVE IN EXCHANGE FOR (DEPRECIATION)
<S> <C> <C> <C>
CONTRACTS PURCHASED:
December 1, 1995 275,178 Hong Kong Dollar $ 35,581 (5)
December 1, 1995 4,724 Argentine Peso $ 4,725 --
December 4,1995 4,574,474 Japanese Yen $ 45,202 (244)
December 5, 1995 61,663 Pound Sterling $ 94,005 396
CONTRACTS SOLD:
December 4, 1995 5,443,173 Japanese Yen $ 45,073 291
December 4, 1995 2,520,000 Japanese Yen $ 24,662 (104)
December 6, 1995 24,999 Swiss Franc $ 21,222 (46)
-----
Net Unrealized Appreciation (Depreciation) on Foreign Currency
Commitments 288
-----
-----
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
FOREIGN CURRENCY TRANSLATION--The accounting records of the Fund are
maintained in U.S. dollars. All assets and liabilities denominated in
foreign currencies ("FC") are translated into U.S. dollars based on the
rate of exchange of such currencies against U.S. dollars on the date of
valuation. Purchases and sales of securities, income and expenses are
translated at the rate of exchange quoted on the respective date that such
transactions are recorded. Differences between income and expense amounts
recorded and collected or paid are adjusted when reported by the custodian
bank. The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales
of FCs, currency gains or losses realized between the trade and settlement
dates on securities transactions, the difference between the amounts of
dividends, interest, and foreign withholding taxes recorded on the Fund's
books, and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes
in the value of assets and liabilities other than investments in securities
at fiscal year end, resulting from changes in the exchange rate.
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 Board of Trustees. 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.
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
Additional information on each restricted security held at November 30,
1995 is as follows:
<TABLE>
<CAPTION>
ACQUISITION ACQUISITION
SECURITY DATE COST
<S> <C> <C>
Carr-Goldstein Foods Sr. Sub Notes 11/9/95 $ 25,000
Coinmach Corporation, Sr. Note 11/14/95 25,000
Crain Industries, Inc., Sr. Sub Note 9/22/95 51,375
Freeport Terminal (Malta), Gtd. Global Note 5/12/95 247,740
Herff Jones, Inc., Sr. Sub Note 9/14/95 77,625
Howmet Corporation, Sr. Sub Note 11/22/95 25,000
IXC Communications, Inc., Sr. Note 9/25/95 48,623
RBX Corp., Sr. Sub Note 10/6/95 50,000
Six Flags Theme Parks, Sr. Sub Disc. Note 6/16/95 73,975
Van De Kamp's Inc., Sr. Sub Note 9/14/95 50,000
Westinghouse Electric Corp., PEPS 9/27/95-9/28/95 245,525
</TABLE>
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, 1995 NOVEMBER 30, 1994(A)
<S> <C> <C> <C> <C>
INSTITUTIONAL SHARES SHARES AMOUNT SHARES AMOUNT
Shares sold 3,678,939 $ 39,452,689 3,096,651 $ 31,041,322
- ---------------------------------------------------------
Shares issued to shareholders in
payment of distributions declared 72,763 769,585 12,494 125,915
- ---------------------------------------------------------
Shares redeemed (772,807) (8,225,144) (158,363) (1,579,515)
- --------------------------------------------------------- ---------- ------------- ---------- -------------
Net change resulting from Institutional Share
transactions 2,978,895 $ 31,997,130 2,950,782 $ 29,587,722
- --------------------------------------------------------- ---------- ------------- ---------- -------------
</TABLE>
(a) For the period from January 27, 1994 (start of business) to November 30,
1994.
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, 1995 NOVEMBER 30, 1994(A)
<S> <C> <C> <C> <C>
SELECT SHARES SHARES AMOUNT SHARES AMOUNT
Shares sold 2,233,281 $ 24,309,689 311,261 $ 3,125,942
- ---------------------------------------------------------
Shares issued to shareholders in payment of distributions
declared 22,609 244,668 1,680 16,938
- ---------------------------------------------------------
Shares redeemed (177,462) (1,874,204) (11,931) (120,328)
- --------------------------------------------------------- ---------- ------------- ---------- -------------
Net change resulting from Select Share transactions 2,078,428 $ 22,680,153 301,010 $ 3,022,552
- --------------------------------------------------------- ---------- ------------- ---------- -------------
Total net change resulting from Share
transactions 5,057,323 $ 54,677,283 3,251,792 $ 32,610,274
- --------------------------------------------------------- ---------- ------------- ---------- -------------
</TABLE>
(a) For the period from January 27, 1994 (start of business) to November 30,
1994.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser
(the "Adviser"), receives for its services an annual investment advisory fee
equal to .75 of 1% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive any portion of its fee and/or reimburse certain
operating expenses of the Fund. The Adviser can modify or terminate this
voluntary waiver and/or reimbursement at any time at its sole discretion.
Under the terms of a sub-advisory agreement between the Adviser and Federated
Global Research Corp., Federated Global Research Corp. receives an allocable
portion of the Fund's advisory fee. Such allocation is based on the amount of
foreign securities which the Sub-Adviser manages for the Fund. This fee is paid
by the Adviser out of its resources and is not an incremental Fund expense.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. This fee 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 Select shares. The Plan provides that the Fund may incur
distribution expenses of up to .75 of 1% of average net assets, annually, to
compensate FSC. The distributor may voluntarily choose to waive any portion of
its fee. The distributor can modify or terminate this voluntary waiver at any
time at its sole discretion.
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of
1% of average daily net assets of the Fund for the period. This fee is to obtain
certain services for shareholders and to maintain shareholder accounts. FSS may
voluntarily choose to waive any portion of its fee. FSS can modify or terminate
this voluntary waiver at any time at its sole discretion. For the fiscal year
ended November 30, 1995, the Institutional Shares fully waived its shareholder
services fee.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Fund. This
fee is based on the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses ($35,959) and start-up
administrative service expenses of ($39,068) were borne initially by Adviser.
The Fund has agreed to reimburse Adviser for the organizational and start-up
administrative expenses during the five year period following effective date.
For the period ended November 30, 1995, the Fund paid $7,896 and $5,001,
respectively, pursuant to this agreement.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended November 30, 1995, were as follows:
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------------------------
PURCHASES $ 110,105,897
- -------------------------------------------------------------------------------------------------- --------------
SALES $ 57,736,580
- -------------------------------------------------------------------------------------------------- --------------
</TABLE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
MANAGED SERIES TRUST
(Federated Managed Growth Fund):
We have audited the accompanying statement of assets and liabilities of
Federated Managed Growth Fund (an investment portfolio of Managed Series Trust,
a Massachusetts business trust), including the schedule of portfolio
investments, as of November 30, 1995, the related statement of operations for
the year then ended, and the statement of changes in net assets and the
financial highlights (see pages 2 and 28 of the prospectus) for the periods
presented. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Federated Managed Growth Fund (an investment portfolio of Managed Series Trust)
as of November 30, 1995, and the results of its operations for the year then
ended, and the changes in its net assets and its financial highlights for the
periods presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
January 18, 1996
APPENDIX
- --------------------------------------------------------------------------------
STANDARD AND POOR'S RATINGS GROUP LONG-TERM DEBT RATINGS
AAA--Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.
A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB--Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.
B--Debt rated B has greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or
BB- rating.
CCC--Debt rated CCC has currently identifiable vulnerability to default and is
dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating.
CC--The rating CC typically is applied to debt subordinated to senior debt that
is assigned an actual or implied CCC debt rating.
C--The rating C typically is applied to debt subordinated to senior debt which
is assigned an actual or implied CCC debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.
CI--The rating CI is reserved for income bonds on which no interest is being
paid.
D--Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D
rating also will be used upon the filing of a bankruptcy petition if debt
service payments are jeopardized.
MOODY'S INVESTORS SERVICE, INC., CORPORATE BOND RATINGS
Aaa--Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment some time in the future.
Baa--Bonds which are rated Baa are considered as medium-grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well.
Ba--Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca--Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C--Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
FITCH INVESTORS SERVICE, INC., LONG-TERM DEBT RATINGS
AAA--Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA--Bonds considered to be investment grade and of very high quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F-1+.
A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB--Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds and, therefore, impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.
BB--Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.
B--Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.
CCC--Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.
CC--Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C--Bonds are in imminent default in payment of interest or principal.
DDD, DD, AND D--Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. DDD
represents the highest potential for recovery on these bonds, and D represents
the lowest potential for recovery.
NR--NR indicates that Fitch does not rate the specific issue.
PLUS (+) OR MINUS (-): Plus or minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the AAA category.
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Federated Managed Growth Fund
Select Shares Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Sub-Adviser
Federated Global 175 Water Street
Research Corp. New York, NY 10038-4965
- ---------------------------------------------------------------------------------------------------------------------
Custodian
State Street Bank and P.O. Box 8600
Trust Company Boston, Massachusetts 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company P.O. Box 8600
Boston, Massachusetts 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED
GROWTH FUND
SELECT SHARES
PROSPECTUS
A Diversified Portfolio
of Managed Series Trust,
an Open-End Management
Investment Company
Prospectus dated January 31, 1996
[LOGO] FEDERATED SECURITIES CORP.
---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Cusip 56166K602
3122011A-SEL (1/96)
Lifecycle Investing
MANAGED SERIES TRUST
From Federated Investors
(LOGO)
FEDERATED MANAGED GROWTH AND INCOME FUND
Lifecycle Investing
MANAGED SERIES TRUST
From Federated Investors
INSTITUTIONAL
SHARES
Federated Managed
Growth and Income Fund is part of
Managed Series Trust,
a lifecycle investing program from
Federated Investors.
Other funds available
in Managed Series Trust are
Federated Managed Income Fund,
Federated Managed Growth Fund,
and Federated Managed
Aggressive Growth Fund.
(Logo)
FEDERATED SECURITIES CORP.
Distributor
A subsidiary of Federated Investors
(Logo)
FEDERATED MANAGED GROWTH AND INCOME FUND
(A PORTFOLIO OF MANAGED SERIES TRUST)
INSTITUTIONAL SHARES
PROSPECTUS
The Institutional Shares of Federated Managed Growth and Income Fund (the
"Fund") offered by this prospectus represent interests in the Fund, which is a
diversified investment portfolio of Managed Series Trust (the "Trust"). The
Trust is an open-end management investment company (a mutual fund).
The investment objective of the Fund is to seek current income and capital
appreciation. The Fund invests in both bonds and stocks. Institutional Shares
are sold at net asset value.
THE INSTITUTIONAL SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR
OBLIGATIONS OF ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD,
OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE INSTITUTIONAL SHARES
INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
This prospectus contains the information you should read and know before you
invest in Institutional Shares of the Fund. Keep this prospectus for future
reference.
The Fund has also filed a Statement of Additional Information for Institutional
Shares and Select Shares of all portfolios of the Trust dated January 31, 1996,
with the Securities and Exchange Commission. The information contained in the
Statement of Additional Information is incorporated by reference into this
prospectus. You may request a copy of the Statement of Additional Information or
a paper copy of this prospectus, if you have received your prospectus
electronically, free of charge by calling 1-800-235-4669. To obtain other
information or to make inquiries about the Fund, contact the Fund at the address
listed in the back of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus dated January 31, 1996
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Investment Limitations 15
TRUST INFORMATION 15
- ------------------------------------------------------
Management of the Trust 15
Distribution of Institutional Shares 19
Administration of the Fund 19
Brokerage Transactions 20
NET ASSET VALUE 21
- ------------------------------------------------------
INVESTING IN INSTITUTIONAL SHARES 21
- ------------------------------------------------------
Share Purchases 21
Minimum Investment Required 22
What Shares Cost 22
Subaccounting Services 22
Systematic Investment Program 22
Certificates and Confirmations 23
Dividends 23
Capital Gains 23
REDEEMING INSTITUTIONAL SHARES 23
- ------------------------------------------------------
Through a Financial Institution 23
Telephone Redemption 23
Written Requests 24
Systematic Withdrawal Program 24
Accounts with Low Balances 25
SHAREHOLDER INFORMATION 25
- ------------------------------------------------------
Voting Rights 25
TAX INFORMATION 25
- ------------------------------------------------------
Federal Income Tax 25
State and Local Taxes 25
PERFORMANCE INFORMATION 26
- ------------------------------------------------------
OTHER CLASSES OF SHARES 26
- ------------------------------------------------------
Financial Highlights--Select Shares 27
FINANCIAL STATEMENTS 28
- ------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 68
- ------------------------------------------------------
APPENDIX 69
- ------------------------------------------------------
ADDRESSES 72
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)...................................................................... None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price)...................................................................... None
Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable).................................................... None
Redemption Fee (as a percentage of amount redeemed, if applicable)......................................... None
Exchange Fee............................................................................................... None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver) (1).......................................................................... 0.45%
12b-1 Fee.................................................................................................. None
Total Other Expenses....................................................................................... 0.55%
Shareholder Services Fee (after waiver) (2)................................................ 0.00%
Total Operating Expenses (3)..................................................................... 1.00%
</TABLE>
- ------------
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate the voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.75%.
(2) The maximum shareholder services fee is 0.25%.
(3) The total operating expenses would have been 1.55% absent the voluntary
waivers of a portion of the management fee and shareholder services fee.
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of Select Shares of the Fund will
bear, either directly or indirectly. For more complete descriptions of the
various costs and expenses, see "Investing in Institutional Shares" and "Trust
Information." Wire-transferred redemptions of less than $5,000 may be subject to
additional fees.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment assuming
(1) 5% annual return and (2) redemption at the end of each time
period................................................................ $10 $32 $55 $122
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
FEDERATED MANAGED GROWTH AND INCOME FUND
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
(FORMERLY, INSTITUTIONAL SERVICE SHARES)
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 68.
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, NOVEMBER 30,
<S> <C> <C>
1995 1994(A)
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.85 $ 10.00
- ----------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------
Net investment income 0.50 0.25
- ----------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments,
foreign currency transactions, and futures contracts 1.28 (0.25)
- ---------------------------------------------------------------------------- ------- -------
Total from investment operations 1.78 0.00
- ----------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------------
Distributions from net investment income (0.49) (0.15)
- ---------------------------------------------------------------------------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 11.14 $ 9.85
- ---------------------------------------------------------------------------- ------- -------
TOTAL RETURN (B) 18.51% 0.02%
- ----------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------
Expenses 1.00% 0.88%*
- ----------------------------------------------------------------------------
Net investment income 5.10% 5.07%*
- ----------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.55% 0.59%*
- ----------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------
Net assets, end of period (000 omitted) $103,715 $43,793
- ----------------------------------------------------------------------------
Portfolio turnover 157% 132%
- ----------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 25, 1994 (date of initial
public investment) to November 30, 1994. For the period from January 27,
1994 (start of business) to May 24, 1994, the Fund had no investment
activity.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
Further information about the Fund's performance is contained in the Fund's
annual report for the year ended November 30, 1995, which can be obtained free
of charge.
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated November 15, 1993. The Declaration of Trust permits the Trust to
offer separate series of shares of beneficial interest representing interests in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. As of the date of this prospectus, the Board of
Trustees ("Trustees") have established two classes of shares of the Fund, known
as Institutional Shares and Select Shares. This prospectus relates only to
Institutional Shares.
Institutional Shares ("Shares") of the Fund are designed to give institutions,
individuals, and financial institutions acting in a fiduciary or agency capacity
a convenient means of accumulating an interest in a professionally managed,
diversified investment portfolio. A minimum initial investment of $25,000 over a
90-day period is required.
Shares are currently sold and redeemed at net asset value without a sales charge
imposed by the Fund.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is to seek current income and capital
appreciation. The Fund will attempt to minimize investment risk by allocating
its assets across various stock and bond categories. There can be, of course, no
assurance that the Fund will achieve its investment objective. The Fund's
investment objective cannot be changed without the approval of shareholders.
Unless otherwise noted, the Fund's investment policies may be changed by the
Trustees without shareholder approval.
INVESTMENT POLICIES
ASSET ALLOCATION. The Fund will primarily invest in two types of assets: bonds
and equities. The Fund's investment approach is based on the conviction that,
over time, the choice of investment asset categories and their relative
long-term weightings within the portfolio will have the primary impact on its
investment performance. Of secondary importance to the Fund's performance are
the shifting of money among asset categories and the selection of securities
within asset categories. Therefore, the Fund will pursue its investment
objective in the following manner: (1) by setting long-term ranges for each
asset category; (2) by moving money among asset categories within those defined
ranges; and (3) by actively selecting securities within each of the asset
categories. The Fund attempts to minimize risk by allocating its assets in such
a fashion.
Within each of these types of investments, the Fund has designated asset
categories. As a matter of investment policy, ranges have been set for each
asset category's portfolio commitment.
The Fund will invest between 50 and 70 percent of its assets in bonds. The bond
asset categories are U.S. Treasury securities, mortgage-backed securities,
investment-grade corporate bonds, high yield corporate bonds and foreign bonds.
The Fund will invest between 30 and 50 percent of its assets in equities. The
equities asset categories are large company stocks, utility stocks, small
company stocks, foreign stocks and equity reserves.
The following is a summary of the asset categories and the amount of the Fund's
total assets which may be invested in each asset category:
<TABLE>
<CAPTION>
ASSET CATEGORY RANGE
<S> <C>
BONDS 50-70%
U.S. Treasury Securities 0-70%
Mortgage-Backed Securities 0-35%
Investment-Grade Corporate Bonds 0-35%
High Yield Corporate Bonds 0-7.5%
Foreign Bonds 0-7.5%
EQUITIES 30-50%
Large Company Stocks 0-50%
Utility Stocks 0-20%
Small Company Stocks 0-7.5%
Foreign Stocks 0-7.5%
Equity Reserves 0-15%
</TABLE>
The Fund's adviser will regularly review the Fund's allocation among the asset
categories and make any changes, within the ranges established for each asset
category, that it believes will provide the most favorable outlook for achieving
the Fund's investment objective. The Fund's adviser will attempt to exploit
inefficiencies among the various asset categories. If, for example, foreign
stocks are judged to be unusually attractive relative to other asset categories,
the allocation for foreign stocks may be moved to its upper limit. At other
times, when foreign stocks appear to be overvalued, the commitment may be moved
down to a lesser allocation. There is no assurance, however, that the adviser's
attempts to pursue this strategy will result in a benefit to the Fund.
Each asset category within the Fund will be a managed portfolio. The Fund will
seek superior investment performance through security selection in addition to
determining the percentage of its assets to allocate to each of the asset
categories.
BOND ASSET CATEGORIES. The portion of the Fund's assets which is invested in
bonds ("Bond Assets") will be allocated among the following asset categories
within the ranges specified. The prices of fixed income securities fluctuate
inversely to the direction of interest rates. The average duration of the Fund's
Bond Assets will be not less than three nor more than five years. Duration is a
commonly used measure of the potential volatility of the price of a debt
security, or the aggregate market value of a portfolio of debt securities, prior
to maturity. Securities with shorter durations generally have less volatile
prices than securities of comparable quality with longer durations. The Fund
should be expected to maintain a higher average duration during periods of lower
expected market volatility, and a lower average duration during periods of
higher expected market volatility.
U.S. TREASURY SECURITIES. U.S. Treasury securities are direct obligations
of the U.S. Treasury, such as U.S. Treasury bills, notes, and bonds. The
Fund may invest up to 70 percent of its total
assets in U.S. Treasury securities. The Fund may invest in other U.S.
government securities if, in the judgment of the adviser, other U.S.
government securities are more attractive than U.S. Treasury securities.
MORTGAGE-BACKED SECURITIES. Mortgage-backed securities represent an
undivided interest in a pool of residential mortgages or may be
collateralized by a pool of residential mortgages. Mortgage-backed
securities are generally either issued or guaranteed by the Government
National Mortgage Association ("GNMA"), Federal National Mortgage
Association ("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC") or
other U.S. government agencies or instrumentalities. Mortgage-backed
securities may also be issued by single-purpose, stand-alone finance
subsidiaries or trusts of financial institutions, government agencies,
investment bankers, or companies related to the construction industry. The
Fund may invest up to 35 percent of its total assets in mortgage-backed
securities.
INVESTMENT-GRADE CORPORATE BONDS. Investment-grade corporate bonds are
corporate debt obligations having fixed or floating rates of interest and
which are rated BBB or higher by a nationally recognized statistical rating
organization ("NRSRO"). The Fund may invest up to 35 percent of its total
assets in investment-grade corporate bonds. In certain cases, the Fund's
adviser may choose bonds which are unrated if it determines that such bonds
are of comparable quality or have similar characteristics to the
investment-grade bonds described above. Yankee bonds, which are U.S.
dollar-denominated bonds issued and traded in the United States by foreign
issuers, are treated as investment-grade corporate bonds for purposes of
the asset category ranges.
HIGH YIELD CORPORATE BONDS. High yield corporate bonds are corporate debt
obligations having fixed or floating rates of interest and which are rated
BB or lower by NRSR's (commonly known as junk bonds). The Fund may invest
up to 7.5 percent of its total assets in high yield corporate bonds. There
is no minimal acceptable rating for a security to be purchased or held in
the Fund's portfolio, and the Fund may, from time to time, purchase or hold
securities rated in the lowest rating category. (See "Appendix.") In
certain cases the Fund's adviser may choose bonds which are unrated if it
determines that such bonds are of comparable quality or have similar
characteristics to the high yield bonds described above.
INVESTMENT RISKS. Lower-rated securities will usually offer higher
yields than higher-rated securities. However, there is more risk
associated with these investments. This is because of reduced
creditworthiness and increased risk of default. Lower-rated securities
generally tend to reflect short-term corporate and market developments
to a greater extent than higher-rated securities which react primarily
to fluctuations in the general level of interest rates. Short-term
corporate and market developments affecting the price or liquidity of
lower-rated securities could include adverse news affecting major
issuers, underwriters, or dealers of lower-rated corporate debt
obligations. In addition, since there are fewer investors in
lower-rated securities, it may be harder to sell the securities at an
optimum time. As a result of these factors, lower-rated securities tend
to have more price volatility and carry more risk to principal than
higher-rated securities.
Many corporate debt obligations, including many lower-rated bonds,
permit the issuers to call the security and thereby redeem their
obligations earlier than the stated maturity dates. Issuers are more
likely to call bonds during periods of declining interest rates. In
these cases, if the Fund owns a bond which is called, the Fund will
receive its return of principal earlier than expected and would likely
be required to reinvest the proceeds at lower interest rates, thus
reducing income to the Fund.
FOREIGN BONDS. Foreign bonds are high-quality debt securities of countries
other than the United States. The Fund's portfolio of foreign bonds will be
comprised mainly of foreign government, foreign governmental agency or
supranational institution bonds. The Fund will also invest in high-quality
debt securities issued by corporations in countries other than the United
States and subject to the Fund's credit limitations for foreign bonds. The
Fund may invest up to 7.5 percent of its total assets in foreign bonds.
EQUITY ASSET CATEGORIES. The portion of the Fund's assets which is
invested in equities will be allocated among the following asset categories
within the ranges specified:
LARGE COMPANY STOCKS. Large company stocks are common stocks and
securities convertible into or exchangeable for common stocks, such as
rights and warrants, of high-quality companies selected by the Fund's
adviser. Ordinarily, these companies will be in the top 25 percent of their
industries with regard to revenues and have a market capitalization of
$500,000,000 or more. However, other factors, such as a company's product
position, market share, current earnings and/or dividend and earnings
growth prospects, will be considered by the Fund's adviser and may outweigh
revenues. The Fund may invest up to 50 percent of its total assets in large
company stocks.
UTILITY STOCKS. Utility stocks are common stocks and securities
convertible into or exchangeable for common stocks, such as rights and
warrants, of utility companies. The Fund may invest up to 20 percent of its
total assets in utility stocks. Common stocks of utilities are generally
characterized by higher dividend yields and lower growth rates than common
stocks of industrial companies. Under normal market conditions, the higher
income stream from utility stocks tends to make them less volatile than
stocks of industrial companies.
SMALL COMPANY STOCKS. Small company stocks are common stocks and
securities convertible into or exchangeable for common stocks, such as
rights and warrants, of companies with a market capitalization (market
price x number of shares outstanding) below the top 1,000 stocks that
comprise the large and mid-range capitalization sector of the United States
equity market. These stocks are comparable to, but not limited to, the
stocks comprising the Russell 2000 Index, an index of small capitalization
stocks. The Fund may invest up to 7.5 percent of its total assets in small
company stocks.
INVESTMENT RISKS. Stocks in the small capitalization sector of the
United States equity market have historically been more volatile in
price than larger capitalization stocks, such as those included in the
Standard & Poor's Ratings Group 500 Index. This is because, among other
things, small companies have less certain growth prospects than larger
companies; have a lower degree of liquidity in the equity market; and
tend to have a greater sensitivity to changing economic conditions.
Further, in addition to exhibiting
greater volatility, the stocks of small companies may, to some degree,
fluctuate independently of the stocks of large companies; that is,
small company stocks may decline in price as large company stocks rise
in price or vice versa.
FOREIGN STOCKS. Foreign stocks are equity securities of established
companies in economically developed countries other than the United States.
These securities may be either dollar-denominated or denominated in foreign
currencies. American Depository Receipts ("ADRs"), including dollar
denominated ADRs which are issued by domestic banks and traded in the
United States on exchanges or over-the-counter, are treated as foreign
stocks for purposes of the asset category ranges. The Fund may invest up to
7.5 percent of its total assets in foreign stocks.
EQUITY RESERVES. When the adviser believes that a temporary defensive
position is desirable, the Fund may invest in equity reserves. Equity
reserves will be used to adjust the risk level of the equity portion of the
Fund in response to market conditions. Equity reserves will consist of U.S.
and foreign short-term money market instruments such as commercial paper
rated A-1 by Standard and Poor's Ratings Group ("Standard & Poor's"),
Prime-1 by Moody's Investors Service, Inc. ("Moody's"), or F-1 by Fitch
Investors Service, Inc. ("Fitch"). The Fund may invest up to 15 percent of
its total assets in equity reserves.
ACCEPTABLE INVESTMENTS
U.S. TREASURY AND OTHER U.S. GOVERNMENT SECURITIES. The U.S. Treasury and
other U.S. government securities in which the Fund invests are either
issued or guaranteed by the U.S. government, its agencies or
instrumentalities. The U.S. government securities in which the Fund may
invest are limited to:
direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds; and
obligations issued by U.S. government agencies or instrumentalities,
including securities that are supported by the full faith and credit of
the U.S. Treasury (such as GNMA certificates); securities that are
supported by the right of the issuer to borrow from the U.S. Treasury
(such as securities of Federal Home Loan Banks); and securities that are
supported by the credit of an agency or instrumentality (such as FNMA and
FHLMC bonds).
MORTGAGE-BACKED SECURITIES. Mortgage-backed securities are securities
collateralized by residential mortgages. The mortgage-backed securities in
which the Fund may invest may be:
issued by an agency of the U.S. government, typically GNMA, FNMA or
FHLMC;
privately issued securities which are collateralized by pools of
mortgages in which each mortgage is guaranteed as to payment of principal
and interest by an agency or instrumentality of the U.S. government;
privately issued securities which are collateralized by pools of
mortgages in which payment of principal and interest are guaranteed by
the issuer and such guarantee is collateralized by U.S. government
securities; and
other privately issued securities in which the proceeds of the issuance
are invested in mortgage-backed securities and payment of the principal
and interest are supported by the credit of an agency or instrumentality
of the U.S. government.
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"). CMOs are bonds issued by
single-purpose, stand-alone finance subsidiaries or trusts of financial
institutions, government agencies, investment bankers, or companies
related to the construction industry. Most of the CMOs in which the
Fund would invest use the same basic structure:
Several classes of securities are issued against a pool of mortgage
collateral. The most common structure contains four classes of
securities. The first three (A, B, and C bonds) pay interest at
their stated rates beginning with the issue date; the final class
(or Z bond) typically receives the residual income from the
underlying investments after payments are made to the other
classes.
The cash flows from the underlying mortgages are applied first to
pay interest and then to retire securities.
The classes of securities are retired sequentially. All principal
payments are directed first to the shortest-maturity class (or A
bonds). When those securities are completely retired, all principal
payments are then directed to the next-shortest maturity security
(or B bond). This process continues until all of the classes have
been paid off.
Because the cash flow is distributed sequentially instead of pro
rata as with pass-through securities, the cash flows and average
lives of CMOs are more predictable, and there is a period of time
during which the investors in the longer-maturity classes receive
no principal paydowns. The interest portion of these payments is
distributed by the Fund as income and the capital portion is
reinvested.
The Fund will invest only in CMOs which are rated AAA or Aaa by an
NRSRO.
REAL ESTATE MORTGAGE INVESTMENT CONDUITS ("REMICS"). REMICs are
offerings of multiple class real estate mortgage-backed securities
which qualify and elect treatment as such under provisions of the
Internal Revenue Code. Issuers of REMICs may take several forms, such
as trusts, partnerships, corporations, associations or a segregated
pool of mortgages. Once REMIC status is elected and obtained, the
entity is not subject to federal income taxation. Instead, income is
passed through the entity and is taxed to the person or persons who
hold interests in the REMIC. A REMIC interest must consist of one or
more classes of "regular interests," some of which may offer adjustable
rates, and a single class of "residual interests." To qualify as a
REMIC, substantially all of the assets of the entity must be in assets
directly or indirectly secured principally by real property.
CHARACTERISTICS OF MORTGAGE-BACKED SECURITIES. Mortgage-backed
securities have yield and maturity characteristics corresponding to the
underlying mortgages. Distributions to holders of mortgage-backed
securities include both interest and principal payments. Principal
payments represent the amortization of the principal of the underlying
mortgages and any prepayments of principal due to prepayment,
refinancing, or foreclosure of the underlying mortgages. Although
maturities of the underlying mortgage loans
may range up to 30 years, amortization and prepayments substantially
shorten the effective maturities of mortgage-backed securities. Due to
these features, mortgage-backed securities are less effective as a
means of "locking in" attractive long-term interest rates than
fixed-income securities which pay only a stated amount of interest
until maturity, when the entire principal amount is returned. This is
caused by the need to reinvest at lower interest rates both
distributions of principal generally and significant prepayments which
become more likely as mortgage interest rates decline. Since
comparatively high interest rates cannot be effectively "locked in,"
mortgage-backed securities may have less potential for capital
appreciation during periods of declining interest rates than other
non-callable, fixed-income government securities of comparable stated
maturities. However, mortgage-backed securities may experience less
pronounced declines in value during periods of rising interest rates.
In addition, some of the CMOs purchased by the Fund may represent an
interest solely in the principal repayments or solely in the interest
payments on mortgage-backed securities (stripped mortgage-backed
securities or "SMBSs"). Due to the possibility of prepayments on the
underlying mortgages, SMBSs may be more interest-rate sensitive than
other securities purchased by the Fund. If prevailing interest rates
fall below the level at which SMBSs were issued, there may be
substantial prepayments on the underlying mortgages, leading to the
relatively early prepayments of principal-only SMBSs and a reduction in
the amount of payments made to holders of interest-only SMBSs. It is
possible that the Fund might not recover its original investment in
interest-only SMBSs if there are substantial prepayments on the
underlying mortgages. Therefore, interest-only SMBSs generally increase
in value as interest rates rise and decrease in value as interest rates
fall, counter to changes in value experienced by most fixed income
securities. The Fund's adviser intends to use this characteristic of
interest-only SMBSs to reduce the effects of interest rate changes on
the value of the Fund's portfolio, while continuing to pursue the
Fund's investment objective.
CORPORATE BONDS. The investment-grade corporate bonds in which the Fund
invests are:
rated within the four highest ratings for corporate bonds by Moody's
(Aaa, Aa, A, or Baa), Standard & Poor's (AAA, AA, A, or BBB), or Fitch
(AAA, AA, A, or BBB);
unrated if other long-term debt securities of that issuer are rated, at
the time of purchase, Baa or better by Moody's or BBB or better by
Standard & Poor's or Fitch; or
unrated if determined to be of equivalent quality to one of the foregoing
rating categories by the Fund's adviser.
Securities which are rated BBB by Standard & Poor's or Fitch or Baa by
Moody's have speculative characteristics. Changes in economic conditions or
other circumstances are more likely to lead to weakened capacity to make
principal and interest payments than higher rated bonds. If a security's
rating is reduced below the required minimum after the Fund has purchased
it, the Fund is not required to sell the security, but may consider doing
so.
The high yield corporate bonds in which the Fund invests are rated Ba or
lower by Moody's or BB or lower by Standard & Poor's or Fitch (commonly
known as junk bonds). A description of the rating categories is contained
in the Appendix to this prospectus.
EQUITY SECURITIES. Common stocks represent ownership interest in a
corporation. Unlike bonds, which are debt securities, common stocks have
neither fixed maturity dates nor fixed schedules of promised payments.
Utility stocks are common stocks of utility companies, including water
companies, companies that produce, transmit, or distribute gas and electric
energy and those companies that provide communications facilities, such as
telephone and telegraph companies. Foreign stocks are equity securities of
foreign issuers.
FOREIGN SECURITIES. The foreign bonds in which the Fund invests are rated
within the four highest ratings for bonds by Moody's (Aaa, Aa, A or Baa) or
by Standard & Poor's (AAA, AA, A or BBB) or are unrated if determined to be
of equivalent quality by the Fund's adviser.
INVESTMENT RISKS. Investments in foreign securities involve special
risks that differ from those associated with investments in domestic
securities. The risks associated with investments in foreign securities
apply to securities issued by foreign corporations and sovereign
governments. These risks relate to political and economic developments
abroad, as well as those that result from the differences between the
regulation of domestic securities and issuers and foreign securities
and issuers. These risks may include, but are not limited to,
expropriation, confiscatory taxation, currency fluctuations,
withholding taxes on interest, limitations on the use or transfer of
Fund assets, political or social instability and adverse diplomatic
developments. It may also be more difficult to enforce contractual
obligations or obtain court judgments abroad than would be the case in
the United States because of differences in the legal systems. If the
issuer of the debt or the governmental authorities that control the
repayment of the debt may be unable or unwilling to repay principal or
interest when due in accordance with the terms of such debt, the Fund
may have limited legal recourse in the event of default. Moreover,
individual foreign economies may differ favorably or unfavorably from
the domestic economy in such respects as growth of gross national
product, the rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position.
Additional differences exist between investing in foreign and domestic
securities. Examples of such differences include: less publicly
available information about foreign issuers; credit risks associated
with certain foreign governments; the lack of uniform financial
accounting standards applicable to foreign issuers; less readily
available market quotations on foreign issuers; the likelihood that
securities of foreign issuers may be less liquid or more volatile;
generally higher foreign brokerage commissions; and unreliable mail
service between countries.
EQUITY RESERVES. The Fund's equity reserves may be cash received from the
sale of Fund shares, reserves for temporary defensive purposes or to take
advantage of market opportunities.
REPURCHASE AGREEMENTS. Repurchase agreements are arrangements in which
banks, broker/dealers, and other recognized financial institutions sell
securities to the Fund and
agree at the time of sale to repurchase them at a mutually agreed upon
time and price. To the extent that the original seller does not
repurchase the securities from the Fund, the Fund could receive less
than the repurchase price on any sale of such securities.
CONVERTIBLE SECURITIES. Convertible securities are fixed-income securities
which may be exchanged or converted into a predetermined number of the
issuer's underlying common stock at the option of the holder during a
specified time period. Convertible securities may take the form of
convertible preferred stock, convertible bonds or debentures, units
consisting of "usable" bonds and warrants or a combination of the features
of several of these securities. The investment characteristics of each
convertible security vary widely, which allows convertible securities to be
employed for different investment objectives. The adviser may treat
convertible securities as large company stocks, small company stocks, or
high yield bonds for purposes of the asset category ranges, depending upon
current market conditions, including the relationship of the then-current
price to the conversion price. The convertible securities in which the Fund
invests may be rated "high yield" or of comparable quality at the time of
purchase.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Fund may invest in
the securities of other investment companies, but it will not own more than 3
percent of the total outstanding voting stock of any such investment company,
invest more than 5 percent of its total assets in any one such investment
company, or invest more than 10 percent of its total assets in such other
investment companies in general. To the extent that the Fund invests in
securities issued by other investment companies, the Fund will indirectly bear
its proportionate share of any fees and expenses paid by such companies in
addition to the fees and expenses payable directly by the Fund.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies but which are
subject to restrictions on resale under federal securities law. However, the
Fund will limit investments in illiquid securities, including certain restricted
securities not determined by the Trustees to be liquid, over-the-counter
options, and repurchase agreements providing for settlement in more than seven
days after notice, to 15 percent of its net assets.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
Accordingly, the Fund may pay more or less than the market value of the
securities on the settlement date.
The Fund may dispose of a commitment prior to settlement if the adviser deems it
appropriate to do so. In addition, the Fund may enter into transactions to sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Fund may realize short-term profits or losses upon the sale of such
commitments.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend its portfolio securities on a short-term or long-term basis up to
one-third of the value of its total assets to broker/dealers, banks, or other
institutional borrowers of securities. The Fund will only enter into loan
arrangements with broker/dealers, banks, or other institutions which the adviser
has determined are creditworthy under guidelines established by the Trustees and
will receive collateral in the form of cash or U.S. government securities equal
to at least 100 percent of the value of the securities loaned.
There is the risk that when lending portfolio securities, the securities may not
be available to the Fund on a timely basis and the Fund may, therefore, lose the
opportunity to sell the securities at a desirable price. In addition, in the
event that a borrower of securities would file for bankruptcy or become
insolvent, disposition of the securities may be delayed pending court action.
FOREIGN CURRENCY TRANSACTIONS. The Fund will enter into foreign currency
transactions to obtain the necessary currencies to settle securities
transactions. Currency transactions may be conducted either on a spot or cash
basis at prevailing rates or through forward foreign currency exchange
contracts.
The Fund may also enter into foreign currency transactions to protect Fund
assets against adverse changes in foreign currency exchange rates or exchange
control regulations. Such changes could unfavorably affect the value of Fund
assets which are denominated in foreign currencies, such as foreign securities
or funds deposited in foreign banks, as measured in U.S. dollars. Although
foreign currency exchanges may be used by the Fund to protect against a decline
in the value of one or more currencies, such efforts may also limit any
potential gain that might result from a relative increase in the value of such
currencies and might, in certain cases, result in losses to the Fund.
CURRENCY RISKS. To the extent that debt securities purchased by the Fund
are denominated in currencies other than the U.S. dollar, changes in
foreign currency exchange rates will affect the Fund's net asset value; the
value of interest earned; gains and losses realized on the sale of
securities; and net investment income and capital gain, if any, to be
distributed to shareholders by the Fund. If the value of a foreign currency
rises against the U.S. dollar, the value of the Fund's assets denominated
in that currency will increase; correspondingly, if the value of a foreign
currency declines against the U.S. dollar, the value of the Fund's assets
denominated in that currency will decrease.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward foreign currency
exchange contract ("forward contract") is an obligation to purchase or sell an
amount of a particular currency at a specific price and on a future date agreed
upon by the parties.
Generally, no commission charges or deposits are involved. At the time the Fund
enters into a forward contract, Fund assets with a value equal to the Fund's
obligation under the forward contract are segregated and are maintained until
the contract has been settled. The Fund will not enter into a forward contract
with a term of more than one year.
The Fund will generally enter into a forward contract to provide the proper
currency to settle a securities transaction at the time the transaction occurs
("trade date"). The period between trade date and settlement date will vary
between 24 hours and 30 days, depending upon local custom.
The Fund may also protect against the decline of a particular foreign currency
by entering into a forward contract to sell an amount of that currency
approximating the value of all or a portion of the Fund's assets denominated in
that currency ("hedging"). The success of this type of short-term hedging
strategy is highly uncertain due to the difficulties of predicting short-term
currency market movements and of precisely matching forward contract amounts and
the constantly changing value of the securities involved. Although the adviser
will consider the likelihood of changes in currency values when making
investment decisions, the adviser believes that it is important to be able to
enter into forward contracts when it believes the interests of the Fund will be
served. The Fund will not enter into forward contracts for hedging purposes in a
particular currency in an amount in excess of the Fund's assets denominated in
that currency. The Fund will not invest more than 21% of its total assets in
forward foreign currency exchange contracts.
OPTIONS. The Fund may deal in options on foreign currencies, foreign currency
futures, securities, and securities indices, which options may be listed for
trading on a national securities exchange or traded over-the-counter. The Fund
will use options only to manage interest rate and currency risks. The Fund may
write covered call options to generate income. The Fund may write covered call
options and secured put options on up to 25 percent of its net assets and may
purchase put and call options provided that no more than 5 percent of the fair
market value of its net assets may be invested in premiums on such options.
A call option gives the purchaser the right to buy, and the writer the
obligation to sell, the underlying currency, security or other asset at the
exercise price during the option period. A put option gives the purchaser the
right to sell, and the writer the obligation to buy, the underlying currency,
security or other asset at the exercise price during the option period. The
writer of a covered call owns assets that are acceptable for escrow, and the
writer of a secured put invests an amount not less than the exercise price in
eligible assets to the extent that it is obligated as a writer. If a call
written by the Fund is exercised, the Fund foregoes any possible profit from an
increase in the market price of the underlying asset over the exercise price
plus the premium received. In writing puts, there is a risk that the Fund may be
required to take delivery of the underlying asset at a disadvantageous price.
Over-the-counter options ("OTC options") differ from exchange traded options in
several respects. They are transacted directly with dealers and not with a
clearing corporation, and there is a risk of non-performance by the dealer as a
result of the insolvency of such dealer or otherwise, in which event the Fund
may experience material losses. However, in writing options, the premium is paid
in advance by the dealer. OTC options, which may not be continuously liquid, are
available for a greater variety of assets and with a wider range of expiration
dates and exercise prices, than are exchange traded options.
FUTURES AND OPTIONS ON FUTURES. The Fund may purchase and sell futures
contracts to accommodate cash flows into and out of the Fund's portfolio and to
hedge against the effects of changes in the value of portfolio securities due to
anticipated changes in interest rates and market conditions. Interest rate
futures contracts call for the delivery of particular debt instruments at a
certain time in the future. The seller of the contract agrees to make delivery
of the type of instrument called for in the contract, and the buyer agrees to
take delivery of the instrument at the specified future time.
Stock index futures contracts are based on indexes that reflect the market value
of common stock of the firms included in the indexes. An index futures contract
is an agreement pursuant to which two parties agree to take or make delivery of
an amount of cash equal to the differences between the value of the index at the
close of the last trading day of the contract and the price at which the index
contract was originally written. The Fund may utilize stock index futures to
handle cash flows into and out of the Fund and to potentially reduce
transactional costs.
The Fund may also write call options and purchase put options on futures
contracts as a hedge to attempt to protect its portfolio securities against
decreases in value. When the Fund writes a call option on a futures contract, it
is undertaking the obligation of selling a futures contract at a fixed price at
any time during a specified period if the option is exercised. Conversely, as
purchaser of a put option on a futures contract, the Fund is entitled (but not
obligated) to sell a futures contract at the fixed price during the life of the
option.
The Fund may not purchase or sell futures contracts or related options if
immediately thereafter the sum of the amount of margin deposits on the Fund's
existing futures positions and premiums paid for related options would exceed 5
percent of the market value of the Fund's total assets. When the Fund purchases
futures contracts, an amount of cash and cash equivalents, equal to the
underlying commodity value of the futures contracts (less any related margin
deposits), will be deposited in a segregated account with the custodian (or the
broker, if legally permitted) to collateralize the position and thereby insure
that the use of such futures contracts are unleveraged. When the Fund sells
futures contracts, it will either own or have the right to receive the
underlying future or security or will make deposits to collateralize the
position as discussed above.
RISKS. When the Fund uses futures and options on futures as hedging
devices, there is a risk that the prices of the securities subject to the
futures contracts may not correlate perfectly with the prices of the
securities in the Fund's portfolio. This may cause the futures contract and
any related options to react differently than the portfolio securities to
market changes. In addition, the investment adviser could be incorrect in
its expectations about the direction or extent of market factors such as
stock price movements. In these events, the Fund may lose money on the
futures contract or option.
It is not certain that a secondary market for positions in futures
contracts or for options will exist at all times. Although the investment
adviser will consider liquidity before entering into these transactions,
there is no assurance that a liquid secondary market on an exchange or
otherwise will exist for any particular futures contract or option at any
particular time. The Fund's ability to establish and close out futures and
options positions depends on this secondary market.
PORTFOLIO TURNOVER. Although the Fund does not intend to invest for the purpose
of seeking short-term profits, securities in its portfolio will be sold whenever
the Fund's adviser believes it is appropriate to do so in light of the Fund's
investment objective, without regard to the length of time a particular security
may have been held. The Fund's rate of portfolio turnover may exceed that of
certain other mutual funds with the same investment objective. A higher rate of
portfolio turnover involves correspondingly greater transaction expenses which
must be borne directly by the Fund and, thus, indirectly by its shareholders. In
addition, a high rate of portfolio turnover may result in
the realization of larger amounts of capital gains which, when distributed to
the Fund's shareholders, are taxable to them. (Further information is contained
in the Fund's Statement of Additional Information within the sections "Brokerage
Transactions" and "Tax Status".) Nevertheless, transactions for the Fund's
portfolio will be based only upon investment considerations and will not be
limited by any other considerations when the Fund's adviser deems it appropriate
to make changes in the Fund's portfolio.
INVESTMENT LIMITATIONS
The Fund will not:
borrow money directly or through reverse repurchase agreements or pledge
securities except, under certain circumstances, the Fund may borrow up to
one-third of the value of its total assets and pledge up to 15 percent of
the value of those assets to secure such borrowings;
lend any securities except for portfolio securities; or
underwrite any issue of securities, except as it may be deemed to be an
underwriter under the Securities Act of 1933 in connection with the sale
of restricted securities which the Fund may purchase pursuant to its
investment objective, policies and limitations.
The above investment limitations cannot be changed without shareholder approval.
TRUST INFORMATION
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MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Trust's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. The Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Except as noted below with regard to the sub-adviser,
investment decisions for the Fund are made by Federated Management, the Fund's
investment adviser (the "Adviser"), subject to direction by the Trustees. The
Adviser continually conducts investment research and supervision for the Fund
and is responsible for the purchase or sale of portfolio instruments, for which
it receives an annual fee from the Fund.
ADVISORY FEES. The Fund's Adviser receives an annual investment advisory
fee equal to .75 of 1% of the Fund's average daily net assets. The fee paid
by the Fund, while higher than the advisory fee paid by other mutual funds
in general, is comparable to fees paid by other mutual funds with similar
objectives and policies. Under the advisory contract, which provides for
voluntary reimbursement of expenses by the Adviser, the Adviser may
voluntarily waive some or all of its fee. This does not include
reimbursement to the Fund of any expenses incurred by shareholders who use
the transfer agent's subaccounting facilities. The Adviser has also
undertaken to reimburse the Fund for operating expenses in excess of
limitations established by certain states.
ADVISER'S BACKGROUND. Federated Management, a Delaware business trust
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940.
SUB-ADVISER. Under the terms of the Sub-Advisory Agreement between the Adviser
and Federated Global Research Corp. (the "Sub-Adviser"), the Sub-Adviser will
provide the Adviser such investment advice, statistical and other factual
information as may, from time to time, be reasonably requested by the Adviser.
SUB-ADVISORY FEES. For its services under the Sub-Advisory Agreement,
the Sub-Adviser receives an allocable portion of the Fund's advisory
fee. Such allocation is based on the amount of foreign securities which
the Sub-Adviser manages for the Fund. This fee is paid by the Adviser
out of its resources and is not an incremental Fund expense.
SUB-ADVISER'S BACKGROUND. Federated Global Research Corp.,
incorporated in Delaware on May 12, 1995, is a registered investment
adviser under the Investment Advisers Act of 1940. Prior to September
1995, the Sub-Adviser had not served as an investment adviser to mutual
funds.
The Adviser and Sub-Adviser are subsidiaries of Federated Investors. All of the
Class A (voting) shares of Federated Investors are owned by a trust, the
trustees of which are John F. Donahue, Chairman and Trustee of Federated
Investors, Mr. Donahue's wife, and Mr. Donahue's son,
J. Christopher Donahue, who is President and Trustee of Federated Investors.
Federated Management, Federated Global Research Corp. and other subsidiaries of
Federated Investors serve as investment advisers to a number of investment
companies and private accounts. Certain other subsidiaries also provide
administrative services to a number of investment companies. With over $80
billion invested across more than 250 funds under management and/or
administration by its subsidiaries, as of December 31, 1995, Federated Investors
is one of the largest mutual fund investment managers in the United States. With
more than 1,800 employees, Federated continues to be led by the management who
founded the company in 1955. Federated funds are presently at work in and
through 4,000 financial institutions nationwide. More than 100,000 investment
professionals have selected Federated funds for their clients.
The Trust, the Adviser, and the Sub-Adviser have adopted strict codes of ethics
governing the conduct of all employees who manage the Fund and its portfolio
securities. These codes recognize that such persons owe a fiduciary duty to the
Fund's shareholders and must place the interests of shareholders ahead of the
employees' own interest. Among other things, the codes: require preclearance and
periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered for
purchase or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less than sixty
days. Violations of the codes are subject to review by the Board of Trustees and
could result in severe penalties.
PORTFOLIO MANAGERS' BACKGROUNDS. Charles A. Ritter is the portfolio
manager for the Fund and performs the overall allocation of the assets of
the Fund among the various asset categories. He has performed these duties
since the Fund's inception. In allocating the Fund's assets,
Mr. Ritter evaluates the market environment and economic outlook, utilizing
the services of the Adviser's economist and strategist. Mr. Ritter joined
Federated Investors in 1983 and has been a Vice President of the Fund's
Adviser since 1992. From 1988 until 1991, Mr. Ritter acted as an Assistant
Vice President. Mr. Ritter is a Chartered Financial Analyst and received
his M.B.A. in Finance from the University of Chicago and his M.S. in
Economics from Carnegie Mellon University.
The portfolio managers for each of the individual asset categories are as
follows:
Peter R. Anderson and Aash Shah are portfolio managers for the domestic
large company stocks asset category. Mr. Anderson has performed this duty
since the Fund's inception. Mr. Shah assumed his responsibilities in
December 1995. Mr. Anderson joined Federated Investors in 1972 and is
presently a Senior Vice President of the Fund's Adviser. Mr. Anderson is a
Chartered Financial Analyst and received his M.B.A. in Finance from the
University of Wisconsin. Mr. Shah joined Federated Investors in 1993 as an
Investment Analyst and has been an Assistant Vice President of the Fund's
Adviser since 1995. Mr. Shah was employed at Westinghouse Credit Corp. from
1990 to 1993 as an Investment Analyst. Mr. Shah received his M.S.I.A. from
Carnegie Mellon University with a concentration in finance and accounting.
Mr. Shah is a Chartered Financial Analyst.
James Grefenstette is the portfolio manager for the domestic small company
stocks asset category. He has served in this capacity since August 1994.
Mr. Grefenstette joined Federated Investors in 1992 and has been an
Assistant Vice President of the Fund's Adviser since 1994. From 1992 until
1994, Mr. Grefenstette acted as an investment analyst. Mr. Grefenstette was
a credit analyst at Westinghouse Credit Corp. from 1990 until 1992. Mr.
Grefenstette received his M.S.I.A. from Carnegie Mellon University.
Christopher H. Wiles is the portfolio manager for the utility stocks asset
category of all the portfolios of Managed Series Trust except for Federated
Managed Aggressive Growth Fund, and has been one of the Fund's portfolio
managers since its inception. Mr. Wiles joined Federated Investors in 1990
and has been a Vice President of the Fund's Adviser since 1992. Mr. Wiles
served as Assistant Vice President of the Fund's Adviser from 1990 until
1992. Mr. Wiles is a Chartered Financial Analyst and received his M.B.A. in
Finance from Cleveland State University.
Henry Frantzen, Drew Collins, Mark Kopinski, Frank Semack, and Alexandre de
Bethmann are portfolio managers for the foreign stocks asset category.
Henry A. Frantzen has been a portfolio manager of the Fund since November
1995. Mr. Frantzen joined Federated Investors in 1995 as an Executive Vice
President of the Fund's Sub-Adviser. Mr. Frantzen served as Chief
Investment Officer of international equities at Brown Brothers Harriman &
Co. from 1992 to 1995. He was the Executive Vice President and Director of
Equities at Oppenheimer Management Corporation from 1989 to 1991. Mr.
Frantzen received his B.S. in finance and marketing from the University of
North Dakota.
Drew J. Collins has been a portfolio manager of the Fund since November
1995. Mr. Collins joined Federated Investors in 1995 as a Senior Vice
President of the Fund's Sub-Adviser.
Mr. Collins served as a Vice President/Portfolio Manager of international
equity portfolios at Arnhold and S. Bleichroeder, Inc. from 1994 to 1995.
He served as an Assistant Vice President/ Portfolio Manager for
international equities at the College Retirement Equities Fund from 1986 to
1994. Mr. Collins is a Chartered Financial Analyst and received his M.B.A.
in finance from the University of Pennsylvania.
Mark S. Kopinski has been a portfolio manager of the Fund since November
1995. Mr. Kopinski joined Federated Investors in 1995 as a Vice President
of the Fund's Sub-Adviser. Mr. Kopinski served as Vice President/Portfolio
Manager of international equity funds at Twentieth Century Mutual Funds
from 1990 to 1995. Mr. Kopinski received his M.B.A. in Asian Studies from
the University of Illinois.
Frank Semack has been a portfolio manager of the Fund since November 1995.
Mr. Semack joined Federated Investors in 1995 as a Vice President of the
Fund's Sub-Adviser. Mr. Semack served as an Investment Analyst at Omega
Advisers, Inc. from 1993 to 1994. He served as an Associate
Director/Portfolio Manager of Wardley Investment Services, Ltd. from 1987
to 1993. Mr. Semack received his M.Sc. in economics from the London School
of Economics.
Alexandre de Bethmann has been a portfolio manager of the Fund since
November 1995. Mr. de Bethmann joined Federated Investors in 1995 as a Vice
President of the Fund's Sub-Adviser. Mr. de Bethmann served as Assistant
Vice President/Portfolio Manager for Japanese and Korean equities at the
College Retirement Equities Fund from 1994 to 1995. He served as an
International Equities Analyst and then as an Assistant Portfolio Manager
at the College Retirement Equities Fund between 1987 and 1994. Mr. de
Bethmann received his M.B.A. in Finance from Duke University.
Henry Frantzen, Drew Collins, and Robert Kowit are portfolio managers for
the foreign bonds asset category. They have performed these duties since
November 1995.
Robert M. Kowit joined Federated Investors in 1995 as a Vice President of
the Fund's Sub-Adviser. Mr. Kowit served as a Managing Partner of
Copernicus Global Asset Management from January 1995 through October 1995.
From 1990 to 1994, he served as Senior Vice President of International
Fixed Income and Foreign Exchange for John Hancock Advisers. Mr. Kowit
received his M.B.A. from Iona College with a concentration in finance.
Susan M. Nason and Joseph M. Balestrino are portfolio managers for the U.S.
Treasury securities asset category. Ms. Nason has performed this duty since
the Fund's inception. Mr. Balestrino assumed his responsibilities on March
1, 1995. Ms. Nason joined Federated Investors in 1987 and has been a Vice
President of the Fund's Adviser since 1993. Ms. Nason served as an
Assistant Vice President of the Adviser from 1990 until 1992. Ms. Nason is
a Chartered Financial Analyst and received her M.S.I.A. in Finance from
Carnegie Mellon University. Mr. Balestrino joined Federated Investors in
1986 and has been Vice President of the Fund's Adviser since 1995. Mr.
Balestrino served as an Assistant Vice President from 1991 until 1995, and
as an investment analyst of the Adviser from 1989 until 1991. Mr.
Balestrino is a Chartered Financial Analyst and received his M.A. in Urban
and Regional Planning from the University of Pittsburgh.
Thomas M. Franks is the portfolio manager for the equity reserves asset
category. He has performed these duties since the Fund's inception. Mr.
Franks joined Federated Investors in 1985 and has been a Vice President of
the Fund's Adviser since 1990. Mr. Franks is a Chartered Financial Analyst
and received his M.S.I.A. in Business Administration from Carnegie Mellon
University.
Kathleen M. Foody-Malus and James D. Roberge are portfolio managers for the
mortgage-backed securities asset category. Ms. Foody-Malus has performed
this duty since the Fund's inception. Mr. Roberge assumed his
responsibilities on March 1, 1995. Ms. Foody-Malus joined Federated
Investors in 1983 and has been a Vice President of the Fund's Adviser since
1993. Ms. Foody-Malus served as an Assistant Vice President of the Adviser
from 1990 until 1992. Ms. Foody-Malus received her M.B.A. in
Accounting/Finance from the University of Pittsburgh. Mr. Roberge joined
Federated Investors in 1990 and has been a Vice President of the Fund's
Adviser since October, 1994. Prior to this, Mr. Roberge served as an
Assistant Vice President of the Fund's Adviser. From 1990 until 1992, Mr.
Roberge acted as an investment analyst. Mr. Roberge is a Chartered
Financial Analyst and received his M.B.A. in Finance from the University of
Pennsylvania.
Joseph M. Balestrino and Susan M. Nason are portfolio managers for the
investment-grade corporate bonds asset category. They have performed these
duties since the Fund's inception.
Mark E. Durbiano is the portfolio manager for the high yield corporate
bonds asset category. He has performed these duties since the Fund's
inception. Mr. Durbiano joined Federated Investors in 1982 and has been a
Senior Vice President of the Fund's Adviser since January 1996. Mr.
Durbiano was a Vice President of the Fund's Adviser from 1988 through 1995.
Mr. Durbiano is a Chartered Financial Analyst and received his M.B.A. in
Finance from the University of Pittsburgh.
DISTRIBUTION OF INSTITUTIONAL SHARES
Federated Securities Corp. is the principal distributor for Shares. It is a
Pennsylvania corporation organized on November 14, 1969, and is the principal
distributor for a number of investment companies. Federated Securities Corp. is
a subsidiary of Federated Investors.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides administrative personnel and services (including
certain legal and financial reporting services) necessary to operate the Fund.
Federated Administrative Services provides these at an annual rate which relates
to the average aggregate daily net assets of all funds advised by subsidiaries
of Federated Investors ("Federated Funds") as specified below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE DAILY
ADMINISTRATIVE FEE NET ASSETS OF THE FEDERATED FUNDS
<S> <C>
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Administrative Services may choose voluntarily to waive a portion of
its fee.
SHAREHOLDER SERVICES. The Fund has entered into a Shareholder Services
Agreement with Federated Shareholder Services, a subsidiary of Federated
Investors, under which the Fund may make payments up to .25 of 1% of the average
daily net asset value of the Institutional Shares, computed at an annual rate,
to obtain certain personal services for shareholders and provide maintenance of
shareholder accounts ("shareholder services"). From time to time and for such
periods as deemed appropriate, the amount stated above may be reduced
voluntarily. Under the Shareholder Services Agreement, Federated Shareholder
Services will either perform shareholder services directly or will select
financial institutions to perform shareholder services. Financial institutions
will receive fees based upon Shares owned by their clients or customers. The
schedules of such fees and the basis upon which such fees will be paid will be
determined from time to time by the Fund and Federated Shareholder Services.
SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS. In addition to receiving the
payments under the Shareholder Services Agreement, Federated Securities Corp.
and Federated Shareholder Services, from their own assets, may pay financial
institutions supplemental fees for the performance of substantial sales
services, distribution-related support services, or shareholder services. The
support may include sponsoring sales, educational and training seminars for
their employees, providing sales literature, and engineering computer software
programs that emphasize the attributes of the Fund. Such assistance will be
predicated upon the amount of Shares the financial institution sells or may
sell, and/or upon the type and nature of sales or marketing support furnished by
the financial institution. Any payments made by the distributor may be
reimbursed by the Fund's Adviser or its affiliates.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the Adviser looks for prompt execution of the order at a favorable
price. In working with dealers, the Adviser will generally use those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. In selecting among firms
believed to meet these criteria, the Adviser may give consideration to those
firms which have sold or are selling shares of the Fund and other funds
distributed by Federated Securities Corp. The Adviser makes decisions on
portfolio transactions and selects brokers and dealers subject to review by the
Board of Trustees.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund's net asset value per Share fluctuates. The net asset value for Shares
is determined by adding the interest of the Shares in the market value of all
securities and other assets of the Fund, subtracting the interest of the Shares
in the liabilities of the Fund and those attributable to Shares, and dividing
the remainder by the total number of Shares outstanding. The net asset value for
Institutional Shares may exceed that of Select Shares due to the variance in
daily net income realized by each class. Such variance will reflect only accrued
net income to which the shareholders of a particular class are entitled.
INVESTING IN INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
SHARE PURCHASES
Shares are sold on days on which the New York Stock Exchange is open for
business. Shares may be purchased through a financial institution which has a
sales agreement with the distributor or by wire or mail.
To purchase Shares, open an account by calling Federated Securities Corp.
Information needed to establish an account will be taken over the telephone. The
Fund reserves the right to reject any purchase request.
THROUGH A FINANCIAL INSTITUTION. An investor may call his financial institution
(such as a bank or an investment dealer) to place an order to purchase Shares.
Orders through a financial institution are considered received when the Fund is
notified of the purchase order. Purchase orders through a registered
broker/dealer must be received by the broker before 4:00 p.m. (Eastern time) and
must be transmitted by the broker to the Fund before 5:00 p.m. (Eastern time) in
order for Shares to be purchased at that day's price. Purchase orders through
other financial institutions must be received by the financial institution and
transmitted to the Fund before 4:00 p.m. (Eastern time) in order for Shares to
be purchased at that day's price. It is the financial institution's
responsibility to transmit orders promptly.
BY WIRE. To purchase Shares by Federal Reserve wire, call the Fund before 4:00
p.m. (Eastern time) to place an order. The order is considered received
immediately. Payment by federal funds must be received before 3:00 p.m. (Eastern
time) on the next business day following the order. Federal funds should be
wired as follows: Federated Services Company, c/o State Street Bank and Trust
Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit to: Federated
Managed Growth and Income Fund--Institutional Shares; Fund Number (this number
can be found on the account statement or by contacting the Fund); Group Number
or Wire Order Number; Nominee or Institution Name; and ABA Number 011000028.
Shares cannot be purchased by wire on holidays when wire transfers are
restricted. Questions on wire purchases should be directed to your shareholder
services representative at the telephone number listed on your account
statement.
BY MAIL. To purchase Shares by mail, send a check made payable to Federated
Managed Growth and Income Fund--Institutional Shares to Federated Services
Company, P.O. Box 8600, Boston,
Massachusetts 02266-8600. Orders by mail are considered received when payment by
check is converted by State Street Bank into federal funds. This is normally the
next business day after State Street Bank receives the check.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in Shares is $25,000. However, an account may be
opened with a smaller amount as long as the $25,000 minimum is reached within 90
days. An institutional investor's minimum investment will be calculated by
combining all accounts it maintains with the Fund. Accounts established through
a non-affiliated bank or broker may be subject to a smaller minimum investment.
WHAT SHARES COST
Shares are sold at their net asset value next determined after an order is
received. There is no sales charge imposed by the Fund. Investors who purchase
Shares through a non-affiliated bank or broker may be charged an additional
service fee by that bank or broker.
The net asset value is determined as of the close of trading (normally 4:00 p.m.
Eastern time) on the New York Stock Exchange, Monday through Friday, except on:
(i) days on which there are not sufficient changes in the value of the Fund's
portfolio securities such that its net asset value might be materially affected;
(ii) days during which no Shares are tendered for redemption and no orders to
purchase Shares are received; and (iii) the following holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
SUBACCOUNTING SERVICES
Institutions are encouraged to open single master accounts. However, certain
institutions may wish to use the transfer agent's subaccounting system to
minimize their internal recordkeeping requirements. The transfer agent may
charge a fee based on the level of subaccounting services rendered. Institutions
holding Shares in a fiduciary, agency, custodial, or similar capacity may charge
or pass through subaccounting fees as part of or in addition to normal trust or
agency account fees. They may also charge fees for other services provided which
may be related to the ownership of Shares. This prospectus should, therefore, be
read together with any agreement between the customer and the institution with
regard to the services provided, the fees charged for those services, and any
restrictions and limitations imposed. State securities laws may require certain
financial institutions such as depository institutions to register as dealers.
SYSTEMATIC INVESTMENT PROGRAM
Once a Fund account had been opened, shareholders may add to their investment on
a regular basis. Under this program, funds may be automatically withdrawn
periodically from the shareholder's checking account and invested in Shares at
the net asset value next determined after an order is received by the Fund. A
shareholder may apply for participation in this program through Federated
Securities Corp.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the Fund.
Detailed confirmations of each purchase or redemption are sent to each
shareholder. Quarterly confirmations are sent to report dividends paid during
that quarter.
DIVIDENDS
Dividends are declared and paid quarterly to all shareholders invested in the
Fund on the record date. Unless shareholders request cash payments by writing
the Fund, dividends are automatically reinvested in additional Shares of the
Fund on payment dates at the ex-dividend date net asset value without a sales
charge.
CAPITAL GAINS
Capital gains realized by the Fund, if any, will be distributed at least once
every 12 months.
REDEEMING INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
The Fund redeems Shares at their net asset value next determined after the Fund
receives the redemption request. Redemptions will be made on days on which the
Fund computes its net asset value. Redemption requests must be received in
proper form and can be made through a financial institution, by telephone
request or by written request.
THROUGH A FINANCIAL INSTITUTION
A shareholder may redeem Shares by calling his financial institution (such as a
bank or an investment dealer) to request the redemption. Shares will be redeemed
at the net asset value next determined after the Fund receives the redemption
request from the financial institution. Redemption requests through a registered
broker/dealer must be received by the broker before 4:00 p.m. (Eastern time) and
must be transmitted by the broker to the Fund before 5:00 p.m. (Eastern time) in
order for Shares to be redeemed at that day's net asset value. Redemption
requests through other financial institutions must be received by the financial
institution and transmitted to the Fund before 4:00 p.m. (Eastern time) in order
for Shares to be redeemed at that day's net asset value. The financial
institution is responsible for promptly submitting redemption requests and
providing proper written redemption instructions to the Fund. The financial
institution may charge customary fees and commissions for this service.
TELEPHONE REDEMPTION
Shareholders may redeem their Shares by telephoning the Fund before 4:00 p.m.
(Eastern time). All proceeds will normally be wire transferred the following
business day, but in no event more than seven days, to the shareholder's account
at a domestic commercial bank that is a member of the Federal Reserve System.
Proceeds from redemption requests received on holidays when wire transfers are
restricted will be wired the following business day. Questions about telephone
redemptions on days when wire transfers are restricted should be directed to
your shareholder
services representative at the telephone number listed on your account
statement. If at any time, the Fund shall determine it necessary to terminate or
modify this method of redemption, shareholders would be promptly notified.
An authorization form permitting the Fund to accept telephone requests must
first be completed. Authorization forms and information on this service are
available from Federated Securities Corp. Telephone redemption instructions may
be recorded. If reasonable procedures are not followed by the Fund, it may be
liable for losses due to unauthorized or fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "Written Requests", should be considered.
WRITTEN REQUESTS
Shares may be redeemed in any amount by mailing a written request to: Federated
Services Company, P.O. Box 8600, Boston, MA 02266-8600. If share certificates
have been issued, they should be sent unendorsed with the written request by
registered or certified mail to the address noted above.
SIGNATURES. Shareholders requesting a redemption of any amount to be sent to an
address other than that on record with the Fund, or a redemption payable other
than to the shareholder of record must have signatures on written redemption
requests guaranteed by:
a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund ("BIF"), which is administered by the Federal Deposit
Insurance Corporation ("FDIC");
a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;
a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund ("SAIF"), which is administered
by the FDIC; or
any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.
RECEIVING PAYMENT. Normally, a check for the proceeds is mailed within one
business day, but in no event more than seven days, after receipt of a proper
written redemption request, provided the Fund or its agents have received
payment for Shares from the shareholder.
SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive payments of a predetermined amount may take
advantage of the Systematic Withdrawal Program. Under this program, Shares are
redeemed to provide for periodic withdrawal payments in an amount directed by
the shareholder. Depending upon the amount of the withdrawal payments, the
amount of dividends paid and capital gains distributions with respect to Shares,
and the fluctuation of the net asset value of Shares redeemed under this
program, redemptions may reduce, and eventually use up, the shareholder's
investment in the Fund. For this reason, payments under this program should not
be considered as yield or income on the shareholder's investment in the Fund. To
be eligible to participate in this program, a shareholder must have an account
value of at least $25,000. A shareholder may apply for participation in this
program through Federated Securities Corp.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem Shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $25,000. This
requirement does not apply, however, if the balance falls below $25,000 because
of changes in the Fund's net asset value. Before Shares are redeemed to close an
account, the shareholder is notified in writing and allowed 30 days to purchase
additional Shares to meet the minimum requirement.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights except that, in matters
affecting only a particular fund or class, only shares of that fund or class are
entitled to vote. As a Massachusetts business trust, the Trust is not required
to hold annual shareholder meetings. Shareholder approval will be sought only
for certain changes in the Trust's or the Fund's operation and for the election
of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust entitled to vote.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code applicable to regulated investment companies and to
receive the special tax treatment afforded to such companies.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional Shares.
STATE AND LOCAL TAXES
In the opinion of Houston, Houston & Donnelly, counsel to the Trust, Fund Shares
may be subject to personal property taxes imposed by counties, municipalities,
and school districts in Pennsylvania
to the extent that the portfolio securities in the Fund would be subject to such
taxes if owned directly by residents of those jurisdictions.
Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its total return and yield for Shares.
Total return represents the change, over a specified period of time, in the
value of an investment in Shares after reinvesting all income and capital gain
distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
The yield of Shares is calculated by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by Shares
over a thirty-day period by the maximum offering price per share of Shares on
the last day of the period. This number is then annualized using semi-annual
compounding. The yield does not necessarily reflect income actually earned by
Shares and, therefore, may not correlate to the dividends or other distributions
paid to shareholders.
Shares are sold without any sales load or other similar non-recurring charges.
Total return and yield will be calculated separately for Institutional Shares
and Select Shares.
From time to time, advertisements for the Fund's Institutional Shares may refer
to ratings, rankings, and other information in certain financial publications
and/or compare the Fund's Institutional Shares performance to certain indices.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
The Fund also offers another class of shares called Select Shares which are sold
at net asset value primarily to retail and private banking customers of
financial institutions and are subject to a minimum initial investment of
$1,500.
Select Shares are distributed under a 12b-1 Plan adopted by the Fund and also
are subject to a shareholder services fees.
Select Shares and Institutional Shares are subject to certain of the same
expenses. Expense differences, however, between Select Shares and Institutional
Shares may affect the performance of each class.
To obtain more information and a prospectus for Select Shares, investors may
call 1-800-235-4669.
FEDERATED MANAGED GROWTH AND INCOME FUND
FINANCIAL HIGHLIGHTS--SELECT SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 68.
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, NOVEMBER 30,
<S> <C> <C>
1995 1994(A)
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.83 $ 10.00
- ----------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------
Net investment income 0.37 0.21
- ----------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments,
foreign currency transactions, and futures contracts 1.34 (0.25)
- ---------------------------------------------------------------------------- ------- -------
Total from investment operations 1.71 (0.04)
- ----------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------------
Distributions from net investment income (0.42) (0.13)
- ---------------------------------------------------------------------------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 11.12 $ 9.83
- ---------------------------------------------------------------------------- ------- -------
TOTAL RETURN (B) 17.76% (0.40%)
- ----------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------
Expenses 1.75% 1.64%*
- ----------------------------------------------------------------------------
Net investment income 4.37% 4.33%*
- ----------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.55% 0.84%*
- ----------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------
Net assets, end of period (000 omitted) $24,787 $3,697
- ----------------------------------------------------------------------------
Portfolio turnover 157% 132%
- ----------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 25, 1994 (date of initial
public investment) to November 30, 1994. For the period from January 27,
1994 (start of business) to May 24, 1994, the Fund had no investment
activity.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
Further information about the Fund's performance is contained in the Fund's
annual report for the year ended November 30, 1995, which can be obtained free
of charge.
FEDERATED MANAGED GROWTH AND INCOME FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
STOCKS--24.6%
- -------------------------------------------------------------------------------------------------
(A)LARGE COMPANY--6.5%
--------------------------------------------------------------------------------
BASIC INDUSTRY--0.8%
--------------------------------------------------------------------------------
6,300 Allegheny Ludlum Corp. $ 117,338
--------------------------------------------------------------------------------
2,600 Aluminum Co. of America 152,100
--------------------------------------------------------------------------------
2,200 Du Pont (E.I.) de Nemours & Co. 146,300
--------------------------------------------------------------------------------
1,600 Eastman Chemical Co. 105,000
--------------------------------------------------------------------------------
2,400 International Paper Co. 91,500
--------------------------------------------------------------------------------
3,500 Phelps Dodge Corp. 237,562
--------------------------------------------------------------------------------
4,900 Praxair, Inc. 142,712
-------------------------------------------------------------------------------- --------------
Total 992,512
-------------------------------------------------------------------------------- --------------
CONSUMER DURABLES--0.3%
--------------------------------------------------------------------------------
2,800 Eastman Kodak Co. 190,400
--------------------------------------------------------------------------------
4,700 Mattel, Inc. 131,600
--------------------------------------------------------------------------------
5,000 Volvo AB, ADR 105,000
-------------------------------------------------------------------------------- --------------
Total 427,000
-------------------------------------------------------------------------------- --------------
CONSUMER NON-DURABLES--0.7%
--------------------------------------------------------------------------------
1,700 Avon Products, Inc. 123,462
--------------------------------------------------------------------------------
4,400 IBP, Inc. 275,000
--------------------------------------------------------------------------------
2,800 Philip Morris Cos., Inc. 245,700
--------------------------------------------------------------------------------
21,700 RJR Nabisco Holdings Corp., Conv. Pfd., Series C, $0.6012 127,487
--------------------------------------------------------------------------------
3,500 Reebok International Ltd. 91,000
-------------------------------------------------------------------------------- --------------
Total 862,649
-------------------------------------------------------------------------------- --------------
ENERGY MINERALS--0.4%
--------------------------------------------------------------------------------
3,700 Chevron Corp. 182,687
--------------------------------------------------------------------------------
3,900 Occidental Petroleum Corp. 86,287
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
(A)LARGE COMPANY--CONTINUED
--------------------------------------------------------------------------------
ENERGY MINERALS--CONTINUED
--------------------------------------------------------------------------------
2,300 Texaco, Inc. $ 170,200
--------------------------------------------------------------------------------
6,000 USX-Marathon Group 110,250
-------------------------------------------------------------------------------- --------------
Total 549,424
-------------------------------------------------------------------------------- --------------
FINANCE--1.4%
--------------------------------------------------------------------------------
3,430 Allstate Corp. 140,630
--------------------------------------------------------------------------------
1,900 American Express Co. 80,750
--------------------------------------------------------------------------------
3,200 Bank of Boston Corp. 148,400
--------------------------------------------------------------------------------
1,600 CIGNA Corp. 176,000
--------------------------------------------------------------------------------
2,700 Chemical Banking Corp. 162,000
--------------------------------------------------------------------------------
3,100 Citicorp 219,325
--------------------------------------------------------------------------------
2,300 Dean Witter, Discover & Co. 117,300
--------------------------------------------------------------------------------
3,648 Mellon Bank Corp. 195,168
--------------------------------------------------------------------------------
2,200 Merrill Lynch & Co., Inc., STRYPES, $3.12 116,050
--------------------------------------------------------------------------------
2,200 Providian Corp. 88,275
--------------------------------------------------------------------------------
1,500 Sunamerica, Inc., Conv. Pfd., Series E, $3.10 100,500
--------------------------------------------------------------------------------
4,700 Travelers Group, Inc. 279,650
--------------------------------------------------------------------------------
50 Webb (Del) Corp. 1,013
-------------------------------------------------------------------------------- --------------
Total 1,825,061
-------------------------------------------------------------------------------- --------------
HEALTH CARE--0.6%
--------------------------------------------------------------------------------
2,400 American Home Products Corp. 219,000
--------------------------------------------------------------------------------
2,300 Becton, Dickinson & Co. 160,425
--------------------------------------------------------------------------------
2,300 Bristol-Myers Squibb Co. 184,575
--------------------------------------------------------------------------------
2,200 Merck & Co., Inc. 136,125
-------------------------------------------------------------------------------- --------------
Total 700,125
-------------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
(A)LARGE COMPANY--CONTINUED
--------------------------------------------------------------------------------
PRODUCER MANUFACTURING--0.8%
--------------------------------------------------------------------------------
2,200 (b)FMC Corp. $ 162,525
--------------------------------------------------------------------------------
2,100 General Electric Co. 141,225
--------------------------------------------------------------------------------
1,000 (b)ITT Corp. 122,625
--------------------------------------------------------------------------------
1,100 Loews Corp. 168,850
--------------------------------------------------------------------------------
3,200 Textron, Inc. 245,200
--------------------------------------------------------------------------------
11,100 (c)Westinghouse Electric Corp., PEPS, Series C, $1.30 183,150
-------------------------------------------------------------------------------- --------------
Total 1,023,575
-------------------------------------------------------------------------------- --------------
RETAIL TRADE--0.2%
--------------------------------------------------------------------------------
4,600 American Stores Co. 120,750
--------------------------------------------------------------------------------
3,700 Sears, Roebuck & Co. 145,688
-------------------------------------------------------------------------------- --------------
Total 266,438
-------------------------------------------------------------------------------- --------------
SERVICES--0.2%
--------------------------------------------------------------------------------
4,600 Baker Hughes, Inc. 93,725
--------------------------------------------------------------------------------
1,200 Gannett Co., Inc. 73,200
--------------------------------------------------------------------------------
1,600 (b)Western Atlas, Inc. 76,600
-------------------------------------------------------------------------------- --------------
Total 243,525
-------------------------------------------------------------------------------- --------------
TECHNOLOGY--1.0%
--------------------------------------------------------------------------------
4,000 General Motors Corp., Class E 202,000
--------------------------------------------------------------------------------
2,300 Hewlett-Packard Co. 190,612
--------------------------------------------------------------------------------
2,000 Intel Corp. 121,750
--------------------------------------------------------------------------------
1,000 International Business Machines Corp. 96,625
--------------------------------------------------------------------------------
2,100 (b)Litton Industries, Inc. 94,238
--------------------------------------------------------------------------------
3,400 Lockheed Martin Corp. 249,475
--------------------------------------------------------------------------------
2,600 Raytheon Co. 115,700
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
(A)LARGE COMPANY--CONTINUED
--------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
--------------------------------------------------------------------------------
2,900 Rockwell International Corp. $ 142,100
-------------------------------------------------------------------------------- --------------
Total 1,212,500
-------------------------------------------------------------------------------- --------------
TRANSPORTATION--0.1%
--------------------------------------------------------------------------------
2,400 Consolidated Rail Corp. 167,700
-------------------------------------------------------------------------------- --------------
(D)UTILITIES--0.0%
--------------------------------------------------------------------------------
800 (b)Columbia Gas System, Inc. 34,600
-------------------------------------------------------------------------------- --------------
TOTAL LARGE COMPANY 8,305,109
-------------------------------------------------------------------------------- --------------
SMALL COMPANY--3.0%
--------------------------------------------------------------------------------
BASIC INDUSTRY--0.3%
--------------------------------------------------------------------------------
2,800 (b)Applied Extrusion Technologies, Inc. 35,350
--------------------------------------------------------------------------------
1,974 Brush Wellman, Inc. 34,545
--------------------------------------------------------------------------------
1,000 Cambrex Corp. 37,000
--------------------------------------------------------------------------------
1,000 Carpenter Technology Corp. 43,250
--------------------------------------------------------------------------------
1,200 Chesapeake Corp. 35,400
--------------------------------------------------------------------------------
700 (b)Cytec Industries, Inc. 44,800
--------------------------------------------------------------------------------
1,500 First Mississippi Corp. 38,250
--------------------------------------------------------------------------------
2,000 (b)Magma Copper Co. 42,500
--------------------------------------------------------------------------------
1,000 Springs Industries, Inc., Class A 42,000
--------------------------------------------------------------------------------
700 Texas Industries, Inc. 35,875
-------------------------------------------------------------------------------- --------------
Total 388,970
-------------------------------------------------------------------------------- --------------
CONSUMER DURABLES--0.1%
--------------------------------------------------------------------------------
900 Barnes Group, Inc. 34,875
--------------------------------------------------------------------------------
1,200 (b)Champion Enterprises, Inc. 36,000
--------------------------------------------------------------------------------
1,900 Coachmen Industries, Inc. 36,813
--------------------------------------------------------------------------------
820 Harman International Industries, Inc. 35,978
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
SMALL COMPANY--CONTINUED
--------------------------------------------------------------------------------
CONSUMER DURABLES--CONTINUED
--------------------------------------------------------------------------------
2,000 (b)Toll Brothers, Inc. $ 36,250
--------------------------------------------------------------------------------
1,100 Toro Co. 34,787
-------------------------------------------------------------------------------- --------------
Total 214,703
-------------------------------------------------------------------------------- --------------
CONSUMER NON-DURABLES--0.1%
--------------------------------------------------------------------------------
2,800 Hudson Foods, Inc., Class A 44,800
--------------------------------------------------------------------------------
2,100 (b)Mondavi, Robert Corp., Class A 66,938
-------------------------------------------------------------------------------- --------------
Total 111,738
-------------------------------------------------------------------------------- --------------
ENERGY MINERALS--0.0%
--------------------------------------------------------------------------------
2,100 KCS Energy, Inc. 28,875
--------------------------------------------------------------------------------
5,500 (b)Tesoro Petroleum Corp. 46,062
-------------------------------------------------------------------------------- --------------
Total 74,937
-------------------------------------------------------------------------------- --------------
FINANCE--0.7%
--------------------------------------------------------------------------------
800 Alex Brown, Inc. 36,800
--------------------------------------------------------------------------------
900 Allied Group, Inc. 31,950
--------------------------------------------------------------------------------
1,300 American Bankers Insurance Group, Inc. 46,962
--------------------------------------------------------------------------------
2,200 (b)American Travellers Corp. 55,000
--------------------------------------------------------------------------------
1,100 Associated Banc Corp. 43,725
--------------------------------------------------------------------------------
1,154 Bankers First Corp. 31,591
--------------------------------------------------------------------------------
400 (b)Brooklyn Bancorp, Inc. 16,100
--------------------------------------------------------------------------------
2,300 CWM Mortgage Holdings, Inc. 34,788
--------------------------------------------------------------------------------
900 Centura Banks, Inc. 30,600
--------------------------------------------------------------------------------
2,200 City National Corp. 30,250
--------------------------------------------------------------------------------
600 Cullen Frost Bankers, Inc. 30,450
--------------------------------------------------------------------------------
2,200 FirstBank Puerto Rico 41,525
--------------------------------------------------------------------------------
1,100 (b)Glendale Federal Bank 17,737
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
SMALL COMPANY--CONTINUED
--------------------------------------------------------------------------------
FINANCE--CONTINUED
--------------------------------------------------------------------------------
3,200 Hibernia Corp., Class A $ 33,600
--------------------------------------------------------------------------------
1,000 Irwin Financial Corp. 39,500
--------------------------------------------------------------------------------
1,100 Money Stores, Inc. 51,975
--------------------------------------------------------------------------------
1,500 North Fork Bancorp, Inc. 34,875
--------------------------------------------------------------------------------
900 PHH Corp. 41,175
--------------------------------------------------------------------------------
1,700 Peoples Heritage Financial Group 35,700
--------------------------------------------------------------------------------
1,100 Queens County Bancorp, Inc. 44,275
--------------------------------------------------------------------------------
1,600 (b)St. Francis Capital Corp. 37,200
--------------------------------------------------------------------------------
1,500 Student Loan Corp. 53,062
--------------------------------------------------------------------------------
1,000 WestAmerica Bancorporation 41,250
-------------------------------------------------------------------------------- --------------
Total 860,090
-------------------------------------------------------------------------------- --------------
HEALTH CARE--0.3%
--------------------------------------------------------------------------------
2,700 Bindley Western Industries, Inc. 48,262
--------------------------------------------------------------------------------
1,400 (b)Bio Rad Laboratories, Inc., Class A 57,750
--------------------------------------------------------------------------------
1,700 (b)Foxmeyer Health Corp. 44,200
--------------------------------------------------------------------------------
900 ICN Pharmaceuticals, Inc. 18,225
--------------------------------------------------------------------------------
5,000 Kinetic Concepts, Inc. 56,875
--------------------------------------------------------------------------------
2,600 (b)Maxicare Health Plans, Inc. 56,875
--------------------------------------------------------------------------------
2,100 (b)North American Biologicals, Inc. 20,212
--------------------------------------------------------------------------------
4,400 (b)Oec-Medical Systems, Inc. 44,000
-------------------------------------------------------------------------------- --------------
Total 346,399
-------------------------------------------------------------------------------- --------------
PRODUCER MANUFACTURING--0.2%
--------------------------------------------------------------------------------
1,000 AGCO Corp. 43,125
--------------------------------------------------------------------------------
1,350 Blount Intl, Inc., Class A 40,669
--------------------------------------------------------------------------------
1,300 Borg-Warner Automotive, Inc. 38,512
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
SMALL COMPANY--CONTINUED
--------------------------------------------------------------------------------
PRODUCER MANUFACTURING--CONTINUED
--------------------------------------------------------------------------------
3,900 Brenco, Inc. $ 40,950
--------------------------------------------------------------------------------
2,100 JLG Industries, Inc. 59,588
--------------------------------------------------------------------------------
600 NACCO Industries, Inc., Class A 34,200
--------------------------------------------------------------------------------
1,800 (b)NCI Building System, Inc. 41,400
-------------------------------------------------------------------------------- --------------
Total 298,444
-------------------------------------------------------------------------------- --------------
RETAIL TRADE--0.2%
--------------------------------------------------------------------------------
1,000 (b)CompUSA, Inc. 37,125
--------------------------------------------------------------------------------
1,100 (b)Eckerd Corp. 46,887
--------------------------------------------------------------------------------
800 Great Atlantic & Pacific Tea Co., Inc. 17,500
--------------------------------------------------------------------------------
1,400 (b)MacFrugal's Bargains CloseOuts, Inc. 18,375
--------------------------------------------------------------------------------
4,900 Pier 1 Imports, Inc. 53,288
--------------------------------------------------------------------------------
4,100 Ruddick Corp. 44,075
--------------------------------------------------------------------------------
2,400 (b)Waban, Inc. 44,400
-------------------------------------------------------------------------------- --------------
Total 261,650
-------------------------------------------------------------------------------- --------------
SERVICES--0.4%
--------------------------------------------------------------------------------
1,600 (b)American Buildings Co. 36,200
--------------------------------------------------------------------------------
1,400 Butler Manufacturing Co. 48,300
--------------------------------------------------------------------------------
2,300 Castle (A.M.) & Co. 56,350
--------------------------------------------------------------------------------
1,200 (b)Devon Group, Inc. 46,200
--------------------------------------------------------------------------------
1,600 Granite Construction, Inc. 44,400
--------------------------------------------------------------------------------
1,100 Plenum Publishing Corp. 39,875
--------------------------------------------------------------------------------
4,200 (b)Pride Petroleum Services, Inc. 40,950
--------------------------------------------------------------------------------
1,201 Pulitzer Publishing Co. 55,246
--------------------------------------------------------------------------------
1,420 Richfood Holdings, Inc. 39,937
--------------------------------------------------------------------------------
644 (b)United Video Satellite Group, Inc., Class A 18,676
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
SMALL COMPANY--CONTINUED
--------------------------------------------------------------------------------
SERVICES--CONTINUED
--------------------------------------------------------------------------------
3,800 (b)Westcott Communications $ 54,150
--------------------------------------------------------------------------------
2,000 (b)Western Waste Industries 36,750
-------------------------------------------------------------------------------- --------------
Total 517,034
-------------------------------------------------------------------------------- --------------
TECHNOLOGY--0.4%
--------------------------------------------------------------------------------
1,677 (b)Bell Industries, Inc. 38,152
--------------------------------------------------------------------------------
1,350 (b)Burr Brown Corp. 38,812
--------------------------------------------------------------------------------
3,400 (b)Computervision Corp. 42,500
--------------------------------------------------------------------------------
400 (b)Electronics for Imaging, Inc. 34,400
--------------------------------------------------------------------------------
900 (b)International Rectifier Corp. 44,662
--------------------------------------------------------------------------------
1,100 (b)Kemet Corp. 33,550
--------------------------------------------------------------------------------
1,100 (b)Marshall Industries 38,775
--------------------------------------------------------------------------------
900 (b)Network Equipment Technologies, Inc. 29,813
--------------------------------------------------------------------------------
1,000 (b)S3, Inc. 18,875
--------------------------------------------------------------------------------
1,200 (b)SCI Systems, Inc. 40,200
--------------------------------------------------------------------------------
1,100 (b)Tech-Sym Corp. 32,862
--------------------------------------------------------------------------------
800 (b)Tencor Instruments 30,200
--------------------------------------------------------------------------------
800 Watkins Johnson Co. 36,300
--------------------------------------------------------------------------------
1,000 Wyle Labs 39,375
-------------------------------------------------------------------------------- --------------
Total 498,476
-------------------------------------------------------------------------------- --------------
TRANSPORTATION--0.1%
--------------------------------------------------------------------------------
2,700 (b)America West Airlines, Inc., Class B 48,263
--------------------------------------------------------------------------------
1,300 (b)Continental Airlines, Inc., Class B 50,863
-------------------------------------------------------------------------------- --------------
Total 99,126
-------------------------------------------------------------------------------- --------------
(D)UTILITIES--0.2%
--------------------------------------------------------------------------------
1,500 Central Hudson Gas & Electric Service 45,562
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
SMALL COMPANY--CONTINUED
--------------------------------------------------------------------------------
(D)UTILITIES--CONTINUED
--------------------------------------------------------------------------------
1,300 Eastern Enterprises $ 42,250
--------------------------------------------------------------------------------
1,700 Oneok, Inc. 39,950
--------------------------------------------------------------------------------
2,700 (b)Public Service Co. New Mexico 47,588
--------------------------------------------------------------------------------
300 Tele Danmark 8,362
--------------------------------------------------------------------------------
1,100 Teppco Partners, L.P. 39,875
-------------------------------------------------------------------------------- --------------
Total 223,587
-------------------------------------------------------------------------------- --------------
TOTAL SMALL COMPANY 3,895,154
-------------------------------------------------------------------------------- --------------
(D)UTILITY--10.4%
--------------------------------------------------------------------------------
ELECTRIC UTILITIES--3.9%
--------------------------------------------------------------------------------
9,800 Baltimore Gas & Electric Co. 260,925
--------------------------------------------------------------------------------
9,600 CMS Energy Corp. 261,600
--------------------------------------------------------------------------------
9,121 Cinergy Corp. 269,069
--------------------------------------------------------------------------------
10,900 DPL, Inc. 261,600
--------------------------------------------------------------------------------
9,300 DQE, Inc. 268,537
--------------------------------------------------------------------------------
5,900 Duke Power Co. 264,763
--------------------------------------------------------------------------------
6,200 FPL Group, Inc. 268,925
--------------------------------------------------------------------------------
7,700 Florida Progress Corp. 264,688
--------------------------------------------------------------------------------
8,400 General Public Utilities 265,650
--------------------------------------------------------------------------------
9,200 Illinova Corp. 261,050
--------------------------------------------------------------------------------
7,200 NIPSCO Industries, Inc. 266,400
--------------------------------------------------------------------------------
13,600 Pacificorp 266,900
--------------------------------------------------------------------------------
9,200 Peco Energy Co. 266,800
--------------------------------------------------------------------------------
9,600 Pinnacle West Capital Corp. 261,600
--------------------------------------------------------------------------------
13,800 SCE Corp. 215,625
--------------------------------------------------------------------------------
11,200 Southern Co. 256,200
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
(D)UTILITY--CONTINUED
--------------------------------------------------------------------------------
ELECTRIC UTILITIES--CONTINUED
--------------------------------------------------------------------------------
6,900 Texas Utilities Co. $ 265,650
--------------------------------------------------------------------------------
9,100 Utilicorp United, Inc. 253,662
--------------------------------------------------------------------------------
8,000 Western Resources, Inc. 265,000
-------------------------------------------------------------------------------- --------------
Total 4,964,644
-------------------------------------------------------------------------------- --------------
MAJOR U.S. TELECOMMUNICATIONS--5.6%
--------------------------------------------------------------------------------
12,600 AT&T Corp. 831,600
--------------------------------------------------------------------------------
14,400 Ameritech Corp. 792,000
--------------------------------------------------------------------------------
12,200 Bell Atlantic Corp. 768,600
--------------------------------------------------------------------------------
20,300 BellSouth Corp. 789,162
--------------------------------------------------------------------------------
18,800 GTE Corp. 801,350
--------------------------------------------------------------------------------
31,300 MCI Communications Corp. 837,275
--------------------------------------------------------------------------------
15,900 NYNEX Corp. 789,038
--------------------------------------------------------------------------------
14,600 SBC Communications, Inc. 788,400
--------------------------------------------------------------------------------
24,500 U.S. West Communications Group 765,625
-------------------------------------------------------------------------------- --------------
Total 7,163,050
-------------------------------------------------------------------------------- --------------
NATURAL GAS DISTRIBUTION--0.3%
--------------------------------------------------------------------------------
9,100 MCN Corp. 197,925
--------------------------------------------------------------------------------
7,500 Pacific Enterprises 200,625
-------------------------------------------------------------------------------- --------------
Total 398,550
-------------------------------------------------------------------------------- --------------
OIL/GAS TRANSMISSION--0.6%
--------------------------------------------------------------------------------
5,300 Enron Corp. 198,750
--------------------------------------------------------------------------------
7,200 Panhandle Eastern Corp. 204,300
--------------------------------------------------------------------------------
6,100 Sonat, Inc. 196,725
--------------------------------------------------------------------------------
5,300 Williams Companies, Inc. 222,600
-------------------------------------------------------------------------------- --------------
Total 822,375
-------------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
(D)UTILITY--CONTINUED
--------------------------------------------------------------------------------
SERVICES--0.0%
--------------------------------------------------------------------------------
1,800 (b)U.S. West Media Group $ 32,400
-------------------------------------------------------------------------------- --------------
TOTAL UTILITY 13,381,019
-------------------------------------------------------------------------------- --------------
FOREIGN EQUITY--4.7%
--------------------------------------------------------------------------------
ARGENTINA--0.0%
--------------------------------------------------------------------------------
600 Banco Frances del Rio de la Plata S.A., ADR 15,675
--------------------------------------------------------------------------------
1,300 Compania Naviera Perez Companc SA, Class B 6,308
--------------------------------------------------------------------------------
303 IRSA Inversiones y Representaciones S.A., GDR 6,586
--------------------------------------------------------------------------------
400 YPF Sociedad Anonima, ADR 7,800
-------------------------------------------------------------------------------- --------------
Total 36,369
-------------------------------------------------------------------------------- --------------
AUSTRALIA--0.1%
--------------------------------------------------------------------------------
6,000 Mayne Nickless Ltd. 27,609
--------------------------------------------------------------------------------
10,000 News Corporation Ltd. 52,397
--------------------------------------------------------------------------------
10,000 Woodside Petroleum Ltd. 49,651
--------------------------------------------------------------------------------
19,000 Woolworth's Ltd. 44,419
-------------------------------------------------------------------------------- --------------
Total 174,076
-------------------------------------------------------------------------------- --------------
FINLAND--0.0%
--------------------------------------------------------------------------------
200 Nokia AB-A 10,974
-------------------------------------------------------------------------------- --------------
FRANCE--0.2%
--------------------------------------------------------------------------------
800 AXA 47,867
--------------------------------------------------------------------------------
340 Accor SA 41,286
--------------------------------------------------------------------------------
850 Compagnie Financiere de Paribas, Class A 47,197
--------------------------------------------------------------------------------
300 LVMH (Moet-Hennessy) 57,109
--------------------------------------------------------------------------------
610 LaFarge-Coppee 38,748
--------------------------------------------------------------------------------
2,500 Lagardere Groupe 48,642
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
--------------------------------------------------------------------------------
FRANCE--CONTINUED
--------------------------------------------------------------------------------
450 Lyonnaise des Eaux SA $ 43,102
-------------------------------------------------------------------------------- --------------
Total 323,951
-------------------------------------------------------------------------------- --------------
GERMANY--0.3%
--------------------------------------------------------------------------------
168 BASF AG 36,822
--------------------------------------------------------------------------------
210 Commerzbank AG, Frankfurt 48,569
--------------------------------------------------------------------------------
775 Deutsche Bank Ag 36,357
--------------------------------------------------------------------------------
155 Gea AG, Pfd. 49,298
--------------------------------------------------------------------------------
100 Henkel KGaA--Vorzug, Pfd. 37,475
--------------------------------------------------------------------------------
105 Kaufhof Holding AG 31,798
--------------------------------------------------------------------------------
65 Linde AG 38,111
--------------------------------------------------------------------------------
120 Mannesmann AG 38,639
--------------------------------------------------------------------------------
100 Siemens AG 52,237
--------------------------------------------------------------------------------
50 Wella AG, Pfd. 23,508
-------------------------------------------------------------------------------- --------------
Total 392,814
-------------------------------------------------------------------------------- --------------
HONG KONG--0.2%
--------------------------------------------------------------------------------
37,000 Amoy Properties Ltd. 35,398
--------------------------------------------------------------------------------
400 Cheung Kong 2,275
--------------------------------------------------------------------------------
1,839 HSBC Holdings PLC 27,104
--------------------------------------------------------------------------------
21,000 Hong Kong Telecom 35,702
--------------------------------------------------------------------------------
78,000 Manhattan Card Co., Ltd. 34,790
--------------------------------------------------------------------------------
4,000 Sun Hung Kai Properties 32,192
--------------------------------------------------------------------------------
9,000 Television Broadcasts Ltd. 33,976
-------------------------------------------------------------------------------- --------------
Total 201,437
-------------------------------------------------------------------------------- --------------
INDONESIA--0.1%
--------------------------------------------------------------------------------
15,000 Astra International 29,888
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
--------------------------------------------------------------------------------
INDONESIA--CONTINUED
--------------------------------------------------------------------------------
9,000 Hero Supermarket $ 17,736
--------------------------------------------------------------------------------
5,000 Indocement Tungal 16,970
--------------------------------------------------------------------------------
8,000 Lippo Bank 11,736
--------------------------------------------------------------------------------
9,000 United Tractors 16,356
-------------------------------------------------------------------------------- --------------
Total 92,686
-------------------------------------------------------------------------------- --------------
ITALY--0.1%
--------------------------------------------------------------------------------
10,400 La Rinascente S.P.A. 58,270
--------------------------------------------------------------------------------
35,000 (b)Telecom Italia Mobile 56,467
-------------------------------------------------------------------------------- --------------
Total 114,737
-------------------------------------------------------------------------------- --------------
JAPAN--2.0%
--------------------------------------------------------------------------------
10,000 Asahi Chemical Industry Co. Ltd. 74,693
--------------------------------------------------------------------------------
4,000 Bridgestone Corp. 58,968
--------------------------------------------------------------------------------
2,000 Canon Inc. 35,184
--------------------------------------------------------------------------------
7 DDI Corp. 56,275
--------------------------------------------------------------------------------
4,000 Dai Nippon Printing Co. Ltd. 69,975
--------------------------------------------------------------------------------
11,000 Daimaru, Inc. 72,432
--------------------------------------------------------------------------------
15,000 Dainippon Ink and Chemical, Inc. 69,435
--------------------------------------------------------------------------------
5,000 Fujitsu Ltd. 58,968
--------------------------------------------------------------------------------
3,000 Hitachi Cable 21,317
--------------------------------------------------------------------------------
3,000 JUSCO Co. 71,941
--------------------------------------------------------------------------------
7,000 Jaccs 68,796
--------------------------------------------------------------------------------
10,000 (b)Japan Airlines Co. 63,980
--------------------------------------------------------------------------------
4,000 Kandenko Co., Ltd. 48,747
--------------------------------------------------------------------------------
18,000 Kawasaki Heavy Industries 81,907
--------------------------------------------------------------------------------
19,000 Kawasaki Steel 67,410
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
--------------------------------------------------------------------------------
JAPAN--CONTINUED
--------------------------------------------------------------------------------
3,000 Kokuyo Co. $ 64,570
--------------------------------------------------------------------------------
11,000 Kubota Corp. 72,324
--------------------------------------------------------------------------------
6,000 Kuraray Co. Ltd. 61,327
--------------------------------------------------------------------------------
1,000 Kurita Water Industries 27,813
--------------------------------------------------------------------------------
8,000 Kyowa Hakko Kogyo Co. 78,624
--------------------------------------------------------------------------------
8,000 Minebea Co. 66,516
--------------------------------------------------------------------------------
13,000 Mitsubishi Heavy Industries 103,617
--------------------------------------------------------------------------------
9,000 Mitsui Marine & Fire Insurance Co. 60,590
--------------------------------------------------------------------------------
4,000 NEC Corp. 51,106
--------------------------------------------------------------------------------
2,000 NGK Insulators 19,853
--------------------------------------------------------------------------------
26,000 (b)NKK Corp. 71,548
--------------------------------------------------------------------------------
9,000 Nagoya Railroad Co. Ltd. 44,226
--------------------------------------------------------------------------------
9,000 Nihon Cement Co., Ltd. 59,617
--------------------------------------------------------------------------------
3,000 Nippon Electric Glass Co., Ltd. 55,725
--------------------------------------------------------------------------------
9,000 Nippon Express Co. Ltd. 78,103
--------------------------------------------------------------------------------
9,000 Nippon Sheet Glass Co. 40,157
--------------------------------------------------------------------------------
3,000 Nishimatsu Construction 35,970
--------------------------------------------------------------------------------
6,000 Sakura Bank Ltd., Tokyo 64,865
--------------------------------------------------------------------------------
1,000 Secom Co. 67,518
--------------------------------------------------------------------------------
1,000 Sega Enterprises 54,054
--------------------------------------------------------------------------------
3,000 Sekisui House Ltd. 35,086
--------------------------------------------------------------------------------
5,000 Shionogi and Co. 43,096
--------------------------------------------------------------------------------
1,000 Sony Music Entertainment, Inc. 44,717
--------------------------------------------------------------------------------
12,000 Sumitomo Chemical Co. 59,676
--------------------------------------------------------------------------------
20,000 Sumitomo Heavy Industries 63,685
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
--------------------------------------------------------------------------------
JAPAN--CONTINUED
--------------------------------------------------------------------------------
2,000 Takeda Chemical Industries $ 29,877
--------------------------------------------------------------------------------
6,000 Tokio Marine & Fire 68,403
--------------------------------------------------------------------------------
1,000 Tostem Corp. 30,467
--------------------------------------------------------------------------------
3,000 Toto Ltd. 40,688
--------------------------------------------------------------------------------
3,000 Yamanouchi Pharmaceutical 64,570
-------------------------------------------------------------------------------- --------------
Total 2,578,416
-------------------------------------------------------------------------------- --------------
MALAYSIA--0.1%
--------------------------------------------------------------------------------
3,000 Malayan Banking Bhd 23,768
--------------------------------------------------------------------------------
26,000 Malayan United Industries Bhd 19,779
--------------------------------------------------------------------------------
11,000 Malayawata Steel Berhad 18,817
--------------------------------------------------------------------------------
9,000 Malaysian International Shipping Bhd 21,994
--------------------------------------------------------------------------------
6,000 (d)Tenaga Nasional Berhad 22,467
--------------------------------------------------------------------------------
9,000 UMW Holdings Bhd 21,108
-------------------------------------------------------------------------------- --------------
Total 127,933
-------------------------------------------------------------------------------- --------------
MEXICO--0.0%
--------------------------------------------------------------------------------
700 Cemex SA, Class B, ADR 4,681
--------------------------------------------------------------------------------
500 Empresas ICA Sociedad Controladora S.A., ADR 5,125
--------------------------------------------------------------------------------
900 Grupo Financiero Bancomer, S.A. de C.V., Class B, ADR 5,175
--------------------------------------------------------------------------------
200 Pan American Beverage, Class A 6,450
--------------------------------------------------------------------------------
600 Transportacion Maritima Mexicana SA , Class L, ADR 4,575
-------------------------------------------------------------------------------- --------------
Total 26,006
-------------------------------------------------------------------------------- --------------
NETHERLANDS--0.2%
--------------------------------------------------------------------------------
4,200 Elsevier NV 57,321
--------------------------------------------------------------------------------
835 Polygram NV 50,276
--------------------------------------------------------------------------------
2,250 Royal PTT Nederland NV 80,173
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
--------------------------------------------------------------------------------
NETHERLANDS--CONTINUED
--------------------------------------------------------------------------------
300 Unilever NV-Cert $ 39,647
-------------------------------------------------------------------------------- --------------
Total 227,417
-------------------------------------------------------------------------------- --------------
NEW ZEALAND--0.0%
--------------------------------------------------------------------------------
7,000 Fletcher Challenge Ltd. 17,366
--------------------------------------------------------------------------------
993 Fletcher Challenge Ltd.--Forestry Shares 1,400
-------------------------------------------------------------------------------- --------------
Total 18,766
-------------------------------------------------------------------------------- --------------
SINGAPORE--0.1%
--------------------------------------------------------------------------------
8,000 First Capital Corp., Ltd., Singapore 21,553
--------------------------------------------------------------------------------
2,000 Fraser and Neave Ltd. 23,821
--------------------------------------------------------------------------------
11,000 Haw Par Brothers International Ltd. 23,708
--------------------------------------------------------------------------------
2,000 Singapore Airlines Ltd. 18,717
--------------------------------------------------------------------------------
2,000 Singapore Press Holdings Ltd. 31,620
-------------------------------------------------------------------------------- --------------
Total 119,419
-------------------------------------------------------------------------------- --------------
SPAIN--0.1%
--------------------------------------------------------------------------------
200 Acerinox SA 20,040
--------------------------------------------------------------------------------
1,500 Repsol SA 47,280
--------------------------------------------------------------------------------
580 Zardoya-Otis SA 60,233
-------------------------------------------------------------------------------- --------------
Total 127,553
-------------------------------------------------------------------------------- --------------
SWEDEN--0.1%
--------------------------------------------------------------------------------
4,400 Stora Kopparbergs, Class A 55,373
--------------------------------------------------------------------------------
2,000 Svedala Industri AB Free 55,373
-------------------------------------------------------------------------------- --------------
Total 110,746
-------------------------------------------------------------------------------- --------------
SWITZERLAND--0.3%
--------------------------------------------------------------------------------
35 BBC Brown Boveri 40,196
--------------------------------------------------------------------------------
600 CS Holding 56,912
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
--------------------------------------------------------------------------------
SWITZERLAND--CONTINUED
--------------------------------------------------------------------------------
50 Ciba-Giegy AG-R $ 44,577
--------------------------------------------------------------------------------
70 Nestle SA 74,615
--------------------------------------------------------------------------------
10 Roche Holdings AG Genusscheine 75,542
--------------------------------------------------------------------------------
142 Zurich Versicherungsgesellschaft 43,609
-------------------------------------------------------------------------------- --------------
Total 335,451
-------------------------------------------------------------------------------- --------------
UNITED KINGDOM--0.8%
--------------------------------------------------------------------------------
9,450 Associated British Ports Holdings PLC 40,942
--------------------------------------------------------------------------------
10,000 BTR PLC 51,209
--------------------------------------------------------------------------------
5,100 Boots Co. PLC 44,192
--------------------------------------------------------------------------------
10,600 (d)British Gas PLC 39,596
--------------------------------------------------------------------------------
15,200 British Steel PLC 39,326
--------------------------------------------------------------------------------
5,800 Cadbury Schweppes PLC 49,458
--------------------------------------------------------------------------------
13,000 Caradon PLC 39,107
--------------------------------------------------------------------------------
8,400 Chubb Security 41,601
--------------------------------------------------------------------------------
6,500 Compass Group 44,531
--------------------------------------------------------------------------------
6,900 Grand Metropolitan PLC 46,690
--------------------------------------------------------------------------------
3,400 Imperial Chemical Industries PLC 39,559
--------------------------------------------------------------------------------
8,000 Marks & Spencer PLC 54,072
--------------------------------------------------------------------------------
4,000 (d)Midlands Electricity 56,767
--------------------------------------------------------------------------------
3,000 RMC Group PLC 47,650
--------------------------------------------------------------------------------
3,100 RTZ Corp. PLC 44,492
--------------------------------------------------------------------------------
6,700 Rank Organisation PLC 42,260
--------------------------------------------------------------------------------
4,200 Reckitt & Colman PLC 43,048
--------------------------------------------------------------------------------
27,300 Rugby Group PLC 44,720
--------------------------------------------------------------------------------
7,700 (d)Scottish Power PLC 44,441
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
--------------------------------------------------------------------------------
UNITED KINGDOM--CONTINUED
--------------------------------------------------------------------------------
23,700 Sedgwick Group PLC $ 43,721
--------------------------------------------------------------------------------
7,000 Smith, W.H. Group PLC 46,402
--------------------------------------------------------------------------------
5,000 Thames Water PLC 42,292
--------------------------------------------------------------------------------
10,600 Tomkins PLC 42,841
--------------------------------------------------------------------------------
6,000 Williams Holdings PLC 30,450
-------------------------------------------------------------------------------- --------------
Total 1,059,367
-------------------------------------------------------------------------------- --------------
TOTAL FOREIGN EQUITY 6,078,118
-------------------------------------------------------------------------------- --------------
TOTAL STOCKS (IDENTIFIED COST $27,323,416) 31,659,400
-------------------------------------------------------------------------------- --------------
PRINCIPAL
AMOUNT
- --------------- --------------------------------------------------------------------------------
BONDS--64.5%
- -------------------------------------------------------------------------------------------------
TREASURY--29.8%
--------------------------------------------------------------------------------
$ 36,775,000 U.S. Treasury Notes, 6.50%-7.50%, 04/30/1999-10/31/1999 38,300,316
-------------------------------------------------------------------------------- --------------
MORTGAGE-BACKED SECURITIES--19.6%
--------------------------------------------------------------------------------
GOVERNMENT AGENCY--19.6%
--------------------------------------------------------------------------------
383,067 Federal Home Loan Mortgage Corp., 7.50%, 05/01/2024 387,848
--------------------------------------------------------------------------------
995,814 Federal Home Loan Mortgage Corp., 7.00%, 8/1/2025 996,730
--------------------------------------------------------------------------------
260,611 Federal Home Loan Mortgage Corp., 7.00%, 07/01/2024 259,629
--------------------------------------------------------------------------------
1,064,839 Federal Home Loan Mortgage Corp., 6.50%, 9/1/2025 1,043,532
--------------------------------------------------------------------------------
458,661 Federal Home Loan Mortgage Corp., 8.00%, 11/01/2009 473,705
--------------------------------------------------------------------------------
364,047 Federal Home Loan Mortgage Corp., 7.00%, 04/01/2009 368,593
--------------------------------------------------------------------------------
992,752 Federal Home Loan Mortgage Corp., 9/1/2010 990,876
--------------------------------------------------------------------------------
699,444 Federal Home Loan Mortgage Corp., 7.00%, 04/01/2009 708,180
--------------------------------------------------------------------------------
1,967,923 Federal National Mortgage Association, 7.50%, 7/1/2025 2,002,952
--------------------------------------------------------------------------------
933,439 Federal National Mortgage Association, 7.50%, 9/1/2009 955,589
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES--CONTINUED
--------------------------------------------------------------------------------
GOVERNMENT AGENCY--CONTINUED
--------------------------------------------------------------------------------
$ 468,653 Federal National Mortgage Association, 7.00%, 5/1/2001 $ 475,969
--------------------------------------------------------------------------------
505,967 Federal National Mortgage Association, 7.00%, 07/01/2024 505,962
--------------------------------------------------------------------------------
1,074,548 Federal National Mortgage Association, 9.50%, 10/01/2024 1,138,333
--------------------------------------------------------------------------------
977,995 Federal National Mortgage Association, 7.00%, 1/1/2024 977,985
--------------------------------------------------------------------------------
214,678 Federal National Mortgage Association, 7.50%, 06/01/2009 219,772
--------------------------------------------------------------------------------
956,516 Federal National Mortgage Association, 6.50%, 6/1/2009 954,412
--------------------------------------------------------------------------------
494,336 Federal National Mortgage Association, 8.00%, 11/01/2024 509,161
--------------------------------------------------------------------------------
873,750 Federal National Mortgage Association, 9.00%, 5/1/2025 916,327
--------------------------------------------------------------------------------
208,768 Federal National Mortgage Association, 8.50%, 02/01/2025 216,921
--------------------------------------------------------------------------------
952,545 Federal National Mortgage Association, 8.00%, 7/1/2025 981,112
--------------------------------------------------------------------------------
1,016,147 Federal National Mortgage Association, 7.00%, 7/1/2025 1,016,137
--------------------------------------------------------------------------------
1,018,206 Federal National Mortgage Association, 6.50%, 9/1/2025 996,875
--------------------------------------------------------------------------------
1,099,125 Federal National Mortgage Association, 6.50%, 10/1/2025 1,076,099
--------------------------------------------------------------------------------
1,094,937 Government National Mortgage Association, 8.00%, 11/15/2024 1,133,249
--------------------------------------------------------------------------------
1,563,605 Government National Mortgage Association, 8.50%, 10/15/2024 1,632,482
--------------------------------------------------------------------------------
247,853 Government National Mortgage Association, 7.00%, 08/15/2024 248,547
--------------------------------------------------------------------------------
2,533,646 Government National Mortgage Association, 7.50%, 4/15/2024 2,587,436
--------------------------------------------------------------------------------
1,314,626 Government National Mortgage Association, 9.00%, 4/15/2025 1,386,497
-------------------------------------------------------------------------------- --------------
TOTAL MORTGAGE-BACKED SECURITIES 25,160,910
-------------------------------------------------------------------------------- --------------
INVESTMENT GRADE BONDS--7.6%
--------------------------------------------------------------------------------
AEROSPACE & DEFENSE--0.2%
--------------------------------------------------------------------------------
250,000 McDonnell Douglas Finance, Note, 9.40%, 10/15/2001 278,087
-------------------------------------------------------------------------------- --------------
AUTOMOTIVE--0.2%
--------------------------------------------------------------------------------
200,000 Chrysler Auburn Hills, Deb., 12.00%, 5/1/2020 308,380
-------------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
INVESTMENT GRADE BONDS--CONTINUED
--------------------------------------------------------------------------------
BANKING--0.5%
--------------------------------------------------------------------------------
$ 330,000 Chase Manhattan, Sub. Note, 8.00%, 5/1/2005 $ 344,738
--------------------------------------------------------------------------------
250,000 Crestar Financial Corp, Sub. Note, 8.75%, 11/15/2004 287,367
-------------------------------------------------------------------------------- --------------
Total 632,105
-------------------------------------------------------------------------------- --------------
BEVERAGE & TOBACCO--0.4%
--------------------------------------------------------------------------------
250,000 Philip Morris Cos., Inc., Deb., 6.00%, 7/15/2001 246,300
--------------------------------------------------------------------------------
250,000 RJR Nabisco, Inc., Note, 9.25%, 8/5/2013 255,108
-------------------------------------------------------------------------------- --------------
Total 501,408
-------------------------------------------------------------------------------- --------------
CHEMICALS & PLASTICS--0.2%
--------------------------------------------------------------------------------
200,000 (c)Bayer Corp, Deb., 7.125%, 10/1/2015 208,180
-------------------------------------------------------------------------------- --------------
CONGLOMERATES--0.2%
--------------------------------------------------------------------------------
275,000 Leucadia National, Sr. Sub. Note, 8.25%, 6/15/2005 290,306
-------------------------------------------------------------------------------- --------------
FINANCE--AUTOMOTIVE--0.2%
--------------------------------------------------------------------------------
250,000 Ford Motor Credit Co., Note, 6.85%, 8/15/2000 258,045
-------------------------------------------------------------------------------- --------------
FINANCE-RETAIL--0.1%
--------------------------------------------------------------------------------
150,000 Household Finance, Deb., 6.45%, 2/1/2009 148,918
-------------------------------------------------------------------------------- --------------
FINANCIAL INTERMEDIARIES--0.9%
--------------------------------------------------------------------------------
225,000 American General Corp., S.F. Deb., 9.625%, 2/1/2018 248,339
--------------------------------------------------------------------------------
250,000 Equitable Cos., Inc., Sr. Note, 9%, 12/15/2004 291,525
--------------------------------------------------------------------------------
250,000 Greentree Financial Corp, Sr. Sub. Note, 10.25%, 6/1/2002 301,950
--------------------------------------------------------------------------------
300,000 Merrill Lynch, Medium Term Note, 7.25%, 6/14/2004 305,334
-------------------------------------------------------------------------------- --------------
Total 1,147,148
-------------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
INVESTMENT GRADE BONDS--CONTINUED
--------------------------------------------------------------------------------
FOOD & DRUG RETAILERS--0.3%
--------------------------------------------------------------------------------
$ 300,000 Hook-Superx, Inc., Sr. Note, 10.125%, 6/1/2002 $ 327,942
-------------------------------------------------------------------------------- --------------
FOOD PRODUCTS--0.4%
--------------------------------------------------------------------------------
275,000 Dr. Pepper-7-Up Cos., Sr. Sub. Disc. Note, 0/11.50%, 11/1/2002 256,856
--------------------------------------------------------------------------------
500,000 Grand Metropolitan Investment Corp., 8.13%, 1/6/2004 298,475
-------------------------------------------------------------------------------- --------------
Total 555,331
-------------------------------------------------------------------------------- --------------
GOVERNMENT AGENCY--0.6%
--------------------------------------------------------------------------------
250,000 Federal National Mortgage Association, Note, 7.43%, 8/4/2005 257,075
--------------------------------------------------------------------------------
250,000 Federal National Mortgage Association 8.59%, 2/3/2005 263,398
--------------------------------------------------------------------------------
200,000 Tennessee Valley Authority 7.318%, 5/31/1999 201,662
-------------------------------------------------------------------------------- --------------
Total 722,135
-------------------------------------------------------------------------------- --------------
INDUSTRIAL PRODUCTS & EQUIPMENT--0.5%
--------------------------------------------------------------------------------
350,000 Joy Technologies Inc, Sr. Note, 10.25%, 9/1/2003 395,433
--------------------------------------------------------------------------------
200,000 Varity Corp, Sr. Note, 11.375%, 11/15/1998 209,698
-------------------------------------------------------------------------------- --------------
Total 605,131
-------------------------------------------------------------------------------- --------------
INSURANCE--0.4%
--------------------------------------------------------------------------------
250,000 Continental Corp, Note, 8.25%, 4/15/1999 264,920
--------------------------------------------------------------------------------
250,000 Sunamerica Inc, Medium Term Note, 7.34%, 8/30/2005 262,984
-------------------------------------------------------------------------------- --------------
Total 527,904
-------------------------------------------------------------------------------- --------------
METALS & MINING--0.2%
--------------------------------------------------------------------------------
250,000 Santa Fe Pacific Gold Co, Note, 8.375%, 7/1/2005 255,000
-------------------------------------------------------------------------------- --------------
OIL & GAS--0.5%
--------------------------------------------------------------------------------
225,000 Occidental Petroleum Corp., Sr. Note, 11.75%, 3/15/2011 240,014
--------------------------------------------------------------------------------
350,000 USX Corp., Note, 6.375%, 7/15/1998 351,498
-------------------------------------------------------------------------------- --------------
Total 591,512
-------------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
INVESTMENT GRADE BONDS--CONTINUED
--------------------------------------------------------------------------------
PRINTING & PUBLISHING--0.2%
--------------------------------------------------------------------------------
$ 250,000 News America Holdings, Sr. Note, 7.50%, 3/1/2000 $ 262,037
-------------------------------------------------------------------------------- --------------
RETAILERS--0.2%
--------------------------------------------------------------------------------
250,000 J.C. Penney Co., S.F. Deb., 9.75%, 6/15/2021 293,717
-------------------------------------------------------------------------------- --------------
SOVEREIGN GOVERNMENT--0.6%
--------------------------------------------------------------------------------
300,000 (c)Freeport Terminal (Malta), Gtd. Global Note, 7.50%, 3/29/2009 317,289
--------------------------------------------------------------------------------
250,000 Quebec Province, Deb., 7.5%, 7/15/2023 256,912
--------------------------------------------------------------------------------
200,000 Republic of South Africa, Global Bond Deb., 9.625%, 12/15/1999 213,378
-------------------------------------------------------------------------------- --------------
Total 787,579
-------------------------------------------------------------------------------- --------------
TELECOMMUNICATIONS & CELLULAR--0.4%
--------------------------------------------------------------------------------
300,000 Cox Communications Inc., Note, 6.375%, 6/15/2000 303,453
--------------------------------------------------------------------------------
250,000 TCI Communications Inc, Note, 6.82%, 9/15/2010 253,167
-------------------------------------------------------------------------------- --------------
Total 556,620
-------------------------------------------------------------------------------- --------------
UTILITIES--0.4%
--------------------------------------------------------------------------------
200,000 Duke Power Co., 1st Mtg. Note, 7.00%, 9/1/2005 201,928
--------------------------------------------------------------------------------
200,000 Gulf States Utilities, FMB, 6.75%, 10/1/1998 202,174
--------------------------------------------------------------------------------
125,000 Pedernales Electric Coop., Inc., 10.875%, 09/01/17 140,761
-------------------------------------------------------------------------------- --------------
Total 544,863
-------------------------------------------------------------------------------- --------------
TOTAL INVESTMENT GRADE BONDS 9,802,348
-------------------------------------------------------------------------------- --------------
HIGH YIELD BONDS--2.4%
--------------------------------------------------------------------------------
AEROSPACE & DEFENSE--0.0%
--------------------------------------------------------------------------------
50,000 Tracor, Inc., Sr. Sub. Note, 10.875%, 8/15/2001 51,875
-------------------------------------------------------------------------------- --------------
AUTOMOTIVE--0.1%
--------------------------------------------------------------------------------
50,000 Aftermarket Technology Co., Sr. Sub. Note, 12.00%, 8/1/2004 52,375
--------------------------------------------------------------------------------
50,000 Exide Corp., Sr. Note, 10%, 4/15/2005 54,000
-------------------------------------------------------------------------------- --------------
Total 106,375
-------------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
--------------------------------------------------------------------------------
BANKING--0.1%
--------------------------------------------------------------------------------
$ 75,000 First Nationwide Holdings, Sr. Note, 12.25%, 5/15/2001 $ 85,594
-------------------------------------------------------------------------------- --------------
BROADCAST RADIO & TV--0.2%
--------------------------------------------------------------------------------
50,000 Chancellor Broadcasting Co., Sr. Sub. Note, 12.50%, 10/1/2004 53,750
--------------------------------------------------------------------------------
125,000 SCI Television, Sr. Secd. Note, 11.00%, 6/30/2005 132,500
--------------------------------------------------------------------------------
50,000 Sinclair Broadcast Group, Sr. Sub. Note, 10.00%, 9/30/2005 51,375
--------------------------------------------------------------------------------
50,000 Young Broadcasting Corp., Sr. Sub. Note, 10.125%, 2/15/2005 52,875
-------------------------------------------------------------------------------- --------------
Total 290,500
-------------------------------------------------------------------------------- --------------
CABLE TELEVISION--0.2%
--------------------------------------------------------------------------------
50,000 CAI Wireless Systems, Sr. Note, 12.25%, 9/15/2002 52,938
--------------------------------------------------------------------------------
75,000 Continental Cablevision, Sr. Deb., 9.50%, 8/1/2013 79,125
--------------------------------------------------------------------------------
100,000 International Cabletel, Sr. Note, 0/12.75%, 4/15/2005 61,125
--------------------------------------------------------------------------------
50,000 Rogers Cablesystems Ltd., Sr. Secd. 2nd Priority Note, 10.00%,
3/15/2005 52,625
--------------------------------------------------------------------------------
50,000 TeleWest PLC, 0/11.00%, Sr. Disc. Deb., 10/1/2007 29,312
-------------------------------------------------------------------------------- --------------
Total 275,125
-------------------------------------------------------------------------------- --------------
CHEMICALS & PLASTICS--0.2%
--------------------------------------------------------------------------------
125,000 Arcadian Partners LP, Sr. Note, Series B, 10.75%, 5/1/2005 137,500
--------------------------------------------------------------------------------
50,000 (c)Crain Industries, Inc., Sr. Sub. Note, 13.5%, 8/15/2005 50,875
--------------------------------------------------------------------------------
75,000 G-I Holdings, Sr. Disc. Note, 0%, 10/1/1998 56,906
--------------------------------------------------------------------------------
50,000 Harris Chemical, Sr. Secd. Disc. Note, 0/10.25%, 7/15/2001 46,750
-------------------------------------------------------------------------------- --------------
Total 292,031
-------------------------------------------------------------------------------- --------------
CLOTHING & TEXTILES--0.1%
--------------------------------------------------------------------------------
125,000 Westpoint Stevens, Inc., Sr. Sub. Deb., 9.375%, 12/15/2005 126,875
-------------------------------------------------------------------------------- --------------
CONGLOMERATES--0.1%
--------------------------------------------------------------------------------
75,000 Sherritt Gordon Ltd., Sr. Note, 9.75%, 4/1/2003 78,375
-------------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
--------------------------------------------------------------------------------
CONSUMER PRODUCTS--0.1%
--------------------------------------------------------------------------------
$ 50,000 (c)Herff Jones, Inc., Sr. Sub. Note, 11.00%, 8/15/2005 $ 52,875
--------------------------------------------------------------------------------
50,000 Playtex Family Products Corp., Sr. Sub. Note, 9.00%, 12/15/2003 44,250
-------------------------------------------------------------------------------- --------------
Total 97,125
-------------------------------------------------------------------------------- --------------
CONTAINER & GLASS PRODUCTS--0.1%
--------------------------------------------------------------------------------
100,000 Owens Illinois, Inc., Sr. Sub. Note, 9.75%, 8/15/2004 104,250
--------------------------------------------------------------------------------
50,000 Portola Packaging Inc., Sr. Note, 10.75%, 10/1/2005 51,625
-------------------------------------------------------------------------------- --------------
Total 155,875
-------------------------------------------------------------------------------- --------------
ECOLOGICAL SERVICES & EQUIPMENT--0.1%
--------------------------------------------------------------------------------
50,000 Mid-American Waste Systems, Inc., Sr. Sub. Note, 12.25%,
2/15/2003 48,500
-------------------------------------------------------------------------------- --------------
FOOD & DRUG RETAILERS--0.1%
--------------------------------------------------------------------------------
50,000 Pathmark Stores, Inc., Sr. Sub. Note, 9.625%, 5/1/2003 46,813
--------------------------------------------------------------------------------
50,000 Ralph's Grocery Co., Sr. Note, 10.45%, 6/15/2004 49,375
-------------------------------------------------------------------------------- --------------
Total 96,188
-------------------------------------------------------------------------------- --------------
FOOD PRODUCTS--0.1%
--------------------------------------------------------------------------------
50,000 Curtice-Burns Foods, Inc., Sr. Sub. Note, 12.25%, 2/1/2005 51,500
--------------------------------------------------------------------------------
50,000 Specialty Foods Corp., Sr. Note, 11.125%, 10/1/2002 47,500
--------------------------------------------------------------------------------
25,000 (c)Van de Kamp's Inc., Sr. Sub. Note, 12.00%, 9/15/2005 25,812
-------------------------------------------------------------------------------- --------------
Total 124,812
-------------------------------------------------------------------------------- --------------
FOOD SERVICES--0.1%
--------------------------------------------------------------------------------
125,000 Flagstar Corp., Sr. Note, 10.875%, 12/1/2002 114,375
-------------------------------------------------------------------------------- --------------
FOREST PRODUCTS--0.1%
--------------------------------------------------------------------------------
50,000 Repap New Brunswick, 2nd Priority Sr. Secd. Note, 10.625%,
4/15/2005 49,687
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
--------------------------------------------------------------------------------
FOREST PRODUCTS--CONTINUED
--------------------------------------------------------------------------------
$ 50,000 Stone Container Corp., Sr. Note, 9.875%, 2/1/2001 $ 48,687
-------------------------------------------------------------------------------- --------------
Total 98,374
-------------------------------------------------------------------------------- --------------
HEALTHCARE--0.0%
--------------------------------------------------------------------------------
50,000 Tenet Healthcare, Sr. Sub. Note, 10.125%, 3/1/2005 54,437
-------------------------------------------------------------------------------- --------------
HOME PRODUCTS & FURNISHINGS--0.1%
--------------------------------------------------------------------------------
50,000 Triangle Pacific Corp., Sr. Note, 10.5%, 8/1/2003 52,500
-------------------------------------------------------------------------------- --------------
LEISURE & ENTERTAINMENT--0.1%
--------------------------------------------------------------------------------
50,000 Alliance Entertainment , Sr. Sub. Note, 11.25%, 7/15/2005 50,000
--------------------------------------------------------------------------------
100,000 (c)Six Flags Theme Parks, Sr. Sub. Disc. Note, 12.25%, 6/15/2005 78,250
-------------------------------------------------------------------------------- --------------
Total 128,250
-------------------------------------------------------------------------------- --------------
MACHINERY & EQUIPMENT--0.1%
--------------------------------------------------------------------------------
50,000 Primeco Inc., Sr. Sub. Note, 12.75%, 3/1/2005 52,125
--------------------------------------------------------------------------------
50,000 Waters Corp., Sr. Sub. Note, 12.75%, 9/30/2004 55,250
-------------------------------------------------------------------------------- --------------
Total 107,375
-------------------------------------------------------------------------------- --------------
OIL & GAS--0.1%
--------------------------------------------------------------------------------
50,000 Falcon Drilling Company, Sr. Note, 9.75%, 1/15/2001 50,750
--------------------------------------------------------------------------------
50,000 United Meridian Corp., Sr. Sub. Note, 10.375%, 10/15/2005 51,125
-------------------------------------------------------------------------------- --------------
Total 101,875
-------------------------------------------------------------------------------- --------------
RETAILERS--0.1%
--------------------------------------------------------------------------------
125,000 Brylane Capital Corp., Sr. Sub. Note, 10.00%, 9/1/2003 109,375
-------------------------------------------------------------------------------- --------------
SERVICES--0.0%
--------------------------------------------------------------------------------
25,000 (c)Coinmach Corp., Sr. Note, 11.75%, 11/15/2005 25,312
-------------------------------------------------------------------------------- --------------
STEEL--0.0%
--------------------------------------------------------------------------------
50,000 GS Technologies Operating Co., Inc., Sr. Note, 12.00%, 9/1/2004 49,500
-------------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
--------------------------------------------------------------------------------
SURFACE TRANSPORTATION--0.0%
--------------------------------------------------------------------------------
$ 50,000 Gearbulk Holding Limited, Sr. Note, 11.25%, 12/1/2004 $ 53,125
-------------------------------------------------------------------------------- --------------
TELECOMMUNICATIONS & CELLULAR--0.2%
--------------------------------------------------------------------------------
50,000 (c)IXC Communications, Inc., Sr. Note, 12.50%, 10/1/2005 52,375
--------------------------------------------------------------------------------
50,000 MetroCall Inc., Sr. Sub. Note, 10.375%, 10/1/2007 51,750
--------------------------------------------------------------------------------
25,000 MobileMedia Communication, Sr. Sub. Note, 9.375%, 11/1/2007 25,312
--------------------------------------------------------------------------------
75,000 Nextel Communications, Inc., Sr. Disc. Note, 0/11.50%, 9/1/2003 45,206
--------------------------------------------------------------------------------
50,000 Paging Network, Sr. Sub. Note, 10.125%, 8/1/2007 53,375
--------------------------------------------------------------------------------
75,000 Panamsat, L.P., Sr. Sub. Disc. Note, 8/1/2003 61,125
-------------------------------------------------------------------------------- --------------
Total 289,143
-------------------------------------------------------------------------------- --------------
UTILITIES--0.1%
--------------------------------------------------------------------------------
75,000 California Energy Co., Sr. Disc. Note, 1/15/2004 69,750
-------------------------------------------------------------------------------- --------------
TOTAL HIGH YIELD BONDS 3,082,641
-------------------------------------------------------------------------------- --------------
FOREIGN
CURRENCY
PAR AMOUNT
- --------------- --------------------------------------------------------------------------------
FOREIGN BONDS--5.1%
--------------------------------------------------------------------------------
AUSTRALIAN DOLLAR--0.1%
--------------------------------------------------------------------------------
150,000 State Bank of New South Wales, 12.25%, 2/26/2001 129,972
-------------------------------------------------------------------------------- --------------
BELGIAN FRANC--0.3%
--------------------------------------------------------------------------------
3,200,000 Belgian Gov't., Foreign Gov't. Guarantee, 10.00%, 4/5/1996 109,906
--------------------------------------------------------------------------------
6,000,000 Belgium Kingdom, 7.75%, 10/15/2004 215,661
-------------------------------------------------------------------------------- --------------
Total 325,567
-------------------------------------------------------------------------------- --------------
CANADIAN DOLLAR--0.2%
--------------------------------------------------------------------------------
375,000 Ontario Hydro, 9.00%, 6/24/2002 300,856
-------------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN VALUE
CURRENCY IN U.S.
PAR AMOUNT DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN BONDS--CONTINUED
--------------------------------------------------------------------------------
DENMARK KRONE--0.2%
--------------------------------------------------------------------------------
1,200,000 Denmark, 8.00%, 5/15/2003 $ 225,369
-------------------------------------------------------------------------------- --------------
FRENCH FRANC--0.6%
--------------------------------------------------------------------------------
1,400,000 KFW International Finance, 7.00%, 5/12/2000 289,124
--------------------------------------------------------------------------------
2,350,000 France O.A.T., 8.50%, 11/25/2002 519,303
-------------------------------------------------------------------------------- --------------
Total 808,427
-------------------------------------------------------------------------------- --------------
DEUTSCHE MARK--0.8%
--------------------------------------------------------------------------------
300,000 Bundesobligationen, Deb., 7.25%, 10/20/1997 219,311
--------------------------------------------------------------------------------
1,100,000 Treuhandanstalt, 7.75%, 10/1/2002 840,725
-------------------------------------------------------------------------------- --------------
Total 1,060,036
-------------------------------------------------------------------------------- --------------
ITALIAN LIRA--0.4%
--------------------------------------------------------------------------------
850,000,000 Buoni Poliennali Del Tes, 9.50%, 1/1/2005 479,914
-------------------------------------------------------------------------------- --------------
JAPANESE YEN--1.3%
--------------------------------------------------------------------------------
65,000,000 Export-Import Bank Japan, 4.375%, 10/1/2003 716,277
--------------------------------------------------------------------------------
42,000,000 Interamerican Development, Deb., 7.25%, 5/15/2000 512,358
--------------------------------------------------------------------------------
33,000,000 KFW International Finance, 6.00%, 11/29/1999 382,703
-------------------------------------------------------------------------------- --------------
Total 1,611,338
-------------------------------------------------------------------------------- --------------
NETHERLAND GUILDER--0.3%
--------------------------------------------------------------------------------
700,000 Netherlands Government, 5.75%, 1/15/2004 426,234
-------------------------------------------------------------------------------- --------------
SPAINISH PESETA--0.2%
--------------------------------------------------------------------------------
40,000,000 Spanish Government, 10.00%, 2/28/2005 320,830
-------------------------------------------------------------------------------- --------------
SWEDISH KRONA--0.2%
--------------------------------------------------------------------------------
2,000,000 Sweden, 6.00%, 2/9/2005 254,479
-------------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN VALUE
CURRENCY IN U.S.
PAR AMOUNT DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN BONDS--CONTINUED
--------------------------------------------------------------------------------
UNITED KINGDOM POUND--0.5%
--------------------------------------------------------------------------------
365,000 UK Conversion, 9.00%, 3/3/2000 $ 601,395
-------------------------------------------------------------------------------- --------------
TOTAL FOREIGN BONDS 6,544,417
-------------------------------------------------------------------------------- --------------
TOTAL BONDS (IDENTIFIED COST $81,308,571) 82,890,632
-------------------------------------------------------------------------------- --------------
(A)CASH EQUIVALENTS--9.6%
- -------------------------------------------------------------------------------------------------
TREASURY SECURITIES--3.8%
--------------------------------------------------------------------------------
$ 5,000,000 U.S. Treasury Bill, 03/14/1996 (identified cost $4,923,921) 4,925,200
-------------------------------------------------------------------------------- --------------
(E)REPURCHASE AGREEMENT--5.8%
--------------------------------------------------------------------------------
7,430,000 J.P. Morgan Securities, Inc., 5.930%, dated 11/30/1995, due 12/1/1995 (at
amortized cost) 7,430,000
-------------------------------------------------------------------------------- --------------
TOTAL CASH EQUIVALENTS 12,355,200
-------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (IDENTIFIED COST $120,985,908)(F) $ 126,905,232
-------------------------------------------------------------------------------- --------------
</TABLE>
(a) The Fund purchases Index futures contracts to efficiently manage cash flows
resulting from shareholder purchases and redemptions, dividend and capital
gain payments to shareholders and corporate actions while maintaining
exposure to the Index and minimizing trade costs. The total market value of
13 S&P 500 open Index futures contracts is $3,955,375 at November 30, 1995,
which represents 3.1% of net assets. Taking into consideration these open
Index futures contracts, the Fund's effective, total exposure to Large Cap
Stocks and total stocks is 9.6% and 27.7%, respectively. The fund holds
cash equivalents as collateral for the 13 S&P 500 Futures contracts.
(b) Non-income producing security.
(c) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. At the end of the period, these securities
amounted to $994,118 which represents 0.8% of net assets.
(d) The utility stocks are shown in the asset category in which they were
purchased. The Fund's total exposure to utility stocks is 10.7% of net
assets.
(e) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations. The investment in the repurchase agreement is through
participation in a joint account with other Federated funds.
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
(f) The cost of investments for federal tax purposes amounts to $121,050,559.
The net unrealized appreciation of investments on a federal tax basis
amounts to $5,854,673 which is comprised of $6,230,538 appreciation and
$375,865 depreciation at November 30, 1995.
Note: The categories of investments are shown as a percentage of net assets
($128,501,918) at November 30, 1995.
The following acronyms are used throughout this portfolio:
ADR--American Depository Receipt
GDR--Global Depository Receipts
GTD--Guaranty
LP--Limited Partnership
PEPS--Participating Equity Preferred Stock
PLC--Public Limited Company
STRYPES--Structured Yield Product Exchangeable for Stock
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED GROWTH AND INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------------------------
Total investments in securities, at value (identified cost $120,985,908, and tax cost $121,050,559) $ 126,905,232
- ---------------------------------------------------------------------------------------------------
Cash denominated in foreign currencies (identified cost $80,009) 78,939
- ---------------------------------------------------------------------------------------------------
Income receivable 1,621,160
- ---------------------------------------------------------------------------------------------------
Receivable for investments sold 99,908
- ---------------------------------------------------------------------------------------------------
Receivable for shares sold 465,183
- ---------------------------------------------------------------------------------------------------
Receivable for foreign currency sold 58,543
- ---------------------------------------------------------------------------------------------------
Deferred expenses 40,709
- --------------------------------------------------------------------------------------------------- -------------
Total assets 129,269,674
- ---------------------------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------------------------
Payable for investments purchased $ 352,976
- ----------------------------------------------------------------------------------------
Payable for shares redeemed 1,199
- ----------------------------------------------------------------------------------------
Payable to Bank 259,767
- ----------------------------------------------------------------------------------------
Payable for taxes withheld 3,049
- ----------------------------------------------------------------------------------------
Payable for daily variation margin 5,050
- ----------------------------------------------------------------------------------------
Payable for foreign currency purchased 58,543
- ----------------------------------------------------------------------------------------
Accrued expenses 87,172
- ---------------------------------------------------------------------------------------- ---------
Total liabilities 767,756
- --------------------------------------------------------------------------------------------------- -------------
Net Assets for 11,537,539 shares outstanding $ 128,501,918
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------------------------
Paid in capital $ 119,471,067
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments, translation of assets and
liabilities in foreign currency, and futures contracts 6,130,173
- ---------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments, foreign currency transactions,
and futures contracts 1,612,126
- ---------------------------------------------------------------------------------------------------
Undistributed net investment income 1,288,552
- --------------------------------------------------------------------------------------------------- -------------
Total Net Assets $ 128,501,918
- --------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ---------------------------------------------------------------------------------------------------
Institutional Shares $103,714,993 / 9,308,790 shares outstanding $11.14
- --------------------------------------------------------------------------------------------------- -------------
Select Shares $24,786,925 / 2,228,749 shares outstanding $11.12
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED GROWTH AND INCOME FUND
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Dividends (net of foreign taxes withheld of $8,032) $ 640,159
- ----------------------------------------------------------------------------------------------------
Interest (net of foreign taxes withheld of $1,322) 4,300,586
- ---------------------------------------------------------------------------------------------------- ----------
Total income 4,940,745
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------------------------
Investment advisory fee $ 606,491
- -----------------------------------------------------------------------------------------
Administrative personnel and services fee 155,000
- -----------------------------------------------------------------------------------------
Custodian fees 96,416
- -----------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 43,257
- -----------------------------------------------------------------------------------------
Directors'/Trustees' fees 2,474
- -----------------------------------------------------------------------------------------
Auditing fees 12,407
- -----------------------------------------------------------------------------------------
Legal fees 2,550
- -----------------------------------------------------------------------------------------
Portfolio accounting fees 33,646
- -----------------------------------------------------------------------------------------
Distribution services fee--Select Shares 82,559
- -----------------------------------------------------------------------------------------
Shareholder services fee--Institutional Shares 174,647
- -----------------------------------------------------------------------------------------
Shareholder services fee--Select Shares 27,520
- -----------------------------------------------------------------------------------------
Share registration costs 41,206
- -----------------------------------------------------------------------------------------
Printing and postage 38,221
- -----------------------------------------------------------------------------------------
Insurance premiums 5,190
- -----------------------------------------------------------------------------------------
Taxes 48
- -----------------------------------------------------------------------------------------
Miscellaneous 17,181
- ----------------------------------------------------------------------------------------- ---------
Total expenses 1,338,813
- -----------------------------------------------------------------------------------------
Waivers--
- -----------------------------------------------------------------------------------------
Waiver of investment advisory fee $(243,174)
- ------------------------------------------------------------------------------
Waiver of distribution services fee--Select Shares (27,520)
- ------------------------------------------------------------------------------
Waiver of shareholder services fee--Institutional Shares (174,647)
- ------------------------------------------------------------------------------ ---------
Total waivers (445,341)
- ----------------------------------------------------------------------------------------- ---------
Net expenses 893,472
- ---------------------------------------------------------------------------------------------------- ----------
Net investment income 4,047,273
- ---------------------------------------------------------------------------------------------------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FOREIGN CURRENCY, AND FUTURES CONTRACTS:
- ----------------------------------------------------------------------------------------------------
Net realized gain on investments, foreign currency transactions, and futures contracts 2,155,646
- ----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments, translation of assets and
liabilities in foreign currency, and futures contracts 6,986,534
- ---------------------------------------------------------------------------------------------------- ----------
Net realized and unrealized gain on investments, foreign currency, and futures contracts 9,142,180
- ---------------------------------------------------------------------------------------------------- ----------
Change in net assets resulting from operations $13,189,453
- ---------------------------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED GROWTH AND INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, NOVEMBER 30,
<S> <C> <C>
1995 1994*
INCREASE (DECREASE) IN NET ASSETS:
- --------------------------------------------------------------------------------
OPERATIONS--
- --------------------------------------------------------------------------------
Net investment income $ 4,047,273 $ 1,036,801
- --------------------------------------------------------------------------------
Net realized gain (loss) on investments, foreign currency transactions, and
futures contracts ($2,295,469 net gain and $405,899 net loss, respectively,
as computed for federal tax purposes) 2,155,646 (416,902)
- --------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments, trans-
lation of assets and liabilities in foreign currency, and futures contracts 6,986,534 (856,361)
- -------------------------------------------------------------------------------- --------------- ---------------
Change in net assets resulting from operations 13,189,453 (236,462)
- -------------------------------------------------------------------------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS--
- --------------------------------------------------------------------------------
Distributions from net investment income:
- --------------------------------------------------------------------------------
Institutional Shares (2,937,306) (576,693)
- --------------------------------------------------------------------------------
Select Shares (373,022) (35,879)
- -------------------------------------------------------------------------------- --------------- ---------------
Change in net assets resulting from distributions
to shareholders (3,310,328) (612,572)
- -------------------------------------------------------------------------------- --------------- ---------------
SHARE TRANSACTIONS--
- --------------------------------------------------------------------------------
Proceeds from sale of shares 87,791,342 52,456,535
- --------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of distributions
declared 1,555,355 257,127
- --------------------------------------------------------------------------------
Cost of shares redeemed (18,214,182) (4,374,350)
- -------------------------------------------------------------------------------- --------------- ---------------
Change in net assets resulting from share transactions 71,132,515 48,339,312
- -------------------------------------------------------------------------------- --------------- ---------------
Change in net assets 81,011,640 47,490,278
- --------------------------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------------------------
Beginning of period 47,490,278 --
- -------------------------------------------------------------------------------- --------------- ---------------
End of period (including undistributed net investment income of $1,288,552 and
$455,224, respectively) $ 128,501,918 $ 47,490,278
- -------------------------------------------------------------------------------- --------------- ---------------
</TABLE>
* For the period from January 27, 1994 (start of business) to November 30, 1994.
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED GROWTH AND INCOME FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Managed Series Trust (the "Trust") is registered under the Investment Company
Act of 1940, as amended (the "Act") as an open-end, management investment
company. The Trust consists of four diversified portfolios. The financial
statements included herein are only those of Federated Managed Growth and Income
Fund (the "Fund"). The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held.
The Fund offers two classes of shares: Institutional Shares (formerly,
Institutional Service Shares) and Select Shares. The Institutional Service
Shares changed its name to Institutional Shares effective June 30, 1995.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Short-term securities with remaining maturities of
sixty days or less at the time of purchase may be valued at amortized cost,
which approximates fair market value. Listed equity securities are valued
at the last sale price reported on national security exchanges. All other
securities are valued at prices provided by an independent pricing service.
REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral
securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
Revenue Code, as amended (the "Code"). Dividend income and distributions to
shareholders are recorded on the ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
foreign currency and futures transactions. As a result of these
differences, the following required reclassifications have been made to the
current year financial statements.
<TABLE>
<CAPTION>
INCREASE (DECREASE)
<S> <C> <C>
ACCUMULATED
NET REALIZED UNDISTRIBUTED NET
PAID-IN CAPITAL GAIN/LOSS INVESTMENT
$(782) $(95,601) $96,383
</TABLE>
Net investment income, net realized gains/losses, and net assets were not
affected by this reclassification.
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.
However, federal taxes may be imposed on the Fund upon the disposition of
certain investments in passive foreign investment companies. Withholding
taxes on foreign interest and dividends have been provided for in
accordance with the Fund's understanding of the applicable country's tax
rules and rates.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized using the straight-line method over a period of five years from
the Fund's commencement date.
CONCENTRATION OF CREDIT RISK--The Fund invests in securities of non-U.S.
issuers. Although the Fund maintains a diversified investment portfolio,
the political or economic developments within a particular country or
region may have an adverse effect on the ability of domiciled issuers to
meet their obligations. Additionally, political or economic developments
may have an effect on the liquidity and volatility of portfolio securities
and currency holdings.
At November 30, 1995, the industry diversification of foreign securities
was as follows:
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY % OF NET ASSETS
<S> <C>
Agency 1.3
Automobiles 0.1
Banking 0.3
Beverages & Tobacco 0.1
Broadcasting & Publishing 0.1
Building Materials & Components 0.3
Business & Public Services 0.3
Chemicals 0.3
Construction & Housing 0.1
Data Processing & Reproduction 0.1
Electrical & Electronics 0.1
Energy Sources 0.1
Financial Services 0.1
Food & Household Products 0.2
Forest Products & Paper 0.1
Health & Personal Care 0.2
<CAPTION>
INDUSTRY % OF NET ASSETS
<S> <C>
INDUSTRIAL COMPONENTS 0.2
Insurance 0.2
Leisure & Tourism 0.1
Machinery & Engineering 0.5
Merchandising 0.3
Metals 0.2
Miscellaneous Materials &
Commodities 0.1
Multi-Industry 0.2
Real Estate 0.1
Recreation, Other Consumer Goods 0.1
Sovereign 3.3
State/Provincial 0.1
Supranational 0.4
Telecommunications 0.2
Transportation 0.2
Utilities--Electrical & Gas 0.1
</TABLE>
FUTURES CONTRACTS--The Fund may purchase and sell futures contracts to
accommodate cash flows into and out of the Fund's portfolio and to hedge
against the effects of changes in the value of portfolio securities due to
anticipated changes in interest rates and market conditions. Upon entering
into a stock futures contract with a broker, the Fund is required to
deposit in a segregated account a specified amount of cash or U.S.
government securities. Futures contracts are valued daily and unrealized
gains or losses are recorded in a "variation margin" account. Daily, the
Fund receives from or pays to the broker a specified amount of cash based
upon changes in the variation margin account. When a contract is closed,
the Fund recognizes a realized gain or loss.
Futures contracts have market risks, including the risk that the change in
the value of the contract may not correlate with changes in the value of
the underlying securities. For the period ended November 30, 1995, the Fund
had realized gains of $515,333 on future contracts.
At November 30, 1995, the Fund had outstanding futures contracts as set
forth below:
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOTAL UNREALIZED
FACE APPRECIATION
EXPIRATION DATE CONTRACTS TO DELIVER/RECEIVE VALUE POSITION (DEPRECIATION)
<S> <C> <C> <C> <C>
December 1995 10 S&P 500 Index Futures 2,845,050 Long $ 191,200
March 1996 3 S&P 500 Index Futures 896,750 Long 22,375
-----------------
Net Unrealized Appreciation on Futures Contracts $ 213,575
</TABLE>
FOREIGN CURRENCY COMMITMENTS--The Fund may enter into foreign currency
commitments for the delayed delivery of securities or foreign currency
exchange transactions. Risks may arise upon entering these transactions
from the potential inability of counterparties to meet the terms of their
commitments and from unanticipated movements in security prices or foreign
exchange rates. The foreign currency transactions are adjusted by the daily
exchange rate of the underlying currency and any gains or losses are
recorded for financial statement purpose as unrealized until the settlement
date. At November 30, 1995, the Fund had outstanding foreign currency
commitments as set forth below:
<TABLE>
<CAPTION>
UNREALIZED
APPRECIATION
SETTLEMENT DATE CONTRACTS TO DELIVER/RECEIVE IN EXCHANGE FOR (DEPRECIATION)
<S> <C> <C> <C>
Contracts Purchased
12/1/95 2,834 Argentine Peso $ 2,835 0
12/5/95 36,541 Pound Sterling $55,708 $235
</TABLE>
FOREIGN CURRENCY TRANSLATION--The accounting records of the Fund are
maintained in U.S. dollars. All assets and liabilities denominated in
foreign currencies ("FC") are translated into U.S. dollars based on the
rate of exchange of such currencies against U.S. dollars on the date of
valuation. Purchases and sales of securities, income and expenses are
translated at the rate of exchange quoted on the respective date that such
transactions are recorded. Differences between income and expense amounts
recorded and collected or paid are adjusted when reported by the custodian
bank. The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales
of FCs, currency gains or losses realized between the trade and settlement
dates on securities transactions, the difference between the amounts of
dividends, interest, and foreign withholding taxes recorded on the Fund's
books, and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes
in the value of assets and liabilities other than investments in securities
at fiscal year end, resulting from changes in the exchange rate.
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
DOLLAR ROLL TRANSACTIONS--The Fund enters into dollar roll transactions,
with respect to mortgage securities issued by GNMA, FNMA and FHLMC, in
which the Fund sells mortgage securities to financial institutions and
simultaneously agrees to accept substantially similar (same type, coupon
and maturity) securities at a later date at an agreed upon price. Dollar
roll transactions are short-term financing arrangements which will not
exceed twelve months. The Fund will use the proceeds generated from the
transactions to invest in short-term investments, which may enhance the
Fund's current yield and total return.
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 Board of Trustees. 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 November 30,
1995 is as follows:
<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE(S) ACQUISITION COST
<S> <C> <C>
Westinghouse Electric Corp., PEPS 9/27/95-9/28/95 $ 169,275
Bayer Corp., Deb. 11/9/95 204,630
Freeport Terminal (Malta), Gtd. Global Note 6/16/94 284,100
Crain Industries, Inc., Sr. Sub. Note 9/22/95 51,375
Herff Jones, Inc., Sr. Sub. Note 9/14/95 51,750
Van de Kamp's Inc., Sr. Sub. Note 9/14/95 25,000
Six Flags Theme Parks, Sr. Sub. Disc. Note 7/17/95 77,798
Coinmach Corp., Sr. Note 11/14/95 25,000
IXC Communications, Sr. Sub. Note 9/25/95 48,633
</TABLE>
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares.
Transactions in shares were as follows:
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, 1995 NOVEMBER 30, 1994*
<S> <C> <C> <C> <C>
INSTITUTIONAL SHARES SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------- ----------- -------------- ---------- -------------
Shares sold 6,226,565 $ 65,821,031 4,831,900 $ 48,424,276
- --------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 122,850 1,277,967 23,521 236,142
- --------------------------------------------------------
Shares redeemed (1,487,709) (15,675,825) (408,337) (4,090,253)
- -------------------------------------------------------- ----------- -------------- ---------- -------------
Net change resulting from Institutional share
transactions 4,861,706 $ 51,423,173 4,447,084 $ 44,570,165
- -------------------------------------------------------- ----------- -------------- ---------- -------------
</TABLE>
*For the period from January 27, 1994 (start of business) to November 30, 1994.
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, 1995 NOVEMBER 30, 1994*
<S> <C> <C> <C> <C>
SELECT SHARES SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------- ----------- -------------- ---------- -------------
Shares sold 2,065,372 $ 21,970,311 402,183 $ 4,032,259
- --------------------------------------------------------
Shares issued to shareholders in payment
of distributions declared 26,322 277,388 2,090 20,985
- --------------------------------------------------------
Shares redeemed (238,977) (2,538,357) (28,241) (284,097)
- -------------------------------------------------------- ----------- -------------- ---------- -------------
Net change resulting from select share transactions 1,852,717 $ 19,709,342 376,032 $ 3,769,147
- -------------------------------------------------------- ----------- -------------- ---------- -------------
Net change resulting from share transactions 6,714,423 $ 71,132,515 4,823,116 $ 48,339,312
- -------------------------------------------------------- ----------- -------------- ---------- -------------
</TABLE>
*For the period from January 27, 1994 (start of business) to November 30, 1994.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser,
(the "Adviser"), receives for its services an annual investment advisory fee
equal to .75 of 1% 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.
Under the terms of a sub-advisory agreement between the Adviser and Federated
Global Research Corp., Federated Global Research Corp. receives an allocable
portion of the Fund's advisory fee. Such allocation is based on the amount of
foreign securities which the Sub-Adviser manages for the Fund. This fee is paid
by the Adviser out of its resources and is not an incremental Fund expense.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. This fee is based
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
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 Select Shares. The Plan provides that the Fund may incur
distribution expenses up to .75 of 1% of average daily net assets of the Select
Shares annually, to compensate FSC. The distributor may voluntarily choose to
waive any portion of its fee. The distributor can modify or terminate this
voluntary waiver at any time at its sole discretion.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of
1% of average daily net assets of the Fund for the period. This fee is to obtain
certain services for shareholders and to maintain shareholder accounts. FSS may
voluntarily choose to waive any portion of its fee. FSS can modify or terminate
this voluntary waiver at any time at its sole discretion. For the fiscal year
ended November 30, 1995, Institutional Shares fully waived its shareholder
serivces fee.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Fund. This
fee is based on the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Trust's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational and start-up administrative service
expenses of $47,500 and $39,068, respectively, were borne initially by the
Adviser. The Fund has agreed to reimburse the Adviser for the organizational and
start-up administrative expenses during the five year period following effective
date. For the period ended November 30, 1995, the Fund paid $7,576 and $4,992,
respectively, pursuant to this agreement.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended November 30, 1995, were as follows:
<TABLE>
<S> <C>
PURCHASES $ 184,101,015
- -------------------------------------------------------------------------------------------------- --------------
SALES $ 118,699,390
- -------------------------------------------------------------------------------------------------- --------------
</TABLE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
MANAGED SERIES TRUST
(Federated Managed Growth and Income Fund):
We have audited the accompanying statement of assets and liabilities of
Federated Managed Growth and Income Fund (an investment portfolio of Managed
Series Trust, a Massachusetts business trust), including the schedule of
portfolio of investments, as of November 30, 1995, the related statement of
operations for the year then ended, and the statement of changes in net assets
and the financial highlights (see pages 2 and 27 of the prospectus) for the
periods presented. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Federated Managed Growth and Income Fund (an investment portfolio of Managed
Series Trust) as of November 30, 1995, and the results of its operations for the
year then ended, and the changes in its net assets and its financial highlights
for the periods presented, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
January 18, 1996
APPENDIX
- --------------------------------------------------------------------------------
STANDARD AND POOR'S RATINGS GROUP LONG-TERM DEBT RATINGS
AAA--Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.
A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB--Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.
B--Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or BB-
rating.
CCC--Debt rated CCC has currently identifiable vulnerability to default and is
dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating.
CC--The rating CC typically is applied to debt subordinated to senior debt that
is assigned an actual or implied CCC debt rating.
C--The rating C typically is applied to debt subordinated to senior debt which
is assigned an actual or implied CCC- debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.
CI--The rating CI is reserved for income bonds on which no interest is being
paid.
D--Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D
rating also will be used upon the filing of a bankruptcy petition if debt
service payments are jeopardized.
MOODY'S INVESTORS SERVICE, INC., CORPORATE BOND RATINGS
Aaa--Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment some time in the future.
Baa--Bonds which are rated Baa are considered as medium-grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well.
Ba--Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca--Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C--Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
FITCH INVESTORS SERVICE, INC., LONG-TERM DEBT RATINGS
AAA--Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA--Bonds considered to be investment grade and of very high quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F-1+.
A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB--Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds and, therefore, impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.
BB--Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.
B--Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.
CCC--Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.
CC--Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C--Bonds are in imminent default in payment of interest or principal.
DDD, DD, AND D--Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. DDD
represents the highest potential for recovery on these bonds, and D represents
the lowest potential for recovery.
NR--NR indicates that Fitch does not rate the specific issue.
PLUS (+) OR MINUS (-): Plus or minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the AAA category.
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Federated Managed Growth and Income Fund
Institutional Shares Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Sub-Adviser
Federated Global Research 175 Water Street
Corp. New York, New York 10038-4965
- ---------------------------------------------------------------------------------------------------------------------
Custodian
State Street Bank and P.O. Box 8600
Trust Company Boston, Massachusetts 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company P.O. Box 8600
Boston, Massachusetts 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED
GROWTH AND INCOME FUND
INSTITUTIONAL SHARES
PROSPECTUS
A Diversified Portfolio
of Managed Series Trust,
an Open-End Management
Investment Company
Prospectus dated January 31, 1996
[LOGO] FEDERATED SECURITIES CORP.
---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
Cusip 56166K305
3122007A-SS (1/96)
Lifecycle Investing
MANAGED SERIES TRUST
From Federated Investors
[LOGO]
FEDERATED MANAGED GROWTH AND INCOME FUND
Lifecycle Investing
MANAGED SERIES TRUST
From Federated Investors
SELECT
SHARES
Federated Managed
Growth and Income Fund is part of
Managed Series Trust,
a lifecycle investing program from
Federated Investors.
Other funds available
in Managed Series Trust are
Federated Managed Income Fund,
Federated Managed Growth Fund,
and Federated Managed
Aggressive Growth Fund.
(Logo)
FEDERATED SECURITIES CORP.
Distributor
A subsidiary of Federated Investors
(Logo)
FEDERATED MANAGED GROWTH AND INCOME FUND
(A PORTFOLIO OF MANAGED SERIES TRUST)
SELECT SHARES
PROSPECTUS
The Select Shares of Federated Managed Growth and Income Fund (the "Fund")
offered by this prospectus represent interests in the Fund, which is a
diversified investment portfolio of Managed Series Trust (the "Trust"). The
Trust is an open-end management investment company (a mutual fund).
The investment objective of the Fund is to seek current income and capital
appreciation. The Fund invests in both bonds and stocks. Select Shares are sold
at net asset value.
THE SELECT SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF
ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THESE SELECT SHARES INVOLVES INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
This prospectus contains the information you should read and know before you
invest in Select Shares of the Fund. Keep this prospectus for future reference.
The Fund has also filed a Statement of Additional Information for Select Shares
and Institutional Shares of all portfolios of the Trust dated January 31, 1996,
with the Securities and Exchange Commission. The information contained in the
Statement of Additional Information is incorporated by reference into this
prospectus. You may request a copy of the Statement of Additional Information or
a paper copy of this prospectus, if you have received your prospectus
electronically, free of charge by calling 1-800-235-4669. To obtain other
information or to make inquiries about the Fund, contact the Fund at the address
listed in the back of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus dated January 31, 1996
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--SELECT SHARES 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Investment Limitations 15
TRUST INFORMATION 15
- ------------------------------------------------------
Management of the Trust 15
Distribution of Select Shares 19
Administration of the Fund 20
Brokerage Transactions 20
NET ASSET VALUE 21
- ------------------------------------------------------
INVESTING IN SELECT SHARES 21
- ------------------------------------------------------
Share Purchases 21
Minimum Investment Required 22
What Shares Cost 22
Subaccounting Services 22
Systematic Investment Program 22
Certificates and Confirmations 23
Dividends 23
Capital Gains 23
REDEEMING SELECT SHARES 23
- ------------------------------------------------------
Through a Financial Institution 23
Telephone Redemption 23
Written Requests 24
Systematic Withdrawal Program 24
Accounts with Low Balances 25
SHAREHOLDER INFORMATION 25
- ------------------------------------------------------
Voting Rights 25
TAX INFORMATION 25
- ------------------------------------------------------
Federal Income Tax 25
State and Local Taxes 25
PERFORMANCE INFORMATION 26
- ------------------------------------------------------
OTHER CLASSES OF SHARES 26
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES 27
- ------------------------------------------------------
FINANCIAL STATEMENTS 28
- ------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 68
- ------------------------------------------------------
APPENDIX 69
- ------------------------------------------------------
ADDRESSES 72
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
SELECT SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price).............................. None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price)...................................................................... None
Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable).................................................... None
Redemption Fee (as a percentage of amount redeemed, if applicable)......................................... None
Exchange Fee............................................................................................... None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver) (1).......................................................................... 0.45%
12b-1 Fee (after waiver) (2)............................................................................... 0.50%
Total Other Expenses....................................................................................... 0.80%
Shareholder Services Fee................................................................... 0.25%
Total Operating Expenses (3)..................................................................... 1.75%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.75%.
(2) The maximum 12b-1 Fee is 0.75%.
(3) The total operating expenses would have been 2.30% absent the voluntary
waivers of portions of the management fee and the 12b-1 fee.
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Select Shares of the Fund
will bear, either directly or indirectly. For more complete descriptions of the
various costs and expenses, see "Investing in Select Shares" and "Trust
Information". Wire-transferred redemptions of less than $5,000 may be subject to
additional fees.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment assuming
(1) 5% annual return and (2) redemption at the end of each time
period................................................................ $18 $55 $95 $206
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
FEDERATED MANAGED GROWTH AND INCOME FUND
FINANCIAL HIGHLIGHTS--SELECT SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 68.
<TABLE>
<CAPTION>
PERIOD ENDED
YEAR ENDED NOVEMBER 30,
NOVEMBER 30, 1995 1994(A)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.83 $ 10.00
- ----------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------
Net investment income 0.37 0.21
- ----------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments, foreign currency
transactions, and futures contracts 1.34 (0.25)
- ---------------------------------------------------------------------------- ------- -------
Total from investment operations 1.71 (0.04)
- ---------------------------------------------------------------------------- ------- -------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------------
Distributions from net investment income (0.42) (0.13)
- ---------------------------------------------------------------------------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 11.12 $ 9.83
- ---------------------------------------------------------------------------- ------- -------
TOTAL RETURN (B) 17.76% (0.40%)
- ----------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------
Expenses 1.75% 1.64%*
- ----------------------------------------------------------------------------
Net investment income 4.37% 4.33%*
- ----------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.55% 0.84%*
- ----------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------
Net assets, end of period (000 omitted) $24,787 $3,697
- ----------------------------------------------------------------------------
Portfolio turnover rate 157% 132%
- ----------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 25, 1994 (date of initial
public investment) to November 30, 1994. For the period from January 27,
1994 (start of business) to May 24, 1994, the Fund had no investment
activity.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
Further information about the Fund's performance is contained in the Fund's
annual report for the year ended November 30, 1995, which can be obtained free
of charge.
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated November 15, 1993. The Declaration of Trust permits the Trust to
offer separate series of shares of beneficial interest representing interests in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. As of the date of this prospectus, the Board of
Trustees ("Trustees") have established two classes of shares of the Fund, known
as Select Shares and Institutional Shares. This prospectus relates only to
Select Shares.
Select Shares ("Shares") of the Fund are designed primarily for retail and
private banking customers of financial institutions as a convenient means of
accumulating an interest in a professionally managed, diversified portfolio of
bonds and equities. A minimum initial investment of $1,500 is required.
Shares are currently sold and redeemed at net asset value without a sales charge
imposed by the Fund.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is to seek current income and capital
appreciation. The Fund will attempt to minimize investment risk by allocating
its assets across various stock and bond categories. There can be, of course, no
assurance that the Fund will achieve its investment objective. The Fund's
investment objective cannot be changed without the approval of shareholders.
Unless otherwise noted, the Fund's investment policies may be changed by the
Trustees without shareholder approval.
INVESTMENT POLICIES
ASSET ALLOCATION. The Fund will primarily invest in two types of assets: bonds
and equities. The Fund's investment approach is based on the conviction that,
over time, the choice of investment asset categories and their relative
long-term weightings within the portfolio will have the primary impact on its
investment performance. Of secondary importance to the Fund's performance are
the shifting of money among asset categories and the selection of securities
within asset categories. Therefore, the Fund will pursue its investment
objective in the following manner: (1) by setting long-term ranges for each
asset category; (2) by moving money among asset categories within those defined
ranges; and (3) by actively selecting securities within each of the asset
categories. The Fund attempts to minimize risk by allocating its assets in such
a fashion.
Within each of these types of investments, the Fund has designated asset
categories. As a matter of investment policy, ranges have been set for each
asset category's portfolio commitment.
The Fund will invest between 50 and 70 percent of its assets in bonds. The bond
asset categories are U.S. Treasury securities, mortgage-backed securities,
investment-grade corporate bonds, high yield corporate bonds and foreign bonds.
The Fund will invest between 30 and 50 percent of its assets in equities. The
equities asset categories are large company stocks, utility stocks, small
company stocks, foreign stocks, and equity reserves.
The following is a summary of the asset categories and the amount of the Fund's
total assets which may be invested in each asset category:
<TABLE>
<CAPTION>
ASSET CATEGORY RANGE
<S> <C>
BONDS 50-70%
U.S. Treasury Securities 0-70%
Mortgage-Backed Securities 0-35%
Investment-Grade Corporate Bonds 0-35%
High Yield Corporate Bonds 0-7.5%
Foreign Bonds 0-7.5%
EQUITIES 30-50%
Large Company Stocks 0-50%
Utility Stocks 0-20%
Small Company Stocks 0-7.5%
Foreign Stocks 0-7.5%
Equity Reserves 0-15%
</TABLE>
The Fund's adviser will regularly review the Fund's allocation among the asset
categories and make any changes, within the ranges established for each asset
category, that it believes will provide the most favorable outlook for achieving
the Fund's investment objective. The Fund's adviser will attempt to exploit
inefficiencies among the various asset categories. If, for example, foreign
stocks are judged to be unusually attractive relative to other asset categories,
the allocation for foreign stocks may be moved to its upper limit. At other
times, when foreign stocks appear to be overvalued, the commitment may be moved
down to a lesser allocation. There is no assurance, however, that the adviser's
attempts to pursue this strategy will result in a benefit to the Fund.
Each asset category within the Fund will be a managed portfolio. The Fund will
seek superior investment performance through security selection in addition to
determining the percentage of its assets to allocate to each of the asset
categories.
BOND ASSET CATEGORIES. The portion of the Fund's assets which is invested in
bonds ("Bond Assets") will be allocated among the following asset categories
within the ranges specified. The prices of fixed income securities fluctuate
inversely to the direction of interest rates. The average duration of the Fund's
Bond Assets will be not less than three nor more than five years. Duration is a
commonly used measure of the potential volatility of the price of a debt
security, or the aggregate market value of a portfolio of debt securities, prior
to maturity. Securities with shorter durations generally have less volatile
prices than securities of comparable quality with longer durations. The Fund
should be expected to maintain a higher average duration during periods of lower
expected market volatility, and a lower average duration during periods of
higher expected market volatility.
U.S. TREASURY SECURITIES. U.S. Treasury securities are direct obligations
of the U.S. Treasury, such as U.S. Treasury bills, notes, and bonds. The
Fund may invest up to 70 percent of its total
assets in U.S. Treasury securities. The Fund may invest in other U.S.
government securities if, in the judgment of the adviser, other U.S.
government securities are more attractive than U.S. Treasury securities.
MORTGAGE-BACKED SECURITIES. Mortgage-backed securities represent an
undivided interest in a pool of residential mortgages or may be
collateralized by a pool of residential mortgages. Mortgage-backed
securities are generally either issued or guaranteed by the Government
National Mortgage Association ("GNMA"), Federal National Mortgage
Association ("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC") or
other U.S. government agencies or instrumentalities. Mortgage-backed
securities may also be issued by single-purpose, stand-alone finance
subsidiaries or trusts of financial institutions, government agencies,
investment bankers, or companies related to the construction industry. The
Fund may invest up to 35 percent of its total assets in mortgage-backed
securities.
INVESTMENT-GRADE CORPORATE BONDS. Investment-grade corporate bonds are
corporate debt obligations having fixed or floating rates of interest and
which are rated BBB or higher by a nationally recognized statistical rating
organization ("NRSRO"). The Fund may invest up to 35 percent of its total
assets in investment-grade corporate bonds. In certain cases, the Fund's
adviser may choose bonds which are unrated if it determines that such bonds
are of comparable quality or have similar characteristics to the
investment-grade bonds described above. Yankee bonds, which are U.S.
dollar-denominated bonds issued and traded in the United States by foreign
issuers, are treated as investment-grade corporate bonds for purposes of
the asset category ranges.
HIGH YIELD CORPORATE BONDS. High yield corporate bonds are corporate debt
obligations having fixed or floating rates of interest and which are rated
BB or lower by NRSROs (commonly known as junk bonds). The Fund may invest
up to 7.5 percent of its total assets in high yield corporate bonds. There
is no minimal acceptable rating for a security to be purchased or held in
the Fund's portfolio, and the Fund may, from time to time, purchase or hold
securities rated in the lowest rating category. (See "Appendix.") In
certain cases the Fund's adviser may choose bonds which are unrated if it
determines that such bonds are of comparable quality or have similar
characteristics to the high yield bonds described above.
INVESTMENT RISKS. Lower-rated securities will usually offer higher
yields than higher-rated securities. However, there is more risk
associated with these investments. This is because of reduced
creditworthiness and increased risk of default. Lower-rated securities
generally tend to reflect short-term corporate and market developments
to a greater extent than higher-rated securities which react primarily
to fluctuations in the general level of interest rates. Short-term
corporate and market developments affecting the price or liquidity of
lower-rated securities could include adverse news affecting major
issuers, underwriters, or dealers of lower-rated corporate debt
obligations. In addition, since there are fewer investors in
lower-rated securities, it may be harder to sell the securities at an
optimum time. As a result of these factors, lower-rated securities tend
to have more price volatility and carry more risk to principal than
higher-rated securities.
Many corporate debt obligations, including many lower-rated bonds,
permit the issuers to call the security and thereby redeem their
obligations earlier than the stated maturity dates. Issuers are more
likely to call bonds during periods of declining interest rates. In
these cases, if the Fund owns a bond which is called, the Fund will
receive its return of principal earlier than expected and would likely
be required to reinvest the proceeds at lower interest rates, thus
reducing income to the Fund.
FOREIGN BONDS. Foreign bonds are high-quality debt securities of countries
other than the United States. The Fund's portfolio of foreign bonds will be
comprised mainly of foreign government, foreign governmental agency or
supranational institution bonds. The Fund will also invest in high-quality
debt securities issued by corporations in countries other than the United
States and subject to the Fund's credit limitations for foreign bonds. The
Fund may invest up to 7.5 percent of its total assets in foreign bonds.
EQUITY ASSET CATEGORIES. The portion of the Fund's assets which is invested in
equities will be allocated among the following asset categories within the
ranges specified:
LARGE COMPANY STOCKS. Large company stocks are common stocks and
securities convertible into or exchangeable for common stocks, such as
rights and warrants, of high-quality companies selected by the Fund's
adviser. Ordinarily, these companies will be in the top 25 percent of their
industries with regard to revenues and have a market capitalization of
$500,000,000 or more. However, other factors, such as a company's product
position, market share, current earnings and/or dividend and earnings
growth prospects, will be considered by the Fund's adviser and may outweigh
revenues. The Fund may invest up to 50 percent of its total assets in large
company stocks.
UTILITY STOCKS. Utility stocks are common stocks and securities
convertible into or exchangeable for common stocks, such as rights and
warrants, of utility companies. The Fund may invest up to 20 percent of its
total assets in utility stocks. Common stocks of utilities are generally
characterized by higher dividend yields and lower growth rates than common
stocks of industrial companies. Under normal market conditions, the higher
income stream from utility stocks tends to make them less volatile than
stocks of industrial companies.
SMALL COMPANY STOCKS. Small company stocks are common stocks and
securities convertible into or exchangeable for common stocks, such as
rights and warrants, of companies with a market capitalization (market
price x number of shares outstanding) below the top 1,000 stocks that
comprise the large and mid-range capitalization sector of the United States
equity market. These stocks are comparable to, but not limited to, the
stocks comprising the Russell 2000 Index, an index of small capitalization
stocks. The Fund may invest up to 7.5 percent of its total assets in small
company stocks.
INVESTMENT RISKS. Stocks in the small capitalization sector of the
United States equity market have historically been more volatile in
price than larger capitalization stocks, such as those included in the
Standard & Poor's Ratings Group 500 Index. This is because, among other
things, small companies have less certain growth prospects than larger
companies; have a lower degree of liquidity in the equity market; and
tend to have a greater sensitivity to changing economic conditions.
Further, in addition to exhibiting
greater volatility, the stocks of small companies may, to some degree,
fluctuate independently of the stocks of large companies; that is,
small company stocks may decline in price as large company stocks rise
in price or vice versa.
FOREIGN STOCKS. Foreign stocks are equity securities of established
companies in economically developed countries other than the United States.
These securities may be either dollar-denominated or denominated in foreign
currencies. American Depository Receipts ("ADRs"), including dollar
denominated ADRs which are issued by domestic banks and traded in the
United States on exchanges or over-the-counter, are treated as foreign
stocks for purposes of the asset category ranges. The Fund may invest up to
7.5 percent of its total assets in foreign stocks.
EQUITY RESERVES. When the adviser believes that a temporary defensive
position is desirable, the Fund may invest in equity reserves. Equity
reserves will be used to adjust the risk level of the equity portion of the
Fund in response to market conditions. Equity reserves will consist of U.S.
and foreign short-term money market instruments such as commercial paper
rated A-1 by Standard and Poor's Ratings Group ("Standard & Poor's"),
Prime-1 by Moody's Investors Service, Inc. ("Moody's"), or F-1 by Fitch
Investors Service, Inc. ("Fitch"). The Fund may invest up to 15 percent of
its total assets in equity reserves.
ACCEPTABLE INVESTMENTS
U.S. TREASURY AND OTHER U.S. GOVERNMENT SECURITIES. The U.S. Treasury and
other U.S. government securities in which the Fund invests are either
issued or guaranteed by the U.S. government, its agencies or
instrumentalities. The U.S. government securities in which the Fund may
invest are limited to:
direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds; and
obligations issued by U.S. government agencies or instrumentalities,
including securities that are supported by the full faith and credit of
the U.S. Treasury (such as GNMA certificates); securities that are
supported by the right of the issuer to borrow from the U.S. Treasury
(such as securities of Federal Home Loan Banks); and securities that are
supported by the credit of an agency or instrumentality (such as FNMA and
FHLMC bonds).
MORTGAGE-BACKED SECURITIES. Mortgaged-backed securities are securities
collateralized by residential mortgages. The mortgage-backed securities in
which the Fund may invest may be:
issued by an agency of the U.S. government, typically GNMA, FNMA or
FHLMC;
privately issued securities which are collateralized by pools of
mortgages in which each mortgage is guaranteed as to payment of principal
and interest by an agency or instrumentality of the U.S. government;
privately issued securities which are collateralized by pools of
mortgages in which payment of principal and interest are guaranteed by
the issuer and such guarantee is collateralized by U.S. government
securities; and
other privately issued securities in which the proceeds of the issuance
are invested in mortgage-backed securities and payment of the principal
and interest are supported by the credit of an agency or instrumentality
of the U.S. government.
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"). CMOs are bonds issued by
single-purpose, stand-alone finance subsidiaries or trusts of financial
institutions, government agencies, investment bankers, or companies
related to the construction industry. Most of the CMOs in which the
Fund would invest use the same basic structure:
Several classes of securities are issued against a pool of mortgage
collateral. The most common structure contains four classes of
securities. The first three (A, B, and C bonds) pay interest at
their stated rates beginning with the issue date; the final class
(or Z bond) typically receives the residual income from the
underlying investments after payments are made to the other
classes.
The cash flows from the underlying mortgages are applied first to
pay interest and then to retire securities.
The classes of securities are retired sequentially. All principal
payments are directed first to the shortest-maturity class (or A
bonds). When those securities are completely retired, all principal
payments are then directed to the next-shortest maturity security
(or B bond). This process continues until all of the classes have
been paid off.
Because the cash flow is distributed sequentially instead of pro
rata as with pass-through securities, the cash flows and average
lives of CMOs are more predictable, and there is a period of time
during which the investors in the longer-maturity classes receive
no principal paydowns. The interest portion of these payments is
distributed by the Fund as income and the capital portion is
reinvested.
The Fund will invest only in CMOs which are rated AAA or Aaa by an
NRSRO.
REAL ESTATE MORTGAGE INVESTMENT CONDUITS ("REMICS"). REMICs are
offerings of multiple class real estate mortgage-backed securities
which qualify and elect treatment as such under provisions of the
Internal Revenue Code. Issuers of REMICs may take several forms, such
as trusts, partnerships, corporations, associations or a segregated
pool of mortgages. Once REMIC status is elected and obtained, the
entity is not subject to federal income taxation. Instead, income is
passed through the entity and is taxed to the person or persons who
hold interests in the REMIC. A REMIC interest must consist of one or
more classes of "regular interests," some of which may offer adjustable
rates, and a single class of "residual interests." To qualify as a
REMIC, substantially all of the assets of the entity must be in assets
directly or indirectly secured principally by real property.
CHARACTERISTICS OF MORTGAGE-BACKED SECURITIES. Mortgage-backed
securities have yield and maturity characteristics corresponding to the
underlying mortgages. Distributions to holders of mortgage-backed
securities include both interest and principal payments. Principal
payments represent the amortization of the principal of the underlying
mortgages and any prepayments of principal due to prepayment,
refinancing, or foreclosure of the underlying mortgages. Although
maturities of the underlying mortgage loans may range up to 30 years,
amortization and prepayments substantially shorten the effective
maturities of mortgage-backed securities. Due to these features,
mortgage-backed securities are less effective as a means of "locking
in" attractive long-term interest rates than fixed-income securities
which pay only a stated amount of interest until maturity,
when the entire principal amount is returned. This is caused by the
need to reinvest at lower interest rates both distributions of
principal generally and significant prepayments which become more
likely as mortgage interest rates decline. Since comparatively high
interest rates cannot be effectively "locked in," mortgage-backed
securities may have less potential for capital appreciation during
periods of declining interest rates than other non-callable,
fixed-income government securities of comparable stated maturities.
However, mortgage-backed securities may experience less pronounced
declines in value during periods of rising interest rates.
In addition, some of the CMOs purchased by the Fund may represent an
interest solely in the principal repayments or solely in the interest
payments on mortgage-backed securities (stripped mortgage-backed
securities or "SMBSs"). Due to the possibility of prepayments on the
underlying mortgages, SMBSs may be more interest-rate sensitive than
other securities purchased by the Fund. If prevailing interest rates
fall below the level at which SMBSs were issued, there may be
substantial prepayments on the underlying mortgages, leading to the
relatively early prepayments of principal-only SMBSs and a reduction in
the amount of payments made to holders of interest-only SMBSs. It is
possible that the Fund might not recover its original investment in
interest-only SMBSs if there are substantial prepayments on the
underlying mortgages. Therefore, interest-only SMBSs generally increase
in value as interest rates rise and decrease in value as interest rates
fall, counter to changes in value experienced by most fixed income
securities. The Fund's adviser intends to use this characteristic of
interest-only SMBSs to reduce the effects of interest rate changes on
the value of the Fund's portfolio, while continuing to pursue the
Fund's investment objective.
CORPORATE BONDS. The investment-grade corporate bonds in which the Fund
invests are:
rated within the four highest ratings for corporate bonds by Moody's
(Aaa, Aa, A, or Baa), Standard & Poor's (AAA, AA, A, or BBB), or Fitch
(AAA, AA, A, or BBB);
unrated if other long-term debt securities of that issuer are rated, at
the time of purchase, Baa or better by Moody's or BBB or better by
Standard & Poor's or Fitch; or
unrated if determined to be of equivalent quality to one of the foregoing
rating categories by the Fund's adviser.
Securities which are rated BBB by Standard & Poor's or Fitch or Baa by Moody's
have speculative characteristics. Changes in economic conditions or other
circumstances are more likely to lead to weakened capacity to make principal and
interest payments than higher rated bonds. If a security's rating is reduced
below the required minimum after the Fund has purchased it, the Fund is not
required to sell the security, but may consider doing so.
The high yield corporate bonds in which the Fund invests are rated Ba or lower
by Moody's or BB or lower by Standard & Poor's or Fitch (commonly known as junk
bonds). A description of the rating categories is contained in the Appendix to
this prospectus.
EQUITY SECURITIES. Common stocks represent ownership interest in a
corporation. Unlike bonds, which are debt securities, common stocks have
neither fixed maturity dates nor fixed
schedules of promised payments. Utility stocks are common stocks of utility
companies, including water companies, companies that produce, transmit, or
distribute gas and electric energy and those companies that provide
communications facilities, such as telephone and telegraph companies.
Foreign stocks are equity securities of foreign issuers.
FOREIGN SECURITIES. The foreign bonds in which the Fund invests are rated
within the four highest ratings for bonds by Moody's (Aaa, Aa, A or Baa) or
by Standard & Poor's (AAA, AA, A or BBB) or are unrated if determined to be
of equivalent quality by the Fund's adviser.
INVESTMENT RISKS. Investments in foreign securities involve special
risks that differ from those associated with investments in domestic
securities. The risks associated with investments in foreign securities
apply to securities issued by foreign corporations and sovereign
governments. These risks relate to political and economic developments
abroad, as well as those that result from the differences between the
regulation of domestic securities and issuers and foreign securities
and issuers. These risks may include, but are not limited to,
expropriation, confiscatory taxation, currency fluctuations,
withholding taxes on interest, limitations on the use or transfer of
Fund assets, political or social instability and adverse diplomatic
developments. It may also be more difficult to enforce contractual
obligations or obtain court judgments abroad than would be the case in
the United States because of differences in the legal systems. If the
issuer of the debt or the governmental authorities that control the
repayment of the debt may be unable or unwilling to repay principal or
interest when due in accordance with the terms of such debt, the Fund
may have limited legal recourse in the event of default. Moreover,
individual foreign economies may differ favorably or unfavorably from
the domestic economy in such respects as growth of gross national
product, the rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position.
Additional differences exist between investing in foreign and domestic
securities. Examples of such differences include: less publicly
available information about foreign issuers; credit risks associated
with certain foreign governments; the lack of uniform financial
accounting standards applicable to foreign issuers; less readily
available market quotations on foreign issuers; the likelihood that
securities of foreign issuers may be less liquid or more volatile;
generally higher foreign brokerage commissions; and unreliable mail
service between countries.
EQUITY RESERVES. The Fund's equity reserves may be cash received from the
sale of Fund shares, reserves for temporary defensive purposes or to take
advantage of market opportunities.
REPURCHASE AGREEMENTS. Repurchase agreements are arrangements in which
banks, broker/dealers, and other recognized financial institutions sell
securities to the Fund and agree at the time of sale to repurchase them
at a mutually agreed upon time and price. To the extent that the
original seller does not repurchase the securities from the Fund, the
Fund could receive less than the repurchase price on any sale of such
securities.
CONVERTIBLE SECURITIES. Convertible securities are fixed-income securities
which may be exchanged or converted into a predetermined number of the
issuer's underlying common
stock at the option of the holder during a specified time period.
Convertible securities may take the form of convertible preferred stock,
convertible bonds or debentures, units consisting of "usable" bonds and
warrants or a combination of the features of several of these securities.
The investment characteristics of each convertible security vary widely,
which allows convertible securities to be employed for different investment
objectives. The adviser may treat convertible securities as large company
stocks, small company stocks, or high yield bonds for purposes of the asset
category ranges, depending upon current market conditions, including the
relationship of the then-current price to the conversion price. The
convertible securities in which the Fund invests may be rated "high yield"
or of comparable quality at the time of purchase.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Fund may invest in
the securities of other investment companies, but it will not own more than 3
percent of the total outstanding voting stock of any such investment company,
invest more than 5 percent of its total assets in any one such investment
company, or invest more than 10 percent of its total assets in such other
investment companies in general. To the extent that the Fund invests in
securities issued by other investment companies, the Fund will indirectly bear
its proportionate share of any fees and expenses paid by such companies in
addition to the fees and expenses payable directly by the Fund.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies but which are
subject to restrictions on resale under federal securities law. However, the
Fund will limit investments in illiquid securities, including certain restricted
securities not determined by the Trustees to be liquid, over-the-counter
options, and repurchase agreements providing for settlement in more than seven
days after notice, to 15 percent of its net assets.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
Accordingly, the Fund may pay more or less than the market value of the
securities on the settlement date.
The Fund may dispose of a commitment prior to settlement if the adviser deems it
appropriate to do so. In addition, the Fund may enter into transactions to sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Fund may realize short-term profits or losses upon the sale of such
commitments.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend its portfolio securities on a short-term or long-term basis up to
one-third of the value of its total assets to broker/dealers, banks, or other
institutional borrowers of securities. The Fund will only enter into loan
arrangements with broker/dealers, banks, or other institutions which the adviser
has determined are creditworthy under guidelines established by the Trustees and
will receive collateral in
the form of cash or U.S. government securities equal to at least 100 percent of
the value of the securities loaned.
There is the risk that when lending portfolio securities, the securities may not
be available to the Fund on a timely basis and the Fund may, therefore, lose the
opportunity to sell the securities at a desirable price. In addition, in the
event that a borrower of securities would file for bankruptcy or become
insolvent, disposition of the securities may be delayed pending court action.
FOREIGN CURRENCY TRANSACTIONS. The Fund will enter into foreign currency
transactions to obtain the necessary currencies to settle securities
transactions. Currency transactions may be conducted either on a spot or cash
basis at prevailing rates or through forward foreign currency exchange
contracts.
The Fund may also enter into foreign currency transactions to protect Fund
assets against adverse changes in foreign currency exchange rates or exchange
control regulations. Such changes could unfavorably affect the value of Fund
assets which are denominated in foreign currencies, such as foreign securities
or funds deposited in foreign banks, as measured in U.S. dollars. Although
foreign currency exchanges may be used by the Fund to protect against a decline
in the value of one or more currencies, such efforts may also limit any
potential gain that might result from a relative increase in the value of such
currencies and might, in certain cases, result in losses to the Fund.
CURRENCY RISKS. To the extent that debt securities purchased by the Fund
are denominated in currencies other than the U.S. dollar, changes in
foreign currency exchange rates will affect the Fund's net asset value; the
value of interest earned; gains and losses realized on the sale of
securities; and net investment income and capital gain, if any, to be
distributed to shareholders by the Fund. If the value of a foreign currency
rises against the U.S. dollar, the value of the Fund's assets denominated
in that currency will increase; correspondingly, if the value of a foreign
currency declines against the U.S. dollar, the value of the Fund's assets
denominated in that currency will decrease.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward foreign currency
exchange contract ("forward contract") is an obligation to purchase or sell an
amount of a particular currency at a specific price and on a future date agreed
upon by the parties.
Generally, no commission charges or deposits are involved. At the time the Fund
enters into a forward contract, Fund assets with a value equal to the Fund's
obligation under the forward contract are segregated and are maintained until
the contract has been settled. The Fund will not enter into a forward contract
with a term of more than one year.
The Fund will generally enter into a forward contract to provide the proper
currency to settle a securities transaction at the time the transaction occurs
("trade date"). The period between trade date and settlement date will vary
between 24 hours and 30 days, depending upon local custom.
The Fund may also protect against the decline of a particular foreign currency
by entering into a forward contract to sell an amount of that currency
approximating the value of all or a portion of the Fund's assets denominated in
that currency ("hedging"). The success of this type of short-term hedging
strategy is highly uncertain due to the difficulties of predicting short-term
currency market movements and of precisely matching forward contract amounts and
the constantly changing value
of the securities involved. Although the adviser will consider the likelihood of
changes in currency values when making investment decisions, the adviser
believes that it is important to be able to enter into forward contracts when it
believes the interests of the Fund will be served. The Fund will not enter into
forward contracts for hedging purposes in a particular currency in an amount in
excess of the Fund's assets denominated in that currency. The Fund will not
invest more than 21% of its total assets in forward foreign currency exchange
contracts.
OPTIONS. The Fund may deal in options on foreign currencies, foreign currency
futures, securities, and securities indices, which options may be listed for
trading on a national securities exchange or traded over-the-counter. The Fund
will use options only to manage interest rate and currency risks. The Fund may
write covered call options to generate income. The Fund may write covered call
options and secured put options on up to 25 percent of its net assets and may
purchase put and call options provided that no more than 5 percent of the fair
market value of its net assets may be invested in premiums on such options.
A call option gives the purchaser the right to buy, and the writer the
obligation to sell, the underlying currency, security or other asset at the
exercise price during the option period. A put option gives the purchaser the
right to sell, and the writer the obligation to buy, the underlying currency,
security or other asset at the exercise price during the option period. The
writer of a covered call owns assets that are acceptable for escrow, and the
writer of a secured put invests an amount not less than the exercise price in
eligible assets to the extent that it is obligated as a writer. If a call
written by the Fund is exercised, the Fund foregoes any possible profit from an
increase in the market price of the underlying asset over the exercise price
plus the premium received. In writing puts, there is a risk that the Fund may be
required to take delivery of the underlying asset at a disadvantageous price.
Over-the-counter options ("OTC options") differ from exchange traded options in
several respects. They are transacted directly with dealers and not with a
clearing corporation, and there is a risk of non-performance by the dealer as a
result of the insolvency of such dealer or otherwise, in which event the Fund
may experience material losses. However, in writing options, the premium is paid
in advance by the dealer. OTC options, which may not be continuously liquid, are
available for a greater variety of assets and with a wider range of expiration
dates and exercise prices, than are exchange traded options.
FUTURES AND OPTIONS ON FUTURES. The Fund may purchase and sell futures
contracts to accommodate cash flows into and out of the Fund's portfolio and to
hedge against the effects of changes in the value of portfolio securities due to
anticipated changes in interest rates and market conditions. Interest rate
futures contracts call for the delivery of particular debt instruments at a
certain time in the future. The seller of the contract agrees to make delivery
of the type of instrument called for in the contract, and the buyer agrees to
take delivery of the instrument at the specified future time.
Stock index futures contracts are based on indexes that reflect the market value
of common stock of the firms included in the indexes. An index futures contract
is an agreement pursuant to which two parties agree to take or make delivery of
an amount of cash equal to the differences between the value of the index at the
close of the last trading day of the contract and the price at which the index
contract was originally written. The Fund may utilize stock index futures to
handle cash flows into and out of the Fund and to potentially reduce
transactional costs.
The Fund may also write call options and purchase put options on futures
contracts as a hedge to attempt to protect its portfolio securities against
decreases in value. When the Fund writes a call option on a futures contract, it
is undertaking the obligation of selling a futures contract at a fixed price at
any time during a specified period if the option is exercised. Conversely, as
purchaser of a put option on a futures contract, the Fund is entitled (but not
obligated) to sell a futures contract at the fixed price during the life of the
option.
The Fund may not purchase or sell futures contracts or related options if
immediately thereafter the sum of the amount of margin deposits on the Fund's
existing futures positions and premiums paid for related options would exceed 5
percent of the market value of the Fund's total assets. When the Fund purchases
futures contracts, an amount of cash and cash equivalents, equal to the
underlying commodity value of the futures contracts (less any related margin
deposits), will be deposited in a segregated account with the custodian (or the
broker, if legally permitted) to collateralize the position and thereby insure
that the use of such futures contracts are unleveraged. When the Fund sells
futures contracts, it will either own or have the right to receive the
underlying future or security or will make deposits to collateralize the
position as discussed above.
RISKS. When the Fund uses futures and options on futures as hedging
devices, there is a risk that the prices of the securities subject to the
futures contracts may not correlate perfectly with the prices of the
securities in the Fund's portfolio. This may cause the futures contract and
any related options to react differently than the portfolio securities to
market changes. In addition, the investment adviser could be incorrect in
its expectations about the direction or extent of market factors such as
stock price movements. In these events, the Fund may lose money on the
futures contract or option.
It is not certain that a secondary market for positions in futures
contracts or for options will exist at all times. Although the investment
adviser will consider liquidity before entering into these transactions,
there is no assurance that a liquid secondary market on an exchange or
otherwise will exist for any particular futures contract or option at any
particular time. The Fund's ability to establish and close out futures and
options positions depends on this secondary market.
PORTFOLIO TURNOVER. Although the Fund does not intend to invest for the purpose
of seeking short-term profits, securities in its portfolio will be sold whenever
the Fund's adviser believes it is appropriate to do so in light of the Fund's
investment objective, without regard to the length of time a particular security
may have been held. The Fund's rate of portfolio turnover may exceed that of
certain other mutual funds with the same investment objective. A higher rate of
portfolio turnover involves correspondingly greater transaction expenses which
must be borne directly by the Fund and, thus, indirectly by its shareholders. In
addition, a high rate of portfolio turnover may result in the realization of
larger amounts of capital gains which, when distributed to the Fund's
shareholders, are taxable to them. (Further information is contained in the
Fund's Statement of Additional Information within the sections "Brokerage
Transactions" and "Tax Status"). Nevertheless, transactions for the Fund's
portfolio will be based only upon investment considerations and will not be
limited by any other considerations when the Fund's adviser deems it appropriate
to make changes in the Fund's portfolio.
INVESTMENT LIMITATIONS
The Fund will not:
borrow money directly or through reverse repurchase agreements or pledge
securities except, under certain circumstances, the Fund may borrow up to
one-third of the value of its total assets and pledge up to 15 percent of
the value of those assets to secure such borrowings;
lend any securities except for portfolio securities; or
underwrite any issue of securities, except as it may be deemed to be an
underwriter under the Securities Act of 1933 in connection with the sale
of restricted securities which the Fund may purchase pursuant to its
investment objective, policies and limitations.
The above investment limitations cannot be changed without shareholder approval.
TRUST INFORMATION
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MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Trust's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. The Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Except as noted below with regard to the sub-adviser,
investment decisions for the Fund are made by Federated Management, the Fund's
investment adviser (the "Adviser"), subject to direction by the Trustees. The
Adviser continually conducts investment research and supervision for the Fund
and is responsible for the purchase or sale of portfolio instruments, for which
it receives an annual fee from the Fund.
ADVISORY FEES. The Fund's Adviser receives an annual investment advisory
fee equal to.75 of 1% of the Fund's average daily net assets. The fee paid
by the Fund, while higher than the advisory fee paid by other mutual funds
in general, is comparable to fees paid by other mutual funds with similar
objectives and policies. Under the advisory contract, which provides for
voluntary reimbursement of expenses by the Adviser, the Adviser may
voluntarily waive some or all of its fee. This does not include
reimbursement to the Fund of any expenses incurred by shareholders who use
the transfer agent's subaccounting facilities. The Adviser has also
undertaken to reimburse the Fund for operating expenses in excess of
limitations established by certain states.
ADVISER'S BACKGROUND. Federated Management, a Delaware business trust
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940.
SUB-ADVISER. Under the terms of the Sub-Advisory Agreement between the Adviser
and Federated Global Research Corp. (the "Sub-Adviser"), the Sub-Adviser will
provide the Adviser such
investment advice, statistical and other factual information as may, from time
to time, be reasonably requested by the Adviser.
SUB-ADVISORY FEES. For its services under the Sub-Advisory Agreement, the
Sub-Adviser receives an allocable portion of the Fund's advisory fee. Such
allocation is based on the amount of foreign securities which the
Sub-Adviser manages for the Fund. This fee is paid by the Adviser out of
its resources and is not an incremental Fund expense.
SUB-ADVISER'S BACKGROUND. Federated Global Research Corp., incorporated in
Delaware on May 12, 1995, is a registered investment adviser under the
Investment Advisers Act of 1940. Prior to September 1995, the Sub-Adviser
had not served as an investment adviser to mutual funds.
The Adviser and Sub-Adviser are subsidiaries of Federated Investors. All of the
Class A (voting) shares of Federated Investors are owned by a trust, the
trustees of which are John F. Donahue, Chairman and Trustee of Federated
Investors, Mr. Donahue's wife, and Mr. Donahue's son, J. Christopher Donahue,
who is President and Trustee of Federated Investors.
Federated Management, Federated Global Research Corp. and other subsidiaries of
Federated Investors serve as investment advisers to a number of investment
companies and private accounts. Certain other subsidiaries also provide
administrative services to a number of investment companies. With over $80
billion invested across more than 250 funds under management and/or
administration by its subsidiaries, as of December 31, 1995, Federated Investors
is one of the largest mutual fund investment managers in the United States. With
more than 1,800 employees, Federated continues to be led by the management who
founded the company in 1955. Federated funds are presently at work in and
through 4,000 financial institutions nationwide. More than 100,000 investment
professionals have selected Federated funds for their clients.
The Trust, the Adviser, and the Sub-Adviser have adopted strict codes of ethics
governing the conduct of all employees who manage the Fund and its portfolio
securities. These codes recognize that such persons owe a fiduciary duty to the
Fund's shareholders and must place the interests of shareholders ahead of the
employees' own interest. Among other things, the codes: require preclearance and
periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered for
purchase or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less than sixty
days. Violations of the codes are subject to review by the Board of Trustees and
could result in severe penalties.
PORTFOLIO MANAGERS' BACKGROUNDS. Charles A. Ritter is the portfolio
manager for the Fund and performs the overall allocation of the assets of
the Fund among the various asset categories. He has performed these duties
since the Fund's inception. In allocating the Fund's assets, Mr. Ritter
evaluates the market environment and economic outlook, utilizing the
services of the Adviser's economist and strategist. Mr. Ritter joined
Federated Investors in 1983 and has been a Vice President of the Fund's
Adviser since 1992. From 1988 until 1991, Mr. Ritter acted as an Assistant
Vice President. Mr. Ritter is a Chartered Financial Analyst and received
his M.B.A. in Finance from the University of Chicago and his M.S. in
Economics from Carnegie Mellon University.
The portfolio managers for each of the individual asset categories are as
follows:
Peter R. Anderson and Aash Shah are portfolio managers for the domestic
large company stocks asset category. Mr. Anderson has performed this duty
since the Fund's inception. Mr. Shah assumed his responsibilities in
December 1995. Mr. Anderson joined Federated Investors in 1972 and is
presently a Senior Vice President of the Fund's Adviser. Mr. Anderson is a
Chartered Financial Analyst and received his M.B.A. in Finance from the
University of Wisconsin. Mr. Shah joined Federated Investors in 1993 as an
Investment Analyst and has been an Assistant Vice President of the Fund's
Adviser since 1995. Mr. Shah was employed at Westinghouse Credit Corp. from
1990 to 1993 as an Investment Analyst. Mr. Shah received his M.S.I.A. from
Carnegie Mellon University with a concentration in finance and accounting.
Mr. Shah is a Chartered Financial Analyst.
James Grefenstette is the portfolio manager for the domestic small company
stocks asset category. He has served in this capacity since August 1994.
Mr. Grefenstette joined Federated Investors in 1992 and has been an
Assistant Vice President of the Fund's Adviser since 1994. From 1992 until
1994, Mr. Grefenstette acted as an investment analyst. Mr. Grefenstette was
a credit analyst at Westinghouse Credit Corp. from 1990 until 1992. Mr.
Grefenstette received his M.S.I.A. from Carnegie Mellon University.
Christopher H. Wiles is the portfolio manager for the utility stocks asset
category of all the portfolios of Managed Series Trust except for Federated
Managed Aggressive Growth Fund, and has been one of the Fund's portfolio
managers since its inception. Mr. Wiles joined Federated Investors in 1990
and has been a Vice President of the Fund's Adviser since 1992. Mr. Wiles
served as Assistant Vice President of the Fund's Adviser from 1990 until
1992. Mr. Wiles is a Chartered Financial Analyst and received his M.B.A. in
Finance from Cleveland State University.
Henry Frantzen, Drew Collins, Mark Kopinski, Frank Semack, and Alexandre de
Bethmann are portfolio managers for the foreign stocks asset category.
Henry A. Frantzen has been a portfolio manager of the Fund since November
1995. Mr. Frantzen joined Federated Investors in 1995 as an Executive Vice
President of the Fund's Sub-Adviser. Mr. Frantzen served as Chief
Investment Officer of international equities at Brown Brothers Harriman &
Co. from 1992 to 1995. He was the Executive Vice President and Director of
Equities at Oppenheimer Management Corporation from 1989 to 1991. Mr.
Frantzen received his B.S. in finance and marketing from the University of
North Dakota.
Drew J. Collins has been a portfolio manager of the Fund since November
1995. Mr. Collins joined Federated Investors in 1995 as a Senior Vice
President of the Fund's Sub-Adviser. Mr. Collins served as a Vice
President/Portfolio Manager of international equity portfolios at Arnhold
and S. Bleichroeder, Inc. from 1994 to 1995. He served as an Assistant Vice
President/ Portfolio Manager for international equities at the College
Retirement Equities Fund from 1986 to 1994. Mr. Collins is a Chartered
Financial Analyst and received his M.B.A. in finance from the University of
Pennsylvania.
Mark S. Kopinski has been a portfolio manager of the Fund since November
1995. Mr. Kopinski joined Federated Investors in 1995 as a Vice President
of the Fund's Sub-Adviser. Mr. Kopinski served as Vice President/Portfolio
Manager of international equity funds at Twentieth Century Mutual Funds
from 1990 to 1995. Mr. Kopinski received his M.B.A. in Asian Studies from
the University of Illinois.
Frank Semack has been a portfolio manager of the Fund since November 1995.
Mr. Semack joined Federated Investors in 1995 as a Vice President of the
Fund's Sub-Adviser. Mr. Semack served as an Investment Analyst at Omega
Advisers, Inc. from 1993 to 1994. He served as an Associate
Director/Portfolio Manager of Wardley Investment Services, Ltd. from 1987
to 1993. Mr. Semack received his M.Sc. in economics from the London School
of Economics.
Alexandre de Bethmann has been a portfolio manager of the Fund since
November 1995. Mr. de Bethmann joined Federated Investors in 1995 as a Vice
President of the Fund's Sub-Adviser. Mr. de Bethmann served as Assistant
Vice President/Portfolio Manager for Japanese and Korean equities at the
College Retirement Equities Fund from 1994 to 1995. He served as an
International Equities Analyst and then as an Assistant Portfolio Manager
at the College Retirement Equities Fund between 1987 and 1994. Mr. de
Bethmann received his M.B.A. in Finance from Duke University.
Henry Frantzen, Drew Collins, and Robert Kowit are portfolio managers for
the foreign bonds asset category. They have performed these duties since
November 1995.
Robert M. Kowit joined Federated Investors in 1995 as a Vice President of
the Fund's Sub-Adviser. Mr. Kowit served as a Managing Partner of
Copernicus Global Asset Management from January 1995 through October 1995.
From 1990 to 1994, he served as Senior Vice President of International
Fixed Income and Foreign Exchange for John Hancock Advisers. Mr. Kowit
received his M.B.A. from Iona College with a concentration in finance.
Susan M. Nason and Joseph M. Balestrino are portfolio managers for the U.S.
Treasury securities asset category. Ms. Nason has performed this duty since
the Fund's inception. Mr. Balestrino assumed his responsibilities on March
1, 1995. Ms. Nason joined Federated Investors in 1987 and has been a Vice
President of the Fund's Adviser since 1993. Ms. Nason served as an
Assistant Vice President of the Adviser from 1990 until 1992. Ms. Nason is
a Chartered Financial Analyst and received her M.S.I.A. in Finance from
Carnegie Mellon University. Mr. Balestrino joined Federated Investors in
1986 and has been Vice President of the Fund's Adviser since 1995. Mr.
Balestrino served as an Assistant Vice President from 1991 until 1995, and
as an investment analyst of the Adviser from 1989 until 1991. Mr.
Balestrino is a Chartered Financial Analyst and received his M.A. in Urban
and Regional Planning from the University of Pittsburgh.
Thomas M. Franks is the portfolio manager for the equity reserves asset
category. He has performed these duties since the Fund's inception. Mr.
Franks joined Federated Investors in 1985 and has been a Vice President of
the Fund's Adviser since 1990. Mr. Franks is a Chartered Financial Analyst
and received his M.S.I.A. in Business Administration from Carnegie Mellon
University.
Kathleen M. Foody-Malus and James D. Roberge are portfolio managers for the
mortgage-backed securities asset category. Ms. Foody-Malus has performed
this duty since the Fund's inception. Mr. Roberge assumed his
responsibilities on March 1, 1995. Ms. Foody-Malus joined Federated
Investors in 1983 and has been a Vice President of the Fund's Adviser since
1993. Ms. Foody-Malus served as an Assistant Vice President of the Adviser
from 1990 until 1992. Ms. Foody-Malus received her M.B.A. in
Accounting/Finance from the University of Pittsburgh. Mr. Roberge joined
Federated Investors in 1990 and has been a Vice President of the Fund's
Adviser since October, 1994. Prior to this, Mr. Roberge served as an
Assistant Vice President of the Fund's Adviser. From 1990 until 1992, Mr.
Roberge acted as an investment analyst. Mr. Roberge is a Chartered
Financial Analyst and received his M.B.A. in Finance from the University of
Pennsylvania.
Joseph M. Balestrino and Susan M. Nason are portfolio managers for the
investment-grade corporate bonds asset category. They have performed these
duties since the Fund's inception.
Mark E. Durbiano is the portfolio manager for the high yield corporate
bonds asset category. He has performed these duties since the Fund's
inception. Mr. Durbiano joined Federated Investors in 1982 and has been a
Senior Vice President of the Fund's Adviser since January 1996. Mr.
Durbiano was a Vice President of the Fund's Adviser from 1988 through 1995.
Mr. Durbiano is a Chartered Financial Analyst and received his M.B.A. in
Finance from the University of Pittsburgh.
DISTRIBUTION OF SELECT SHARES
Federated Securities Corp. is the principal distributor for Shares. It is a
Pennsylvania corporation organized on November 14, 1969, and is the principal
distributor for a number of investment companies. Federated Securities Corp. is
a subsidiary of Federated Investors.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES. Under a distribution plan adopted
in accordance with Investment Company Act Rule 12b-1 (the "Distribution Plan"),
the distributor may be paid a fee in an amount computed at an annual rate of .75
of 1% of the average daily net assets of Select Shares to finance any activity
which is principally intended to result in the sale of Shares subject to the
Distribution Plan. The distributor may select financial institutions such as
banks, fiduciaries, custodians for public funds, investment advisers, and
broker/dealers to provide sales services or distribution-related support
services as agents for their clients or customers.
The Distribution Plan is a compensation-type plan. As such, the Fund makes no
payments to the distributor except as described above. Therefore, the Fund does
not pay separately for unreimbursed expenses of the distributor, including
amounts expended by the distributor in excess of amounts received by it from the
Fund, interest, carrying or other financing charges in connection with excess
amounts expended, or the distributor's overhead expenses. However, the
distributor may be able to recover such amount or may earn a profit from
payments made by the Fund under the Distribution Plan.
In addition, the Fund has entered into a Shareholder Services Agreement with
Federated Shareholder Services, a subsidiary of Federated Investors, under which
the Fund may make payments up to .25 of 1% of the average daily net asset value
of the Select Shares to obtain certain personal
services for shareholders and for the maintenance of shareholder accounts. Under
the Shareholder Services Agreement, Federated Shareholder Services will either
perform shareholder services directly or will select financial institutions to
perform shareholder services. Financial institutions will receive fees based
upon Shares owned by their clients or customers. The schedules of such fees and
the basis upon which such fees will be paid will be determined from time to time
by the Fund and Federated Shareholder Services.
SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS. In addition to receiving the
payments under the Distribution Plan and Shareholder Services Agreement,
Federated Securities Corp. and Federated Shareholder Services, from their own
assets, may pay financial institutions supplemental fees for the performance of
substantial sales services, distribution-related support services, or
shareholder services. The support may include sponsoring sales, educational and
training seminars for their employees, providing sales literature, and
engineering computer software programs that emphasize the attributes of the
Fund. Such assistance will be predicated upon the amount of Shares the financial
institution sells or may sell, and/or upon the type and nature of sales or
marketing support furnished by the financial institution. Any payments made by
the distributor may be reimbursed by the Fund's Adviser or its affiliates.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides administrative personnel and services (including
certain legal and financial reporting services) necessary to operate the Fund.
Federated Administrative Services provides these at an annual rate which relates
to the average aggregate daily net assets of all funds advised by subsidiaries
of Federated Investors ("Federated Funds") as specified below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE DAILY
ADMINISTRATIVE FEE NET ASSETS OF THE FEDERATED FUNDS
<S> <C>
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Administrative Services may choose voluntarily to waive a portion of
its fee.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the Adviser looks for prompt execution of the order at a favorable
price. In working with dealers, the Adviser will generally use those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. In selecting among firms
believed to meet these criteria, the Adviser may give consideration to those
firms which have sold or are selling shares of the Fund and other funds
distributed by Federated Securities Corp. The Adviser makes decisions on
portfolio transactions and selects brokers and dealers subject to review by the
Trustees.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund's net asset value per Share fluctuates. The net asset value for Shares
is determined by adding the interest of the Shares in the market value of all
securities and other assets of the Fund, subtracting the interest of the Shares
in the liabilities of the Fund and those attributable to Shares, and dividing
the remainder by the total number of Shares outstanding. The net asset value for
Institutional Shares may exceed that of Select Shares due to the variance in
daily net income realized by each class. Such variance will reflect only accrued
net income to which the shareholders of a particular class are entitled.
INVESTING IN SELECT SHARES
- --------------------------------------------------------------------------------
SHARE PURCHASES
Shares are sold on days on which the New York Stock Exchange is open for
business. Shares may be purchased through a financial institution which has a
sales agreement with the distributor or by wire or mail.
To purchase Shares, open an account by calling Federated Securities Corp.
Information needed to establish an account will be taken over the telephone. The
Fund reserves the right to reject any purchase request.
THROUGH A FINANCIAL INSTITUTION. An investor may call his financial institution
(such as a bank or an investment dealer) to place an order to purchase Shares.
Orders through a financial institution are considered received when the Fund is
notified of the purchase order. Purchase orders through a registered
broker/dealer must be received by the broker before 4:00 p.m. (Eastern time) and
must be transmitted by the broker to the Fund before 5:00 p.m. (Eastern time) in
order for Shares to be purchased at that day's price. Purchase orders through
other financial institutions must be received by the financial institution and
transmitted to the Fund before 4:00 p.m. (Eastern time) in order for Shares to
be purchased at that day's price. It is the financial institution's
responsibility to transmit orders promptly.
BY WIRE. To purchase Shares by Federal Reserve wire, call the Fund before 4:00
p.m. (Eastern time) to place an order. The order is considered received
immediately. Payment by federal funds must be received before 3:00 p.m. (Eastern
time) on the next business day following the order. Federal funds should be
wired as follows: Federated Services Company, c/o State Street Bank and Trust
Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit to: Federated
Managed Growth and Income Fund--Select Shares; Fund Number (this number can be
found on the account statement or by contacting the Fund); Group Number or Wire
Order Number; Nominee or Institution Name; and ABA Number 011000028. Shares
cannot be purchased by wire on holidays when wire transfers are restricted.
Questions on wire purchases should be directed to your shareholder services
representative at the telephone number listed on your account statement.
BY MAIL. To purchase Shares by mail, send a check made payable to Federated
Managed Growth and Income Fund--Select Shares to: Federated Services Company,
P.O. Box 8600, Boston, Massachusetts 02266-8600. Orders by mail are considered
received when payment by check is converted by State Street Bank into federal
funds. This is normally the next business day after State Street Bank receives
the check.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in Shares is $1,500. Accounts established through
a non-affiliated bank or broker may be subject to a smaller minimum investment.
WHAT SHARES COST
Shares are sold at their net asset value next determined after an order is
received. There is no sales charge imposed by the Fund. Investors who purchase
Shares through a non-affiliated bank or broker may be charged an additional
service fee by that bank or broker.
The net asset value is determined as of the close of trading (normally 4:00 p.m.
Eastern time) on the New York Stock Exchange, Monday through Friday, except on:
(i) days on which there are not sufficient changes in the value of the Fund's
portfolio securities such that its net asset value might be materially affected;
(ii) days during which no Shares are tendered for redemption and no orders to
purchase Shares are received; and (iii) the following holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
SUBACCOUNTING SERVICES
Institutions are encouraged to open single master accounts. However, certain
institutions may wish to use the transfer agent's subaccounting system to
minimize their internal recordkeeping requirements. The transfer agent may
charge a fee based on the level of subaccounting services rendered. Institutions
holding Shares in a fiduciary, agency, custodial, or similar capacity may charge
or pass through subaccounting fees as part of or in addition to normal trust or
agency account fees. They may also charge fees for other services provided which
may be related to the ownership of Shares. This prospectus should, therefore, be
read together with any agreement between the customer and the institution with
regard to the services provided, the fees charged for those services, and any
restrictions and limitations imposed. State securities laws may require certain
financial institutions such as depository institutions to register as dealers.
SYSTEMATIC INVESTMENT PROGRAM
Once a Fund account has been opened, shareholders may add to their investment on
a regular basis. Under this program, funds may be automatically withdrawn
periodically from the shareholder's checking account and invested in Shares at
the net asset value next determined after an order is received by the Fund. A
shareholder may apply for participation in this program through Federated
Securities Corp.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the Fund.
Detailed confirmations of each purchase or redemption are sent to each
shareholder. Quarterly confirmations are sent to report dividends paid during
the quarter.
DIVIDENDS
Dividends are declared and paid quarterly to all shareholders invested in the
Fund on the record date. Unless shareholders request cash payments by writing
the Fund, dividends are automatically reinvested in additional Shares of the
Fund on payment dates at the ex-dividend date net asset value without a sales
charge.
CAPITAL GAINS
Capital gains realized by the Fund, if any, will be distributed at least once
every 12 months.
REDEEMING SELECT SHARES
- --------------------------------------------------------------------------------
The Fund redeems Shares at their net asset value next determined after the Fund
receives the redemption request. Redemptions will be made on days on which the
Fund computes its net asset value. Redemption requests must be received in
proper form and can be made through a financial institution, by telephone
request or by written request.
THROUGH A FINANCIAL INSTITUTION
A shareholder may redeem Shares by calling his financial institution (such as a
bank or an investment dealer) to request the redemption. Shares will be redeemed
at the net asset value next determined after the Fund receives the redemption
request from the financial institution. Redemption requests through a registered
broker/dealer must be received by the broker before 4:00 p.m. (Eastern time) and
must be transmitted by the broker to the Fund before 5:00 p.m. (Eastern time) in
order for Shares to be redeemed at that day's net asset value. Redemption
requests through other financial institutions must be received by the financial
institution and transmitted to the Fund before 4:00 p.m. (Eastern time) in order
for Shares to be redeemed at that day's net asset value. The financial
institution is responsible for promptly submitting redemption requests and
providing proper written redemption instructions to the Fund. The financial
institution may charge customary fees and commissions for this service.
TELEPHONE REDEMPTION
Shareholders may redeem their Shares by telephoning the Fund before 4:00 p.m.
(Eastern time). All proceeds will normally be wire transferred the following
business day, but in no event more than seven days, to the shareholder's account
at a domestic commercial bank that is a member of the Federal Reserve System.
Proceeds from redemption requests received on holidays when wire transfers are
restricted will be wired the following business day. Questions about telephone
redemptions on days when wire transfers are restricted should be directed to
your shareholder services representative at the telephone number listed on your
account statement. If at any time, the Fund shall determine it necessary to
terminate or modify this method of redemption, shareholders would be promptly
notified.
An authorization form permitting the Fund to accept telephone requests must
first be completed. Authorization forms and information on this service are
available from Federated Securities Corp. Telephone redemption instructions may
be recorded. If reasonable procedures are not followed by the Fund, it may be
liable for losses due to unauthorized or fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "Written Requests", should be considered.
WRITTEN REQUESTS
Shares may be redeemed in any amount by mailing a written request to: Federated
Services Company, P.O. Box 8600, Boston, MA 02266-8600. If share certificates
have been issued, they should be sent unendorsed with the written request by
registered or certified mail to the address noted above.
SIGNATURES. Shareholders requesting a redemption of any amount to be sent to an
address other than that on record with the Fund, or a redemption payable other
than to the shareholder of record must have signatures on written redemption
requests guaranteed by:
a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund ("BIF"), which is administered by the Federal Deposit
Insurance Corporation ("FDIC");
a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;
a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund ("SAIF"), which is administered
by the FDIC; or
any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.
RECEIVING PAYMENT. Normally, a check for the proceeds is mailed within one
business day, but in no event more than seven days, after receipt of a proper
written redemption request, provided the Fund or its agents have received
payment for Shares from the shareholder.
SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive payments of a predetermined amount may take
advantage of the Systematic Withdrawal Program. Under this program, Shares are
redeemed to provide for periodic withdrawal payments in an amount directed by
the shareholder. Depending upon the amount of the withdrawal payments, the
amount of dividends paid and capital gains distributions with respect to Shares,
and the fluctuation of the net asset value of Shares redeemed under this
program, redemptions may reduce, and eventually use up, the shareholder's
investment in the Fund. For this reason, payments under this program should not
be considered as yield or income on
the shareholder's investment in the Fund. To be eligible to participate in this
program, a shareholder must have an account value of at least $10,000. A
shareholder may apply for participation in this program through Federated
Securities Corp.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem Shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $1,500. This requirement
does not apply, however, if the balance falls below $1,500 because of changes in
the Fund's net asset value. Before Shares are redeemed to close an account, the
shareholder is notified in writing and allowed 30 days to purchase additional
Shares to meet the minimum requirement.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights except that, in matters
affecting only a particular fund or class, only shares of that fund or class are
entitled to vote. As a Massachusetts business trust, the Trust is not required
to hold annual shareholder meetings. Shareholder approval will be sought only
for certain changes in the Trust's or the Fund's operation and for the election
of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust entitled to vote.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code applicable to regulated investment companies and to
receive the special tax treatment afforded to such companies.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional Shares.
STATE AND LOCAL TAXES
In the opinion of Houston, Houston & Donnelly, counsel to the Trust, Fund Shares
may be subject to personal property taxes imposed by counties, municipalities,
and school districts in Pennsylvania to the extent that the portfolio securities
in the Fund would be subject to such taxes if owned directly by residents of
those jurisdictions.
Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its total return and yield for Shares.
Total return represents the change, over a specified period of time, in the
value of an investment in Shares after reinvesting all income and capital gain
distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
The yield of Shares is calculated by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by Shares
over a thirty-day period by the maximum offering price per share of Shares on
the last day of the period. This number is then annualized using semi-annual
compounding. The yield does not necessarily reflect income actually earned by
Shares and, therefore, may not correlate to the dividends or other distributions
paid to shareholders.
Shares are sold without any sales load or other similar non-recurring charges.
Total return and yield will be calculated separately for Select Shares and
Institutional Shares.
From time to time, advertisements for the Fund's Select Shares may refer to
ratings, rankings, and other information in certain financial publications
and/or compare the Fund's Select Shares performance to certain indices.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
The Fund also offers another class of shares called Institutional Shares which
are sold at net asset value primarily to financial institutions acting in a
fiduciary or agency capacity and are subject to a minimum initial investment of
$25,000 over a 90-day period.
Institutional Shares are distributed with no 12b-1 Plan but are subject to
shareholder services fees.
Institutional Shares and Select Shares are subject to certain of the same
expenses. Expense differences, however, between Institutional Shares and Select
Shares may affect the performance of each class.
To obtain more information and a prospectus for Institutional Shares, investors
may call 1-800-235-4669.
FEDERATED MANAGED GROWTH AND INCOME FUND
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
(FORMERLY, INSTITUTIONAL SERVICE SHARES)
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 68.
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, NOVEMBER 30,
1995 1994(A)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.85 $ 10.00
- ---------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------------------------------------------
Net investment income 0.50 0.25
- ---------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments, foreign currency
transactions, and futures contracts 1.28 (0.25)
- --------------------------------------------------------------------------- ------- -------
Total from investment operations 1.78 0.00
- --------------------------------------------------------------------------- ------- -------
LESS DISTRIBUTIONS
- ---------------------------------------------------------------------------
Distributions from net investment income (0.49) (0.15)
- --------------------------------------------------------------------------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 11.14 $ 9.85
- --------------------------------------------------------------------------- ------- -------
TOTAL RETURN (B) 18.51% 0.02%
- ---------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------------------------------
Expenses 1.00% 0.88%*
- ---------------------------------------------------------------------------
Net investment income 5.10% 5.07%*
- ---------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.55% 0.59%*
- ---------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------
Net assets, end of period (000 omitted) $103,715 $43,793
- ---------------------------------------------------------------------------
Portfolio turnover 157% 132%
- ---------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 25, 1994 (date of initial
public investment) to November 30, 1994. For the period from January 27,
1994 (start of business) to May 24, 1994, the Fund had no investment
activity.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
Further information about the Fund's performance is contained in the Fund's
annual report for the year ended November 30, 1995, which can be obtained free
of charge.
FEDERATED MANAGED GROWTH AND INCOME FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
STOCKS--24.6%
- -------------------------------------------------------------------------------------------------
(A)LARGE COMPANY--6.5%
--------------------------------------------------------------------------------
BASIC INDUSTRY--0.8%
--------------------------------------------------------------------------------
6,300 Allegheny Ludlum Corp. $ 117,338
--------------------------------------------------------------------------------
2,600 Aluminum Co. of America 152,100
--------------------------------------------------------------------------------
2,200 Du Pont (E.I.) de Nemours & Co. 146,300
--------------------------------------------------------------------------------
1,600 Eastman Chemical Co. 105,000
--------------------------------------------------------------------------------
2,400 International Paper Co. 91,500
--------------------------------------------------------------------------------
3,500 Phelps Dodge Corp. 237,562
--------------------------------------------------------------------------------
4,900 Praxair, Inc. 142,712
-------------------------------------------------------------------------------- --------------
Total 992,512
-------------------------------------------------------------------------------- --------------
CONSUMER DURABLES--0.3%
--------------------------------------------------------------------------------
2,800 Eastman Kodak Co. 190,400
--------------------------------------------------------------------------------
4,700 Mattel, Inc. 131,600
--------------------------------------------------------------------------------
5,000 Volvo AB, ADR 105,000
-------------------------------------------------------------------------------- --------------
Total 427,000
-------------------------------------------------------------------------------- --------------
CONSUMER NON-DURABLES--0.7%
--------------------------------------------------------------------------------
1,700 Avon Products, Inc. 123,462
--------------------------------------------------------------------------------
4,400 IBP, Inc. 275,000
--------------------------------------------------------------------------------
2,800 Philip Morris Cos., Inc. 245,700
--------------------------------------------------------------------------------
21,700 RJR Nabisco Holdings Corp., Conv. Pfd., Series C, $0.6012 127,487
--------------------------------------------------------------------------------
3,500 Reebok International Ltd. 91,000
-------------------------------------------------------------------------------- --------------
Total 862,649
-------------------------------------------------------------------------------- --------------
ENERGY MINERALS--0.4%
--------------------------------------------------------------------------------
3,700 Chevron Corp. 182,687
--------------------------------------------------------------------------------
3,900 Occidental Petroleum Corp. 86,287
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
(A)LARGE COMPANY--CONTINUED
--------------------------------------------------------------------------------
ENERGY MINERALS--CONTINUED
--------------------------------------------------------------------------------
2,300 Texaco, Inc. $ 170,200
--------------------------------------------------------------------------------
6,000 USX-Marathon Group 110,250
-------------------------------------------------------------------------------- --------------
Total 549,424
-------------------------------------------------------------------------------- --------------
FINANCE--1.4%
--------------------------------------------------------------------------------
3,430 Allstate Corp. 140,630
--------------------------------------------------------------------------------
1,900 American Express Co. 80,750
--------------------------------------------------------------------------------
3,200 Bank of Boston Corp. 148,400
--------------------------------------------------------------------------------
1,600 CIGNA Corp. 176,000
--------------------------------------------------------------------------------
2,700 Chemical Banking Corp. 162,000
--------------------------------------------------------------------------------
3,100 Citicorp 219,325
--------------------------------------------------------------------------------
2,300 Dean Witter, Discover & Co. 117,300
--------------------------------------------------------------------------------
3,648 Mellon Bank Corp. 195,168
--------------------------------------------------------------------------------
2,200 Merrill Lynch & Co., Inc., STRYPES, $3.12 116,050
--------------------------------------------------------------------------------
2,200 Providian Corp. 88,275
--------------------------------------------------------------------------------
1,500 Sunamerica, Inc., Conv. Pfd., Series E, $3.10 100,500
--------------------------------------------------------------------------------
4,700 Travelers Group, Inc. 279,650
--------------------------------------------------------------------------------
50 Webb (Del) Corp. 1,013
-------------------------------------------------------------------------------- --------------
Total 1,825,061
-------------------------------------------------------------------------------- --------------
HEALTH CARE--0.6%
--------------------------------------------------------------------------------
2,400 American Home Products Corp. 219,000
--------------------------------------------------------------------------------
2,300 Becton, Dickinson & Co. 160,425
--------------------------------------------------------------------------------
2,300 Bristol-Myers Squibb Co. 184,575
--------------------------------------------------------------------------------
2,200 Merck & Co., Inc. 136,125
-------------------------------------------------------------------------------- --------------
Total 700,125
-------------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
(A)LARGE COMPANY--CONTINUED
--------------------------------------------------------------------------------
PRODUCER MANUFACTURING--0.8%
--------------------------------------------------------------------------------
2,200 (b)FMC Corp. $ 162,525
--------------------------------------------------------------------------------
2,100 General Electric Co. 141,225
--------------------------------------------------------------------------------
1,000 (b)ITT Corp. 122,625
--------------------------------------------------------------------------------
1,100 Loews Corp. 168,850
--------------------------------------------------------------------------------
3,200 Textron, Inc. 245,200
--------------------------------------------------------------------------------
11,100 (c)Westinghouse Electric Corp., PEPS, Series C, $1.30 183,150
-------------------------------------------------------------------------------- --------------
Total 1,023,575
-------------------------------------------------------------------------------- --------------
RETAIL TRADE--0.2%
--------------------------------------------------------------------------------
4,600 American Stores Co. 120,750
--------------------------------------------------------------------------------
3,700 Sears, Roebuck & Co. 145,688
-------------------------------------------------------------------------------- --------------
Total 266,438
-------------------------------------------------------------------------------- --------------
SERVICES--0.2%
--------------------------------------------------------------------------------
4,600 Baker Hughes, Inc. 93,725
--------------------------------------------------------------------------------
1,200 Gannett Co., Inc. 73,200
--------------------------------------------------------------------------------
1,600 (b)Western Atlas, Inc. 76,600
-------------------------------------------------------------------------------- --------------
Total 243,525
-------------------------------------------------------------------------------- --------------
TECHNOLOGY--1.0%
--------------------------------------------------------------------------------
4,000 General Motors Corp., Class E 202,000
--------------------------------------------------------------------------------
2,300 Hewlett-Packard Co. 190,612
--------------------------------------------------------------------------------
2,000 Intel Corp. 121,750
--------------------------------------------------------------------------------
1,000 International Business Machines Corp. 96,625
--------------------------------------------------------------------------------
2,100 (b)Litton Industries, Inc. 94,238
--------------------------------------------------------------------------------
3,400 Lockheed Martin Corp. 249,475
--------------------------------------------------------------------------------
2,600 Raytheon Co. 115,700
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
(A)LARGE COMPANY--CONTINUED
--------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
--------------------------------------------------------------------------------
2,900 Rockwell International Corp. $ 142,100
-------------------------------------------------------------------------------- --------------
Total 1,212,500
-------------------------------------------------------------------------------- --------------
TRANSPORTATION--0.1%
--------------------------------------------------------------------------------
2,400 Consolidated Rail Corp. 167,700
-------------------------------------------------------------------------------- --------------
(D)UTILITIES--0.0%
--------------------------------------------------------------------------------
800 (b)Columbia Gas System, Inc. 34,600
-------------------------------------------------------------------------------- --------------
TOTAL LARGE COMPANY 8,305,109
-------------------------------------------------------------------------------- --------------
SMALL COMPANY--3.0%
--------------------------------------------------------------------------------
BASIC INDUSTRY--0.3%
--------------------------------------------------------------------------------
2,800 (b)Applied Extrusion Technologies, Inc. 35,350
--------------------------------------------------------------------------------
1,974 Brush Wellman, Inc. 34,545
--------------------------------------------------------------------------------
1,000 Cambrex Corp. 37,000
--------------------------------------------------------------------------------
1,000 Carpenter Technology Corp. 43,250
--------------------------------------------------------------------------------
1,200 Chesapeake Corp. 35,400
--------------------------------------------------------------------------------
700 (b)Cytec Industries, Inc. 44,800
--------------------------------------------------------------------------------
1,500 First Mississippi Corp. 38,250
--------------------------------------------------------------------------------
2,000 (b)Magma Copper Co. 42,500
--------------------------------------------------------------------------------
1,000 Springs Industries, Inc., Class A 42,000
--------------------------------------------------------------------------------
700 Texas Industries, Inc. 35,875
-------------------------------------------------------------------------------- --------------
Total 388,970
-------------------------------------------------------------------------------- --------------
CONSUMER DURABLES--0.1%
--------------------------------------------------------------------------------
900 Barnes Group, Inc. 34,875
--------------------------------------------------------------------------------
1,200 (b)Champion Enterprises, Inc. 36,000
--------------------------------------------------------------------------------
1,900 Coachmen Industries, Inc. 36,813
--------------------------------------------------------------------------------
820 Harman International Industries, Inc. 35,978
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
SMALL COMPANY--CONTINUED
--------------------------------------------------------------------------------
CONSUMER DURABLES--CONTINUED
--------------------------------------------------------------------------------
2,000 (b)Toll Brothers, Inc. $ 36,250
--------------------------------------------------------------------------------
1,100 Toro Co. 34,787
-------------------------------------------------------------------------------- --------------
Total 214,703
-------------------------------------------------------------------------------- --------------
CONSUMER NON-DURABLES--0.1%
--------------------------------------------------------------------------------
2,800 Hudson Foods, Inc., Class A 44,800
--------------------------------------------------------------------------------
2,100 (b)Mondavi, Robert Corp., Class A 66,938
-------------------------------------------------------------------------------- --------------
Total 111,738
-------------------------------------------------------------------------------- --------------
ENERGY MINERALS--0.0%
--------------------------------------------------------------------------------
2,100 KCS Energy, Inc. 28,875
--------------------------------------------------------------------------------
5,500 (b)Tesoro Petroleum Corp. 46,062
-------------------------------------------------------------------------------- --------------
Total 74,937
-------------------------------------------------------------------------------- --------------
FINANCE--0.7%
--------------------------------------------------------------------------------
800 Alex Brown, Inc. 36,800
--------------------------------------------------------------------------------
900 Allied Group, Inc. 31,950
--------------------------------------------------------------------------------
1,300 American Bankers Insurance Group, Inc. 46,962
--------------------------------------------------------------------------------
2,200 (b)American Travellers Corp. 55,000
--------------------------------------------------------------------------------
1,100 Associated Banc Corp. 43,725
--------------------------------------------------------------------------------
1,154 Bankers First Corp. 31,591
--------------------------------------------------------------------------------
400 (b)Brooklyn Bancorp, Inc. 16,100
--------------------------------------------------------------------------------
2,300 CWM Mortgage Holdings, Inc. 34,788
--------------------------------------------------------------------------------
900 Centura Banks, Inc. 30,600
--------------------------------------------------------------------------------
2,200 City National Corp. 30,250
--------------------------------------------------------------------------------
600 Cullen Frost Bankers, Inc. 30,450
--------------------------------------------------------------------------------
2,200 FirstBank Puerto Rico 41,525
--------------------------------------------------------------------------------
1,100 (b)Glendale Federal Bank 17,737
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
SMALL COMPANY--CONTINUED
--------------------------------------------------------------------------------
FINANCE--CONTINUED
--------------------------------------------------------------------------------
3,200 Hibernia Corp., Class A $ 33,600
--------------------------------------------------------------------------------
1,000 Irwin Financial Corp. 39,500
--------------------------------------------------------------------------------
1,100 Money Stores, Inc. 51,975
--------------------------------------------------------------------------------
1,500 North Fork Bancorp, Inc. 34,875
--------------------------------------------------------------------------------
900 PHH Corp. 41,175
--------------------------------------------------------------------------------
1,700 Peoples Heritage Financial Group 35,700
--------------------------------------------------------------------------------
1,100 Queens County Bancorp, Inc. 44,275
--------------------------------------------------------------------------------
1,600 (b)St. Francis Capital Corp. 37,200
--------------------------------------------------------------------------------
1,500 Student Loan Corp. 53,062
--------------------------------------------------------------------------------
1,000 WestAmerica Bancorporation 41,250
-------------------------------------------------------------------------------- --------------
Total 860,090
-------------------------------------------------------------------------------- --------------
HEALTH CARE--0.3%
--------------------------------------------------------------------------------
2,700 Bindley Western Industries, Inc. 48,262
--------------------------------------------------------------------------------
1,400 (b)Bio Rad Laboratories, Inc., Class A 57,750
--------------------------------------------------------------------------------
1,700 (b)Foxmeyer Health Corp. 44,200
--------------------------------------------------------------------------------
900 ICN Pharmaceuticals, Inc. 18,225
--------------------------------------------------------------------------------
5,000 Kinetic Concepts, Inc. 56,875
--------------------------------------------------------------------------------
2,600 (b)Maxicare Health Plans, Inc. 56,875
--------------------------------------------------------------------------------
2,100 (b)North American Biologicals, Inc. 20,212
--------------------------------------------------------------------------------
4,400 (b)Oec-Medical Systems, Inc. 44,000
-------------------------------------------------------------------------------- --------------
Total 346,399
-------------------------------------------------------------------------------- --------------
PRODUCER MANUFACTURING--0.2%
--------------------------------------------------------------------------------
1,000 AGCO Corp. 43,125
--------------------------------------------------------------------------------
1,350 Blount Intl, Inc., Class A 40,669
--------------------------------------------------------------------------------
1,300 Borg-Warner Automotive, Inc. 38,512
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
SMALL COMPANY--CONTINUED
--------------------------------------------------------------------------------
PRODUCER MANUFACTURING--CONTINUED
--------------------------------------------------------------------------------
3,900 Brenco, Inc. $ 40,950
--------------------------------------------------------------------------------
2,100 JLG Industries, Inc. 59,588
--------------------------------------------------------------------------------
600 NACCO Industries, Inc., Class A 34,200
--------------------------------------------------------------------------------
1,800 (b)NCI Building System, Inc. 41,400
-------------------------------------------------------------------------------- --------------
Total 298,444
-------------------------------------------------------------------------------- --------------
RETAIL TRADE--0.2%
--------------------------------------------------------------------------------
1,000 (b)CompUSA, Inc. 37,125
--------------------------------------------------------------------------------
1,100 (b)Eckerd Corp. 46,887
--------------------------------------------------------------------------------
800 Great Atlantic & Pacific Tea Co., Inc. 17,500
--------------------------------------------------------------------------------
1,400 (b)MacFrugal's Bargains CloseOuts, Inc. 18,375
--------------------------------------------------------------------------------
4,900 Pier 1 Imports, Inc. 53,288
--------------------------------------------------------------------------------
4,100 Ruddick Corp. 44,075
--------------------------------------------------------------------------------
2,400 (b)Waban, Inc. 44,400
-------------------------------------------------------------------------------- --------------
Total 261,650
-------------------------------------------------------------------------------- --------------
SERVICES--0.4%
--------------------------------------------------------------------------------
1,600 (b)American Buildings Co. 36,200
--------------------------------------------------------------------------------
1,400 Butler Manufacturing Co. 48,300
--------------------------------------------------------------------------------
2,300 Castle (A.M.) & Co. 56,350
--------------------------------------------------------------------------------
1,200 (b)Devon Group, Inc. 46,200
--------------------------------------------------------------------------------
1,600 Granite Construction, Inc. 44,400
--------------------------------------------------------------------------------
1,100 Plenum Publishing Corp. 39,875
--------------------------------------------------------------------------------
4,200 (b)Pride Petroleum Services, Inc. 40,950
--------------------------------------------------------------------------------
1,201 Pulitzer Publishing Co. 55,246
--------------------------------------------------------------------------------
1,420 Richfood Holdings, Inc. 39,937
--------------------------------------------------------------------------------
644 (b)United Video Satellite Group, Inc., Class A 18,676
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
SMALL COMPANY--CONTINUED
--------------------------------------------------------------------------------
SERVICES--CONTINUED
--------------------------------------------------------------------------------
3,800 (b)Westcott Communications $ 54,150
--------------------------------------------------------------------------------
2,000 (b)Western Waste Industries 36,750
-------------------------------------------------------------------------------- --------------
Total 517,034
-------------------------------------------------------------------------------- --------------
TECHNOLOGY--0.4%
--------------------------------------------------------------------------------
1,677 (b)Bell Industries, Inc. 38,152
--------------------------------------------------------------------------------
1,350 (b)Burr Brown Corp. 38,812
--------------------------------------------------------------------------------
3,400 (b)Computervision Corp. 42,500
--------------------------------------------------------------------------------
400 (b)Electronics for Imaging, Inc. 34,400
--------------------------------------------------------------------------------
900 (b)International Rectifier Corp. 44,662
--------------------------------------------------------------------------------
1,100 (b)Kemet Corp. 33,550
--------------------------------------------------------------------------------
1,100 (b)Marshall Industries 38,775
--------------------------------------------------------------------------------
900 (b)Network Equipment Technologies, Inc. 29,813
--------------------------------------------------------------------------------
1,000 (b)S3, Inc. 18,875
--------------------------------------------------------------------------------
1,200 (b)SCI Systems, Inc. 40,200
--------------------------------------------------------------------------------
1,100 (b)Tech-Sym Corp. 32,862
--------------------------------------------------------------------------------
800 (b)Tencor Instruments 30,200
--------------------------------------------------------------------------------
800 Watkins Johnson Co. 36,300
--------------------------------------------------------------------------------
1,000 Wyle Labs 39,375
-------------------------------------------------------------------------------- --------------
Total 498,476
-------------------------------------------------------------------------------- --------------
TRANSPORTATION--0.1%
--------------------------------------------------------------------------------
2,700 (b)America West Airlines, Inc., Class B 48,263
--------------------------------------------------------------------------------
1,300 (b)Continental Airlines, Inc., Class B 50,863
-------------------------------------------------------------------------------- --------------
Total 99,126
-------------------------------------------------------------------------------- --------------
(D)UTILITIES--0.2%
--------------------------------------------------------------------------------
1,500 Central Hudson Gas & Electric Service 45,562
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
SMALL COMPANY--CONTINUED
--------------------------------------------------------------------------------
(D)UTILITIES--CONTINUED
--------------------------------------------------------------------------------
1,300 Eastern Enterprises $ 42,250
--------------------------------------------------------------------------------
1,700 Oneok, Inc. 39,950
--------------------------------------------------------------------------------
2,700 (b)Public Service Co. New Mexico 47,588
--------------------------------------------------------------------------------
300 Tele Danmark 8,362
--------------------------------------------------------------------------------
1,100 Teppco Partners, L.P. 39,875
-------------------------------------------------------------------------------- --------------
Total 223,587
-------------------------------------------------------------------------------- --------------
TOTAL SMALL COMPANY 3,895,154
-------------------------------------------------------------------------------- --------------
(D)UTILITY--10.4%
--------------------------------------------------------------------------------
ELECTRIC UTILITIES--3.9%
--------------------------------------------------------------------------------
9,800 Baltimore Gas & Electric Co. 260,925
--------------------------------------------------------------------------------
9,600 CMS Energy Corp. 261,600
--------------------------------------------------------------------------------
9,121 Cinergy Corp. 269,069
--------------------------------------------------------------------------------
10,900 DPL, Inc. 261,600
--------------------------------------------------------------------------------
9,300 DQE, Inc. 268,537
--------------------------------------------------------------------------------
5,900 Duke Power Co. 264,763
--------------------------------------------------------------------------------
6,200 FPL Group, Inc. 268,925
--------------------------------------------------------------------------------
7,700 Florida Progress Corp. 264,688
--------------------------------------------------------------------------------
8,400 General Public Utilities 265,650
--------------------------------------------------------------------------------
9,200 Illinova Corp. 261,050
--------------------------------------------------------------------------------
7,200 NIPSCO Industries, Inc. 266,400
--------------------------------------------------------------------------------
13,600 Pacificorp 266,900
--------------------------------------------------------------------------------
9,200 Peco Energy Co. 266,800
--------------------------------------------------------------------------------
9,600 Pinnacle West Capital Corp. 261,600
--------------------------------------------------------------------------------
13,800 SCE Corp. 215,625
--------------------------------------------------------------------------------
11,200 Southern Co. 256,200
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
(D)UTILITY--CONTINUED
--------------------------------------------------------------------------------
ELECTRIC UTILITIES--CONTINUED
--------------------------------------------------------------------------------
6,900 Texas Utilities Co. $ 265,650
--------------------------------------------------------------------------------
9,100 Utilicorp United, Inc. 253,662
--------------------------------------------------------------------------------
8,000 Western Resources, Inc. 265,000
-------------------------------------------------------------------------------- --------------
Total 4,964,644
-------------------------------------------------------------------------------- --------------
MAJOR U.S. TELECOMMUNICATIONS--5.6%
--------------------------------------------------------------------------------
12,600 AT&T Corp. 831,600
--------------------------------------------------------------------------------
14,400 Ameritech Corp. 792,000
--------------------------------------------------------------------------------
12,200 Bell Atlantic Corp. 768,600
--------------------------------------------------------------------------------
20,300 BellSouth Corp. 789,162
--------------------------------------------------------------------------------
18,800 GTE Corp. 801,350
--------------------------------------------------------------------------------
31,300 MCI Communications Corp. 837,275
--------------------------------------------------------------------------------
15,900 NYNEX Corp. 789,038
--------------------------------------------------------------------------------
14,600 SBC Communications, Inc. 788,400
--------------------------------------------------------------------------------
24,500 U.S. West Communications Group 765,625
-------------------------------------------------------------------------------- --------------
Total 7,163,050
-------------------------------------------------------------------------------- --------------
NATURAL GAS DISTRIBUTION--0.3%
--------------------------------------------------------------------------------
9,100 MCN Corp. 197,925
--------------------------------------------------------------------------------
7,500 Pacific Enterprises 200,625
-------------------------------------------------------------------------------- --------------
Total 398,550
-------------------------------------------------------------------------------- --------------
OIL/GAS TRANSMISSION--0.6%
--------------------------------------------------------------------------------
5,300 Enron Corp. 198,750
--------------------------------------------------------------------------------
7,200 Panhandle Eastern Corp. 204,300
--------------------------------------------------------------------------------
6,100 Sonat, Inc. 196,725
--------------------------------------------------------------------------------
5,300 Williams Companies, Inc. 222,600
-------------------------------------------------------------------------------- --------------
Total 822,375
-------------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
(D)UTILITY--CONTINUED
--------------------------------------------------------------------------------
SERVICES--0.0%
--------------------------------------------------------------------------------
1,800 (b)U.S. West Media Group $ 32,400
-------------------------------------------------------------------------------- --------------
TOTAL UTILITY 13,381,019
-------------------------------------------------------------------------------- --------------
FOREIGN EQUITY--4.7%
--------------------------------------------------------------------------------
ARGENTINA--0.0%
--------------------------------------------------------------------------------
600 Banco Frances del Rio de la Plata S.A., ADR 15,675
--------------------------------------------------------------------------------
1,300 Compania Naviera Perez Companc SA, Class B 6,308
--------------------------------------------------------------------------------
303 IRSA Inversiones y Representaciones S.A., GDR 6,586
--------------------------------------------------------------------------------
400 YPF Sociedad Anonima, ADR 7,800
-------------------------------------------------------------------------------- --------------
Total 36,369
-------------------------------------------------------------------------------- --------------
AUSTRALIA--0.1%
--------------------------------------------------------------------------------
6,000 Mayne Nickless Ltd. 27,609
--------------------------------------------------------------------------------
10,000 News Corporation Ltd. 52,397
--------------------------------------------------------------------------------
10,000 Woodside Petroleum Ltd. 49,651
--------------------------------------------------------------------------------
19,000 Woolworth's Ltd. 44,419
-------------------------------------------------------------------------------- --------------
Total 174,076
-------------------------------------------------------------------------------- --------------
FINLAND--0.0%
--------------------------------------------------------------------------------
200 Nokia AB-A 10,974
-------------------------------------------------------------------------------- --------------
FRANCE--0.2%
--------------------------------------------------------------------------------
800 AXA 47,867
--------------------------------------------------------------------------------
340 Accor SA 41,286
--------------------------------------------------------------------------------
850 Compagnie Financiere de Paribas, Class A 47,197
--------------------------------------------------------------------------------
300 LVMH (Moet-Hennessy) 57,109
--------------------------------------------------------------------------------
610 LaFarge-Coppee 38,748
--------------------------------------------------------------------------------
2,500 Lagardere Groupe 48,642
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
--------------------------------------------------------------------------------
FRANCE--CONTINUED
--------------------------------------------------------------------------------
450 Lyonnaise des Eaux SA $ 43,102
-------------------------------------------------------------------------------- --------------
Total 323,951
-------------------------------------------------------------------------------- --------------
GERMANY--0.3%
--------------------------------------------------------------------------------
168 BASF AG 36,822
--------------------------------------------------------------------------------
210 Commerzbank AG, Frankfurt 48,569
--------------------------------------------------------------------------------
775 Deutsche Bank Ag 36,357
--------------------------------------------------------------------------------
155 Gea AG, Pfd. 49,298
--------------------------------------------------------------------------------
100 Henkel KGaA--Vorzug, Pfd. 37,475
--------------------------------------------------------------------------------
105 Kaufhof Holding AG 31,798
--------------------------------------------------------------------------------
65 Linde AG 38,111
--------------------------------------------------------------------------------
120 Mannesmann AG 38,639
--------------------------------------------------------------------------------
100 Siemens AG 52,237
--------------------------------------------------------------------------------
50 Wella AG, Pfd. 23,508
-------------------------------------------------------------------------------- --------------
Total 392,814
-------------------------------------------------------------------------------- --------------
HONG KONG--0.2%
--------------------------------------------------------------------------------
37,000 Amoy Properties Ltd. 35,398
--------------------------------------------------------------------------------
400 Cheung Kong 2,275
--------------------------------------------------------------------------------
1,839 HSBC Holdings PLC 27,104
--------------------------------------------------------------------------------
21,000 Hong Kong Telecom 35,702
--------------------------------------------------------------------------------
78,000 Manhattan Card Co., Ltd. 34,790
--------------------------------------------------------------------------------
4,000 Sun Hung Kai Properties 32,192
--------------------------------------------------------------------------------
9,000 Television Broadcasts Ltd. 33,976
-------------------------------------------------------------------------------- --------------
Total 201,437
-------------------------------------------------------------------------------- --------------
INDONESIA--0.1%
--------------------------------------------------------------------------------
15,000 Astra International 29,888
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
--------------------------------------------------------------------------------
INDONESIA--CONTINUED
--------------------------------------------------------------------------------
9,000 Hero Supermarket $ 17,736
--------------------------------------------------------------------------------
5,000 Indocement Tungal 16,970
--------------------------------------------------------------------------------
8,000 Lippo Bank 11,736
--------------------------------------------------------------------------------
9,000 United Tractors 16,356
-------------------------------------------------------------------------------- --------------
Total 92,686
-------------------------------------------------------------------------------- --------------
ITALY--0.1%
--------------------------------------------------------------------------------
10,400 La Rinascente S.P.A. 58,270
--------------------------------------------------------------------------------
35,000 (b)Telecom Italia Mobile 56,467
-------------------------------------------------------------------------------- --------------
Total 114,737
-------------------------------------------------------------------------------- --------------
JAPAN--2.0%
--------------------------------------------------------------------------------
10,000 Asahi Chemical Industry Co. Ltd. 74,693
--------------------------------------------------------------------------------
4,000 Bridgestone Corp. 58,968
--------------------------------------------------------------------------------
2,000 Canon Inc. 35,184
--------------------------------------------------------------------------------
7 DDI Corp. 56,275
--------------------------------------------------------------------------------
4,000 Dai Nippon Printing Co. Ltd. 69,975
--------------------------------------------------------------------------------
11,000 Daimaru, Inc. 72,432
--------------------------------------------------------------------------------
15,000 Dainippon Ink and Chemical, Inc. 69,435
--------------------------------------------------------------------------------
5,000 Fujitsu Ltd. 58,968
--------------------------------------------------------------------------------
3,000 Hitachi Cable 21,317
--------------------------------------------------------------------------------
3,000 JUSCO Co. 71,941
--------------------------------------------------------------------------------
7,000 Jaccs 68,796
--------------------------------------------------------------------------------
10,000 (b)Japan Airlines Co. 63,980
--------------------------------------------------------------------------------
4,000 Kandenko Co., Ltd. 48,747
--------------------------------------------------------------------------------
18,000 Kawasaki Heavy Industries 81,907
--------------------------------------------------------------------------------
19,000 Kawasaki Steel 67,410
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
--------------------------------------------------------------------------------
JAPAN--CONTINUED
--------------------------------------------------------------------------------
3,000 Kokuyo Co. $ 64,570
--------------------------------------------------------------------------------
11,000 Kubota Corp. 72,324
--------------------------------------------------------------------------------
6,000 Kuraray Co. Ltd. 61,327
--------------------------------------------------------------------------------
1,000 Kurita Water Industries 27,813
--------------------------------------------------------------------------------
8,000 Kyowa Hakko Kogyo Co. 78,624
--------------------------------------------------------------------------------
8,000 Minebea Co. 66,516
--------------------------------------------------------------------------------
13,000 Mitsubishi Heavy Industries 103,617
--------------------------------------------------------------------------------
9,000 Mitsui Marine & Fire Insurance Co. 60,590
--------------------------------------------------------------------------------
4,000 NEC Corp. 51,106
--------------------------------------------------------------------------------
2,000 NGK Insulators 19,853
--------------------------------------------------------------------------------
26,000 (b)NKK Corp. 71,548
--------------------------------------------------------------------------------
9,000 Nagoya Railroad Co. Ltd. 44,226
--------------------------------------------------------------------------------
9,000 Nihon Cement Co., Ltd. 59,617
--------------------------------------------------------------------------------
3,000 Nippon Electric Glass Co., Ltd. 55,725
--------------------------------------------------------------------------------
9,000 Nippon Express Co. Ltd. 78,103
--------------------------------------------------------------------------------
9,000 Nippon Sheet Glass Co. 40,157
--------------------------------------------------------------------------------
3,000 Nishimatsu Construction 35,970
--------------------------------------------------------------------------------
6,000 Sakura Bank Ltd., Tokyo 64,865
--------------------------------------------------------------------------------
1,000 Secom Co. 67,518
--------------------------------------------------------------------------------
1,000 Sega Enterprises 54,054
--------------------------------------------------------------------------------
3,000 Sekisui House Ltd. 35,086
--------------------------------------------------------------------------------
5,000 Shionogi and Co. 43,096
--------------------------------------------------------------------------------
1,000 Sony Music Entertainment, Inc. 44,717
--------------------------------------------------------------------------------
12,000 Sumitomo Chemical Co. 59,676
--------------------------------------------------------------------------------
20,000 Sumitomo Heavy Industries 63,685
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
--------------------------------------------------------------------------------
JAPAN--CONTINUED
--------------------------------------------------------------------------------
2,000 Takeda Chemical Industries $ 29,877
--------------------------------------------------------------------------------
6,000 Tokio Marine & Fire 68,403
--------------------------------------------------------------------------------
1,000 Tostem Corp. 30,467
--------------------------------------------------------------------------------
3,000 Toto Ltd. 40,688
--------------------------------------------------------------------------------
3,000 Yamanouchi Pharmaceutical 64,570
-------------------------------------------------------------------------------- --------------
Total 2,578,416
-------------------------------------------------------------------------------- --------------
MALAYSIA--0.1%
--------------------------------------------------------------------------------
3,000 Malayan Banking Bhd 23,768
--------------------------------------------------------------------------------
26,000 Malayan United Industries Bhd 19,779
--------------------------------------------------------------------------------
11,000 Malayawata Steel Berhad 18,817
--------------------------------------------------------------------------------
9,000 Malaysian International Shipping Bhd 21,994
--------------------------------------------------------------------------------
6,000 (d)Tenaga Nasional Berhad 22,467
--------------------------------------------------------------------------------
9,000 UMW Holdings Bhd 21,108
-------------------------------------------------------------------------------- --------------
Total 127,933
-------------------------------------------------------------------------------- --------------
MEXICO--0.0%
--------------------------------------------------------------------------------
700 Cemex SA, Class B, ADR 4,681
--------------------------------------------------------------------------------
500 Empresas ICA Sociedad Controladora S.A., ADR 5,125
--------------------------------------------------------------------------------
900 Grupo Financiero Bancomer, S.A. de C.V., Class B, ADR 5,175
--------------------------------------------------------------------------------
200 Pan American Beverage, Class A 6,450
--------------------------------------------------------------------------------
600 Transportacion Maritima Mexicana SA , Class L, ADR 4,575
-------------------------------------------------------------------------------- --------------
Total 26,006
-------------------------------------------------------------------------------- --------------
NETHERLANDS--0.2%
--------------------------------------------------------------------------------
4,200 Elsevier NV 57,321
--------------------------------------------------------------------------------
835 Polygram NV 50,276
--------------------------------------------------------------------------------
2,250 Royal PTT Nederland NV 80,173
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
--------------------------------------------------------------------------------
NETHERLANDS--CONTINUED
--------------------------------------------------------------------------------
300 Unilever NV-Cert $ 39,647
-------------------------------------------------------------------------------- --------------
Total 227,417
-------------------------------------------------------------------------------- --------------
NEW ZEALAND--0.0%
--------------------------------------------------------------------------------
7,000 Fletcher Challenge Ltd. 17,366
--------------------------------------------------------------------------------
993 Fletcher Challenge Ltd.--Forestry Shares 1,400
-------------------------------------------------------------------------------- --------------
Total 18,766
-------------------------------------------------------------------------------- --------------
SINGAPORE--0.1%
--------------------------------------------------------------------------------
8,000 First Capital Corp., Ltd., Singapore 21,553
--------------------------------------------------------------------------------
2,000 Fraser and Neave Ltd. 23,821
--------------------------------------------------------------------------------
11,000 Haw Par Brothers International Ltd. 23,708
--------------------------------------------------------------------------------
2,000 Singapore Airlines Ltd. 18,717
--------------------------------------------------------------------------------
2,000 Singapore Press Holdings Ltd. 31,620
-------------------------------------------------------------------------------- --------------
Total 119,419
-------------------------------------------------------------------------------- --------------
SPAIN--0.1%
--------------------------------------------------------------------------------
200 Acerinox SA 20,040
--------------------------------------------------------------------------------
1,500 Repsol SA 47,280
--------------------------------------------------------------------------------
580 Zardoya-Otis SA 60,233
-------------------------------------------------------------------------------- --------------
Total 127,553
-------------------------------------------------------------------------------- --------------
SWEDEN--0.1%
--------------------------------------------------------------------------------
4,400 Stora Kopparbergs, Class A 55,373
--------------------------------------------------------------------------------
2,000 Svedala Industri AB Free 55,373
-------------------------------------------------------------------------------- --------------
Total 110,746
-------------------------------------------------------------------------------- --------------
SWITZERLAND--0.3%
--------------------------------------------------------------------------------
35 BBC Brown Boveri 40,196
--------------------------------------------------------------------------------
600 CS Holding 56,912
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
--------------------------------------------------------------------------------
SWITZERLAND--CONTINUED
--------------------------------------------------------------------------------
50 Ciba-Giegy AG-R $ 44,577
--------------------------------------------------------------------------------
70 Nestle SA 74,615
--------------------------------------------------------------------------------
10 Roche Holdings AG Genusscheine 75,542
--------------------------------------------------------------------------------
142 Zurich Versicherungsgesellschaft 43,609
-------------------------------------------------------------------------------- --------------
Total 335,451
-------------------------------------------------------------------------------- --------------
UNITED KINGDOM--0.8%
--------------------------------------------------------------------------------
9,450 Associated British Ports Holdings PLC 40,942
--------------------------------------------------------------------------------
10,000 BTR PLC 51,209
--------------------------------------------------------------------------------
5,100 Boots Co. PLC 44,192
--------------------------------------------------------------------------------
10,600 (d)British Gas PLC 39,596
--------------------------------------------------------------------------------
15,200 British Steel PLC 39,326
--------------------------------------------------------------------------------
5,800 Cadbury Schweppes PLC 49,458
--------------------------------------------------------------------------------
13,000 Caradon PLC 39,107
--------------------------------------------------------------------------------
8,400 Chubb Security 41,601
--------------------------------------------------------------------------------
6,500 Compass Group 44,531
--------------------------------------------------------------------------------
6,900 Grand Metropolitan PLC 46,690
--------------------------------------------------------------------------------
3,400 Imperial Chemical Industries PLC 39,559
--------------------------------------------------------------------------------
8,000 Marks & Spencer PLC 54,072
--------------------------------------------------------------------------------
4,000 (d)Midlands Electricity 56,767
--------------------------------------------------------------------------------
3,000 RMC Group PLC 47,650
--------------------------------------------------------------------------------
3,100 RTZ Corp. PLC 44,492
--------------------------------------------------------------------------------
6,700 Rank Organisation PLC 42,260
--------------------------------------------------------------------------------
4,200 Reckitt & Colman PLC 43,048
--------------------------------------------------------------------------------
27,300 Rugby Group PLC 44,720
--------------------------------------------------------------------------------
7,700 (d)Scottish Power PLC 44,441
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
--------------------------------------------------------------------------------
UNITED KINGDOM--CONTINUED
--------------------------------------------------------------------------------
23,700 Sedgwick Group PLC $ 43,721
--------------------------------------------------------------------------------
7,000 Smith, W.H. Group PLC 46,402
--------------------------------------------------------------------------------
5,000 Thames Water PLC 42,292
--------------------------------------------------------------------------------
10,600 Tomkins PLC 42,841
--------------------------------------------------------------------------------
6,000 Williams Holdings PLC 30,450
-------------------------------------------------------------------------------- --------------
Total 1,059,367
-------------------------------------------------------------------------------- --------------
TOTAL FOREIGN EQUITY 6,078,118
-------------------------------------------------------------------------------- --------------
TOTAL STOCKS (IDENTIFIED COST $27,323,416) 31,659,400
-------------------------------------------------------------------------------- --------------
PRINCIPAL
AMOUNT
- --------------- --------------------------------------------------------------------------------
BONDS--64.5%
- -------------------------------------------------------------------------------------------------
TREASURY--29.8%
--------------------------------------------------------------------------------
$ 36,775,000 U.S. Treasury Notes, 6.50%-7.50%, 04/30/1999-10/31/1999 38,300,316
-------------------------------------------------------------------------------- --------------
MORTGAGE-BACKED SECURITIES--19.6%
--------------------------------------------------------------------------------
GOVERNMENT AGENCY--19.6%
--------------------------------------------------------------------------------
383,067 Federal Home Loan Mortgage Corp., 7.50%, 05/01/2024 387,848
--------------------------------------------------------------------------------
995,814 Federal Home Loan Mortgage Corp., 7.00%, 8/1/2025 996,730
--------------------------------------------------------------------------------
260,611 Federal Home Loan Mortgage Corp., 7.00%, 07/01/2024 259,629
--------------------------------------------------------------------------------
1,064,839 Federal Home Loan Mortgage Corp., 6.50%, 9/1/2025 1,043,532
--------------------------------------------------------------------------------
458,661 Federal Home Loan Mortgage Corp., 8.00%, 11/01/2009 473,705
--------------------------------------------------------------------------------
364,047 Federal Home Loan Mortgage Corp., 7.00%, 04/01/2009 368,593
--------------------------------------------------------------------------------
992,752 Federal Home Loan Mortgage Corp., 6.50%, 9/1/2010 990,876
--------------------------------------------------------------------------------
699,444 Federal Home Loan Mortgage Corp., 7.00%, 04/01/2009 708,180
--------------------------------------------------------------------------------
1,967,923 Federal National Mortgage Association, 7.50%, 7/1/2025 2,002,952
--------------------------------------------------------------------------------
933,439 Federal National Mortgage Association, 7.50%, 9/1/2009 955,589
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES--CONTINUED
--------------------------------------------------------------------------------
GOVERNMENT AGENCY--CONTINUED
--------------------------------------------------------------------------------
$ 468,653 Federal National Mortgage Association, 7.00%, 5/1/2001 $ 475,969
--------------------------------------------------------------------------------
505,967 Federal National Mortgage Association, 7.00%, 07/01/2024 505,962
--------------------------------------------------------------------------------
1,074,548 Federal National Mortgage Association, 9.50%, 10/01/2024 1,138,333
--------------------------------------------------------------------------------
977,995 Federal National Mortgage Association, 7.00%, 1/1/2024 977,985
--------------------------------------------------------------------------------
214,678 Federal National Mortgage Association, 7.50%, 06/01/2009 219,772
--------------------------------------------------------------------------------
956,516 Federal National Mortgage Association, 6.50%, 6/1/2009 954,412
--------------------------------------------------------------------------------
494,336 Federal National Mortgage Association, 8.00%, 11/01/2024 509,161
--------------------------------------------------------------------------------
873,750 Federal National Mortgage Association, 9.00%, 5/1/2025 916,327
--------------------------------------------------------------------------------
208,768 Federal National Mortgage Association, 8.50%, 02/01/2025 216,921
--------------------------------------------------------------------------------
952,545 Federal National Mortgage Association, 8.00%, 7/1/2025 981,112
--------------------------------------------------------------------------------
1,016,147 Federal National Mortgage Association, 7.00%, 7/1/2025 1,016,137
--------------------------------------------------------------------------------
1,018,206 Federal National Mortgage Association, 6.50%, 9/1/2025 996,875
--------------------------------------------------------------------------------
1,099,125 Federal National Mortgage Association, 6.50%, 10/1/2025 1,076,099
--------------------------------------------------------------------------------
1,094,937 Government National Mortgage Association, 8.00%, 11/15/2024 1,133,249
--------------------------------------------------------------------------------
1,563,605 Government National Mortgage Association, 8.50%, 10/15/2024 1,632,482
--------------------------------------------------------------------------------
247,853 Government National Mortgage Association, 7.00%, 08/15/2024 248,547
--------------------------------------------------------------------------------
2,533,646 Government National Mortgage Association, 7.50%, 4/15/2024 2,587,436
--------------------------------------------------------------------------------
1,314,626 Government National Mortgage Association, 9.00%, 4/15/2025 1,386,497
-------------------------------------------------------------------------------- --------------
TOTAL MORTGAGE-BACKED SECURITIES 25,160,910
-------------------------------------------------------------------------------- --------------
INVESTMENT GRADE BONDS--7.6%
--------------------------------------------------------------------------------
AEROSPACE & DEFENSE--0.2%
--------------------------------------------------------------------------------
250,000 McDonnell Douglas Finance, Note, 9.40%, 10/15/2001 278,087
-------------------------------------------------------------------------------- --------------
AUTOMOTIVE--0.2%
--------------------------------------------------------------------------------
200,000 Chrysler Auburn Hills, Deb., 12.00%, 5/1/2020 308,380
-------------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
INVESTMENT GRADE BONDS--CONTINUED
--------------------------------------------------------------------------------
BANKING--0.5%
--------------------------------------------------------------------------------
$ 330,000 Chase Manhattan, Sub. Note, 8.00%, 5/1/2005 $ 344,738
--------------------------------------------------------------------------------
250,000 Crestar Financial Corp, Sub. Note, 8.75%, 11/15/2004 287,367
-------------------------------------------------------------------------------- --------------
Total 632,105
-------------------------------------------------------------------------------- --------------
BEVERAGE & TOBACCO--0.4%
--------------------------------------------------------------------------------
250,000 Philip Morris Cos., Inc., Deb., 6.00%, 7/15/2001 246,300
--------------------------------------------------------------------------------
250,000 RJR Nabisco, Inc., Note, 9.25%, 8/5/2013 255,108
-------------------------------------------------------------------------------- --------------
Total 501,408
-------------------------------------------------------------------------------- --------------
CHEMICALS & PLASTICS--0.2%
--------------------------------------------------------------------------------
200,000 (c)Bayer Corp, Deb., 7.125%, 10/1/2015 208,180
-------------------------------------------------------------------------------- --------------
CONGLOMERATES--0.2%
--------------------------------------------------------------------------------
275,000 Leucadia National, Sr. Sub. Note, 8.25%, 6/15/2005 290,306
-------------------------------------------------------------------------------- --------------
FINANCE--AUTOMOTIVE--0.2%
--------------------------------------------------------------------------------
250,000 Ford Motor Credit Co., Note, 6.85%, 8/15/2000 258,045
-------------------------------------------------------------------------------- --------------
FINANCE-RETAIL--0.1%
--------------------------------------------------------------------------------
150,000 Household Finance, Deb., 6.45%, 2/1/2009 148,918
-------------------------------------------------------------------------------- --------------
FINANCIAL INTERMEDIARIES--0.9%
--------------------------------------------------------------------------------
225,000 American General Corp., S.F. Deb., 9.625%, 2/1/2018 248,339
--------------------------------------------------------------------------------
250,000 Equitable Cos., Inc., Sr. Note, 9%, 12/15/2004 291,525
--------------------------------------------------------------------------------
250,000 Greentree Financial Corp, Sr. Sub. Note, 10.25%, 6/1/2002 301,950
--------------------------------------------------------------------------------
300,000 Merrill Lynch, Medium Term Note, 7.25%, 6/14/2004 305,334
-------------------------------------------------------------------------------- --------------
Total 1,147,148
-------------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
INVESTMENT GRADE BONDS--CONTINUED
--------------------------------------------------------------------------------
FOOD & DRUG RETAILERS--0.3%
--------------------------------------------------------------------------------
$ 300,000 Hook-Superx, Inc., Sr. Note, 10.125%, 6/1/2002 $ 327,942
-------------------------------------------------------------------------------- --------------
FOOD PRODUCTS--0.4%
--------------------------------------------------------------------------------
275,000 Dr. Pepper-7-Up Cos., Sr. Sub. Disc. Note, 0/11.50%, 11/1/2002 256,856
--------------------------------------------------------------------------------
500,000 Grand Metropolitan Investment Corp., 8.13%, 1/6/2004 298,475
-------------------------------------------------------------------------------- --------------
Total 555,331
-------------------------------------------------------------------------------- --------------
GOVERNMENT AGENCY--0.6%
--------------------------------------------------------------------------------
250,000 Federal National Mortgage Association, Note, 7.43%, 8/4/2005 257,075
--------------------------------------------------------------------------------
250,000 Federal National Mortgage Association 8.59%, 2/3/2005 263,398
--------------------------------------------------------------------------------
200,000 Tennessee Valley Authority 7.318%, 5/31/1999 201,662
-------------------------------------------------------------------------------- --------------
Total 722,135
-------------------------------------------------------------------------------- --------------
INDUSTRIAL PRODUCTS & EQUIPMENT--0.5%
--------------------------------------------------------------------------------
350,000 Joy Technologies Inc, Sr. Note, 10.25%, 9/1/2003 395,433
--------------------------------------------------------------------------------
200,000 Varity Corp, Sr. Note, 11.375%, 11/15/1998 209,698
-------------------------------------------------------------------------------- --------------
Total 605,131
-------------------------------------------------------------------------------- --------------
INSURANCE--0.4%
--------------------------------------------------------------------------------
250,000 Continental Corp, Note, 8.25%, 4/15/1999 264,920
--------------------------------------------------------------------------------
250,000 Sunamerica Inc, Medium Term Note, 7.34%, 8/30/2005 262,984
-------------------------------------------------------------------------------- --------------
Total 527,904
-------------------------------------------------------------------------------- --------------
METALS & MINING--0.2%
--------------------------------------------------------------------------------
250,000 Santa Fe Pacific Gold Co, Note, 8.375%, 7/1/2005 255,000
-------------------------------------------------------------------------------- --------------
OIL & GAS--0.5%
--------------------------------------------------------------------------------
225,000 Occidental Petroleum Corp., Sr. Note, 11.75%, 3/15/2011 240,014
--------------------------------------------------------------------------------
350,000 USX Corp., Note, 6.375%, 7/15/1998 351,498
-------------------------------------------------------------------------------- --------------
Total 591,512
-------------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
INVESTMENT GRADE BONDS--CONTINUED
--------------------------------------------------------------------------------
PRINTING & PUBLISHING--0.2%
--------------------------------------------------------------------------------
$ 250,000 News America Holdings, Sr. Note, 7.50%, 3/1/2000 $ 262,037
-------------------------------------------------------------------------------- --------------
RETAILERS--0.2%
--------------------------------------------------------------------------------
250,000 J.C. Penney Co., S.F. Deb., 9.75%, 6/15/2021 293,717
-------------------------------------------------------------------------------- --------------
SOVEREIGN GOVERNMENT--0.6%
--------------------------------------------------------------------------------
300,000 (c)Freeport Terminal (Malta), Gtd. Global Note, 7.50%, 3/29/2009 317,289
--------------------------------------------------------------------------------
250,000 Quebec Province, Deb., 7.5%, 7/15/2023 256,912
--------------------------------------------------------------------------------
200,000 Republic of South Africa, Global Bond Deb., 9.625%, 12/15/1999 213,378
-------------------------------------------------------------------------------- --------------
Total 787,579
-------------------------------------------------------------------------------- --------------
TELECOMMUNICATIONS & CELLULAR--0.4%
--------------------------------------------------------------------------------
300,000 Cox Communications Inc., Note, 6.375%, 6/15/2000 303,453
--------------------------------------------------------------------------------
250,000 TCI Communications Inc, Note, 6.82%, 9/15/2010 253,167
-------------------------------------------------------------------------------- --------------
Total 556,620
-------------------------------------------------------------------------------- --------------
UTILITIES--0.4%
--------------------------------------------------------------------------------
200,000 Duke Power Co., 1st Mtg. Note, 7.00%, 9/1/2005 201,928
--------------------------------------------------------------------------------
200,000 Gulf States Utilities, FMB, 6.75%, 10/1/1998 202,174
--------------------------------------------------------------------------------
125,000 Pedernales Electric Coop., Inc., 10.875%, 09/01/17 140,761
-------------------------------------------------------------------------------- --------------
Total 544,863
-------------------------------------------------------------------------------- --------------
TOTAL INVESTMENT GRADE BONDS 9,802,348
-------------------------------------------------------------------------------- --------------
HIGH YIELD BONDS--2.4%
--------------------------------------------------------------------------------
AEROSPACE & DEFENSE--0.0%
--------------------------------------------------------------------------------
50,000 Tracor, Inc., Sr. Sub. Note, 10.875%, 8/15/2001 51,875
-------------------------------------------------------------------------------- --------------
AUTOMOTIVE--0.1%
--------------------------------------------------------------------------------
50,000 Aftermarket Technology Co., Sr. Sub. Note, 12.00%, 8/1/2004 52,375
--------------------------------------------------------------------------------
50,000 Exide Corp., Sr. Note, 10%, 4/15/2005 54,000
-------------------------------------------------------------------------------- --------------
Total 106,375
-------------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
--------------------------------------------------------------------------------
BANKING--0.1%
--------------------------------------------------------------------------------
$ 75,000 First Nationwide Holdings, Sr. Note, 12.25%, 5/15/2001 $ 85,594
-------------------------------------------------------------------------------- --------------
BROADCAST RADIO & TV--0.2%
--------------------------------------------------------------------------------
50,000 Chancellor Broadcasting Co., Sr. Sub. Note, 12.50%, 10/1/2004 53,750
--------------------------------------------------------------------------------
125,000 SCI Television, Sr. Secd. Note, 11.00%, 6/30/2005 132,500
--------------------------------------------------------------------------------
50,000 Sinclair Broadcast Group, Sr. Sub. Note, 10.00%, 9/30/2005 51,375
--------------------------------------------------------------------------------
50,000 Young Broadcasting Corp., Sr. Sub. Note, 10.125%, 2/15/2005 52,875
-------------------------------------------------------------------------------- --------------
Total 290,500
-------------------------------------------------------------------------------- --------------
CABLE TELEVISION--0.2%
--------------------------------------------------------------------------------
50,000 CAI Wireless Systems, Sr. Note, 12.25%, 9/15/2002 52,938
--------------------------------------------------------------------------------
75,000 Continental Cablevision, Sr. Deb., 9.50%, 8/1/2013 79,125
--------------------------------------------------------------------------------
100,000 International Cabletel, Sr. Note, 0/12.75%, 4/15/2005 61,125
--------------------------------------------------------------------------------
50,000 Rogers Cablesystems Ltd., Sr. Secd. 2nd Priority Note, 10.00%,
3/15/2005 52,625
--------------------------------------------------------------------------------
50,000 TeleWest PLC, 0/11.00%, Sr. Disc. Deb., 10/1/2007 29,312
-------------------------------------------------------------------------------- --------------
Total 275,125
-------------------------------------------------------------------------------- --------------
CHEMICALS & PLASTICS--0.2%
--------------------------------------------------------------------------------
125,000 Arcadian Partners LP, Sr. Note, Series B, 10.75%, 5/1/2005 137,500
--------------------------------------------------------------------------------
50,000 (c)Crain Industries, Inc., Sr. Sub. Note, 13.5%, 8/15/2005 50,875
--------------------------------------------------------------------------------
75,000 G-I Holdings, Sr. Disc. Note, 0%, 10/1/1998 56,906
--------------------------------------------------------------------------------
50,000 Harris Chemical, Sr. Secd. Disc. Note, 0/10.25%, 7/15/2001 46,750
-------------------------------------------------------------------------------- --------------
Total 292,031
-------------------------------------------------------------------------------- --------------
CLOTHING & TEXTILES--0.1%
--------------------------------------------------------------------------------
125,000 Westpoint Stevens, Inc., Sr. Sub. Deb., 9.375%, 12/15/2005 126,875
-------------------------------------------------------------------------------- --------------
CONGLOMERATES--0.1%
--------------------------------------------------------------------------------
75,000 Sherritt Gordon Ltd., Sr. Note, 9.75%, 4/1/2003 78,375
-------------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
--------------------------------------------------------------------------------
CONSUMER PRODUCTS--0.1%
--------------------------------------------------------------------------------
$ 50,000 (c)Herff Jones, Inc., Sr. Sub. Note, 11.00%, 8/15/2005 $ 52,875
--------------------------------------------------------------------------------
50,000 Playtex Family Products Corp., Sr. Sub. Note, 9.00%, 12/15/2003 44,250
-------------------------------------------------------------------------------- --------------
Total 97,125
-------------------------------------------------------------------------------- --------------
CONTAINER & GLASS PRODUCTS--0.1%
--------------------------------------------------------------------------------
100,000 Owens Illinois, Inc., Sr. Sub. Note, 9.75%, 8/15/2004 104,250
--------------------------------------------------------------------------------
50,000 Portola Packaging Inc., Sr. Note, 10.75%, 10/1/2005 51,625
-------------------------------------------------------------------------------- --------------
Total 155,875
-------------------------------------------------------------------------------- --------------
ECOLOGICAL SERVICES & EQUIPMENT--0.1%
--------------------------------------------------------------------------------
50,000 Mid-American Waste Systems, Inc., Sr. Sub. Note, 12.25%,
2/15/2003 48,500
-------------------------------------------------------------------------------- --------------
FOOD & DRUG RETAILERS--0.1%
--------------------------------------------------------------------------------
50,000 Pathmark Stores, Inc., Sr. Sub. Note, 9.625%, 5/1/2003 46,813
--------------------------------------------------------------------------------
50,000 Ralph's Grocery Co., Sr. Note, 10.45%, 6/15/2004 49,375
-------------------------------------------------------------------------------- --------------
Total 96,188
-------------------------------------------------------------------------------- --------------
FOOD PRODUCTS--0.1%
--------------------------------------------------------------------------------
50,000 Curtice-Burns Foods, Inc., Sr. Sub. Note, 12.25%, 2/1/2005 51,500
--------------------------------------------------------------------------------
50,000 Specialty Foods Corp., Sr. Note, 11.125%, 10/1/2002 47,500
--------------------------------------------------------------------------------
25,000 (c)Van de Kamp's Inc., Sr. Sub. Note, 12.00%, 9/15/2005 25,812
-------------------------------------------------------------------------------- --------------
Total 124,812
-------------------------------------------------------------------------------- --------------
FOOD SERVICES--0.1%
--------------------------------------------------------------------------------
125,000 Flagstar Corp., Sr. Note, 10.875%, 12/1/2002 114,375
-------------------------------------------------------------------------------- --------------
FOREST PRODUCTS--0.1%
--------------------------------------------------------------------------------
50,000 Repap New Brunswick, 2nd Priority Sr. Secd. Note, 10.625%,
4/15/2005 49,687
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
--------------------------------------------------------------------------------
FOREST PRODUCTS--CONTINUED
--------------------------------------------------------------------------------
$ 50,000 Stone Container Corp., Sr. Note, 9.875%, 2/1/2001 $ 48,687
-------------------------------------------------------------------------------- --------------
Total 98,374
-------------------------------------------------------------------------------- --------------
HEALTHCARE--0.0%
--------------------------------------------------------------------------------
50,000 Tenet Healthcare, Sr. Sub. Note, 10.125%, 3/1/2005 54,437
-------------------------------------------------------------------------------- --------------
HOME PRODUCTS & FURNISHINGS--0.1%
--------------------------------------------------------------------------------
50,000 Triangle Pacific Corp., Sr. Note, 10.5%, 8/1/2003 52,500
-------------------------------------------------------------------------------- --------------
LEISURE & ENTERTAINMENT--0.1%
--------------------------------------------------------------------------------
50,000 Alliance Entertainment , Sr. Sub. Note, 11.25%, 7/15/2005 50,000
--------------------------------------------------------------------------------
100,000 (c)Six Flags Theme Parks, Sr. Sub. Disc. Note, 12.25%, 6/15/2005 78,250
-------------------------------------------------------------------------------- --------------
Total 128,250
-------------------------------------------------------------------------------- --------------
MACHINERY & EQUIPMENT--0.1%
--------------------------------------------------------------------------------
50,000 Primeco Inc., Sr. Sub. Note, 12.75%, 3/1/2005 52,125
--------------------------------------------------------------------------------
50,000 Waters Corp., Sr. Sub. Note, 12.75%, 9/30/2004 55,250
-------------------------------------------------------------------------------- --------------
Total 107,375
-------------------------------------------------------------------------------- --------------
OIL & GAS--0.1%
--------------------------------------------------------------------------------
50,000 Falcon Drilling Company, Sr. Note, 9.75%, 1/15/2001 50,750
--------------------------------------------------------------------------------
50,000 United Meridian Corp., Sr. Sub. Note, 10.375%, 10/15/2005 51,125
-------------------------------------------------------------------------------- --------------
Total 101,875
-------------------------------------------------------------------------------- --------------
RETAILERS--0.1%
--------------------------------------------------------------------------------
125,000 Brylane Capital Corp., Sr. Sub. Note, 10.00%, 9/1/2003 109,375
-------------------------------------------------------------------------------- --------------
SERVICES--0.0%
--------------------------------------------------------------------------------
25,000 (c)Coinmach Corp., Sr. Note, 11.75%, 11/15/2005 25,312
-------------------------------------------------------------------------------- --------------
STEEL--0.0%
--------------------------------------------------------------------------------
50,000 GS Technologies Operating Co., Inc., Sr. Note, 12.00%, 9/1/2004 49,500
-------------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
--------------------------------------------------------------------------------
SURFACE TRANSPORTATION--0.0%
--------------------------------------------------------------------------------
$ 50,000 Gearbulk Holding Limited, Sr. Note, 11.25%, 12/1/2004 $ 53,125
-------------------------------------------------------------------------------- --------------
TELECOMMUNICATIONS & CELLULAR--0.2%
--------------------------------------------------------------------------------
50,000 (c)IXC Communications, Inc., Sr. Note, 12.50%, 10/1/2005 52,375
--------------------------------------------------------------------------------
50,000 MetroCall Inc., Sr. Sub. Note, 10.375%, 10/1/2007 51,750
--------------------------------------------------------------------------------
25,000 MobileMedia Communication, Sr. Sub. Note, 9.375%, 11/1/2007 25,312
--------------------------------------------------------------------------------
75,000 Nextel Communications, Inc., Sr. Disc. Note, 0/11.50%, 9/1/2003 45,206
--------------------------------------------------------------------------------
50,000 Paging Network, Sr. Sub. Note, 10.125%, 8/1/2007 53,375
--------------------------------------------------------------------------------
75,000 Panamsat, L.P., Sr. Sub. Disc. Note, 8/1/2003 61,125
-------------------------------------------------------------------------------- --------------
Total 289,143
-------------------------------------------------------------------------------- --------------
UTILITIES--0.1%
--------------------------------------------------------------------------------
75,000 California Energy Co., Sr. Disc. Note, 1/15/2004 69,750
-------------------------------------------------------------------------------- --------------
TOTAL HIGH YIELD BONDS 3,082,641
-------------------------------------------------------------------------------- --------------
FOREIGN
CURRENCY
PAR AMOUNT
- --------------- --------------------------------------------------------------------------------
FOREIGN BONDS--5.1%
--------------------------------------------------------------------------------
AUSTRALIAN DOLLAR--0.1%
--------------------------------------------------------------------------------
150,000 State Bank of New South Wales, 12.25%, 2/26/2001 129,972
-------------------------------------------------------------------------------- --------------
BELGIAN FRANC--0.3%
--------------------------------------------------------------------------------
3,200,000 Belgian Gov't., Foreign Gov't. Guarantee, 10.00%, 4/5/1996 109,906
--------------------------------------------------------------------------------
6,000,000 Belgium Kingdom, 7.75%, 10/15/2004 215,661
-------------------------------------------------------------------------------- --------------
Total 325,567
-------------------------------------------------------------------------------- --------------
CANADIAN DOLLAR--0.2%
--------------------------------------------------------------------------------
375,000 Ontario Hydro, 9.00%, 6/24/2002 300,856
-------------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN VALUE
CURRENCY IN U.S.
PAR AMOUNT DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN BONDS--CONTINUED
--------------------------------------------------------------------------------
DENMARK KRONE--0.2%
--------------------------------------------------------------------------------
1,200,000 Denmark, 8.00%, 5/15/2003 $ 225,369
-------------------------------------------------------------------------------- --------------
FRENCH FRANC--0.6%
--------------------------------------------------------------------------------
1,400,000 KFW International France, 7.00%, 5/12/2000 289,124
--------------------------------------------------------------------------------
2,350,000 France O.A.T., 8.50%, 11/25/2002 519,303
-------------------------------------------------------------------------------- --------------
Total 808,427
-------------------------------------------------------------------------------- --------------
DEUTSCHE MARK--0.8%
--------------------------------------------------------------------------------
300,000 Bundesobligationen, Deb., 7.25%, 10/20/1997 219,311
--------------------------------------------------------------------------------
1,100,000 Treuhandanstalt, 7.75%, 10/1/2002 840,725
-------------------------------------------------------------------------------- --------------
Total 1,060,036
-------------------------------------------------------------------------------- --------------
ITALIAN LIRA--0.4%
--------------------------------------------------------------------------------
850,000,000 Buoni Poliennali Del Tes, 9.50%, 1/1/2005 479,914
-------------------------------------------------------------------------------- --------------
JAPANESE YEN--1.3%
--------------------------------------------------------------------------------
65,000,000 Export-Import Bank Japan, 4.375%, 10/1/2003 716,277
--------------------------------------------------------------------------------
42,000,000 Interamerican Development, Deb., 7.25%, 5/15/2000 512,358
--------------------------------------------------------------------------------
33,000,000 KFW International Finance, 6.00%, 11/29/1999 382,703
-------------------------------------------------------------------------------- --------------
Total 1,611,338
-------------------------------------------------------------------------------- --------------
NETHERLAND GUILDER--0.3%
--------------------------------------------------------------------------------
700,000 Netherlands Government, 5.75%, 1/15/2004 426,234
-------------------------------------------------------------------------------- --------------
SPAINISH PESETA--0.2%
--------------------------------------------------------------------------------
40,000,000 Spanish Government, 10.00%, 2/28/2005 320,830
-------------------------------------------------------------------------------- --------------
SWEDISH KRONA--0.2%
--------------------------------------------------------------------------------
2,000,000 Sweden, 6.00%, 2/9/2005 254,479
-------------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN VALUE
CURRENCY IN U.S.
PAR AMOUNT DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN BONDS--CONTINUED
--------------------------------------------------------------------------------
UNITED KINGDOM POUND--0.5%
--------------------------------------------------------------------------------
365,000 UK Conversion, 9.00%, 3/3/2000 $ 601,395
-------------------------------------------------------------------------------- --------------
TOTAL FOREIGN BONDS 6,544,417
-------------------------------------------------------------------------------- --------------
TOTAL BONDS (IDENTIFIED COST $81,308,571) 82,890,632
-------------------------------------------------------------------------------- --------------
PRINCIPAL
AMOUNT
- ---------------
(A)CASH EQUIVALENTS--9.6%
- -------------------------------------------------------------------------------------------------
TREASURY SECURITIES--3.8%
--------------------------------------------------------------------------------
$ 5,000,000 U.S. Treasury Bill, 03/14/1996 (identified cost $4,923,921) 4,925,200
-------------------------------------------------------------------------------- --------------
(E)REPURCHASE AGREEMENT--5.8%
--------------------------------------------------------------------------------
7,430,000 J.P. Morgan Securities, Inc., 5.930%, dated 11/30/1995, due 12/1/1995 (at
amortized cost) 7,430,000
-------------------------------------------------------------------------------- --------------
TOTAL CASH EQUIVALENTS 12,355,200
-------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (IDENTIFIED COST $120,985,908)(F) $ 126,905,232
-------------------------------------------------------------------------------- --------------
</TABLE>
(a) The Fund purchases Index futures contracts to efficiently manage cash flows
resulting from shareholder purchases and redemptions, dividend and capital
gain payments to shareholders and corporate actions while maintaining
exposure to the Index and minimizing trade costs. The total market value of
13 S&P 500 open Index futures contracts is $3,955,375 at November 30, 1995,
which represents 3.1% of net assets. Taking into consideration these open
Index futures contracts, the Fund's effective, total exposure to Large Cap
Stocks and total stocks is 9.6% and 27.7%, respectively. The fund holds
cash equivalents as collateral for the 13 S&P 500 Futures contracts.
(b) Non-income producing security.
(c) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. At the end of the period, these securities
amounted to $994,118 which represents 0.8% of net assets.
(d) The utility stocks are shown in the asset category in which they were
purchased. The Fund's total exposure to utility stocks is 10.7% of net
assets.
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
(e) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations. The investment in the repurchase agreement is through
participation in a joint account with other Federated funds.
(f) The cost of investments for federal tax purposes amounts to $121,050,559.
The net unrealized appreciation of investments on a federal tax basis
amounts to $5,854,673 which is comprised of $6,230,538 appreciation and
$375,865 depreciation at November 30, 1995.
Note: The categories of investments are shown as a percentage of net assets
($128,501,918) at November 30, 1995.
The following acronyms are used throughout this portfolio:
ADR--American Depository Receipt
GDR--Global Depository Receipts
GTD--Guaranty
LP--Limited Partnership
PEPS--Participating Equity Preferred Stock
PLC--Public Limited Company
STRYPES--Structured Yield Product Exchangeable for Stock
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED GROWTH AND INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------------------------
Total investments in securities, at value (identified cost $120,985,908, and tax cost $121,050,559) $ 126,905,232
- ---------------------------------------------------------------------------------------------------
Cash denominated in foreign currencies (identified cost $80,009) 78,939
- ---------------------------------------------------------------------------------------------------
Income receivable 1,621,160
- ---------------------------------------------------------------------------------------------------
Receivable for investments sold 99,908
- ---------------------------------------------------------------------------------------------------
Receivable for shares sold 465,183
- ---------------------------------------------------------------------------------------------------
Receivable for foreign currency sold 58,543
- ---------------------------------------------------------------------------------------------------
Deferred expenses 40,709
- --------------------------------------------------------------------------------------------------- -------------
Total assets 129,269,674
- ---------------------------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------------------------
Payable for investments purchased $ 352,976
- ----------------------------------------------------------------------------------------
Payable for shares redeemed 1,199
- ----------------------------------------------------------------------------------------
Payable to Bank 259,767
- ----------------------------------------------------------------------------------------
Payable for taxes withheld 3,049
- ----------------------------------------------------------------------------------------
Payable for daily variation margin 5,050
- ----------------------------------------------------------------------------------------
Payable for foreign currency purchased 58,543
- ----------------------------------------------------------------------------------------
Accrued expenses 87,172
- ---------------------------------------------------------------------------------------- ---------
Total liabilities 767,756
- --------------------------------------------------------------------------------------------------- -------------
Net Assets for 11,537,539 shares outstanding $ 128,501,918
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------------------------
Paid in capital $ 119,471,067
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments, translation of assets and
liabilities in foreign currency, and futures contracts 6,130,173
- ---------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments, foreign currency transactions,
and futures contracts 1,612,126
- ---------------------------------------------------------------------------------------------------
Undistributed net investment income 1,288,552
- --------------------------------------------------------------------------------------------------- -------------
Total Net Assets $ 128,501,918
- --------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ---------------------------------------------------------------------------------------------------
Institutional Shares $103,714,993 / 9,308,790 shares outstanding $11.14
- --------------------------------------------------------------------------------------------------- -------------
Select Shares $24,786,925 / 2,228,749 shares outstanding $11.12
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED GROWTH AND INCOME FUND
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Dividends (net of foreign taxes withheld of $8,032) $ 640,159
- ----------------------------------------------------------------------------------------------------
Interest (net of foreign taxes withheld of $1,322) 4,300,586
- ---------------------------------------------------------------------------------------------------- ----------
Total income 4,940,745
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------------------------
Investment advisory fee $ 606,491
- -----------------------------------------------------------------------------------------
Administrative personnel and services fee 155,000
- -----------------------------------------------------------------------------------------
Custodian fees 96,416
- -----------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 43,257
- -----------------------------------------------------------------------------------------
Directors'/Trustees' fees 2,474
- -----------------------------------------------------------------------------------------
Auditing fees 12,407
- -----------------------------------------------------------------------------------------
Legal fees 2,550
- -----------------------------------------------------------------------------------------
Portfolio accounting fees 33,646
- -----------------------------------------------------------------------------------------
Distribution services fee--Select Shares 82,559
- -----------------------------------------------------------------------------------------
Shareholder services fee--Institutional Shares 174,647
- -----------------------------------------------------------------------------------------
Shareholder services fee--Select Shares 27,520
- -----------------------------------------------------------------------------------------
Share registration costs 41,206
- -----------------------------------------------------------------------------------------
Printing and postage 38,221
- -----------------------------------------------------------------------------------------
Insurance premiums 5,190
- -----------------------------------------------------------------------------------------
Taxes 48
- -----------------------------------------------------------------------------------------
Miscellaneous 17,181
- ----------------------------------------------------------------------------------------- ---------
Total expenses 1,338,813
- -----------------------------------------------------------------------------------------
Waivers--
- -----------------------------------------------------------------------------------------
Waiver of investment advisory fee $(243,174)
- ------------------------------------------------------------------------------
Waiver of distribution services fee--Select Shares (27,520)
- ------------------------------------------------------------------------------
Waiver of shareholder services fee--Institutional Shares (174,647)
- ------------------------------------------------------------------------------ ---------
Total waivers (445,341)
- ----------------------------------------------------------------------------------------- ---------
Net expenses 893,472
- ---------------------------------------------------------------------------------------------------- ----------
Net investment income 4,047,273
- ---------------------------------------------------------------------------------------------------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FOREIGN CURRENCY, AND FUTURES CONTRACTS:
- ----------------------------------------------------------------------------------------------------
Net realized gain on investments, foreign currency transactions, and futures contracts 2,155,646
- ----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments, translation of assets and
liabilities in foreign currency, and futures contracts 6,986,534
- ---------------------------------------------------------------------------------------------------- ----------
Net realized and unrealized gain on investments, foreign currency, and futures contracts 9,142,180
- ---------------------------------------------------------------------------------------------------- ----------
Change in net assets resulting from operations $13,189,453
- ---------------------------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED GROWTH AND INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, NOVEMBER 30,
1995 1994*
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- --------------------------------------------------------------------------------
OPERATIONS--
- --------------------------------------------------------------------------------
Net investment income $ 4,047,273 $ 1,036,801
- --------------------------------------------------------------------------------
Net realized gain (loss) on investments, foreign currency transactions, and
futures contracts ($2,295,469 net gain and $405,899 net loss, respectively,
as computed for federal tax purposes) 2,155,646 (416,902)
- --------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments, trans-
lation of assets and liabilities in foreign currency, and futures contracts 6,986,534 (856,361)
- -------------------------------------------------------------------------------- --------------- ---------------
Change in net assets resulting from operations 13,189,453 (236,462)
- -------------------------------------------------------------------------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS--
- --------------------------------------------------------------------------------
Distributions from net investment income:
- --------------------------------------------------------------------------------
Institutional Shares (2,937,306) (576,693)
- --------------------------------------------------------------------------------
Select Shares (373,022) (35,879)
- -------------------------------------------------------------------------------- --------------- ---------------
Change in net assets resulting from distributions
to shareholders (3,310,328) (612,572)
- -------------------------------------------------------------------------------- --------------- ---------------
SHARE TRANSACTIONS--
- --------------------------------------------------------------------------------
Proceeds from sale of shares 87,791,342 52,456,535
- --------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of distributions
declared 1,555,355 257,127
- --------------------------------------------------------------------------------
Cost of shares redeemed (18,214,182) (4,374,350)
- -------------------------------------------------------------------------------- --------------- ---------------
Change in net assets resulting from share transactions 71,132,515 48,339,312
- -------------------------------------------------------------------------------- --------------- ---------------
Change in net assets 81,011,640 47,490,278
- --------------------------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------------------------
Beginning of period 47,490,278 --
- -------------------------------------------------------------------------------- --------------- ---------------
End of period (including undistributed net investment income of $1,288,552 and
$455,224, respectively) $ 128,501,918 $ 47,490,278
- -------------------------------------------------------------------------------- --------------- ---------------
</TABLE>
* For the period from January 27, 1994 (start of business) to November 30, 1994.
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED GROWTH AND INCOME FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Managed Series Trust (the "Trust") is registered under the Investment Company
Act of 1940, as amended (the "Act") as an open-end, management investment
company. The Trust consists of four diversified portfolios. The financial
statements included herein are only those of Federated Managed Growth and Income
Fund (the "Fund"). The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held.
The Fund offers two classes of shares: Institutional Shares (formerly,
Institutional Service Shares) and Select Shares. The Institutional Service
Shares changed its name to Institutional Shares effective June 30, 1995.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Short-term securities with remaining maturities of
sixty days or less at the time of purchase may be valued at amortized cost,
which approximates fair market value. Listed equity securities are valued
at the last sale price reported on national security exchanges. All other
securities are valued at prices provided by an independent pricing service.
REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral
securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
Revenue Code, as amended (the "Code"). Dividend income and distributions to
shareholders are recorded on the ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
foreign currency and futures transactions. As a result of these
differences, the following required reclassifications have been made to the
current year financial statements.
<TABLE>
<CAPTION>
INCREASE (DECREASE)
<S> <C> <C>
ACCUMULATED UNDISTRIBUTED NET
NET REALIZED INVESTMENT
PAID-IN CAPITAL GAIN/LOSS INCOME
$(782) $(95,601) $96,383
</TABLE>
Net investment income, net realized gains/losses, and net assets were not
affected by this reclassification.
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.
However, federal taxes may be imposed on the Fund upon the disposition of
certain investments in passive foreign investment companies. Withholding
taxes on foreign interest and dividends have been provided for in
accordance with the Fund's understanding of the applicable country's tax
rules and rates.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized using the straight-line method over a period of five years from
the Fund's commencement date.
CONCENTRATION OF CREDIT RISK--The Fund invests in securities of non-U.S.
issuers. Although the Fund maintains a diversified investment portfolio,
the political or economic developments within a particular country or
region may have an adverse effect on the ability of domiciled issuers to
meet their obligations. Additionally, political or economic developments
may have an effect on the liquidity and volatility of portfolio securities
and currency holdings.
At November 30, 1995, the industry diversification of foreign securities
was as follows:
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY % OF NET ASSETS
<S> <C>
Agency 1.3
Automobiles 0.1
Banking 0.3
Beverages & Tobacco 0.1
Broadcasting & Publishing 0.1
Building Materials & Components 0.3
Business & Public Services 0.3
Chemicals 0.3
Construction & Housing 0.1
Data Processing & Reproduction 0.1
Electrical & Electronics 0.1
Energy Sources 0.1
Financial Services 0.1
Food & Household Products 0.2
Forest Products & Paper 0.1
Health & Personal Care 0.2
<CAPTION>
INDUSTRY % OF NET ASSETS
<S> <C>
INDUSTRIAL COMPONENTS 0.2
Insurance 0.2
Leisure & Tourism 0.1
Machinery & Engineering 0.5
Merchandising 0.3
Metals 0.2
Miscellaneous Materials &
Commodities 0.1
Multi-Industry 0.2
Real Estate 0.1
Recreation, Other Consumer Goods 0.1
Sovereign 3.3
State/Provincial 0.1
Supranational 0.4
Telecommunications 0.2
Transportation 0.2
Utilities--Electrical & Gas 0.1
</TABLE>
FUTURES CONTRACTS--The Fund may purchase and sell futures contracts to
accommodate cash flows into and out of the Fund's portfolio and to hedge
against the effects of changes in the value of portfolio securities due to
anticipated changes in interest rates and market conditions. Upon entering
into a stock futures contract with a broker, the Fund is required to
deposit in a segregated account a specified amount of cash or U.S.
government securities. Futures contracts are valued daily and unrealized
gains or losses are recorded in a "variation margin" account. Daily, the
Fund receives from or pays to the broker a specified amount of cash based
upon changes in the variation margin account. When a contract is closed,
the Fund recognizes a realized gain or loss.
Futures contracts have market risks, including the risk that the change in
the value of the contract may not correlate with changes in the value of
the underlying securities. For the period ended November 30, 1995, the Fund
had realized gains of $515,333 on future contracts.
At November 30, 1995, the Fund had outstanding futures contracts as set
forth below:
<TABLE>
<CAPTION>
UNREALIZED
TOTAL APPRECIATION
EXPIRATION DATE CONTRACTS TO DELIVER/RECEIVE FACE VALUE POSITION (DEPRECIATION)
<S> <C> <C> <C> <C>
December 1995 10 S&P 500 Index Futures 2,845,050 Long $ 191,200
March 1996 3 S&P 500 Index Futures 896,750 Long 22,375
-----------------
Net Unrealized Appreciation on Futures Contracts $ 213,575
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
FOREIGN CURRENCY COMMITMENTS--The Fund may enter into foreign currency
commitments for the delayed delivery of securities or foreign currency
exchange transactions. Risks may arise upon entering these transactions
from the potential inability of counterparties to meet the terms of their
commitments and from unanticipated movements in security prices or foreign
exchange rates. The foreign currency transactions are adjusted by the daily
exchange rate of the underlying currency and any gains or losses are
recorded for financial statement purpose as unrealized until the settlement
date. At November 30, 1995, the Fund had outstanding foreign currency
commitments as set forth below:
<TABLE>
<CAPTION>
UNREALIZED
APPRECIATION
SETTLEMENT DATE CONTRACTS TO DELIVER/RECEIVE IN EXCHANGE FOR (DEPRECIATION)
<S> <C> <C> <C>
Contracts Purchased
12/1/95 2,834 Argentine Peso $ 2,835 0
12/5/95 36,541 Pound Sterling $55,708 $235
</TABLE>
FOREIGN CURRENCY TRANSLATION--The accounting records of the Fund are
maintained in U.S. dollars. All assets and liabilities denominated in
foreign currencies ("FC") are translated into U.S. dollars based on the
rate of exchange of such currencies against U.S. dollars on the date of
valuation. Purchases and sales of securities, income and expenses are
translated at the rate of exchange quoted on the respective date that such
transactions are recorded. Differences between income and expense amounts
recorded and collected or paid are adjusted when reported by the custodian
bank. The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales
of FCs, currency gains or losses realized between the trade and settlement
dates on securities transactions, the difference between the amounts of
dividends, interest, and foreign withholding taxes recorded on the Fund's
books, and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes
in the value of assets and liabilities other than investments in securities
at fiscal year end, resulting from changes in the exchange rate.
DOLLAR ROLL TRANSACTIONS--The Fund enters into dollar roll transactions,
with respect to mortgage securities issued by GNMA, FNMA and FHLMC, in
which the Fund sells mortgage securities to financial institutions and
simultaneously agrees to accept substantially similar (same type, coupon
and maturity) securities at a later date at an agreed upon price. Dollar
roll transactions are short-term financing arrangements which will not
exceed twelve months. The Fund will use the proceeds generated from the
transactions to invest in short-term investments, which may enhance the
Fund's current yield and total return.
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 Board of Trustees. 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 November 30,
1995 is as follows:
<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE(S) ACQUISITION COST
<S> <C> <C>
Westinghouse Electric Corp., PEPS 9/27/95-9/28/95 $ 169,275
Bayer Corp., Deb. 11/9/95 204,630
Freeport Terminal (Malta), Gtd. Global Note 6/16/94 284,100
Crain Industries, Inc., Sr. Sub. Note 9/22/95 51,375
Herff Jones, Inc., Sr. Sub. Note 9/14/95 51,750
Van de Kamp's Inc., Sr. Sub. Note 9/14/95 25,000
Six Flags Theme Parks, Sr. Sub. Disc. Note 7/17/95 77,798
Coinmach Corp., Sr. Note 11/14/95 25,000
IXC Communications, Sr. Sub. Note 9/25/95 48,635
</TABLE>
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares.
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, 1995 NOVEMBER 30, 1994*
<S> <C> <C> <C> <C>
INSTITUTIONAL SHARES SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------- ----------- -------------- ---------- -------------
Shares sold 6,226,565 $ 65,821,031 4,831,900 $ 48,424,276
- --------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 122,850 1,277,967 23,521 236,142
- --------------------------------------------------------
Shares redeemed (1,487,709) (15,675,825) (408,337) (4,090,253)
- -------------------------------------------------------- ----------- -------------- ---------- -------------
Net change resulting from Institutional share
transactions 4,861,706 $ 51,423,173 4,447,084 $ 44,570,165
- -------------------------------------------------------- ----------- -------------- ---------- -------------
</TABLE>
*For the period from January 27, 1994 (start of business) to November 30, 1994.
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, 1995 NOVEMBER 30, 1994*
<S> <C> <C> <C> <C>
SELECT SHARES SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------- ----------- -------------- ---------- -------------
Shares sold 2,065,372 $ 21,970,311 402,183 $ 4,032,259
- --------------------------------------------------------
Shares issued to shareholders in payment
of distributions declared 26,322 277,388 2,090 20,985
- --------------------------------------------------------
Shares redeemed (238,977) (2,538,357) (28,241) (284,097)
- -------------------------------------------------------- ----------- -------------- ---------- -------------
Net change resulting from select share transactions 1,852,717 $ 19,709,342 376,032 $ 3,769,147
- -------------------------------------------------------- ----------- -------------- ---------- -------------
Net change resulting from share transactions 6,714,423 $ 71,132,515 4,823,116 $ 48,339,312
- -------------------------------------------------------- ----------- -------------- ---------- -------------
</TABLE>
*For the period from January 27, 1994 (start of business) to November 30, 1994.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser,
(the "Adviser"), receives for its services an annual investment advisory fee
equal to .75 of 1% 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.
Under the terms of a sub-advisory agreement between the Adviser and Federated
Global Research Corp., Federated Global Research Corp. receives an allocable
portion of the Fund's advisory fee. Such allocation is based on the amount of
foreign securities which the Sub-Adviser manages for the Fund. This fee is paid
by the Adviser out of its resources and is not an incremental Fund expense.
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. This fee 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 Select Shares. The Plan provides that the Fund may incur
distribution expenses up to .75 of 1% of average daily net assets of the Select
Shares annually, to compensate FSC. The distributor may voluntarily choose to
waive any portion of its fee. The distributor can modify or terminate this
voluntary waiver at any time at its sole discretion.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of
1% of average daily net assets of the Fund for the period. This fee is to obtain
certain services for shareholders and to maintain shareholder accounts. FSS may
voluntarily choose to waive any portion of its fee. FSS can modify
or terminate this voluntary waiver at any time at its sole discretion. For the
fiscal year ended
November 30, 1995, Institutional Shares fully waived its Shareholder Services
fee.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Fund. This
fee is based on the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Trust's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational and start-up administrative service
expenses of $47,500 and $39,068, respectively, were borne initially by the
Adviser. The Fund has agreed to reimburse the Adviser for the organizational and
start-up administrative expenses during the five year period following effective
date. For the period ended November 30, 1995, the Fund paid $7,576 and $4,992,
respectively, pursuant to this agreement.
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended November 30, 1995, were as follows:
<TABLE>
<S> <C>
PURCHASES $ 184,101,015
- -------------------------------------------------------------------------------------------------- --------------
SALES $ 118,699,390
- -------------------------------------------------------------------------------------------------- --------------
</TABLE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
MANAGED SERIES TRUST
(Federated Managed Growth and Income Fund):
We have audited the accompanying statement of assets and liabilities of
Federated Managed Growth and Income Fund (an investment portfolio of Managed
Series Trust, a Massachusetts business trust), including the schedule of
portfolio of investments, as of November 30, 1995, the related statement of
operations for the year then ended, and the statement of changes in net assets
and the financial highlights (see pages 2 and 27 of the prospectus) for the
periods presented. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Federated Managed Growth and Income Fund (an investment portfolio of Managed
Series Trust) as of November 30, 1995, and the results of its operations for the
year then ended, and the changes in its net assets and its financial highlights
for the periods presented, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
January 18, 1995
APPENDIX
- --------------------------------------------------------------------------------
STANDARD AND POOR'S RATINGS GROUP LONG-TERM DEBT RATINGS
AAA--Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.
A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB--Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.
B--Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or
BB- rating.
CCC--Debt rated CCC has currently identifiable vulnerability to default and is
dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating.
CC--The rating CC typically is applied to debt subordinated to senior debt that
is assigned an actual or implied CCC debt rating.
C--The rating C typically is applied to debt subordinated to senior debt which
is assigned an actual or implied CCC- debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.
CI--The rating CI is reserved for income bonds on which no interest is being
paid.
D--Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D
rating also will be used upon the filing of a bankruptcy petition if debt
service payments are jeopardized.
MOODY'S INVESTORS SERVICE, INC., CORPORATE BOND RATINGS
Aaa--Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment some time in the future.
Baa--Bonds which are rated Baa are considered as medium-grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well.
Ba--Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca--Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C--Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
FITCH INVESTORS SERVICE, INC., LONG-TERM DEBT RATINGS
AAA--Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA--Bonds considered to be investment grade and of very high quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F-1+.
A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB--Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds and, therefore, impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.
BB--Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.
B--Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.
CCC--Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.
CC--Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C--Bonds are in imminent default in payment of interest or principal.
DDD, DD, AND D--Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. DDD
represents the highest potential for recovery on these bonds, and D represents
the lowest potential for recovery.
NR--NR indicates that Fitch does not rate the specific issue.
PLUS (+) OR MINUS (-): Plus or minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the AAA category.
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Federated Managed Growth and Income Fund
Select Shares Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Sub-Adviser
Federated Global Research Corp. 175 Water Street
New York, New York 10038-4965
- ---------------------------------------------------------------------------------------------------------------------
Custodian
State Street Bank and Trust Company P.O. Box 8600
Boston, Massachusetts 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company P.O. Box 8600
Boston, Massachusetts 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED
GROWTH AND INCOME FUND
SELECT SHARES
PROSPECTUS
A Diversified Portfolio
of Managed Series Trust,
an Open-End Management
Investment Company
Prospectus dated January 31, 1996
[LOGO] FEDERATED SECURITIES CORP.
---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
Lifecycle Investing
MANAGED SERIES TRUST
From Federated Investors
[LOGO]
Cusip 56166K404
3122006A-SEL (1/95)
FEDERATED MANAGED INCOME FUND
Lifecycle Investing
MANAGED SERIES TRUST
From Federated Investors
INSTITUTIONAL
SHARES
Federated Managed
Income Fund is part of
Managed Series Trust,
a lifecycle investing program from
Federated Investors.
Other funds available
in Managed Series Trust are
Federated Managed Growth and Income Fund,
Federated Managed Growth Fund,
and Federated Managed
Aggressive Growth Fund.
(Logo)
FEDERATED SECURITIES CORP.
Distributor
A subsidiary of Federated Investors
(Logo)
FEDERATED MANAGED INCOME FUND
(A PORTFOLIO OF MANAGED SERIES TRUST)
INSTITUTIONAL SHARES
PROSPECTUS
The Institutional Shares of Federated Managed Income Fund (the "Fund") offered
by this prospectus represent interests in the Fund, which is a diversified
investment portfolio of Managed Series Trust (the "Trust"). The Trust is an
open-end management investment company (a mutual fund).
The investment objective of the Fund is to seek current income. The Fund invests
in both bonds and stocks. Institutional Shares are sold at net asset value.
THE INSTITUTIONAL SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR
OBLIGATIONS OF ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD,
OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE INSTITUTIONAL SHARES
INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
This prospectus contains the information you should read and know before you
invest in Institutional Shares of the Fund. Keep this prospectus for future
reference.
The Fund has also filed a Statement of Additional Information for Institutional
Shares and Select Shares of all portfolios of the Trust dated January 31, 1996,
with the Securities and Exchange Commission. The information contained in the
Statement of Additional Information is incorporated by reference into this
prospectus. You may request a copy of the Statement of Additional Information or
a paper copy of this prospectus, if you have received your prospectus
electronically, free of charge by calling 1-800-235-4669. To obtain other
information or to make inquiries about the Fund, contact the Fund at the address
listed in the back of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus dated January 31, 1996
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Investment Limitations 15
TRUST INFORMATION 15
- ------------------------------------------------------
Management of the Trust 15
Distribution of Institutional Shares 19
Administration of the Fund 19
Brokerage Transactions 20
NET ASSET VALUE 20
- ------------------------------------------------------
INVESTING IN INSTITUTIONAL SHARES 21
- ------------------------------------------------------
Share Purchases 21
Minimum Investment Required 21
What Shares Cost 22
Subaccounting Services 22
Systematic Investment Program 22
Certificates and Confirmations 22
Dividends 22
Capital Gains 23
REDEEMING INSTITUTIONAL SHARES 23
- ------------------------------------------------------
Through a Financial Institution 23
Telephone Redemption 23
Written Requests 24
Systematic Withdrawal Program 24
Accounts with Low Balances 24
SHAREHOLDER INFORMATION 25
- ------------------------------------------------------
Voting Rights 25
TAX INFORMATION 25
- ------------------------------------------------------
Federal Income Tax 25
State and Local Taxes 25
PERFORMANCE INFORMATION 26
- ------------------------------------------------------
OTHER CLASSES OF SHARES 26
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--SELECT SHARES 27
- ------------------------------------------------------
FINANCIAL STATEMENTS 28
- ------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 52
- ------------------------------------------------------
APPENDIX 53
- ------------------------------------------------------
ADDRESSES 56
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price)........................... None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price)................................................................... None
Contingent Deferred Sales Charge (as a percentage of original purchase price or
redemption proceeds, as applicable)................................................................... None
Redemption Fee (as a percentage of amount redeemed, if applicable)...................................... None
Exchange Fee............................................................................................ None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver) (1)....................................................................... 0.00%
12b-1 Fee............................................................................................... None
Total Other Expenses (after expense reimbursement)...................................................... 0.75%
Shareholder Services Fee (after waiver) (2)............................................. 0.00%
Total Operating Expenses (3).................................................................. 0.75%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver of the
management fee. The adviser can terminate this voluntary waiver at any time
at its sole discretion. The maximum management fee is 0.75%.
(2) The maximum shareholder services fee is 0.25%.
(3) The total operating expenses would have been 1.81% absent the voluntary
waivers of the management fee and the shareholder services fee and the
voluntary reimbursement of certain other operating expenses.
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of Institutional Shares of the
Fund will bear, either directly or indirectly. For more complete descriptions of
the various costs and expenses, see "Investing in Institutional Shares" and
"Trust Information". Wire-transferred redemptions of less than $5,000 may be
subject to additional fees.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment assuming
(1) 5% annual return and (2) redemption at the end of each time
period................................................................ $8 $24 $42 $93
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
FEDERATED MANAGED INCOME FUND
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
(FORMERLY, INSTITUTIONAL SERVICE SHARES)
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 52.
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, NOVEMBER 30,
1995 1994(A)
<S> <C> <C>
- ---------------------------------------------------------------------------- ----------------- -----------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.76 $ 10.00
- ----------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------
Net investment income 0.62 0.31
- ----------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments,
foreign currency and futures contracts 0.78 (0.25)
- ---------------------------------------------------------------------------- ------- -------
Total from investment operations 1.40 0.06
- ---------------------------------------------------------------------------- ------- -------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------------
Distributions from net investment income (0.62) (0.30)
- ---------------------------------------------------------------------------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 10.54 $ 9.76
- ---------------------------------------------------------------------------- ------- -------
TOTAL RETURN (B) 14.74% 0.55%
- ----------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------
Expenses 0.75% 0.67%*
- ----------------------------------------------------------------------------
Net investment income 6.26% 6.02%*
- ----------------------------------------------------------------------------
Expense waiver/reimbursement (c) 1.06% 1.01%*
- ----------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------
Net assets, end of period (000 omitted) $50,852 $34,692
- ----------------------------------------------------------------------------
Portfolio turnover 165% 153%
- ----------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 25, 1994 (date of initial
public investment) to November 30, 1994. For the period from the start of
business, January 18, 1994 to May 24, 1994, the net investment income was
distributed to the Trust's adviser.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
Further information about the Fund's performance is contained in the Fund's
annual report for the fiscal year ended November 30, 1995, which can be obtained
free of charge.
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated November 15, 1993. The Declaration of Trust permits the Trust to
offer separate series of shares of beneficial interest representing interests in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. As of the date of this prospectus, the Board of
Trustees ("Trustees") have established two classes of shares of the Fund, known
as Institutional Shares and Select Shares. This prospectus relates only to
Institutional Shares.
Institutional Shares ("Shares") of the Fund are designed to give institutions,
individuals, and financial institutions acting in a fiduciary or agency capacity
a convenient means of accumulating an interest in a professionally managed,
diversified investment portfolio. A minimum initial investment of $25,000 over a
90-day period is required.
Shares are currently sold and redeemed at net asset value without a sales charge
imposed by the Fund.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is to seek current income. There can be, of
course, no assurance that the Fund will achieve its investment objective. The
Fund's investment objective cannot be changed without the approval of
shareholders. Unless otherwise noted, the Fund's investment policies may be
changed by the Trustees without shareholder approval.
INVESTMENT POLICIES
ASSET ALLOCATION. The Fund will primarily invest in two types of assets: bonds
and equities. The Fund's investment approach is based on the conviction that,
over time, the choice of investment asset categories and their relative
long-term weightings within the portfolio will have the primary impact on its
investment performance. Of secondary importance to the Fund's performance are
the shifting of money among asset categories and the selection of securities
within asset categories. Therefore, the Fund will pursue its investment
objective in the following manner: (1) by setting long-term ranges for each
asset category; (2) by moving money among asset categories within those defined
ranges; and (3) by actively selecting securities within each of the asset
categories. The Fund attempts to minimize risk by allocating its assets in such
a fashion.
Within each of these types of investments, the Fund has designated asset
categories. As a matter of investment policy, ranges have been set for each
asset category's portfolio commitment.
The Fund will invest between 70 and 90 percent of its assets in bonds. The bond
asset categories are U.S. Treasury securities, mortgage-backed securities,
investment-grade corporate bonds, high yield corporate bonds and foreign bonds.
The Fund will invest between 10 and 30 percent of its assets in equities. The
Fund's ability to invest a portion of its assets in equities offers the
opportunity for higher return than other income-
oriented funds. The equities asset categories are large company stocks, utility
stocks, small company stocks, foreign stocks, and equity reserves.
The following is a summary of the asset categories and the amount of the Fund's
total assets which may be invested in each asset category:
<TABLE>
<S> <C>
ASSET CATEGORY RANGE
BONDS 70-90%
U.S. Treasury Securities 0-90%
Mortgage-Backed Securities 0-45%
Investment-Grade Corporate Bonds 0-45%
High Yield Corporate Bonds 0-10%
Foreign Bonds 0-10%
EQUITIES 10-30%
Large Company Stocks 0-30%
Utility Stocks 0-15%
Small Company Stocks 0-3%
Foreign Stocks 0-3%
Equity Reserves 0-12.5%
</TABLE>
The Fund's adviser will regularly review the Fund's allocation among the asset
categories and make any changes, within the ranges established for each asset
category, that it believes will provide the most favorable outlook for achieving
the Fund's investment objective. The Fund's adviser will attempt to exploit
inefficiencies among the various asset categories. If, for example, U.S.
Treasury securities are judged to be unusually attractive relative to other
asset categories, the allocation for U.S. Treasury securities may be moved to
its upper limit. At other times, when U.S. Treasury securities appear to be
overvalued, the commitment may be moved down to a lesser allocation. There is no
assurance, however, that the adviser's attempts to pursue this strategy will
result in a benefit to the Fund.
Each asset category within the Fund will be a managed portfolio. The Fund will
seek superior investment performance through security selection in addition to
determining the percentage of its assets to allocate to each of the asset
categories.
BOND ASSET CATEGORIES. The portion of the Fund's assets which is invested in
bonds ("Bond Assets") will be allocated among the following asset categories
within the ranges specified. The prices of fixed income securities fluctuate
inversely to the direction of interest rates. The average duration of the Fund's
Bond Assets will be not less than two nor more than four years. Duration is a
commonly used measure of the potential volatility of the price of a debt
security, or the aggregate market value of a portfolio of debt securities, prior
to maturity. Securities with shorter durations generally have less volatile
prices than securities of comparable quality with longer durations. The Fund
should be expected to maintain a higher average duration during periods of lower
expected market volatility, and a lower average duration during periods of
higher expected market volatility.
U.S. TREASURY SECURITIES. U.S. Treasury securities are direct obligations
of the U.S. Treasury, such as U.S. Treasury bills, notes, and bonds. The
Fund may invest up to 90 percent of its total
assets in U.S. Treasury securities. The Fund may invest in other U.S.
government securities if, in the judgment of the adviser, other U.S.
government securities are more attractive than U.S. Treasury securities.
MORTGAGE-BACKED SECURITIES. Mortgage-backed securities represent an
undivided interest in a pool of residential mortgages or may be
collateralized by a pool of residential mortgages. Mortgage-backed
securities are generally either issued or guaranteed by the Government
National Mortgage Association ("GNMA"), Federal National Mortgage
Association ("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC") or
other U.S. government agencies or instrumentalities. Mortgage-backed
securities may also be issued by single-purpose, stand-alone finance
subsidiaries or trusts of financial institutions, government agencies,
investment bankers, or companies related to the construction industry. The
Fund may invest up to 45 percent of its total assets in mortgage-backed
securities.
INVESTMENT-GRADE CORPORATE BONDS. Investment-grade corporate bonds are
corporate debt obligations having fixed or floating rates of interest and
which are rated BBB or higher by a nationally recognized statistical rating
organization ("NRSRO"). The Fund may invest up to 45 percent of its total
assets in investment-grade corporate bonds. In certain cases, the Fund's
adviser may choose bonds which are unrated if it determines that such bonds
are of comparable quality or have similar characteristics to the
investment-grade bonds described above. Yankee bonds, which are U.S.
dollar-denominated bonds issued and traded in the United States by foreign
issuers, are treated as investment-grade corporate bonds for purposes of
the asset category ranges.
HIGH YIELD CORPORATE BONDS. High yield corporate bonds are corporate debt
obligations having fixed or floating rates of interest and which are rated
BB or lower by NRSROs (commonly known as junk bonds). The Fund may invest
up to ten percent of its total assets in high yield corporate bonds. There
is no minimal acceptable rating for a security to be purchased or held in
the Fund's portfolio, and the Fund may, from time to time, purchase or hold
securities rated in the lowest rating category. (See "Appendix.") In
certain cases the Fund's adviser may choose bonds which are unrated if it
determines that such bonds are of comparable quality or have similar
characteristics to the high yield bonds described above.
INVESTMENT RISKS. Lower-rated securities will usually offer higher
yields than higher-rated securities. However, there is more risk
associated with these investments. This is because of reduced
creditworthiness and increased risk of default. Lower-rated securities
generally tend to reflect short-term corporate and market developments
to a greater extent than higher-rated securities which react primarily
to fluctuations in the general level of interest rates. Short-term
corporate and market developments affecting the price or liquidity of
lower-rated securities could include adverse news affecting major
issuers, underwriters, or dealers of lower-rated corporate debt
obligations. In addition, since there are fewer investors in
lower-rated securities, it may be harder to sell the securities at an
optimum time. As a result of these factors, lower-rated securities tend
to have more price volatility and carry more risk to principal than
higher-rated securities.
Many corporate debt obligations, including many lower-rated bonds,
permit the issuers to call the security and thereby redeem their
obligations earlier than the stated maturity dates. Issuers are more
likely to call bonds during periods of declining interest rates. In
these cases, if the Fund owns a bond which is called, the Fund will
receive its return of principal earlier than expected and would likely
be required to reinvest the proceeds at lower interest rates, thus
reducing income to the Fund.
FOREIGN BONDS. Foreign bonds are high-quality debt securities of countries
other than the United States. The Fund's portfolio of foreign bonds will be
comprised mainly of foreign government, foreign governmental agency or
supranational institution bonds. The Fund will also invest in high-quality
debt securities issued by corporations in countries other than the United
States and subject to the Fund's credit limitations for foreign bonds. The
Fund may invest up to ten percent of its total assets in foreign bonds.
EQUITY ASSET CATEGORIES. The portion of the Fund's assets which is invested in
equities will be allocated among the following asset categories within the
ranges specified:
LARGE COMPANY STOCKS. Large company stocks are common stocks and
securities convertible into or exchangeable for common stocks, such as
rights and warrants, of high-quality companies selected by the Fund's
adviser. Ordinarily, these companies will be in the top 25 percent of their
industries with regard to revenues and have a market capitalization of
$500,000,000 or more. However, other factors, such as a company's product
position, market share, current earnings and/or dividend and earnings
growth prospects, will be considered by the Fund's adviser and may outweigh
revenues. The Fund may invest up to 30 percent of its total assets in large
company stocks.
UTILITY STOCKS. Utility stocks are common stocks and securities
convertible into or exchangeable for common stocks, such as rights and
warrants, of utility companies. The Fund may invest up to 15 percent of its
total assets in utility stocks. Common stocks of utilities are generally
characterized by higher dividend yields and lower growth rates than common
stocks of industrial companies. Under normal market conditions, the higher
income stream from utility stocks tends to make them less volatile than
stocks of industrial companies.
SMALL COMPANY STOCKS. Small company stocks are common stocks and
securities convertible into or exchangeable for common stocks, such as
rights and warrants, of companies with a market capitalization (market
price x number of shares outstanding) below the top 1,000 stocks that
comprise the large and mid-range capitalization sector of the United States
equity market. These stocks are comparable to, but not limited to, the
stocks comprising the Russell 2000 Index, an index of small capitalization
stocks. The Fund may invest up to three percent of its total assets in
small company stocks.
FOREIGN STOCKS. Foreign stocks are equity securities of established
companies in economically developed countries other than the United States.
These securities may be either dollar-denominated or denominated in foreign
currencies. American Depository Receipts ("ADRs"), including dollar
denominated ADRs which are issued by domestic banks and traded in the
United States on exchanges or over-the-counter, are treated as foreign
stocks for
purposes of the asset category ranges. The Fund may invest up to three
percent of its total assets in foreign stocks.
EQUITY RESERVES. When the adviser believes that a temporary defensive
position is available, the Fund may invest in equity reserves. Equity
reserves will be used to adjust the risk level of the equity portion of the
Fund in response to market conditions. Equity reserves will consist of U.S.
and foreign short-term money market instruments such as commercial paper
rated A-1 by Standard and Poor's Ratings Group ("Standard & Poor's"),
Prime-1 by Moody's Investors Service, Inc. ("Moody's"), or F-1 by Fitch
Investors Service, Inc. ("Fitch"). The Fund may invest up to 12.5 percent
of its total assets in equity reserves.
ACCEPTABLE INVESTMENTS
U.S. TREASURY AND OTHER U.S. GOVERNMENT SECURITIES. The U.S. Treasury and
other U.S. government securities in which the Fund invests are either
issued or guaranteed by the U.S. government, its agencies or
instrumentalities. The U.S. government securities in which the Fund may
invest are limited to:
direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds; and
obligations issued by U.S. government agencies or instrumentalities,
including securities that are supported by the full faith and credit of
the U.S. Treasury (such as GNMA certificates); securities that are
supported by the right of the issuer to borrow from the U.S. Treasury
(such as securities of Federal Home Loan Banks); and securities that are
supported by the credit of an agency or instrumentality (such as FNMA and
FHLMC bonds).
MORTGAGE-BACKED SECURITIES. Mortgaged-backed securities are securities
collateralized by residential mortgages. The mortgage-backed securities in
which the Fund may invest may be:
issued by an agency of the U.S. government, typically GNMA, FNMA or
FHLMC;
privately issued securities which are collateralized by pools of
mortgages in which each mortgage is guaranteed as to payment of principal
and interest by an agency or instrumentality of the U.S. government;
privately issued securities which are collateralized by pools of
mortgages in which payment of principal and interest are guaranteed by
the issuer and such guarantee is collateralized by U.S. government
securities; and
other privately issued securities in which the proceeds of the issuance
are invested in mortgage-backed securities and payment of the principal
and interest are supported by the credit of an agency or instrumentality
of the U.S. government.
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"). CMOs are bonds issued by
single-purpose, stand-alone finance subsidiaries or trusts of financial
institutions, government agencies, investment bankers, or companies
related to the construction industry. Most of the CMOs in which the
Fund would invest use the same basic structure:
Several classes of securities are issued against a pool of mortgage
collateral. The most common structure contains four classes of
securities. The first three (A, B, and C bonds) pay interest at
their stated rates beginning with the issue date; the final class
(or Z
bond) typically receives the residual income from the underlying
investments after payments are made to the other classes.
The cash flows from the underlying mortgages are applied first to
pay interest and then to retire securities.
The classes of securities are retired sequentially. All principal
payments are directed first to the shortest-maturity class (or A
bonds). When those securities are completely retired, all principal
payments are then directed to the next-shortest maturity security
(or B bond). This process continues until all of the classes have
been paid off.
Because the cash flow is distributed sequentially instead of pro rata
as with pass-through securities, the cash flows and average lives of
CMOs are more predictable, and there is a period of time during which
the investors in the longer-maturity classes receive no principal
paydowns. The interest portion of these payments is distributed by the
Fund as income and the capital portion is reinvested.
The Fund will invest only in CMOs which are rated AAA or Aaa by an
NRSRO.
REAL ESTATE MORTGAGE INVESTMENT CONDUITS ("REMICS"). REMICs are
offerings of multiple class real estate mortgage-backed securities
which qualify and elect treatment as such under provisions of the
Internal Revenue Code. Issuers of REMICs may take several forms, such
as trusts, partnerships, corporations, associations or a segregated
pool of mortgages. Once REMIC status is elected and obtained, the
entity is not subject to federal income taxation. Instead, income is
passed through the entity and is taxed to the person or persons who
hold interests in the REMIC. A REMIC interest must consist of one or
more classes of "regular interests," some of which may offer adjustable
rates, and a single class of "residual interests." To qualify as a
REMIC, substantially all of the assets of the entity must be in assets
directly or indirectly secured principally by real property.
CHARACTERISTICS OF MORTGAGE-BACKED SECURITIES. Mortgage-backed
securities have yield and maturity characteristics corresponding to the
underlying mortgages. Distributions to holders of mortgage-backed
securities include both interest and principal payments. Principal
payments represent the amortization of the principal of the underlying
mortgages and any prepayments of principal due to prepayment,
refinancing, or foreclosure of the underlying mortgages. Although
maturities of the underlying mortgage loans may range up to 30 years,
amortization and prepayments substantially shorten the effective
maturities of mortgage-backed securities. Due to these features,
mortgage-backed securities are less effective as a means of "locking
in" attractive long-term interest rates than fixed-income securities
which pay only a stated amount of interest until maturity, when the
entire principal amount is returned. This is caused by the need to
reinvest at lower interest rates both distributions of principal
generally and significant prepayments which become more likely as
mortgage interest rates decline. Since comparatively high interest
rates cannot be effectively "locked in," mortgage-backed securities may
have less potential for capital appreciation during periods of
declining interest rates than other
non-callable, fixed-income government securities of comparable stated
maturities. However, mortgage-backed securities may experience less
pronounced declines in value during periods of rising interest rates.
In addition, some of the CMOs purchased by the Fund may represent an
interest solely in the principal repayments or solely in the interest
payments on mortgage-backed securities (stripped mortgage-backed
securities or "SMBSs"). Due to the possibility of prepayments on the
underlying mortgages, SMBSs may be more interest-rate sensitive than
other securities purchased by the Fund. If prevailing interest rates
fall below the level at which SMBSs were issued, there may be
substantial prepayments on the underlying mortgages, leading to the
relatively early prepayments of principal-only SMBSs and a reduction in
the amount of payments made to holders of interest-only SMBSs. It is
possible that the Fund might not recover its original investment in
interest-only SMBSs if there are substantial prepayments on the
underlying mortgages. Therefore, interest-only SMBSs generally increase
in value as interest rates rise and decrease in value as interest rates
fall, counter to changes in value experienced by most fixed-income
securities. The Fund's adviser intends to use this characteristic of
interest-only SMBSs to reduce the effects of interest rate changes on
the value of the Fund's portfolio, while continuing to pursue the
Fund's investment objective.
CORPORATE BONDS. The investment-grade corporate bonds in which the Fund
invests are:
rated within the four highest ratings for corporate bonds by Moody's
(Aaa, Aa, A, or Baa), Standard & Poor's (AAA, AA, A, or BBB), or Fitch
(AAA, AA, A, or BBB);
unrated if other long-term debt securities of that issuer are rated, at
the time of purchase, Baa or better by Moody's or BBB or better by
Standard & Poor's or Fitch; or
unrated if determined to be of equivalent quality to one of the foregoing
rating categories by the Fund's adviser.
Securities which are rated BBB by Standard & Poor's or Fitch or Baa by
Moody's have speculative characteristics. Changes in economic conditions or
other circumstances are more likely to lead to weakened capacity to make
principal and interest payments than higher rated bonds. If a security's
rating is reduced below the required minimum after the Fund has purchased
it, the Fund is not required to sell the security, but may consider doing
so.
The high yield corporate bonds in which the Fund invests are rated Ba or
lower by Moody's or BB or lower by Standard & Poor's or Fitch (commonly
known as junk bonds). A description of the rating categories is contained
in the Appendix to this prospectus.
EQUITY SECURITIES. Common stocks represent ownership interest in a
corporation. Unlike bonds, which are debt securities, common stocks have
neither fixed maturity dates nor fixed schedules of promised payments.
Utility stocks are common stocks of utility companies, including water
companies, companies that produce, transmit, or distribute gas and electric
energy and those companies that provide communications facilities, such as
telephone and telegraph companies. Foreign stocks are equity securities of
foreign issuers.
FOREIGN SECURITIES. The foreign bonds in which the Fund invests are rated
within the four highest ratings for bonds by Moody's (Aaa, Aa, A or Baa) or
by Standard & Poor's (AAA, AA, A or BBB) or are unrated if determined to be
of equivalent quality by the Fund's adviser.
INVESTMENT RISKS. Investments in foreign securities involve special
risks that differ from those associated with investments in domestic
securities. The risks associated with investments in foreign securities
apply to securities issued by foreign corporations and sovereign
governments. These risks relate to political and economic developments
abroad, as well as those that result from the differences between the
regulation of domestic securities and issuers and foreign securities
and issuers. These risks may include, but are not limited to,
expropriation, confiscatory taxation, currency fluctuations,
withholding taxes on interest, limitations on the use or transfer of
Fund assets, political or social instability and adverse diplomatic
developments. It may also be more difficult to enforce contractual
obligations or obtain court judgments abroad than would be the case in
the United States because of differences in the legal systems. If the
issuer of the debt or the governmental authorities that control the
repayment of the debt may be unable or unwilling to repay principal or
interest when due in accordance with the terms of such debt, the Fund
may have limited legal recourse in the event of default. Moreover,
individual foreign economies may differ favorably or unfavorably from
the domestic economy in such respects as growth of gross national
product, the rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position.
Additional differences exist between investing in foreign and domestic
securities. Examples of such differences include: less publicly
available information about foreign issuers; credit risks associated
with certain foreign governments; the lack of uniform financial
accounting standards applicable to foreign issuers; less readily
available market quotations on foreign issuers; the likelihood that
securities of foreign issuers may be less liquid or more volatile;
generally higher foreign brokerage commissions; and unreliable mail
service between countries.
EQUITY RESERVES. The Fund's equity reserves may be cash received from the
sale of Fund shares, reserves for temporary defensive purposes or to take
advantage of market opportunities.
REPURCHASE AGREEMENTS. Repurchase agreements are arrangements in which
banks, broker/dealers, and other recognized financial institutions sell
securities to the Fund and agree at the time of sale to repurchase them
at a mutually agreed upon time and price. To the extent that the
original seller does not repurchase the securities from the Fund, the
Fund could receive less than the repurchase price on any sale of such
securities.
CONVERTIBLE SECURITIES. Convertible securities are fixed-income securities
which may be exchanged or converted into a predetermined number of the
issuer's underlying common stock at the option of the holder during a
specified time period. Convertible securities may take the form of
convertible preferred stock, convertible bonds or debentures, units
consisting of "usable" bonds and warrants or a combination of the features
of several of these securities.
The investment characteristics of each convertible security vary widely,
which allows convertible securities to be employed for different investment
objectives. The adviser may treat convertible securities as large company
stocks, small company stocks, or high yield bonds for purposes of the asset
category ranges, depending upon current market conditions, including the
relationship of the then-current price to the conversion price. The
convertible securities in which the Fund invests may be rated "high yield"
or of comparable quality at the time of purchase.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Fund may invest in
the securities of other investment companies, but it will not own more than 3
percent of the total outstanding voting stock of any such investment company,
invest more than 5 percent of its total assets in any one such investment
company, or invest more than 10 percent of its total assets in such other
investment companies in general. To the extent that the Fund invests in
securities issued by other investment companies, the Fund will indirectly bear
its proportionate share of any fees and expenses paid by such companies in
addition to the fees and expenses payable directly by the Fund.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies but which are
subject to restrictions on resale under federal securities law. However, the
Fund will limit investments in illiquid securities, including certain restricted
securities not determined by the Trustees to be liquid, over-the-counter
options, and repurchase agreements providing for settlement in more than seven
days after notice, to 15 percent of its net assets.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
Accordingly, the Fund may pay more or less than the market value of the
securities on the settlement date.
The Fund may dispose of a commitment prior to settlement if the adviser deems it
appropriate to do so. In addition, the Fund may enter into transactions to sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Fund may realize short-term profits or losses upon the sale of such
commitments.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend its portfolio securities on a short-term or long-term basis up to
one-third of the value of its total assets to broker/dealers, banks, or other
institutional borrowers of securities. The Fund will only enter into loan
arrangements with broker/dealers, banks, or other institutions which the adviser
has determined are creditworthy under guidelines established by the Trustees and
will receive collateral in the form of cash or U.S. government securities equal
to at least 100 percent of the value of the securities loaned.
There is the risk that when lending portfolio securities, the securities may not
be available to the Fund on a timely basis and the Fund may, therefore, lose the
opportunity to sell the securities at a
desirable price. In addition, in the event that a borrower of securities would
file for bankruptcy or become insolvent, disposition of the securities may be
delayed pending court action.
FOREIGN CURRENCY TRANSACTIONS. The Fund will enter into foreign currency
transactions to obtain the necessary currencies to settle securities
transactions. Currency transactions may be conducted either on a spot or cash
basis at prevailing rates or through forward foreign currency exchange
contracts.
The Fund may also enter into foreign currency transactions to protect Fund
assets against adverse changes in foreign currency exchange rates or exchange
control regulations. Such changes could unfavorably affect the value of Fund
assets which are denominated in foreign currencies, such as foreign securities
or funds deposited in foreign banks, as measured in U.S. dollars. Although
foreign currency exchanges may be used by the Fund to protect against a decline
in the value of one or more currencies, such efforts may also limit any
potential gain that might result from a relative increase in the value of such
currencies and might, in certain cases, result in losses to the Fund.
CURRENCY RISKS. To the extent that debt securities purchased by the Fund
are denominated in currencies other than the U.S. dollar, changes in
foreign currency exchange rates will affect the Fund's net asset value; the
value of interest earned; gains and losses realized on the sale of
securities; and net investment income and capital gain, if any, to be
distributed to shareholders by the Fund. If the value of a foreign currency
rises against the U.S. dollar, the value of the Fund's assets denominated
in that currency will increase; correspondingly, if the value of a foreign
currency declines against the U.S. dollar, the value of the Fund's assets
denominated in that currency will decrease.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward foreign currency
exchange contract ("forward contract") is an obligation to purchase or sell an
amount of a particular currency at a specific price and on a future date agreed
upon by the parties.
Generally, no commission charges or deposits are involved. At the time the Fund
enters into a forward contract, Fund assets with a value equal to the Fund's
obligation under the forward contract are segregated and are maintained until
the contract has been settled. The Fund will not enter into a forward contract
with a term of more than one year.
The Fund will generally enter into a forward contract to provide the proper
currency to settle a securities transaction at the time the transaction occurs
("trade date"). The period between trade date and settlement date will vary
between 24 hours and 30 days, depending upon local custom.
The Fund may also protect against the decline of a particular foreign currency
by entering into a forward contract to sell an amount of that currency
approximating the value of all or a portion of the Fund's assets denominated in
that currency ("hedging"). The success of this type of short-term hedging
strategy is highly uncertain due to the difficulties of predicting short-term
currency market movements and of precisely matching forward contract amounts and
the constantly changing value of the securities involved. Although the adviser
will consider the likelihood of changes in currency values when making
investment decisions, the adviser believes that it is important to be able to
enter into forward contracts when it believes the interests of the Fund will be
served. The Fund will not enter into forward contracts for hedging purposes in a
particular currency in an amount in
excess of the Fund's assets denominated in that currency. The Fund will not
invest more than 3% of its total assets in forward foreign currency exchange
contracts.
OPTIONS. The Fund may deal in options on foreign currencies, foreign currency
futures, securities, and securities indices, which options may be listed for
trading on a national securities exchange or traded over-the-counter. The Fund
will use options only to manage interest rate and currency risks. The Fund may
write covered call options to generate income. The Fund may write covered call
options and secured put options on up to 25 percent of its net assets and may
purchase put and call options provided that no more than 5 percent of the fair
market value of its net assets may be invested in premiums on such options.
A call option gives the purchaser the right to buy, and the writer the
obligation to sell, the underlying currency, security or other asset at the
exercise price during the option period. A put option gives the purchaser the
right to sell, and the writer the obligation to buy, the underlying currency,
security or other asset at the exercise price during the option period. The
writer of a covered call owns assets that are acceptable for escrow, and the
writer of a secured put invests an amount not less than the exercise price in
eligible assets to the extent that it is obligated as a writer. If a call
written by the Fund is exercised, the Fund foregoes any possible profit from an
increase in the market price of the underlying asset over the exercise price
plus the premium received. In writing puts, there is a risk that the Fund may be
required to take delivery of the underlying asset at a disadvantageous price.
Over-the-counter options ("OTC options") differ from exchange traded options in
several respects. They are transacted directly with dealers and not with a
clearing corporation, and there is a risk of non-performance by the dealer as a
result of the insolvency of such dealer or otherwise, in which event the Fund
may experience material losses. However, in writing options, the premium is paid
in advance by the dealer. OTC options, which may not be continuously liquid, are
available for a greater variety of assets and with a wider range of expiration
dates and exercise prices, than are exchange traded options.
FUTURES AND OPTIONS ON FUTURES. The Fund may purchase and sell futures
contracts to accommodate cash flows into and out of the Fund's portfolio and to
hedge against the effects of changes in the value of portfolio securities due to
anticipated changes in interest rates and market conditions. Interest rate
futures contracts call for the delivery of particular debt instruments at a
certain time in the future. The seller of the contract agrees to make delivery
of the type of instrument called for in the contract and the buyer agrees to
take delivery of the instrument at the specified future time.
Stock index futures contracts are based on indexes that reflect the market value
of common stock of the firms included in the indexes. An index futures contract
is an agreement pursuant to which two parties agree to take or make delivery of
an amount of cash equal to the differences between the value of the index at the
close of the last trading day of the contract and the price at which the index
contract was originally written. The Fund may utilize stock index futures to
handle cash flows into and out of the Fund and to potentially reduce
transactional costs.
The Fund may also write call options and purchase put options on futures
contracts as a hedge to attempt to protect its portfolio securities against
decreases in value. When the Fund writes a call option on a futures contract, it
is undertaking the obligation of selling a futures contract at a fixed
price at any time during a specified period if the option is exercised.
Conversely, as purchaser of a put option on a futures contract, the Fund is
entitled (but not obligated) to sell a futures contract at the fixed price
during the life of the option.
The Fund may not purchase or sell futures contracts or related options if
immediately thereafter the sum of the amount of margin deposits on the Fund's
existing futures positions and premiums paid for related options would exceed 5
percent of the market value of the Fund's total assets. When the Fund purchases
futures contracts, an amount of cash and cash equivalents, equal to the
underlying commodity value of the futures contracts (less any related margin
deposits), will be deposited in a segregated account with the custodian (or the
broker, if legally permitted) to collateralize the position and thereby insure
that the use of such futures contracts are unleveraged. When the Fund sells
futures contracts, it will either own or have the right to receive the
underlying future or security or will make deposits to collateralize the
position as discussed above.
RISKS. When the Fund uses futures and options on futures as hedging
devices, there is a risk that the prices of the securities subject to the
futures contracts may not correlate perfectly with the prices of the
securities in the Fund's portfolio. This may cause the futures contract and
any related options to react differently than the portfolio securities to
market changes. In addition, the investment adviser could be incorrect in
its expectations about the direction or extent of market factors such as
stock price movements. In these events, the Fund may lose money on the
futures contract or option.
It is not certain that a secondary market for positions in futures
contracts or for options will exist at all times. Although the investment
adviser will consider liquidity before entering into these transactions,
there is no assurance that a liquid secondary market on an exchange or
otherwise will exist for any particular futures contract or option at any
particular time. The Fund's ability to establish and close out futures and
options positions depends on this secondary market.
PORTFOLIO TURNOVER. Although the Fund does not intend to invest for the purpose
of seeking short-term profits, securities in its portfolio will be sold whenever
the Fund's adviser believes it is appropriate to do so in light of the Fund's
investment objective, without regard to the length of time a particular security
may have been held. The Fund's rate of portfolio turnover may exceed that of
certain other mutual funds with the same investment objective. A higher rate of
portfolio turnover involves correspondingly greater transaction expenses which
must be borne directly by the Fund and, thus, indirectly by its shareholders. In
addition, a high rate of portfolio turnover may result in the realization of
larger amounts of capital gains which, when distributed to the Fund's
shareholders, are taxable to them. (Further information is contained in the
Fund's Statement of Additional Information within the sections "Brokerage
Transactions" and "Tax Status"). Nevertheless, transactions for the Fund's
portfolio will be based only upon investment considerations and will not be
limited by any other considerations when the Fund's adviser deems it appropriate
to make changes in the Fund's portfolio.
INVESTMENT LIMITATIONS
The Fund will not:
borrow money directly or through reverse repurchase agreements or pledge
securities except, under certain circumstances, the Fund may borrow up to
one-third of the value of its total assets and pledge up to 15 percent of
the value of those assets to secure such borrowings;
lend any securities except for portfolio securities; or
underwrite any issue of securities, except as it may be deemed to be an
underwriter under the Securities Act of 1933 in connection with the sale
of restricted securities which the Fund may purchase pursuant to its
investment objective, policies and limitations.
The above investment limitations cannot be changed without shareholder approval.
TRUST INFORMATION
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MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Trust's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. The Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Except as noted below with regard to the sub-adviser,
investment decisions for the Fund are made by Federated Management, the Fund's
investment adviser (the "Adviser"), subject to direction by the Trustees. The
Adviser continually conducts investment research and supervision for the Fund
and is responsible for the purchase or sale of portfolio instruments, for which
it receives an annual fee from the Fund.
ADVISORY FEES. The Fund's Adviser receives an annual investment advisory
fee equal to .75 of 1% of the Fund's average daily net assets. The fee paid
by the Fund, while higher than the advisory fee paid by other mutual funds
in general, is comparable to fees paid by other mutual funds with similar
objectives and policies. Under the advisory contract, which provides for
voluntary reimbursement of expenses by the Adviser, the Adviser may
voluntarily waive some or all of its fee. This does not include
reimbursement to the Fund of any expenses incurred by shareholders who use
the transfer agent's subaccounting facilities. The Adviser has also
undertaken to reimburse the Fund for operating expenses in excess of
limitations established by certain states.
ADVISER'S BACKGROUND. Federated Management, a Delaware business trust
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940.
SUB-ADVISER. Under the terms of the Sub-Advisory Agreement between the Adviser
and Federated Global Research Corp. (the "Sub-Adviser"), the Sub-Adviser will
provide the Adviser such investment advice, statistical and other factual
information as may, from time to time, be reasonably requested by the Adviser.
SUB-ADVISORY FEES. For its services under the Sub-Advisory Agreement, the
Sub-Adviser receives an allocable portion of the Fund's advisory fee. Such
allocation is based on the amount of foreign securities which the
Sub-Adviser manages for the Fund. This fee is paid by the Adviser out of
its resources and is not an incremental Fund expense.
SUB-ADVISER'S BACKGROUND. Federated Global Research Corp., incorporated in
Delaware on May 12, 1995, is a registered investment adviser under the
Investment Advisers Act of 1940. Prior to September 1995, the Sub-Adviser
had not served as an investment adviser to mutual funds.
The Adviser and Sub-Adviser are subsidiaries of Federated Investors. All of the
Class A (voting) shares of Federated Investors are owned by a trust, the
trustees of which are John F. Donahue, Chairman and Trustee of Federated
Investors, Mr. Donahue's wife, and Mr. Donahue's son, J. Christopher Donahue,
who is President and Trustee of Federated Investors.
Federated Management, Federated Global Research Corp. and other subsidiaries of
Federated Investors serve as investment advisers to a number of investment
companies and private accounts. Certain other subsidiaries also provide
administrative services to a number of investment companies. With over $80
billion invested across more than 250 funds under management and/or
administration by its subsidiaries, as of December 31, 1995, Federated Investors
is one of the largest mutual fund investment managers in the United States. With
more than 1,800 employees, Federated continues to be led by the management who
founded the company in 1955. Federated funds are presently at work in and
through 4,000 financial institutions nationwide. More than 100,000 investment
professionals have selected Federated funds for their clients.
The Trust, the Adviser, and the Sub-Adviser have adopted strict codes of ethics
governing the conduct of all employees who manage the Fund and its portfolio
securities. These codes recognize that such persons owe a fiduciary duty to the
Fund's shareholders and must place the interests of shareholders ahead of the
employees' own interest. Among other things, the codes: require preclearance and
periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered for
purchase or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less than sixty
days. Violations of the codes are subject to review by the Board of Trustees and
could result in severe penalties.
PORTFOLIO MANAGERS' BACKGROUNDS. Charles A. Ritter is the portfolio
manager for the Fund and performs the overall allocation of the assets of
the Fund among the various asset categories. He has performed these duties
since the Fund's inception. In allocating the Fund's assets, Mr. Ritter
evaluates the market environment and economic outlook, utilizing the
services of the Adviser's economist and strategist. Mr. Ritter joined
Federated Investors in 1983 and has been a Vice President of the Fund's
Adviser since 1992. From 1988 until 1991, Mr. Ritter acted as an Assistant
Vice President. Mr. Ritter is a Chartered Financial Analyst and received
his M.B.A. in Finance from the University of Chicago and his M.S. in
Economics from Carnegie Mellon University.
The portfolio managers for each of the individual asset categories are as
follows:
Peter R. Anderson and Aash Shah are portfolio managers for the domestic
large company stocks asset category. Mr. Anderson has performed this duty
since the Fund's inception. Mr. Shah assumed his responsibilities in
December 1995. Mr. Anderson joined Federated Investors in 1972 and is
presently a Senior Vice President of the Fund's Adviser. Mr. Anderson is a
Chartered Financial Analyst and received his M.B.A. in Finance from the
University of Wisconsin. Mr. Shah joined Federated Investors in 1993 as an
Investment Analyst and has been an Assistant Vice President of the Fund's
Adviser since 1995. Mr. Shah was employed at Westinghouse Credit Corp. from
1990 to 1993 as an Investment Analyst. Mr. Shah received his M.S.I.A. from
Carnegie Mellon University with a concentration in finance and accounting.
Mr. Shah is a Chartered Financial Analyst.
James Grefenstette is the portfolio manager for the domestic small company
stocks asset category. He has served in this capacity since August 1994.
Mr. Grefenstette joined Federated Investors in 1992 and has been an
Assistant Vice President of the Fund's Adviser since 1994. From 1992 until
1994, Mr. Grefenstette acted as an investment analyst. Mr. Grefenstette was
a credit analyst at Westinghouse Credit Corp. from 1990 until 1992. Mr.
Grefenstette received his M.S.I.A. from Carnegie Mellon University.
Christopher H. Wiles is the portfolio manager for the utility stocks asset
category of all the portfolios of Managed Series Trust except for Federated
Managed Aggressive Growth Fund, and has been one of the Fund's portfolio
managers since its inception. Mr. Wiles joined Federated Investors in 1990
and has been a Vice President of the Fund's Adviser since 1992. Mr. Wiles
served as Assistant Vice President of the Fund's Adviser from 1990 until
1992. Mr. Wiles is a Chartered Financial Analyst and received his M.B.A. in
Finance from Cleveland State University.
Henry Frantzen, Drew Collins, Mark Kopinski, Frank Semack, and Alexandre de
Bethmann are portfolio managers for the foreign stocks asset category.
Henry A. Frantzen has been a portfolio manager of the Fund since November
1995. Mr. Frantzen joined Federated Investors in 1995 as an Executive Vice
President of the Fund's Sub-Adviser. Mr. Frantzen served as Chief
Investment Officer of international equities at Brown Brothers Harriman &
Co. from 1992 to 1995. He was the Executive Vice President and Director of
Equities at Oppenheimer Management Corporation from 1989 to 1991. Mr.
Frantzen received his B.S. in finance and marketing from the University of
North Dakota.
Drew J. Collins has been a portfolio manager of the Fund since November
1995. Mr. Collins joined Federated Investors in 1995 as a Senior Vice
President of the Fund's Sub-Adviser. Mr. Collins served as a Vice
President/Portfolio Manager of international equity portfolios at Arnhold
and S. Bleichroeder, Inc. from 1994 to 1995. He served as an Assistant Vice
President/ Portfolio Manager for international equities at the College
Retirement Equities Fund from 1986 to 1994. Mr. Collins is a Chartered
Financial Analyst and received his M.B.A. in finance from the University of
Pennsylvania.
Mark S. Kopinski has been a portfolio manager of the Fund since November
1995. Mr. Kopinski joined Federated Investors in 1995 as a Vice President
of the Fund's Sub-Adviser. Mr.
Kopinski served as Vice President/Portfolio Manager of international equity
funds at Twentieth Century Mutual Funds from 1990 to 1995. Mr. Kopinski
received his M.B.A. in Asian Studies from the University of Illinois.
Frank Semack has been a portfolio manager of the Fund since November 1995.
Mr. Semack joined Federated Investors in 1995 as a Vice President of the
Fund's Sub-Adviser. Mr. Semack served as an Investment Analyst at Omega
Advisers, Inc. from 1993 to 1994. He served as an Associate
Director/Portfolio Manager of Wardley Investment Services, Ltd. from 1987
to 1993. Mr. Semack received his M.Sc. in economics from the London School
of Economics.
Alexandre de Bethmann has been a portfolio manager of the Fund since
November 1995. Mr. de Bethmann joined Federated Investors in 1995 as a Vice
President of the Fund's Sub-Adviser. Mr. de Bethmann served as Assistant
Vice President/Portfolio Manager for Japanese and Korean equities at the
College Retirement Equities Fund from 1994 to 1995. He served as an
International Equities Analyst and then as an Assistant Portfolio Manager
at the College Retirement Equities Fund between 1987 and 1994. Mr. de
Bethmann received his M.B.A. in Finance from Duke University.
Henry Frantzen, Drew Collins, and Robert Kowit are portfolio managers for
the foreign bonds asset category. They have performed these duties since
November 1995.
Robert M. Kowit joined Federated Investors in 1995 as a Vice President of
the Fund's Sub-Adviser. Mr. Kowit served as a Managing Partner of
Copernicus Global Asset Management from January 1995 through October 1995.
From 1990 to 1994, he served as Senior Vice President of International
Fixed Income and Foreign Exchange for John Hancock Advisers. Mr. Kowit
received his M.B.A. from Iona College with a concentration in finance.
Susan M. Nason and Joseph M. Balestrino are portfolio managers for the U.S.
Treasury securities asset category. Ms. Nason has performed this duty since
the Fund's inception. Mr. Balestrino assumed his responsibilities on March
1, 1995. Ms. Nason joined Federated Investors in 1987 and has been a Vice
President of the Fund's Adviser since 1993. Ms. Nason served as an
Assistant Vice President of the Adviser from 1990 until 1992. Ms. Nason is
a Chartered Financial Analyst and received her M.S.I.A. in Finance from
Carnegie Mellon University. Mr. Balestrino joined Federated Investors in
1986 and has been Vice President of the Fund's Adviser since 1995. Mr.
Balestrino served as an Assistant Vice President from 1991 until 1995, and
as an investment analyst of the Adviser from 1989 until 1991. Mr.
Balestrino is a Chartered Financial Analyst and received his M.A. in Urban
and Regional Planning from the University of Pittsburgh.
Thomas M. Franks is the portfolio manager for the equity reserves asset
category. He has performed these duties since the Fund's inception. Mr.
Franks joined Federated Investors in 1985 and has been a Vice President of
the Fund's Adviser since 1990. Mr. Franks is a Chartered Financial Analyst
and received his M.S.I.A. in Business Administration from Carnegie Mellon
University.
Kathleen M. Foody-Malus and James D. Roberge are portfolio managers for the
mortgage-backed securities asset category. Ms. Foody-Malus has performed
this duty since the
Fund's inception. Mr. Roberge assumed his responsibilities on March 1,
1995. Ms. Foody-Malus joined Federated Investors in 1983 and has been a
Vice President of the Fund's Adviser since 1993. Ms. Foody-Malus served as
an Assistant Vice President of the Adviser from 1990 until 1992. Ms.
Foody-Malus received her M.B.A. in Accounting/Finance from the University
of Pittsburgh. Mr. Roberge joined Federated Investors in 1990 and has been
a Vice President of the Fund's Adviser since October, 1994. Prior to this,
Mr. Roberge served as an Assistant Vice President of the Fund's Adviser.
From 1990 until 1992, Mr. Roberge acted as an investment analyst. Mr.
Roberge is a Chartered Financial Analyst and received his M.B.A. in Finance
from the University of Pennsylvania.
Joseph M. Balestrino and Susan M. Nason are portfolio managers for the
investment-grade corporate bonds asset category. They have performed these
duties since the Fund's inception.
Mark E. Durbiano is the portfolio manager for the high yield corporate
bonds asset category. He has performed these duties since the Fund's
inception. Mr. Durbiano joined Federated Investors in 1982 and has been a
Senior Vice President of the Fund's Adviser since January 1996. Mr.
Durbiano was a Vice President of the Fund's Adviser from 1988 through 1995.
Mr. Durbiano is a Chartered Financial Analyst and received his M.B.A. in
Finance from the University of Pittsburgh.
DISTRIBUTION OF INSTITUTIONAL SHARES
Federated Securities Corp. is the principal distributor for Shares. It is a
Pennsylvania corporation organized on November 14, 1969, and is the principal
distributor for a number of investment companies. Federated Securities Corp. is
a subsidiary of Federated Investors.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides administrative personnel and services (including
certain legal and financial reporting services) necessary to operate the Fund.
Federated Administrative Services provides these at an annual rate which relates
to the average aggregate daily net assets of all funds advised by subsidiaries
of Federated Investors ("Federated Funds") as specified below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE DAILY
ADMINISTRATIVE FEE NET ASSETS OF THE FEDERATED FUNDS
<S> <C>
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Administrative Services may choose voluntarily to waive a portion of
its fee.
SHAREHOLDER SERVICES. The Fund has entered into a Shareholder Services
Agreement with Federated Shareholder Services, a subsidiary of Federated
Investors, under which the Fund may make payments up to .25 of 1% of the average
daily net asset value of the Institutional Shares, computed
at an annual rate, to obtain certain personal services for shareholders and
provide maintenance of shareholder accounts ("shareholder services"). From time
to time and for such periods as deemed appropriate, the amount stated above may
be reduced voluntarily. Under the Shareholder Services Agreement, Federated
Shareholder Services will either perform shareholder services directly or will
select financial institutions to perform shareholder services. Financial
institutions will receive fees based upon Shares owned by their clients or
customers. The schedules of such fees and the basis upon which such fees will be
paid will be determined from time to time by the Fund and Federated Shareholder
Services.
SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS. In addition to receiving the
payments under the Shareholder Services Agreement, Federated Securities Corp.
and Federated Shareholder Services, from their own assets, may pay financial
institutions supplemental fees for the performance of substantial sales
services, distribution-related support services, or shareholder services. The
support may include sponsoring sales, educational and training seminars for
their employees, providing sales literature, and engineering computer software
programs that emphasize the attributes of the Fund. Such assistance will be
predicated upon the amount of Shares the financial institution sells or may
sell, and/or upon the type and nature of sales or marketing support furnished by
the financial institution. Any payments made by the distributor may be
reimbursed by the Fund's Adviser or its affiliates.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the Adviser looks for prompt execution of the order at a favorable
price. In working with dealers, the Adviser will generally use those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. In selecting among firms
believed to meet these criteria, the Adviser may give consideration to those
firms which have sold or are selling shares of the Fund and other funds
distributed by Federated Securities Corp. The Adviser makes decisions on
portfolio transactions and selects brokers and dealers subject to review by the
Trustees.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund's net asset value per Share fluctuates. The net asset value for Shares
is determined by adding the interest of the Shares in the market value of all
securities and other assets of the Fund, subtracting the interest of the Shares
in the liabilities of the Fund and those attributable to Shares, and dividing
the remainder by the total number of Shares outstanding. The net asset value for
Institutional Shares may exceed that of Select Shares due to the variance in
daily net income realized by each class. Such variance will reflect only accrued
net income to which the shareholders of a particular class are entitled.
INVESTING IN INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
SHARE PURCHASES
Shares are sold on days on which the New York Stock Exchange is open for
business. Shares may be purchased through a financial institution which has a
sales agreement with the distributor or by wire or mail.
To purchase Shares, open an account by calling Federated Securities Corp.
Information needed to establish an account will be taken over the telephone. The
Fund reserves the right to reject any purchase request.
THROUGH A FINANCIAL INSTITUTION. An investor may call his financial institution
(such as a bank or an investment dealer) to place an order to purchase Shares.
Orders through a financial institution are considered received when the Fund is
notified of the purchase order. Purchase orders through a registered
broker/dealer must be received by the broker before 4:00 p.m. (Eastern time) and
must be transmitted by the broker to the Fund before 5:00 p.m. (Eastern time) in
order for Shares to be purchased at that day's price. Purchase orders through
other financial institutions must be received by the financial institution and
transmitted to the Fund before 4:00 p.m. (Eastern time) in order for Shares to
be purchased at that day's price. It is the financial institution's
responsibility to transmit orders promptly.
BY WIRE. To purchase Shares by Federal Reserve wire, call the Fund before 4:00
p.m. (Eastern time) to place an order. The order is considered received
immediately. Payment by federal funds must be received before 3:00 p.m. (Eastern
time) on the next business day following the order. Federal funds should be
wired as follows: Federated Services Company, c/o State Street Bank and Trust
Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit to: Federated
Managed Income Fund-- Institutional Shares; Fund Number (this number can be
found on the account statement or by contacting the Fund); Group Number or Wire
Order Number; Nominee or Institution Name; and ABA Number 011000028. Shares
cannot be purchased by wire on holidays when wire transfers are restricted.
Questions on wire purchases should be directed to your shareholder services
representative at the telephone number listed on your account statement.
BY MAIL. To purchase Shares by mail, send a check made payable to Federated
Managed Income Fund--Institutional Shares to: Federated Services Company, P.O.
Box 8600, Boston, Massachusetts 02266-8600. Orders by mail are considered
received when payment by check is converted by State Street Bank into federal
funds. This is normally the next business day after State Street Bank receives
the check.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in Shares is $25,000. However, an account may be
opened with a smaller amount as long as the $25,000 minimum is reached within 90
days. An institutional investor's minimum investment will be calculated by
combining all accounts it maintains with the Fund. Accounts established through
a non-affiliated bank or broker may be subject to a smaller minimum investment.
WHAT SHARES COST
Shares are sold at their net asset value next determined after an order is
received. There is no sales charge imposed by the Fund. Investors who purchase
Shares through a non-affiliated bank or broker may be charged an additional
service fee by that bank or broker.
The net asset value is determined as of the close of trading (normally 4:00 p.m.
Eastern time) on the New York Stock Exchange, Monday through Friday, except on:
(i) days on which there are not sufficient changes in the value of the Fund's
portfolio securities such that its net asset value might be materially affected;
(ii) days during which no Shares are tendered for redemption and no orders to
purchase Shares are received; and (iii) the following holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
SUBACCOUNTING SERVICES
Institutions are encouraged to open single master accounts. However, certain
institutions may wish to use the transfer agent's subaccounting system to
minimize their internal recordkeeping requirements. The transfer agent may
charge a fee based on the level of subaccounting services rendered. Institutions
holding Shares in a fiduciary, agency, custodial, or similar capacity may charge
or pass through subaccounting fees as part of or in addition to normal trust or
agency account fees. They may also charge fees for other services provided which
may be related to the ownership of Shares. This prospectus should, therefore, be
read together with any agreement between the customer and the institution with
regard to the services provided, the fees charged for those services, and any
restrictions and limitations imposed. State securities laws may require certain
financial institutions such as depository institutions to register as dealers.
SYSTEMATIC INVESTMENT PROGRAM
Once a Fund account has been opened, shareholders may add to their investment on
a regular basis. Under this program, funds may be automatically withdrawn
periodically from the shareholder's checking account and invested in Shares at
the net asset value next determined after an order is received by the Fund. A
shareholder may apply for participation in this program through Federated
Securities Corp.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the Fund.
Detailed confirmations of each purchase or redemption are sent to each
shareholder. Quarterly confirmations are sent to report dividends paid during
that quarter.
DIVIDENDS
Dividends are declared and paid monthly to all shareholders invested in the Fund
on the record date. Unless shareholders request cash payments by writing the
Fund, dividends are automatically reinvested in additional Shares of the Fund on
payment dates at the ex-dividend date net asset value without a sales charge.
CAPITAL GAINS
Capital gains realized by the Fund, if any, will be distributed at least once
every 12 months.
REDEEMING INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
The Fund redeems Shares at their net asset value next determined after the Fund
receives the redemption request. Redemptions will be made on days on which the
Fund computes its net asset value. Redemption requests must be received in
proper form and can be made through a financial institution, by telephone
request or by written request.
THROUGH A FINANCIAL INSTITUTION
A shareholder may redeem Shares by calling his financial institution (such as a
bank or an investment dealer) to request the redemption. Shares will be redeemed
at the net asset value next determined after the Fund receives the redemption
request from the financial institution. Redemption requests through a registered
broker/dealer must be received by the broker before 4:00 p.m. (Eastern time) and
must be transmitted by the broker to the Fund before 5:00 p.m. (Eastern time) in
order for Shares to be redeemed at that day's net asset value. Redemption
requests through other financial institutions must be received by the financial
institution and transmitted to the Fund before 4:00 p.m. (Eastern time) in order
for Shares to be redeemed at that day's net asset value. The financial
institution is responsible for promptly submitting redemption requests and
providing proper written redemption instructions to the Fund. The financial
institution may charge customary fees and commissions for this service.
TELEPHONE REDEMPTION
Shareholders may redeem their Shares by telephoning the Fund before 4:00 p.m.
(Eastern Time). All proceeds will normally be wire transferred the following
business day, but in no event more than seven days, to the shareholder's account
at a domestic commercial bank that is a member of the Federal Reserve System.
Proceeds from redemption requests received on holidays when wire transfers are
restricted will be wired the following business day. Questions about telephone
redemptions on days when wire transfers are restricted should be directed to
your shareholder services representative at the telephone number listed on your
account statement. If at any time, the Fund shall determine it necessary to
terminate or modify this method of redemption, shareholders would be promptly
notified.
An authorization form permitting the Fund to accept telephone requests must
first be completed. Authorization forms and information on this service are
available from Federated Securities Corp. Telephone redemption instructions may
be recorded. If reasonable procedures are not followed by the Fund, it may be
liable for losses due to unauthorized or fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "Written Requests", should be considered.
WRITTEN REQUESTS
Shares may be redeemed in any amount by mailing a written request to: Federated
Services Company, P.O. Box 8600, Boston, MA 02266-8600. If share certificates
have been issued, they should be sent unendorsed with the written request by
registered or certified mail to the address noted above.
SIGNATURES. Shareholders requesting a redemption of any amount to be sent to an
address other than that on record with the Fund, or a redemption payable other
than to the shareholder of record must have signatures on written redemption
requests guaranteed by:
a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund ("BIF"), which is administered by the Federal Deposit
Insurance Corporation ("FDIC");
a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;
a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund ("SAIF"), which is administered
by the FDIC; or
any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.
RECEIVING PAYMENT. Normally, a check for the proceeds is mailed within one
business day, but in no event more than seven days, after receipt of a proper
written redemption request, provided the Fund or its agents have received
payment for Shares from the shareholder.
SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive payments of a predetermined amount may take
advantage of the Systematic Withdrawal Program. Under this program, Shares are
redeemed to provide for periodic withdrawal payments in an amount directed by
the shareholder. Depending upon the amount of the withdrawal payments, the
amount of dividends paid and capital gains distributions with respect to Shares,
and the fluctuation of the net asset value of Shares redeemed under this
program, redemptions may reduce, and eventually use up, the shareholder's
investment in the Fund. For this reason, payments under this program should not
be considered as yield or income on the shareholder's investment in the Fund. To
be eligible to participate in this program, a shareholder must have an account
value of at least $25,000. A shareholder may apply for participation in this
program through Federated Securities Corp.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem Shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $25,000. This
requirement does not apply, however, if the balance falls below $25,000 because
of changes in the Fund's net asset value. Before Shares are redeemed to close an
account, the shareholder is notified in writing and allowed 30 days to purchase
additional Shares to meet the minimum requirement.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights except that, in matters
affecting only a particular fund or class, only shares of that fund or class are
entitled to vote. As a Massachusetts business trust, the Trust is not required
to hold annual shareholder meetings. Shareholder approval will be sought only
for certain changes in the Trust's or the Fund's operation and for the election
of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust entitled to vote.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code applicable to regulated investment companies and to
receive the special tax treatment afforded to such companies.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional Shares.
STATE AND LOCAL TAXES
In the opinion of Houston, Houston & Donnelly, counsel to the Trust, Fund Shares
may be subject to personal property taxes imposed by counties, municipalities,
and school districts in Pennsylvania to the extent that the portfolio securities
in the Fund would be subject to such taxes if owned directly by residents of
those jurisdictions.
Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its total return and yield for Shares.
Total return represents the change, over a specified period of time, in the
value of an investment in Shares after reinvesting all income and capital gain
distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
The yield of Shares is calculated by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by Shares
over a thirty-day period by the maximum offering price per share of Shares on
the last day of the period. This number is then annualized using semi-annual
compounding. The yield does not necessarily reflect income actually earned by
Shares and, therefore, may not correlate to the dividends or other distributions
paid to shareholders.
Shares are sold without any sales load or other similar non-recurring charges.
Total return and yield will be calculated separately for Institutional Shares
and Select Shares.
From time to time, advertisements for the Fund's Institutional Shares may refer
to ratings, rankings, and other information in certain financial publications
and/or compare the Fund's Institutional Shares performance to certain indices.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
The Fund also offers another class of shares called Select Shares which are sold
at net asset value primarily to retail and private banking customers of
financial institutions and are subject to a minimum initial investment of
$1,500.
Select Shares are distributed under a 12b-1 Plan adopted by the Fund and also
are subject to shareholder services fees.
Select Shares and Institutional Shares are subject to certain of the same
expenses. Expense differences, however, between Select Shares and Institutional
Shares may affect the performance of each class.
To obtain more information and a prospectus for Select Shares, investors may
call 1-800-235-4669.
FEDERATED MANAGED INCOME FUND
FINANCIAL HIGHLIGHTS--SELECT SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 52.
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, NOVEMBER 30,
1995 1994(A)
<S> <C> <C>
- ---------------------------------------------------------------------------- ----------------- -----------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.77 $ 10.00
- ----------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------
Net investment income 0.48 0.28
- ----------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments,
foreign currency and futures contracts 0.83 (0.25)
- ---------------------------------------------------------------------------- ------- -------
Total from investment operations 1.31 0.03
- ---------------------------------------------------------------------------- ------- -------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------------
Distributions from net investment income (0.54) (0.26)
- ---------------------------------------------------------------------------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 10.54 $ 9.77
- ---------------------------------------------------------------------------- ------- -------
TOTAL RETURN (B) 13.76% 0.26%
- ----------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------
Expenses 1.50% 1.42%*
- ----------------------------------------------------------------------------
Net investment income 5.56% 5.24%*
- ----------------------------------------------------------------------------
Expense waiver/reimbursement (c) 1.06% 1.26%*
- ----------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------
Net assets, end of period (000 omitted) $13,927 $ 3,198
- ----------------------------------------------------------------------------
Portfolio turnover 165% 153%
- ----------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 25, 1994 (date of initial
public investment) to November 30, 1994. For the period from the start of
business, January 27, 1994 to May 24, 1994, the net investment income was
distributed to the Trust's adviser.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
Further information about the Fund's performance is contained in the Fund's
annual report for the period ended November 30, 1995, which can be obtained free
of charge.
FEDERATED MANAGED INCOME FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--10.4%
- ---------------------------------------------------------------------------------------------------
LARGE COMPANY--2.6%
----------------------------------------------------------------------------------
BASIC INDUSTRY--0.3%
----------------------------------------------------------------------------------
1,200 Allegheny Ludlum Corp. $ 22,350
----------------------------------------------------------------------------------
400 Aluminum Co. of America 23,400
----------------------------------------------------------------------------------
400 Du Pont (E.I.) de Nemours & Co. 26,600
----------------------------------------------------------------------------------
300 Eastman Chemical Co. 19,688
----------------------------------------------------------------------------------
500 International Paper Co. 19,063
----------------------------------------------------------------------------------
700 Phelps Dodge Corp. 47,513
----------------------------------------------------------------------------------
900 Praxair, Inc. 26,213
---------------------------------------------------------------------------------- -------------
Total 184,827
---------------------------------------------------------------------------------- -------------
CONSUMER DURABLES--0.1%
----------------------------------------------------------------------------------
600 Eastman Kodak Co. 40,800
----------------------------------------------------------------------------------
900 Mattel, Inc. 25,200
----------------------------------------------------------------------------------
800 Volvo AB, ADR 16,800
---------------------------------------------------------------------------------- -------------
Total 82,800
---------------------------------------------------------------------------------- -------------
CONSUMER NON-DURABLES--0.2%
----------------------------------------------------------------------------------
300 Avon Products, Inc. 21,788
----------------------------------------------------------------------------------
600 IBP, Inc. 37,500
----------------------------------------------------------------------------------
600 Philip Morris Cos., Inc. 52,650
----------------------------------------------------------------------------------
4,400 RJR Nabisco Holdings Corp., Conv. Pfd., Series C, $0.6012 25,850
----------------------------------------------------------------------------------
700 Reebok International Ltd. 18,200
---------------------------------------------------------------------------------- -------------
Total 155,988
---------------------------------------------------------------------------------- -------------
ENERGY MINERALS--0.2%
----------------------------------------------------------------------------------
700 Chevron Corp. 34,563
----------------------------------------------------------------------------------
700 Occidental Petroleum Corp. 15,488
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
LARGE COMPANY--CONTINUED
----------------------------------------------------------------------------------
ENERGY MINERALS--CONTINUED
----------------------------------------------------------------------------------
400 Texaco, Inc. $ 29,600
----------------------------------------------------------------------------------
1,200 USX-Marathon Group 22,050
---------------------------------------------------------------------------------- -------------
Total 101,701
---------------------------------------------------------------------------------- -------------
FINANCE--0.5%
----------------------------------------------------------------------------------
648 Allstate Corp. 26,568
----------------------------------------------------------------------------------
400 American Express Co. 17,000
----------------------------------------------------------------------------------
700 Bank of Boston Corp. 32,463
----------------------------------------------------------------------------------
300 CIGNA Corp. 33,000
----------------------------------------------------------------------------------
400 Chemical Banking Corp. 24,000
----------------------------------------------------------------------------------
600 Citicorp 42,450
----------------------------------------------------------------------------------
400 Dean Witter, Discover & Co. 20,400
----------------------------------------------------------------------------------
742 Mellon Bank Corp. 39,697
----------------------------------------------------------------------------------
400 Merrill Lynch & Co., Inc., STRYPES, $3.12 21,100
----------------------------------------------------------------------------------
400 Providian Corp. 16,050
----------------------------------------------------------------------------------
300 Sunamerica, Inc., Conv. Pfd., Series E, $3.10 20,100
----------------------------------------------------------------------------------
1,000 Travelers Group, Inc. 59,500
---------------------------------------------------------------------------------- -------------
Total 352,328
---------------------------------------------------------------------------------- -------------
HEALTH CARE--0.2%
----------------------------------------------------------------------------------
450 American Home Products Corp. 41,063
----------------------------------------------------------------------------------
400 Becton, Dickinson & Co. 27,900
----------------------------------------------------------------------------------
400 Bristol-Myers Squibb Co. 32,100
----------------------------------------------------------------------------------
400 Merck & Co., Inc. 24,750
---------------------------------------------------------------------------------- -------------
Total 125,813
---------------------------------------------------------------------------------- -------------
PRODUCER MANUFACTURING--0.3%
----------------------------------------------------------------------------------
400 (a)FMC Corp. 29,550
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
LARGE COMPANY--CONTINUED
----------------------------------------------------------------------------------
PRODUCER MANUFACTURING--CONTINUED
----------------------------------------------------------------------------------
400 General Electric Co. $ 26,900
----------------------------------------------------------------------------------
300 ITT Corp. 36,788
----------------------------------------------------------------------------------
200 Loews Corp. 30,700
----------------------------------------------------------------------------------
700 Textron, Inc. 53,638
----------------------------------------------------------------------------------
2,100 (b)Westinghouse Electric Corp., PEPS, Series C, $1.30 34,650
---------------------------------------------------------------------------------- -------------
Total 212,226
---------------------------------------------------------------------------------- -------------
RETAIL TRADE--0.1%
----------------------------------------------------------------------------------
900 American Stores Co. 23,625
----------------------------------------------------------------------------------
700 Sears, Roebuck & Co. 27,563
---------------------------------------------------------------------------------- -------------
Total 51,188
---------------------------------------------------------------------------------- -------------
SERVICES--0.1%
----------------------------------------------------------------------------------
1,000 Baker Hughes, Inc. 20,375
----------------------------------------------------------------------------------
200 Gannett Co., Inc. 12,200
----------------------------------------------------------------------------------
300 (a)Western Atlas, Inc. 14,363
---------------------------------------------------------------------------------- -------------
Total 46,938
---------------------------------------------------------------------------------- -------------
TECHNOLOGY--0.4%
----------------------------------------------------------------------------------
800 General Motors Corp., Class E 40,400
----------------------------------------------------------------------------------
400 Hewlett-Packard Co. 33,150
----------------------------------------------------------------------------------
400 Intel Corp. 24,350
----------------------------------------------------------------------------------
200 International Business Machines Corp. 19,325
----------------------------------------------------------------------------------
400 (a)Litton Industries, Inc. 17,950
----------------------------------------------------------------------------------
700 Lockheed Martin Corp. 51,363
----------------------------------------------------------------------------------
400 Raytheon Co. 17,800
----------------------------------------------------------------------------------
600 Rockwell International Corp. 29,400
---------------------------------------------------------------------------------- -------------
Total 233,738
---------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
LARGE COMPANY--CONTINUED
----------------------------------------------------------------------------------
TRANSPORTATION--0.0%
----------------------------------------------------------------------------------
300 Consolidated Rail Corp. $ 20,963
---------------------------------------------------------------------------------- -------------
(C)UTILITIES--0.2%
----------------------------------------------------------------------------------
700 AT&T Corp. 46,200
----------------------------------------------------------------------------------
400 (a)Columbia Gas System, Inc. 17,300
----------------------------------------------------------------------------------
400 Enron Corp. 15,000
----------------------------------------------------------------------------------
300 FPL Group, Inc. 13,013
----------------------------------------------------------------------------------
900 MCI Communications Corp. 24,075
---------------------------------------------------------------------------------- -------------
Total 115,588
---------------------------------------------------------------------------------- -------------
TOTAL LARGE COMPANY STOCKS 1,684,098
---------------------------------------------------------------------------------- -------------
(C)UTILITY STOCKS--7.8%
----------------------------------------------------------------------------------
ELECTRIC UTILITIES: CENTRAL--1.1%
----------------------------------------------------------------------------------
3,700 CMS Energy Corp. 100,825
----------------------------------------------------------------------------------
3,464 Cinergy Corp. 102,188
----------------------------------------------------------------------------------
4,200 DPL, Inc. 100,800
----------------------------------------------------------------------------------
3,600 Illinova Corp. 102,150
----------------------------------------------------------------------------------
2,800 NIPSCO Industries, Inc. 103,600
----------------------------------------------------------------------------------
3,500 Utilicorp United, Inc. 97,563
----------------------------------------------------------------------------------
3,100 Western Resources, Inc. 102,688
---------------------------------------------------------------------------------- -------------
Total 709,814
---------------------------------------------------------------------------------- -------------
ELECTRIC UTILITIES: EAST--0.6%
----------------------------------------------------------------------------------
3,800 Baltimore Gas & Electric Co. 101,175
----------------------------------------------------------------------------------
3,600 DQE, Inc. 103,950
----------------------------------------------------------------------------------
3,200 General Public Utilities 101,200
----------------------------------------------------------------------------------
3,500 Peco Energy Co. 101,500
---------------------------------------------------------------------------------- -------------
Total 407,825
---------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
(C)UTILITY STOCKS--CONTINUED
----------------------------------------------------------------------------------
ELECTRIC UTILITIES: SOUTH--0.8%
----------------------------------------------------------------------------------
2,300 Duke Power Co. $ 103,212
----------------------------------------------------------------------------------
2,100 FPL Group, Inc. 91,088
----------------------------------------------------------------------------------
2,950 Florida Progress Corp. 101,406
----------------------------------------------------------------------------------
4,300 Southern Co. 98,363
----------------------------------------------------------------------------------
2,700 Texas Utilities Co. 103,950
---------------------------------------------------------------------------------- -------------
Total 498,019
---------------------------------------------------------------------------------- -------------
ELECTRIC UTILITIES: WEST--0.5%
----------------------------------------------------------------------------------
5,300 Pacificorp 104,013
----------------------------------------------------------------------------------
3,700 Pinnacle West Capital Corp. 100,825
----------------------------------------------------------------------------------
5,500 SCE Corp. 85,938
---------------------------------------------------------------------------------- -------------
Total 290,776
---------------------------------------------------------------------------------- -------------
MAJOR U.S. TELECOMMUNICATIONS--4.1%
----------------------------------------------------------------------------------
4,000 AT&T Corp. 264,000
----------------------------------------------------------------------------------
5,500 Ameritech Corp. 302,500
----------------------------------------------------------------------------------
4,700 Bell Atlantic Corp. 296,100
----------------------------------------------------------------------------------
7,800 BellSouth Corp. 303,225
----------------------------------------------------------------------------------
7,200 GTE Corp. 306,900
----------------------------------------------------------------------------------
10,800 MCI Communications Corp. 288,900
----------------------------------------------------------------------------------
6,100 NYNEX Corp. 302,713
----------------------------------------------------------------------------------
5,600 SBC Communications, Inc. 302,400
----------------------------------------------------------------------------------
9,600 U.S. West Communications Group 300,000
---------------------------------------------------------------------------------- -------------
Total 2,666,738
---------------------------------------------------------------------------------- -------------
NATURAL GAS DISTRIBUTION--0.2%
----------------------------------------------------------------------------------
3,500 MCN Corp. 76,125
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
(C)UTILITY STOCKS--CONTINUED
----------------------------------------------------------------------------------
2,900 Pacific Enterprises $ 77,575
---------------------------------------------------------------------------------- -------------
Total 153,700
---------------------------------------------------------------------------------- -------------
OIL/GAS TRANSMISSION--0.5%
----------------------------------------------------------------------------------
1,700 Enron Corp. 63,750
----------------------------------------------------------------------------------
2,800 Panhandle Eastern Corp. 79,450
----------------------------------------------------------------------------------
2,400 Sonat, Inc. 77,400
----------------------------------------------------------------------------------
2,000 Williams Companies, Inc. 84,000
---------------------------------------------------------------------------------- -------------
Total 304,600
---------------------------------------------------------------------------------- -------------
SERVICES--0.0%
----------------------------------------------------------------------------------
500 (a)U.S. West Media Group 9,000
---------------------------------------------------------------------------------- -------------
TOTAL UTILITY STOCKS 5,040,472
---------------------------------------------------------------------------------- -------------
TOTAL STOCKS (IDENTIFIED COST $5,695,720) 6,724,570
---------------------------------------------------------------------------------- -------------
<CAPTION>
PRINCIPAL
AMOUNT
- --------------- ----------------------------------------------------------------------------------
BONDS--84.5%
- ---------------------------------------------------------------------------------------------------
TREASURY--40.5%
----------------------------------------------------------------------------------
$ 525,000 U.S. Treasury Bill 8/22/1996 505,181
----------------------------------------------------------------------------------
2,100,000 U.S. Treasury Note 6.50%, 9/30/1996 2,118,039
----------------------------------------------------------------------------------
600,000 U.S. Treasury Note 6.625%, 3/31/1997 609,582
----------------------------------------------------------------------------------
1,400,000 U.S. Treasury Note 6.875%, 04/30/1997 1,428,308
----------------------------------------------------------------------------------
970,000 U.S. Treasury Note 6.875%, 10/31/1996 982,484
----------------------------------------------------------------------------------
20,100,000 U.S. Treasury Note 7.50%, 01/31/1997 20,572,953
---------------------------------------------------------------------------------- -------------
TOTAL TREASURY 26,216,547
---------------------------------------------------------------------------------- -------------
MORTGAGE-BACKED SECURITIES--26.4%
----------------------------------------------------------------------------------
994,551 Federal Home Loan Mortgage Corp. 7.50%, 7/1/2025 1,013,179
----------------------------------------------------------------------------------
482,381 Federal Home Loan Mortgage Corp., 7.50%, 05/01/2024 488,401
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- ---------------------------------------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES--CONTINUED
----------------------------------------------------------------------------------
$ 260,611 Federal Home Loan Mortgage Corp., 7.00%, 07/01/2024 $ 259,629
----------------------------------------------------------------------------------
1,029,154 Federal Home Loan Mortgage Corp., 6.50%, 9/1/2025 1,008,561
----------------------------------------------------------------------------------
458,660 Federal Home Loan Mortgage Corp., 8.00%, 11/01/2009 473,704
----------------------------------------------------------------------------------
1,300,000 Federal Home Loan Mortgage Corp., 6.50%, 11/1/2010 1,297,543
----------------------------------------------------------------------------------
878,743 Federal Home Loan Mortgage Corp., 7.00%, 4/1/2009 889,718
----------------------------------------------------------------------------------
998,721 Federal National Mortgage Association, 7.50%, 7/1/2025 1,016,498
----------------------------------------------------------------------------------
566,289 Federal National Mortgage Association, 7.00%, 5/1/2001 575,129
----------------------------------------------------------------------------------
506,909 Federal National Mortgage Association, 7.00%, 7/1/2024 506,904
----------------------------------------------------------------------------------
835,760 Federal National Mortgage Association, 9.50%, 10/1/2024 885,370
----------------------------------------------------------------------------------
1,441,249 Federal National Mortgage Association, 8.00%, 8/1/2025 1,484,472
----------------------------------------------------------------------------------
214,678 Federal National Mortgage Association, 7.50%, 6/1/2009 219,772
----------------------------------------------------------------------------------
534,780 Federal National Mortgage Association, 6.50%, 6/1/2009 533,603
----------------------------------------------------------------------------------
484,739 Federal National Mortgage Association, 8.00%, 11/1/2024 499,276
----------------------------------------------------------------------------------
208,768 Federal National Mortgage Association, 8.50%, 2/1/2025 216,921
----------------------------------------------------------------------------------
1,016,147 Federal National Mortgage Association, 7.00%, 7/1/2025 1,016,137
----------------------------------------------------------------------------------
1,001,105 Federal National Mortgage Association, 6.50%, 10/1/2025 980,132
----------------------------------------------------------------------------------
230,872 Government National Mortgage Association, 7.50%, 05/15/2024 235,773
----------------------------------------------------------------------------------
1,226,985 Government National Mortgage Association, 9.00%, 4/15/2025 1,294,064
----------------------------------------------------------------------------------
802,562 Government National Mortgage Association, 8.50%, 10/15/2024 837,915
----------------------------------------------------------------------------------
826,896 Government National Mortgage Association, 7.00%, 7/15/2024 829,211
----------------------------------------------------------------------------------
505,454 Government National Mortgage Association, 8.00%, 7/15/2025 523,140
---------------------------------------------------------------------------------- -------------
TOTAL MORTGAGE BACKED SECURITIES 17,085,052
---------------------------------------------------------------------------------- -------------
HIGH YIELD BONDS--2.3%
----------------------------------------------------------------------------------
BANKING--0.1%
----------------------------------------------------------------------------------
50,000 First Nationwide Holdings, Sr. Note, 12.25%, 5/15/2001 57,062
---------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- ---------------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
----------------------------------------------------------------------------------
BROADCAST RADIO & TV--0.2%
----------------------------------------------------------------------------------
$ 75,000 SCI Television, Sr. Secd. Note, 11.00%, 6/30/2005 $ 79,500
----------------------------------------------------------------------------------
50,000 Sinclair Broadcast Group, Sr. Sub. Note, 10.00%, 9/30/2005 51,375
---------------------------------------------------------------------------------- -------------
Total 130,875
---------------------------------------------------------------------------------- -------------
CABLE TELEVISION--0.3%
----------------------------------------------------------------------------------
25,000 CAI Wireless Systems, Sr. Note, 12.25%, 9/15/2002 26,469
----------------------------------------------------------------------------------
75,000 Continental Cablevision, Sr. Deb., 9.50%, 8/1/2013 79,125
----------------------------------------------------------------------------------
100,000 TeleWest Plc, 0/11.00%, Sr. Disc. Deb., 10/1/2007 58,625
---------------------------------------------------------------------------------- -------------
Total 164,219
---------------------------------------------------------------------------------- -------------
CHEMICALS & PLASTICS--0.1%
----------------------------------------------------------------------------------
50,000 Arcadian Partners L.P., Sr. Note, Series B, 10.75%, 5/1/2005 55,000
---------------------------------------------------------------------------------- -------------
CLOTHING & TEXTILES--0.2%
----------------------------------------------------------------------------------
100,000 Westpoint Stevens, Inc., Sr. Sub. Deb., 9.375%, 12/15/2005 101,500
---------------------------------------------------------------------------------- -------------
CONGLOMERATES--0.1%
----------------------------------------------------------------------------------
50,000 Sherritt Gordon Ltd., Sr. Note, 9.75%, 4/1/2003 52,250
---------------------------------------------------------------------------------- -------------
CONSUMER PRODUCTS--0.1%
----------------------------------------------------------------------------------
50,000 (b)Herff Jones, Inc., Sr. Sub. Note, 11.00%, 8/15/2005 52,875
----------------------------------------------------------------------------------
50,000 Playtex Family Products Corp., Sr. Sub. Note, 9.00%, 12/15/2003 44,250
---------------------------------------------------------------------------------- -------------
Total 97,125
---------------------------------------------------------------------------------- -------------
CONTAINER & GLASS PRODUCTS--0.2%
----------------------------------------------------------------------------------
75,000 Owens Illinois, Inc., Sr. Sub. Note, 9.75%, 8/15/2004 78,187
----------------------------------------------------------------------------------
50,000 Portola Packaging Inc., Sr. Note, 10.75%, 10/1/2005 51,625
---------------------------------------------------------------------------------- -------------
Total 129,812
---------------------------------------------------------------------------------- -------------
FOOD & DRUG RETAILERS--0.1%
----------------------------------------------------------------------------------
25,000 (b)Carr-Gottstein Foods, Sr. Sub. Note, 12.00%, 11/15/2005 25,062
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- ---------------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
----------------------------------------------------------------------------------
FOOD & DRUG RETAILERS--CONTINUED
----------------------------------------------------------------------------------
$ 50,000 Ralph's Grocery Co., Sr. Note, 10.45%, 6/15/2004 $ 49,375
---------------------------------------------------------------------------------- -------------
Total 74,437
---------------------------------------------------------------------------------- -------------
FOOD PRODUCTS--0.1%
----------------------------------------------------------------------------------
50,000 Specialty Foods Corp., Sr. Note, 11.125%, 10/1/2002 47,500
----------------------------------------------------------------------------------
25,000 (b)Van de Kamp's Inc., Sr. Sub. Note, 12.00%, 9/15/2005 25,812
---------------------------------------------------------------------------------- -------------
Total 73,312
---------------------------------------------------------------------------------- -------------
FOOD SERVICES--0.1%
----------------------------------------------------------------------------------
75,000 Flagstar Corp., Sr. Note, 10.875%, 12/1/2002 68,625
---------------------------------------------------------------------------------- -------------
FOREST PRODUCTS--0.1%
----------------------------------------------------------------------------------
50,000 Stone Container Corp., Sr. Note, 9.875%, 2/1/2001 48,687
---------------------------------------------------------------------------------- -------------
HEALTHCARE--0.1%
----------------------------------------------------------------------------------
50,000 Tenet Healthcare, Sr. Sub. Note, 10.125%, 3/1/2005 54,437
---------------------------------------------------------------------------------- -------------
OIL & GAS--0.1%
----------------------------------------------------------------------------------
50,000 Falcon Drilling Company, Sr. Note, 9.75%, 1/15/2001 50,750
---------------------------------------------------------------------------------- -------------
SERVICES--0.0%
----------------------------------------------------------------------------------
25,000 (b)Coinmach Corporation, Sr. Note, 11.75%, 11/15/2005 25,312
---------------------------------------------------------------------------------- -------------
STEEL--0.1%
----------------------------------------------------------------------------------
75,000 GS Technologies Operating Co., Inc., Sr. Note, 12.00%, 9/1/2004 74,250
---------------------------------------------------------------------------------- -------------
TELECOMMUNICATIONS & CELLULAR--0.3%
----------------------------------------------------------------------------------
25,000 (b)IXC Communications, Inc., Sr. Note, 12.50%, 10/1/2005 26,187
----------------------------------------------------------------------------------
50,000 Nextel Communications, Inc., Sr. Disc. Note, 0/11.50%, 9/1/2003 30,125
----------------------------------------------------------------------------------
50,000 Paging Network, Sr. Sub. Note, 10.125%, 8/1/2007 53,375
----------------------------------------------------------------------------------
75,000 Panamsat, L.P., Sr. Sub. Disc. Note, 0/11.375%, 8/1/2003 61,125
---------------------------------------------------------------------------------- -------------
Total 170,812
---------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- ---------------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
----------------------------------------------------------------------------------
UTILITIES--0.1%
----------------------------------------------------------------------------------
$ 75,000 California Energy Co., Sr. Disc. Note, 0/10.25%, 1/15/2004 $ 69,750
---------------------------------------------------------------------------------- -------------
TOTAL HIGH YIELD BONDS 1,498,215
---------------------------------------------------------------------------------- -------------
INVESTMENT GRADE BONDS--10.2%
----------------------------------------------------------------------------------
AEROSPACE & DEFENSE--0.4%
----------------------------------------------------------------------------------
250,000 McDonnell Douglas Finance, Note, 9.40%, 10/15/2001 278,087
---------------------------------------------------------------------------------- -------------
BANKING--0.4%
----------------------------------------------------------------------------------
250,000 Chase Manhattan, Sub. Note, 8.00%, 5/1/2005 261,165
---------------------------------------------------------------------------------- -------------
BEVERAGE & TOBACCO--0.8%
----------------------------------------------------------------------------------
250,000 Philip Morris Cos., Inc., Deb., 6.00%, 7/15/2001 246,300
----------------------------------------------------------------------------------
250,000 RJR Nabisco, Inc., Note, 9.25%, 8/15/2013 255,107
---------------------------------------------------------------------------------- -------------
Total 501,407
---------------------------------------------------------------------------------- -------------
CHEMICALS & PLASTICS--0.2%
----------------------------------------------------------------------------------
100,000 (b)Bayer Corp, Deb., 7.125%, 10/1/2015 104,090
---------------------------------------------------------------------------------- -------------
CONGLOMERATES--0.5%
----------------------------------------------------------------------------------
275,000 Leucadia National, Sr. Sub. Note, 8.25%, 6/15/2005 290,306
---------------------------------------------------------------------------------- -------------
FINANCE--AUTOMOTIVE--0.4%
----------------------------------------------------------------------------------
250,000 Ford Motor Credit Co., Note, 6.85%, 8/15/2000 258,045
---------------------------------------------------------------------------------- -------------
FINANCE--RETAIL--0.4%
----------------------------------------------------------------------------------
250,000 Household Finance, Deb., 6.45%, 2/1/2009 248,197
---------------------------------------------------------------------------------- -------------
FINANCIAL INTERMEDIARIES--0.8%
----------------------------------------------------------------------------------
250,000 Equitable Cos., Inc., Sr. Note, 9.00%, 12/15/2004 291,525
----------------------------------------------------------------------------------
200,000 Merrill Lynch, Medium Term Note, 7.25%, 6/14/2004 203,556
---------------------------------------------------------------------------------- -------------
Total 495,081
---------------------------------------------------------------------------------- -------------
FOOD & DRUG RETAILERS--0.4%
----------------------------------------------------------------------------------
225,000 Hook-Superx, Inc., Sr. Note, 10.125%, 6/1/2002 245,956
---------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- ---------------------------------------------------------------------------------------------------
INVESTMENT GRADE BONDS--CONTINUED
----------------------------------------------------------------------------------
GOVERNMENT AGENCY--0.9%
----------------------------------------------------------------------------------
$ 250,000 Federal National Mortgage Association 8.59%, 2/3/2005 $ 263,397
----------------------------------------------------------------------------------
300,000 Tennessee Valley Authority 7.318%, 5/31/1999 302,493
---------------------------------------------------------------------------------- -------------
Total 565,890
---------------------------------------------------------------------------------- -------------
INDUSTRIAL PRODUCTS & EQUIPMENT--0.4%
----------------------------------------------------------------------------------
250,000 Joy Technologies Inc, Sr. Note, 10.25%, 9/1/2003 282,452
---------------------------------------------------------------------------------- -------------
INSURANCE--0.4%
----------------------------------------------------------------------------------
250,000 Sunamerica Inc, Medium Term Note, 7.34%, 8/30/2005 262,984
---------------------------------------------------------------------------------- -------------
OIL & GAS--0.9%
----------------------------------------------------------------------------------
300,000 Occidental Petroleum Corp., Sr. Note, 11.75%, 3/15/2011 320,019
----------------------------------------------------------------------------------
250,000 USX Corp., Note, 6.375%, 7/15/1998 251,070
---------------------------------------------------------------------------------- -------------
Total 571,089
---------------------------------------------------------------------------------- -------------
PRINTING & PUBLISHING--0.4%
----------------------------------------------------------------------------------
250,000 News America Holdings, Sr. Note, 7.50%, 3/1/2000 262,037
---------------------------------------------------------------------------------- -------------
RETAILERS--0.5%
----------------------------------------------------------------------------------
250,000 J.C. Penney Co., S.F. Deb., 9.75%, 6/15/2021 293,717
---------------------------------------------------------------------------------- -------------
SOVEREIGN GOVERNMENT--1.1%
----------------------------------------------------------------------------------
300,000 (b)Freeport Terminal (Malta), Gtd. Global Note, 7.50%, 3/29/2009 317,289
----------------------------------------------------------------------------------
250,000 Quebec Province, Deb., 7.50%, 7/15/2023 256,913
----------------------------------------------------------------------------------
100,000 Republic of South Africa, Global Bond Deb., 9.625%, 12/15/1999 106,689
---------------------------------------------------------------------------------- -------------
Total 680,891
---------------------------------------------------------------------------------- -------------
TELECOMMUNICATIONS & CELLULAR--0.4%
----------------------------------------------------------------------------------
250,000 TCI Communications Inc, Note, 6.82%, 9/15/2010 253,167
---------------------------------------------------------------------------------- -------------
UTILITIES--1.2%
----------------------------------------------------------------------------------
300,000 Duke Power Co., 1st Mtg. Note, 7.00%, 9/1/2005 302,892
----------------------------------------------------------------------------------
300,000 Gulf States Utilities, FMB, 6.75%, 10/1/1998 303,261
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- ---------------------------------------------------------------------------------------------------
INVESTMENT GRADE BONDS--CONTINUED
----------------------------------------------------------------------------------
UTILITIES--CONTINUED
----------------------------------------------------------------------------------
$ 125,000 Pedernales Electric Coop, 10.875%, 9/01/17 $ 140,761
---------------------------------------------------------------------------------- -------------
Total 746,914
---------------------------------------------------------------------------------- -------------
TOTAL INVESTMENT GRADE BONDS 6,601,475
---------------------------------------------------------------------------------- -------------
FOREIGN
CURRENCY
PAR AMOUNT
- --------------- ----------------------------------------------------------------------------------
FOREIGN BONDS--5.1%
----------------------------------------------------------------------------------
AUSTRALIAN DOLLAR--0.1%
----------------------------------------------------------------------------------
100,000 State Bank of New South Wales, 12.25%, 2/26/2001 86,648
---------------------------------------------------------------------------------- -------------
BELGIUM FRANC--0.3%
----------------------------------------------------------------------------------
3,100,000 Belgian Gov't., Foreign Gov't. Guarantee, 10.00%, 4/5/1996 106,472
----------------------------------------------------------------------------------
2,000,000 Belgium Kingdom, 7.75%, 10/15/2004 71,887
---------------------------------------------------------------------------------- -------------
Total 178,359
---------------------------------------------------------------------------------- -------------
CANADIAN DOLLAR--0.3%
----------------------------------------------------------------------------------
200,000 Ontario Hydro, 9.00%, 6/24/2002 160,456
---------------------------------------------------------------------------------- -------------
DANISH KRONE--0.2%
----------------------------------------------------------------------------------
600,000 Denmark, 8.00%, 5/15/2003 112,685
---------------------------------------------------------------------------------- -------------
FRENCH FRANC--0.6%
----------------------------------------------------------------------------------
1,300,000 France O.A.T., 8.50%, 11/25/2002 287,274
----------------------------------------------------------------------------------
600,000 KFW International Finance, 7.00%, 5/12/2000 123,910
---------------------------------------------------------------------------------- -------------
Total 411,184
---------------------------------------------------------------------------------- -------------
DEUTSCHE MARK--0.8%
----------------------------------------------------------------------------------
700,000 Treuhandanstalt, 7.75%, 10/1/2002 535,007
---------------------------------------------------------------------------------- -------------
ITALIAN LIRA--0.4%
----------------------------------------------------------------------------------
425,000,000 Buoni Poliennali Del Tes, 9.50%, 1/1/2005 239,955
---------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN VALUE
CURRENCY IN U.S.
PAR AMOUNT DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- ---------------------------------------------------------------------------------------------------
FOREIGN BONDS--CONTINUED
----------------------------------------------------------------------------------
JAPANESE YEN--1.3%
----------------------------------------------------------------------------------
$ 24,000,000 Export-Import Bank Japan, 4.375%, 10/1/2003 $ 264,472
----------------------------------------------------------------------------------
10,000,000 Interamerican Development, Deb., 7.25%, 5/15/2000 121,990
----------------------------------------------------------------------------------
38,000,000 KFW International Finance, 6.00%, 11/29/1999 440,688
---------------------------------------------------------------------------------- -------------
Total 827,150
---------------------------------------------------------------------------------- -------------
NETHERLANDS GUILDER--0.3%
----------------------------------------------------------------------------------
350,000 Netherlands Government, 5.75%, 1/15/2004 213,117
---------------------------------------------------------------------------------- -------------
SPANISH PESETA--0.2%
----------------------------------------------------------------------------------
20,000,000 Spanish Government, 10.00%, 2/28/2005 160,415
---------------------------------------------------------------------------------- -------------
SWEDISH KRONA--0.2%
----------------------------------------------------------------------------------
800,000 Sweden, 6.00%, 2/9/2005 101,793
---------------------------------------------------------------------------------- -------------
UNITED KINGDOM POUND--0.4%
----------------------------------------------------------------------------------
175,000 UK Conversion, 9.00%, 3/3/2000 288,341
---------------------------------------------------------------------------------- -------------
TOTAL FOREIGN BONDS 3,315,110
---------------------------------------------------------------------------------- -------------
TOTAL BONDS (IDENTIFIED COST $53,888,169) 54,716,399
---------------------------------------------------------------------------------- -------------
PRINCIPAL
AMOUNT
- --------------- ----------------------------------------------------------------------------------
(D)REPURCHASE AGREEMENT--3.8%
- ---------------------------------------------------------------------------------------------------
$ 2,430,000 J.P. Morgan & Co., Inc., 5.930%, dated 11/30/1995, due 12/1/1995 $ 2,430,000
---------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST $62,013,889)(E) $ 63,870,969
---------------------------------------------------------------------------------- -------------
</TABLE>
(a) Non-income producing security.
(b) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. These securities have been determined to be
liquid under criteria established by the Board of Trustees. At the end of
the period, these securities amounted to ($611,277) which represents 0.9%
of net assets.
(c) The utilities are shown in the asset category in which they were
purchased. The funds total exposure to utility stocks is 8% of net assets.
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
(d) 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 joint
accounts with other Federated Funds.
(e) The cost of investments for federal tax purposes amounts to $62,017,320.
The net unrealized appreciation of investments on a federal tax basis
amounts to $1,853,649 which is comprised of $1,989,524 appreciation and
$135,875 depreciation at November 30, 1995.
Note: The categories of investments are shown as a percentage of net assets
($64,779,572) at November 30, 1995.
The following acronym(s) are used throughout this portfolio:
ADR -- American Depository Receipt
GTD -- Guaranty
LP -- Limited Partnership
PEPS -- Participating Equity Preferred Stock
PLC -- Public Limited Company
STRYPES -- Structured Yield Product Exchangeable for Stock
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ----------------------------------------------------------------------------------------------------
Total investments in securities, at value (identified cost $62,013,889 and tax cost $62,017,320) $ 63,870,969
- ----------------------------------------------------------------------------------------------------
Cash denominated in foreign currencies (identified cost $22,479) 22,408
- ----------------------------------------------------------------------------------------------------
Income receivable 949,051
- ----------------------------------------------------------------------------------------------------
Receivable for shares sold 150,548
- ----------------------------------------------------------------------------------------------------
Deferred expenses 38,394
- ---------------------------------------------------------------------------------------------------- ------------
Total assets 65,031,370
- ----------------------------------------------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------------------------------
Payable for investments purchased $ 48,158
- -----------------------------------------------------------------------------------------
Payable for shares redeemed 26,874
- -----------------------------------------------------------------------------------------
Payable to Bank 135,128
- -----------------------------------------------------------------------------------------
Payable for taxes withheld 384
- -----------------------------------------------------------------------------------------
Accrued expenses 41,254
- ----------------------------------------------------------------------------------------- ---------
Total liabilities 251,798
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSETS for 6,148,777 shares outstanding $ 64,779,572
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSETS CONSIST OF:
- ----------------------------------------------------------------------------------------------------
Paid in capital $ 62,198,271
- ----------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments, translation of assets and liabilities in foreign
currency, and futures contracts 1,871,638
- ----------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments, foreign currency transactions, and futures contracts
404,304
- ----------------------------------------------------------------------------------------------------
Undistributed net investment income 305,359
- ---------------------------------------------------------------------------------------------------- ------------
Total Net Assets $ 64,779,572
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ----------------------------------------------------------------------------------------------------
Institutional Shares $50,852,336 / 4,826,791 shares outstanding $10.54
- ---------------------------------------------------------------------------------------------------- ------------
Select Shares $13,927,236 / 1,321,986 shares outstanding $10.54
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED INCOME FUND
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ------------------------------------------------------------------------------------------------------
Dividends (net of foreign taxes withheld of $153) $ 208,643
- ------------------------------------------------------------------------------------------------------
Interest (net of foreign taxes withheld of $832) 3,111,665
- ------------------------------------------------------------------------------------------------------ ---------
Total income 3,320,308
- ------------------------------------------------------------------------------------------------------
EXPENSES:
- ------------------------------------------------------------------------------------------------------
Investment advisory fee $ 354,801
- -------------------------------------------------------------------------------------------
Administrative personnel and services fee 155,000
- -------------------------------------------------------------------------------------------
Custodian fees 61,257
- -------------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 44,652
- -------------------------------------------------------------------------------------------
Directors'/Trustees' fees 1,859
- -------------------------------------------------------------------------------------------
Auditing fees 12,407
- -------------------------------------------------------------------------------------------
Legal fees 2,995
- -------------------------------------------------------------------------------------------
Portfolio accounting fees 31,725
- -------------------------------------------------------------------------------------------
Distribution services fee--Select Shares 55,959
- -------------------------------------------------------------------------------------------
Shareholder services fee--Institutional Shares 99,614
- -------------------------------------------------------------------------------------------
Shareholder services fee--Select Shares 18,653
- -------------------------------------------------------------------------------------------
Share registration costs 22,997
- -------------------------------------------------------------------------------------------
Printing and postage 32,697
- -------------------------------------------------------------------------------------------
Insurance premiums 4,503
- -------------------------------------------------------------------------------------------
Taxes 109
- -------------------------------------------------------------------------------------------
Miscellaneous 12,513
- ------------------------------------------------------------------------------------------- ---------
Total expenses 911,741
- -------------------------------------------------------------------------------------------
Waivers and reimbursements--
- --------------------------------------------------------------------------------
Waiver of investment advisory fee $(354,801)
- --------------------------------------------------------------------------------
Waiver of distribution services fee--Select Shares (18,653)
- --------------------------------------------------------------------------------
Waiver of shareholder services fee--Institutional Shares (99,614)
- --------------------------------------------------------------------------------
Reimbursement of other operating expenses (26,732)
- -------------------------------------------------------------------------------- ---------
Total waivers and reimbursements (499,800)
- ------------------------------------------------------------------------------------------- ---------
Net expenses 411,941
- ------------------------------------------------------------------------------------------------------ ---------
Net investment income 2,908,367
- ------------------------------------------------------------------------------------------------------ ---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FOREIGN CURRENCY, AND FUTURES CONTRACTS:
- ------------------------------------------------------------------------------------------------------
Net realized gain on investments, foreign currency transactions, and futures contracts 911,082
- ------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments, translation of assets and liabilities in foreign
currency, and futures contracts 2,481,101
- ------------------------------------------------------------------------------------------------------ ---------
Net realized and unrealized gain on investments, foreign currency, and futures contracts 3,392,183
- ------------------------------------------------------------------------------------------------------ ---------
Change in net assets resulting from operations $6,300,550
- ------------------------------------------------------------------------------------------------------ ---------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, 1995 NOVEMBER 30, 1994*
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- --------------------------------------------------------------------
OPERATIONS--
- --------------------------------------------------------------------
Net investment income $ 2,908,367 $ 999,639
- --------------------------------------------------------------------
Net realized gain (loss) on investments, foreign currency
transactions, and future contracts ($729,136 net gain and $305,808
net loss, respectively, as computed for federal tax purposes) 911,082 (311,738)
- --------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments,
translation of assets and liabilities in foreign currency, and
futures contracts 2,481,101 (609,463)
- -------------------------------------------------------------------- -------------------- ---------------------
Change in net assets resulting from operations 6,300,550 78,438
- -------------------------------------------------------------------- -------------------- ---------------------
DISTRIBUTIONS TO SHAREHOLDERS--
- --------------------------------------------------------------------
Distributions from net investment income
- --------------------------------------------------------------------
Institutional Shares (2,431,427) (883,551)
- --------------------------------------------------------------------
Select Shares (394,936) (87,664)
- -------------------------------------------------------------------- -------------------- ---------------------
Change in net assets resulting from distributions to
shareholders (2,826,363) (971,215)
- -------------------------------------------------------------------- -------------------- ---------------------
SHARE TRANSACTIONS--
- --------------------------------------------------------------------
Proceeds from sale of shares 36,889,780 42,977,477
- --------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 900,372 228,430
- --------------------------------------------------------------------
Cost of shares redeemed (14,374,680) (4,523,217)
- -------------------------------------------------------------------- -------------------- ---------------------
Change in net assets resulting from share transactions 23,415,472 38,682,690
- -------------------------------------------------------------------- -------------------- ---------------------
Change in net assets 26,889,659 37,789,913
- --------------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------------
Beginning of period 37,889,913 100,000
- -------------------------------------------------------------------- -------------------- ---------------------
End of period (including undistributed net investment income of
$305,359 and $45,969, respectively) $ 64,779,572 $ 37,889,913
- -------------------------------------------------------------------- -------------------- ---------------------
</TABLE>
* For the period from January 18, 1994 (start of business) to November 30, 1994.
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED INCOME FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Managed Series Trust (the "Trust") is registered under the Investment Company
Act of 1940, as amended (the "Act") as an open-end, management investment
company. The Trust consists of four diversified portfolios. The financial
statements included herein are only those of Federated Managed Income Fund (the
"Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held.
The Fund offers two classes of shares: Institutional Shares (formerly,
Institutional Service Shares) and Select Shares. The Institutional Service
Shares changed its name to Institutional Shares effective June 30, 1995.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Short-term securities with remaining maturities of
sixty days or less at the time of purchase may be valued at amortized cost,
which approximates fair market value. Listed equity securities are valued
at the last sale price reported on national security exchanges. All other
securities are valued at prices provided by an independent pricing source.
REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risk 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 the 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
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
Revenue Code, as amended (the "Code"). Dividend income and distributions to
shareholders are recorded on the ex-dividend date. Income and capital gain
distributions are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles. These
differences are primarily due to differing treatments for foreign currency
transactions. As a result of these difference, the following required
reclassifications have been made to the current year financial statements.
<TABLE>
<CAPTION>
Increase (Decrease)
<S> <C>
Accumulated
Net Realized Undistributed Net
Gain/Loss Investment Income
($177,386) $177,386
</TABLE>
Net investment income, net realized gains/losses, and net assets were not
affected by this reclassification.
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.
However, federal taxes may be imposed on the Fund upon the disposition of
certain investments in passive foreign investment companies. Withholding
taxes on foreign interest and dividends have been provided for in
accordance with the Fund's understanding of the applicable country's tax
rules and rates.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized using the straight-line method over a period of five years from
the Fund's commencement date.
CONCENTRATION OF CREDIT RISK--The Fund invests in securities of non-U.S.
issuers. Although the Fund maintains a diversified investment portfolio,
the political or economic developments within a particular country or
region may have an adverse effect on the ability of domiciled issuers to
meet their obligations. Additionally, political or economic developments
may have an effect on the liquidity and volatility of portfolio securities
and currency holdings.
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
At November 30, 1995, the industry diversification of foreign securities
was as follows:
<TABLE>
<CAPTION>
INDUSTRIES % OF NET ASSETS
<S> <C>
Agency 1.34%
Sovereign 3.46%
State/Provincial 0.13%
Supranational 0.19%
</TABLE>
FUTURES CONTRACTS--The Fund may purchase and sell futures contracts to
accommodate cash flows into and out of the Fund's portfolio and to hedge
against the effects of changes in the value of portfolio securities due to
anticipated changes in interest rates and market conditions. Upon entering
into a stock futures contract with a broker, the Fund is required to
deposit in a segregated account an amount of cash or U.S. government
securities. Futures contracts are valued daily and unrealized gains or
losses are recorded in a "variation margin" account. Daily the fund
receives from or pays to the broker a specified amount of cash based upon
changes in the variation margin account. When a contract is closed, the
Fund recognizes a realized gain or loss. Futures contracts have market
risks, including the risk that the change in the value of the contract may
not correlate with changes in the value of the underlying securities. For
the period ended November 30, 1995, the Fund had realized gains of $14,814
on future contracts. At November 30, 1995, the Fund had no outstanding
futures contracts.
FOREIGN CURRENCY COMMITMENTS--The Fund may enter into foreign currency
commitments for the delayed delivery of securities or foreign currency
exchange transactions. Risks may arise upon entering these transactions
from the potential inability of counterparties to meet the terms of their
commitments and from unanticipated movements in security prices or foreign
exchange rates. The foreign currency transactions are adjusted by the daily
exchange rate of the underlying currency and any gains or losses are
recorded for financial statement purpose as unrealized until the settlement
date. At November 30, 1995, the Fund had no outstanding foreign currency
commitments.
FOREIGN CURRENCY TRANSLATION--The accounting records of the Fund are
maintained in U.S. dollars. All assets and liabilities denominated in
foreign currencies ("FC") are translated into U.S. dollars based on the
rate of exchange of such currencies against U.S. dollars on the date of
valuation. Purchases and sales of securities, income and expenses are
translated at the rate of exchange quoted on the respective date that such
transactions are recorded. Differences between income and expense amounts
recorded and collected or paid are adjusted when reported by the custodian
bank. The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales
of FCs, currency gains or losses realized
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
between the trade and settlement dates on securities transactions, the
difference between the amounts of dividends, interest, and foreign
withholding taxes recorded on the Fund's books, and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in the value of assets and
liabilities other than investments in securities at fiscal year end,
resulting from changes in the exchange rate.
DOLLAR ROLL TRANSACTIONS--The Fund enters into dollar roll transactions,
with respect to mortgage securities issued by GNMA, FNMA and FHLMC, in
which the Fund sells mortgage securities to financial institutions and
simultaneously agrees to accept substantially similar (same type, coupon
and maturity) securities at a later date at an agreed upon price. Dollar
roll transactions are short-term financing arrangements which will not
exceed twelve months. The Fund will use the proceeds generated from the
transactions to invest in short-term investments, which may enhance the
Fund's current yield and total return.
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 Trustees. 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 November 30,
1995 is as follows:
<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE ACQUISITION COST
<S> <C> <C>
Bayer Corp., Deb 11/9/95 $ 102,315
Carr-Goldstein Foods Sr. Sub Note 11/9/95 25,000
Coinmach Corporation, Sr. Note 11/14/95 25,000
Freeport Terminal (Malta), Gtd. Global Note 7/19/94 284,196
Herff Jones Inc., Sr. Sub. Note 9/14/95 51,750
IXC Communications, Inc., Sr. Note 9/25/95 24,320
Van De Kamp's Inc., Sr. Sub Note 9/14/95 25,000
Westinghouse Electric Corp., PEPS 9/27/95-9/28/95 32,025
</TABLE>
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares.
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, 1995 NOVEMBER 30, 1994*
<S> <C> <C> <C> <C>
INSTITUTIONAL SHARES SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------- ----------- ------------- ----------- -------------
Shares sold 2,449,773 $ 25,139,690 3,801,238 $ 37,969,931
- --------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 68,764 702,502 21,807 216,633
- --------------------------------------------------------
Shares redeemed (1,244,562) (12,651,519) (280,229) (2,787,738)
- -------------------------------------------------------- ----------- ------------- ----------- -------------
Net change resulting from Institutional Service
share transactions 1,273,975 $ 13,190,673 3,542,816 $ 35,398,826
- -------------------------------------------------------- ----------- ------------- ----------- -------------
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, 1995 NOVEMBER 30, 1994**
SELECT SHARES SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
- -------------------------------------------------------- ----------- ------------- ----------- -------------
Shares sold 1,144,376 $ 11,750,090 501,463 $ 5,007,546
- --------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 19,145 197,870 1,189 11,797
- --------------------------------------------------------
Shares redeemed (168,971) (1,723,161) (175,216) (1,735,479)
- -------------------------------------------------------- ----------- ------------- ----------- -------------
Net change resulting from Select share transactions 994,550 $ 10,224,799 327,436 $ 3,283,864
- -------------------------------------------------------- ----------- ------------- ----------- -------------
Net change resulting from share transactions 2,268,525 $ 23,415,472 3,870,252 $ 38,682,690
- -------------------------------------------------------- ----------- ------------- ----------- -------------
</TABLE>
*For the period from January 18, 1994 (start of business) to November 30, 1994.
**For the period from January 27, 1994 (start of business) to November 30, 1994.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser,
(the "Adviser"), receives for its services an annual investment advisory fee
equal to .75 of 1% of the Fund's average daily net assets.The Adviser may
voluntarily choose to waive any portion of its fee and/or reimburse certain
operating expenses of the Fund. The Adviser can modify or terminate this
voluntary waiver and/or reimbursement at any time at its sole discretion.
Under the terms of the sub-advisory agreement between the Adviser and Federated
Global Research Corp., Federated Global Research Corp., receives an allocable
portion of the Fund's advisory fee. Such allocation is based on the amount of
foreign securities which the Sub-Adviser
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
manages for the Fund. This fee is paid by the Adviser out of its resources and
is not an incremental Fund expense.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. This fee 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 Funds Select shares. The Plan provides that the Fund may incur
distribution expenses of up to .75 of 1% of average daily net assets of Select
shares, annually to compensate FSC. The distributor may voluntarily choose to
waive any portion of its fee. The distributor can modify or terminate this
voluntary waiver at any time at its sole discretion.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of
1% of average daily net assets of the Fund for the period. This fee is to obtain
certain services for shareholders and to maintain shareholder accounts. FSS may
voluntarily choose to waive any portion of its fee. FSS can modify or terminate
this voluntary waiver at any time at its sole discretion. For the fiscal year
ended November 30, 1995, the Institutional Shares fully waived its shareholder
service fee.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company ("
FServ") serves as transfer and dividend disbursing agent for the Fund. This fee
is based on the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses of ($52,265) and start-up
administrative service expenses of ($39,068) were borne initially by Adviser.
The Fund has agreed to reimburse Adviser for the organizational and start-up
administrative expenses during the five year period following effective date.
For the period ended November 30, 1995, the Fund paid $8,414 and $4,992,
respectively, pursuant to this agreement.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended November 30, 1995, were as follows:
<TABLE>
<S> <C>
PURCHASES $ 96,151,262
- --------------------------------------------------------------------------------------------------- -------------
SALES $ 75,605,276
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
MANAGED SERIES TRUST
(Federated Managed Income Fund):
We have audited the accompanying statement of assets and liabilities of
Federated Managed Income Fund (an investment portfolio of Managed Series Trust,
a Massachusetts business trust), including the schedule of portfolio of
investments, as of November 30, 1995, the related statement of operations for
the year then ended, and the statement of changes in net assets and the
financial highlights (see pages 2 and 27 of the prospectus) for the periods
presented. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Federated Managed Income Fund (an investment portfolio of Managed Series Trust)
as of November 30, 1995, and the results of its operations for the year then
ended, and the changes in its net assets and its financial highlights for the
periods presented in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
January 18, 1996
APPENDIX
- --------------------------------------------------------------------------------
STANDARD AND POOR'S RATINGS GROUP LONG-TERM DEBT RATINGS
AAA--Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.
A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB--Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.
B--Debt rated B has greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or
BB- rating.
CCC--Debt rated CCC has currently identifiable vulnerability to default and is
dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating.
CC--The rating CC typically is applied to debt subordinated to senior debt that
is assigned an actual or implied CCC debt rating.
C--The rating C typically is applied to debt subordinated to senior debt which
is assigned an actual or implied CCC- debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.
CI--The rating CI is reserved for income bonds on which no interest is being
paid.
D--Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D
rating also will be used upon the filing of a bankruptcy petition if debt
service payments are jeopardized.
MOODY'S INVESTORS SERVICE, INC., CORPORATE BOND RATINGS
Aaa--Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment some time in the future.
Baa--Bonds which are rated Baa are considered as medium-grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well.
Ba--Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca--Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C--Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
FITCH INVESTORS SERVICE, INC., LONG-TERM DEBT RATINGS
AAA--Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA--Bonds considered to be investment grade and of very high quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F-1+.
A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB--Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds and, therefore, impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.
BB--Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.
B--Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.
CCC--Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.
CC--Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C--Bonds are in imminent default in payment of interest or principal.
DDD, DD, AND D--Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. DDD
represents the highest potential for recovery on these bonds, and D represents
the lowest potential for recovery.
NR--NR indicates that Fitch does not rate the specific issue.
PLUS (+) OR MINUS (-): Plus or minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the AAA category.
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Federated Managed Income Fund
Institutional Shares Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Sub-Adviser
Federated Global Research Corp. 175 Water Street
New York, New York 10038-4965
- ---------------------------------------------------------------------------------------------------------------------
Custodian
State Street Bank and P.O. Box 8600
Trust Company Boston, Massachusetts 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company P.O. Box 8600
Boston, Massachusetts 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED
INCOME FUND
INSTITUTIONAL SHARES
PROSPECTUS
A Diversified Portfolio
of Managed Series Trust,
an Open-End Management
Investment Company
Prospectus dated January 31, 1996
[LOGO] FEDERATED SECURITIES CORP.
---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
Cusip 56166K107
3122013A-SS (1/96)
Life Cyclcle Investing
MANAGED SERIES TRUST
FEDERATED MANAGED INCOME FUND
Lifecycle Investing
MANAGED SERIES TRUST
From Federated Investors
SELECT
SHARES
Federated Managed
Income Fund is part of
Managed Series Trust,
a lifecycle investing program from
Federated Investors.
Other funds available
in Managed Series Trust are
Federated Managed Growth and Income Fund,
Federated Managed Growth Fund,
and Federated Managed
Aggressive Growth Fund.
(Logo)
FEDERATED SECURITIES CORP.
Distributor
A subsidiary of Federated Investors
(Logo)
FEDERATED MANAGED INCOME FUND
(A PORTFOLIO OF MANAGED SERIES TRUST)
SELECT SHARES
PROSPECTUS
The Select Shares of Federated Managed Income Fund (the "Fund") offered by this
prospectus represent interests in the Fund, which is a diversified investment
portfolio of Managed Series Trust (the "Trust"). The Trust is an open-end
management investment company (a mutual fund).
The investment objective of the Fund is to seek current income. The Fund invests
in both bonds and stocks. Select Shares are sold at net asset value.
THE SELECT SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF
ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THESE SELECT SHARES INVOLVES INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
This prospectus contains the information you should read and know before you
invest in Select Shares of the Fund. Keep this prospectus for future reference.
The Fund has also filed a Statement of Additional Information for Select Shares
and Institutional Shares of all portfolios of the Trust dated January 31, 1996,
with the Securities and Exchange Commission. The information contained in the
Statement of Additional Information is incorporated by reference into this
prospectus. You may request a copy of the Statement of Additional Information or
a paper copy of this prospectus, if you have received your prospectus
electronically, free of charge by calling 1-800-235-4669. To obtain other
information or to make inquiries about the Fund, contact the Fund at the address
listed in the back of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus dated January 31, 1996
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--SELECT SHARES 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Investment Limitations 15
TRUST INFORMATION 15
- ------------------------------------------------------
Management of the Trust 15
Distribution of Select Shares 19
Administration of the Fund 20
Brokerage Transactions 20
NET ASSET VALUE 21
- ------------------------------------------------------
INVESTING IN SELECT SHARES 21
- ------------------------------------------------------
Share Purchases 21
Minimum Investment Required 22
What Shares Cost 22
Subaccounting Services 22
Systematic Investment Program 22
Certificates and Confirmations 22
Dividends 23
Capital Gains 23
REDEEMING SELECT SHARES 23
- ------------------------------------------------------
Through a Financial Institution 23
Telephone Redemption 23
Written Requests 24
Systematic Withdrawal Program 24
Accounts with Low Balances 25
SHAREHOLDER INFORMATION 25
- ------------------------------------------------------
Voting Rights 25
TAX INFORMATION 25
- ------------------------------------------------------
Federal Income Tax 25
State and Local Taxes 25
PERFORMANCE INFORMATION 26
- ------------------------------------------------------
OTHER CLASSES OF SHARES 26
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES 27
- ------------------------------------------------------
FINANCIAL STATEMENTS 28
- ------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 52
- ------------------------------------------------------
APPENDIX 53
- ------------------------------------------------------
ADDRESSES 56
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
SELECT SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price)........................... None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price)................................................................... None
Contingent Deferred Sales Charge (as a percentage of original purchase price or
redemption proceeds, as applicable)................................................................... None
Redemption Fee (as a percentage of amount redeemed, if applicable)...................................... None
Exchange Fee............................................................................................ None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver) (1)....................................................................... 0.00%
12b-1 Fee (after waiver) (2)............................................................................ 0.50%
Total Other Expenses (after expense reimbursement)...................................................... 1.00%
Shareholder Services Fee................................................................ 0.25%
Total Operating Expenses (3).................................................................. 1.50%
</TABLE>
1 The management fee has been reduced to reflect the voluntary waiver of the
management fee. The adviser can terminate this voluntary waiver at any time
at its sole discretion. The maximum management fee is 0.75%.
(2) The maximum 12b-1 fee is 0.75%.
(3) The total operating expenses would have been 2.56% absent the voluntary
waivers of the management fee and a portion of the 12b-1 fee and the
voluntary reimbursement of certain other operating expenses.
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of Select Shares of the Fund will
bear, either directly or indirectly. For more complete descriptions of the
various costs and expenses, see "Investing in Select Shares" and "Trust
Information". Wire-transferred redemptions of less than $5,000 may be subject to
additional fees.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment assuming
(1) 5% annual return and (2) redemption at the end of each time
period................................................................ $15 $47 $82 $179
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
FEDERATED MANAGED INCOME FUND
FINANCIAL HIGHLIGHTS--SELECT SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 52.
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, NOVEMBER 30,
1995 1994(A)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.77 $ 10.00
- ----------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------
Net investment income 0.48 0.28
- ----------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments,
foreign currency and futures contracts 0.83 (0.25)
- ---------------------------------------------------------------------------- ------- -------
Total from investment operations 1.31 0.03
- ---------------------------------------------------------------------------- ------- -------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------------
Distributions from net investment income (0.54) (0.26)
- ---------------------------------------------------------------------------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 10.54 $ 9.77
- ---------------------------------------------------------------------------- ------- -------
TOTAL RETURN (B) 13.76% 0.26%
- ----------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------
Expenses 1.50% 1.42%*
- ----------------------------------------------------------------------------
Net investment income 5.56% 5.24%*
- ----------------------------------------------------------------------------
Expense waiver/reimbursement (c) 1.06% 1.26%*
- ----------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------
Net assets, end of period (000 omitted) $13,927 $3,198
- ----------------------------------------------------------------------------
Portfolio turnover 165% 153%
- ----------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 25, 1994 (date of initial
public investment) to November 30, 1994. For the period from the start of
business, January 27, 1994 to May 24, 1994, the net investment income was
distributed to the Trust's adviser.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
Further information about the Fund's performance is contained in the Fund's
annual report for the fiscal year ended November 30, 1995, which can be obtained
free of charge.
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated November 15, 1993. The Declaration of Trust permits the Trust to
offer separate series of shares of beneficial interest representing interests in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. As of the date of this prospectus, the Board of
Trustees ("Trustees") have established two classes of shares of the Fund, known
as Select Shares and Institutional Shares. This prospectus relates only to
Select Shares.
Select Shares ("Shares") of the Fund are designed primarily for retail and
private banking customers of financial institutions as a convenient means of
accumulating an interest in a professionally managed, diversified portfolio of
bonds and equities. A minimum initial investment of $1,500 is required.
Shares are currently sold and redeemed at net asset value without a sales charge
imposed by the Fund.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is to seek current income. There can be, of
course, no assurance that the Fund will achieve its investment objective. The
Fund's investment objective cannot be changed without the approval of
shareholders. Unless otherwise noted, the Fund's investment policies may be
changed by the Trustees without shareholder approval.
INVESTMENT POLICIES
ASSET ALLOCATION. The Fund will primarily invest in two types of assets: bonds
and equities. The Fund's investment approach is based on the conviction that,
over time, the choice of investment asset categories and their relative
long-term weightings within the portfolio will have the primary impact on its
investment performance. Of secondary importance to the Fund's performance are
the shifting of money among asset categories and the selection of securities
within asset categories. Therefore, the Fund will pursue its investment
objective in the following manner: (1) by setting long-term ranges for each
asset category; (2) by moving money among asset categories within those defined
ranges; and (3) by actively selecting securities within each of the asset
categories. The Fund attempts to minimize risk by allocating its assets in such
a fashion.
Within each of these types of investments, the Fund has designated asset
categories. As a matter of investment policy, ranges have been set for each
asset category's portfolio commitment.
The Fund will invest between 70 and 90 percent of its assets in bonds. The bond
asset categories are U.S. Treasury securities, mortgage-backed securities,
investment-grade corporate bonds, high yield corporate bonds and foreign bonds.
The Fund will invest between 10 and 30 percent of its assets in equities. The
Fund's ability to invest a portion of its assets in equities offers the
opportunity for higher return than other income-
oriented funds. The equities asset categories are large company stocks, utility
stocks, small company stocks, foreign stocks, and equity reserves.
The following is a summary of the asset categories and the amount of the Fund's
total assets which may be invested in each asset category:
<TABLE>
<CAPTION>
<S> <C>
ASSET CATEGORY RANGE
BONDS 70-90%
U.S. Treasury Securities 0-90%
Mortgage-Backed Securities 0-45%
Investment-Grade Corporate Bonds 0-45%
High Yield Corporate Bonds 0-10%
Foreign Bonds 0-10%
EQUITIES 10-30%
Large Company Stocks 0-30%
Utility Stocks 0-15%
Small Company Stocks 0-3%
Foreign Stocks 0-3%
Equity Reserves 0-12.5%
</TABLE>
The Fund's adviser will regularly review the Fund's allocation among the asset
categories and make any changes, within the ranges established for each asset
category, that it believes will provide the most favorable outlook for achieving
the Fund's investment objective. The Fund's adviser will attempt to exploit
inefficiencies among the various asset categories. If, for example, U.S.
Treasury securities are judged to be unusually attractive relative to other
asset categories, the allocation for U.S. Treasury securities may be moved to
its upper limit. At other times, when U.S. Treasury securities appear to be
overvalued, the commitment may be moved down to a lesser allocation. There is no
assurance, however, that the adviser's attempts to pursue this strategy will
result in a benefit to the Fund.
Each asset category within the Fund will be a managed portfolio. The Fund will
seek superior investment performance through security selection in addition to
determining the percentage of its assets to allocate to each of the asset
categories.
BOND ASSET CATEGORIES. The portion of the Fund's assets which is invested in
bonds ("Bond Assets") will be allocated among the following asset categories
within the ranges specified. The prices of fixed income securities fluctuate
inversely to the direction of interest rates. The average duration of the Fund's
Bond Assets will be not less than two nor more than four years. Duration is a
commonly used measure of the potential volatility of the price of a debt
security, or the aggregate market value of a portfolio of debt securities, prior
to maturity. Securities with shorter durations generally have less volatile
prices than securities of comparable quality with longer durations. The Fund
should be expected to maintain a higher average duration during periods of lower
expected market volatility, and a lower average duration during periods of
higher expected market volatility.
U.S. TREASURY SECURITIES. U.S. Treasury securities are direct obligations
of the U.S. Treasury, such as U.S. Treasury bills, notes, and bonds. The
Fund may invest up to 90 percent of its total
assets in U.S. Treasury securities. The Fund may invest in other U.S.
government securities if, in the judgment of the adviser, other U.S.
government securities are more attractive than U.S. Treasury securities.
MORTGAGE-BACKED SECURITIES. Mortgage-backed securities represent an
undivided interest in a pool of residential mortgages or may be
collateralized by a pool of residential mortgages. Mortgage-backed
securities are generally either issued or guaranteed by the Government
National Mortgage Association ("GNMA"), Federal National Mortgage
Association ("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC") or
other U.S. government agencies or instrumentalities. Mortgage-backed
securities may also be issued by single-purpose, stand-alone finance
subsidiaries or trusts of financial institutions, government agencies,
investment bankers, or companies related to the construction industry. The
Fund may invest up to 45 percent of its total assets in mortgage-backed
securities.
INVESTMENT-GRADE CORPORATE BONDS. Investment-grade corporate bonds are
corporate debt obligations having fixed or floating rates of interest and
which are rated BBB or higher by a nationally recognized statistical rating
organization ("NRSRO"). The Fund may invest up to 45 percent of its total
assets in investment-grade corporate bonds. In certain cases, the Fund's
adviser may choose bonds which are unrated if it determines that such bonds
are of comparable quality or have similar characteristics to the
investment-grade bonds described above. Yankee bonds, which are U.S.
dollar-denominated bonds issued and traded in the United States by foreign
issuers, are treated as investment-grade corporate bonds for purposes of
the asset category ranges.
HIGH YIELD CORPORATE BONDS. High yield corporate bonds are corporate debt
obligations having fixed or floating rates of interest and which are rated
BB or lower by NRSROs (commonly known as junk bonds). The Fund may invest
up to ten percent of its total assets in high yield corporate bonds. There
is no minimal acceptable rating for a security to be purchased or held in
the Fund's portfolio, and the Fund may, from time to time, purchase or hold
securities rated in the lowest rating category. (See "Appendix.") In
certain cases the Fund's adviser may choose bonds which are unrated if it
determines that such bonds are of comparable quality or have similar
characteristics to the high yield bonds described above.
INVESTMENT RISKS. Lower-rated securities will usually offer higher
yields than higher-rated securities. However, there is more risk
associated with these investments. This is because of reduced
creditworthiness and increased risk of default. Lower-rated securities
generally tend to reflect short-term corporate and market developments
to a greater extent than higher-rated securities which react primarily
to fluctuations in the general level of interest rates. Short-term
corporate and market developments affecting the price or liquidity of
lower-rated securities could include adverse news affecting major
issuers, underwriters, or dealers of lower-rated corporate debt
obligations. In addition, since there are fewer investors in
lower-rated securities, it may be harder to sell the securities at an
optimum time. As a result of these factors, lower-rated securities tend
to have more price volatility and carry more risk to principal than
higher-rated securities.
Many corporate debt obligations, including many lower-rated bonds,
permit the issuers to call the security and thereby redeem their
obligations earlier than the stated maturity dates. Issuers are more
likely to call bonds during periods of declining interest rates. In
these cases, if the Fund owns a bond which is called, the Fund will
receive its return of principal earlier than expected and would likely
be required to reinvest the proceeds at lower interest rates, thus
reducing income to the Fund.
FOREIGN BONDS. Foreign bonds are high-quality debt securities of countries
other than the United States. The Fund's portfolio of foreign bonds will be
comprised mainly of foreign government, foreign governmental agency or
supranational institution bonds. The Fund will also invest in high-quality
debt securities issued by corporations in countries other than the United
States and subject to the Fund's credit limitations for foreign bonds. The
Fund may invest up to ten percent of its total assets in foreign bonds.
EQUITY ASSET CATEGORIES. The portion of the Fund's assets which is invested in
equities will be allocated among the following asset categories within the
ranges specified:
LARGE COMPANY STOCKS. Large company stocks are common stocks and
securities convertible into or exchangeable for common stocks, such as
rights and warrants, of high-quality companies selected by the Fund's
adviser. Ordinarily, these companies will be in the top 25 percent of their
industries with regard to revenues and have a market capitalization of
$500,000,000 or more. However, other factors, such as a company's product
position, market share, current earnings and/or dividend and earnings
growth prospects, will be considered by the Fund's adviser and may outweigh
revenues. The Fund may invest up to 30 percent of its total assets in large
company stocks.
UTILITY STOCKS. Utility stocks are common stocks and securities
convertible into or exchangeable for common stocks, such as rights and
warrants, of utility companies. The Fund may invest up to 15 percent of its
total assets in utility stocks. Common stocks of utilities are generally
characterized by higher dividend yields and lower growth rates than common
stocks of industrial companies. Under normal market conditions, the higher
income stream from utility stocks tends to make them less volatile than
stocks of industrial companies.
SMALL COMPANY STOCKS. Small company stocks are common stocks and
securities convertible into or exchangeable for common stocks, such as
rights and warrants, of companies with a market capitalization (market
price x number of shares outstanding) below the top 1,000 stocks that
comprise the large and mid-range capitalization sector of the United States
equity market. These stocks are comparable to, but not limited to, the
stocks comprising the Russell 2000 Index, an index of small capitalization
stocks. The Fund may invest up to three percent of its total assets in
small company stocks.
FOREIGN STOCKS. Foreign stocks are equity securities of established
companies in economically developed countries other than the United States.
These securities may be either dollar-denominated or denominated in foreign
currencies. American Depository Receipts ("ADRs"), including dollar
denominated ADRs which are issued by domestic banks and traded in the
United States on exchanges or over-the-counter, are treated as foreign
stocks for
purposes of the asset category ranges. The Fund may invest up to three
percent of its total assets in foreign stocks.
EQUITY RESERVES. When the adviser believes that a temporary defensive
position is available, the Fund may invest in equity reserves. Equity
reserves will be used to adjust the risk level of the equity portion of the
Fund in response to market conditions. Equity reserves will consist of U.S.
and foreign short-term money market instruments such as commercial paper
rated A-1 by Standard and Poor's Ratings Group ("Standard & Poor's"),
Prime-1 by Moody's Investors Service, Inc. ("Moody's"), or F-1 by Fitch
Investors Service, Inc. ("Fitch"). The Fund may invest up to 12.5 percent
of its total assets in equity reserves.
ACCEPTABLE INVESTMENTS
U.S. TREASURY AND OTHER U.S. GOVERNMENT SECURITIES. The U.S. Treasury and
other U.S. government securities in which the Fund invests are either
issued or guaranteed by the U.S. government, its agencies or
instrumentalities. The U.S. government securities in which the Fund may
invest are limited to:
direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds; and
obligations issued by U.S. government agencies or instrumentalities,
including securities that are supported by the full faith and credit of
the U.S. Treasury (such as GNMA certificates); securities that are
supported by the right of the issuer to borrow from the U.S. Treasury
(such as securities of Federal Home Loan Banks); and securities that are
supported by the credit of an agency or instrumentality (such as FNMA and
FHLMC bonds).
MORTGAGE-BACKED SECURITIES. Mortgage-backed securities are securities
collateralized by residential mortgages. The mortgage-backed securities in
which the Fund may invest may be:
issued by an agency of the U.S. government, typically GNMA, FNMA or
FHLMC;
privately issued securities which are collateralized by pools of
mortgages in which each mortgage is guaranteed as to payment of principal
and interest by an agency or instrumentality of the U.S. government;
privately issued securities which are collateralized by pools of
mortgages in which payment of principal and interest are guaranteed by
the issuer and such guarantee is collateralized by U.S. government
securities; and
other privately issued securities in which the proceeds of the issuance
are invested in mortgage-backed securities and payment of the principal
and interest are supported by the credit of an agency or instrumentality
of the U.S. government.
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"). CMOs are bonds issued by
single-
purpose, stand-alone finance subsidiaries or trusts of financial
institutions, government agencies, investment bankers, or companies
related to the construction industry. Most of the CMOs in which the
Fund would invest use the same basic structure:
Several classes of securities are issued against a pool of mortgage
collateral. The most common structure contains four classes of
securities. The first three (A, B, and C bonds) pay interest at
their stated rates beginning with the issue date; the final class
(or Z
bond) typically receives the residual income from the underlying
investments after payments are made to the other classes.
The cash flows from the underlying mortgages are applied first to
pay interest and then to retire securities.
The classes of securities are retired sequentially. All principal
payments are directed first to the shortest-maturity class (or A
bonds). When those securities are completely retired, all principal
payments are then directed to the next-shortest maturity security
(or B bond). This process continues until all of the classes have
been paid off.
Because the cash flow is distributed sequentially instead of pro rata
as with pass-through securities, the cash flows and average lives of
CMOs are more predictable, and there is a period of time during which
the investors in the longer-maturity classes receive no principal
paydowns. The interest portion of these payments is distributed by the
Fund as income and the capital portion is reinvested.
The Fund will invest only in CMOs which are rated AAA or Aaa by an
NRSRO.
REAL ESTATE MORTGAGE INVESTMENT CONDUITS ("REMICS"). REMICs are
offerings of multiple class real estate mortgage-backed securities
which qualify and elect treatment as such under provisions of the
Internal Revenue Code. Issuers of REMICs may take several forms, such
as trusts, partnerships, corporations, associations or a segregated
pool of mortgages. Once REMIC status is elected and obtained, the
entity is not subject to federal income taxation. Instead, income is
passed through the entity and is taxed to the person or persons who
hold interests in the REMIC. A REMIC interest must consist of one or
more classes of "regular interests," some of which may offer adjustable
rates, and a single class of "residual interests." To qualify as a
REMIC, substantially all of the assets of the entity must be in assets
directly or indirectly secured principally by real property.
CHARACTERISTICS OF MORTGAGE-BACKED SECURITIES. Mortgage-backed
securities have yield and maturity characteristics corresponding to the
underlying mortgages. Distributions to holders of mortgage-backed
securities include both interest and principal payments. Principal
payments represent the amortization of the principal of the underlying
mortgages and any prepayments of principal due to prepayment,
refinancing, or foreclosure of the underlying mortgages. Although
maturities of the underlying mortgage loans may range up to 30 years,
amortization and prepayments substantially shorten the effective
maturities of mortgage-backed securities. Due to these features,
mortgage-backed securities are less effective as a means of "locking
in" attractive long-term interest rates than fixed-income securities
which pay only a stated amount of interest until maturity, when the
entire principal amount is returned. This is caused by the need to
reinvest at lower interest rates both distributions of principal
generally and significant prepayments which become more likely as
mortgage interest rates decline. Since comparatively high interest
rates cannot be effectively "locked in," mortgage-backed securities may
have less potential for capital appreciation during periods of
declining interest rates than other
non-callable, fixed-income government securities of comparable stated
maturities. However, mortgage-backed securities may experience less
pronounced declines in value during periods of rising interest rates.
In addition, some of the CMOs purchased by the Fund may represent an
interest solely in the principal repayments or solely in the interest
payments on mortgage-backed securities (stripped mortgage-backed
securities or "SMBSs"). Due to the possibility of prepayments on the
underlying mortgages, SMBSs may be more interest-rate sensitive than
other securities purchased by the Fund. If prevailing interest rates
fall below the level at which SMBSs were issued, there may be
substantial prepayments on the underlying mortgages, leading to the
relatively early prepayments of principal-only SMBSs and a reduction in
the amount of payments made to holders of interest-only SMBSs. It is
possible that the Fund might not recover its original investment in
interest-only SMBSs if there are substantial prepayments on the
underlying mortgages. Therefore, interest-only SMBSs generally increase
in value as interest rates rise and decrease in value as interest rates
fall, counter to changes in value experienced by most fixed-income
securities. The Fund's adviser intends to use this characteristic of
interest-only SMBSs to reduce the effects of interest rate changes on
the value of the Fund's portfolio, while continuing to pursue the
Fund's investment objective.
CORPORATE BONDS. The investment-grade corporate bonds in which the Fund
invests are:
rated within the four highest ratings for corporate bonds by Moody's
(Aaa, Aa, A, or Baa), Standard & Poor's (AAA, AA, A, or BBB), or Fitch
(AAA, AA, A, or BBB);
unrated if other long-term debt securities of that issuer are rated, at
the time of purchase, Baa or better by Moody's or BBB or better by
Standard & Poor's or Fitch; or
unrated if determined to be of equivalent quality to one of the foregoing
rating categories by the Fund's adviser.
Securities which are rated BBB by Standard & Poor's or Fitch or Baa by
Moody's have speculative characteristics. Changes in economic conditions or
other circumstances are more likely to lead to weakened capacity to make
principal and interest payments than higher rated bonds. If a security's
rating is reduced below the required minimum after the Fund has purchased
it, the Fund is not required to sell the security, but may consider doing
so.
The high yield corporate bonds in which the Fund invests are rated Ba or
lower by Moody's or BB or lower by Standard & Poor's or Fitch (commonly
known as junk bonds). A description of the rating categories is contained
in the Appendix to this prospectus.
EQUITY SECURITIES. Common stocks represent ownership interest in a
corporation. Unlike bonds, which are debt securities, common stocks have
neither fixed maturity dates nor fixed schedules of promised payments.
Utility stocks are common stocks of utility companies, including water
companies, companies that produce, transmit, or distribute gas and electric
energy and those companies that provide communications facilities, such as
telephone and telegraph companies. Foreign stocks are equity securities of
foreign issuers.
FOREIGN SECURITIES. The foreign bonds in which the Fund invests are rated
within the four highest ratings for bonds by Moody's (Aaa, Aa, A or Baa) or
by Standard & Poor's (AAA, AA, A or BBB) or are unrated if determined to be
of equivalent quality by the Fund's adviser.
INVESTMENT RISKS. Investments in foreign securities involve special
risks that differ from those associated with investments in domestic
securities. The risks associated with investments in foreign securities
apply to securities issued by foreign corporations and sovereign
governments. These risks relate to political and economic developments
abroad, as well as those that result from the differences between the
regulation of domestic securities and issuers and foreign securities
and issuers. These risks may include, but are not limited to,
expropriation, confiscatory taxation, currency fluctuations,
withholding taxes on interest, limitations on the use or transfer of
Fund assets, political or social instability and adverse diplomatic
developments. It may also be more difficult to enforce contractual
obligations or obtain court judgments abroad than would be the case in
the United States because of differences in the legal systems. If the
issuer of the debt or the governmental authorities that control the
repayment of the debt may be unable or unwilling to repay principal or
interest when due in accordance with the terms of such debt, the Fund
may have limited legal recourse in the event of default. Moreover,
individual foreign economies may differ favorably or unfavorably from
the domestic economy in such respects as growth of gross national
product, the rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position.
Additional differences exist between investing in foreign and domestic
securities. Examples of such differences include: less publicly
available information about foreign issuers; credit risks associated
with certain foreign governments; the lack of uniform financial
accounting standards applicable to foreign issuers; less readily
available market quotations on foreign issuers; the likelihood that
securities of foreign issuers may be less liquid or more volatile;
generally higher foreign brokerage commissions; and unreliable mail
service between countries.
EQUITY RESERVES. The Fund's equity reserves may be cash received from the
sale of Fund shares, reserves for temporary defensive purposes or to take
advantage of market opportunities.
REPURCHASE AGREEMENTS. Repurchase agreements are arrangements in which
banks, broker/dealers, and other recognized financial institutions sell
securities to the Fund and agree at the time of sale to repurchase them
at a mutually agreed upon time and price. To the extent that the
original seller does not repurchase the securities from the Fund, the
Fund could receive less than the repurchase price on any sale of such
securities.
CONVERTIBLE SECURITIES. Convertible securities are fixed-income securities
which may be exchanged or converted into a predetermined number of the
issuer's underlying common stock at the option of the holder during a
specified time period. Convertible securities may take the form of
convertible preferred stock, convertible bonds or debentures, units
consisting of "usable" bonds and warrants or a combination of the features
of several of these securities.
The investment characteristics of each convertible security vary widely,
which allows convertible securities to be employed for different investment
objectives. The adviser may treat convertible securities as large company
stocks, small company stocks, or high yield bonds for purposes of the asset
category ranges, depending upon current market conditions, including the
relationship of the then-current price to the conversion price. The
convertible securities in which the Fund invests may be rated "high yield"
or of comparable quality at the time of purchase.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Fund may invest in
the securities of other investment companies, but it will not own more than 3
percent of the total outstanding voting stock of any such investment company,
invest more than 5 percent of its total assets in any one such investment
company, or invest more than 10 percent of its total assets in such other
investment companies in general. To the extent that the Fund invests in
securities issued by other investment companies, the Fund will indirectly bear
its proportionate share of any fees and expenses paid by such companies in
addition to the fees and expenses payable directly by the Fund.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies but which are
subject to restrictions on resale under federal securities law. However, the
Fund will limit investments in illiquid securities, including certain restricted
securities not determined by the Trustees to be liquid, over-the-counter
options, and repurchase agreements providing for settlement in more than seven
days after notice, to 15 percent of its net assets.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
Accordingly, the Fund may pay more or less than the market value of the
securities on the settlement date.
The Fund may dispose of a commitment prior to settlement if the adviser deems it
appropriate to do so. In addition, the Fund may enter into transactions to sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Fund may realize short-term profits or losses upon the sale of such
commitments.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend its portfolio securities on a short-term or long-term basis up to
one-third of the value of its total assets to broker/dealers, banks, or other
institutional borrowers of securities. The Fund will only enter into loan
arrangements with broker/dealers, banks, or other institutions which the adviser
has determined are creditworthy under guidelines established by the Trustees and
will receive collateral in the form of cash or U.S. government securities equal
to at least 100 percent of the value of the securities loaned.
There is a risk that when lending portfolio securities, the securities may not
be available to the Fund on a timely basis and the Fund may, therefore, lose the
opportunity to sell the securities at a
desirable price. In addition, in the event that a borrower of securities would
file for bankruptcy or become insolvent, disposition of the securities may be
delayed pending court action.
FOREIGN CURRENCY TRANSACTIONS. The Fund will enter into foreign currency
transactions to obtain the necessary currencies to settle securities
transactions. Currency transactions may be conducted either on a spot or cash
basis at prevailing rates or through forward foreign currency exchange
contracts.
The Fund may also enter into foreign currency transactions to protect Fund
assets against adverse changes in foreign currency exchange rates or exchange
control regulations. Such changes could unfavorably affect the value of Fund
assets which are denominated in foreign currencies, such as foreign securities
or funds deposited in foreign banks, as measured in U.S. dollars. Although
foreign currency exchanges may be used by the Fund to protect against a decline
in the value of one or more currencies, such efforts may also limit any
potential gain that might result from a relative increase in the value of such
currencies and might, in certain cases, result in losses to the Fund.
CURRENCY RISKS. To the extent that debt securities purchased by the Fund
are denominated in currencies other than the U.S. dollar, changes in
foreign currency exchange rates will affect the Fund's net asset value; the
value of interest earned; gains and losses realized on the sale of
securities; and net investment income and capital gain, if any, to be
distributed to shareholders by the Fund. If the value of a foreign currency
rises against the U.S. dollar, the value of the Fund's assets denominated
in that currency will increase; correspondingly, if the value of a foreign
currency declines against the U.S. dollar, the value of the Fund's assets
denominated in that currency will decrease.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward foreign currency
exchange contract ("forward contract") is an obligation to purchase or sell an
amount of a particular currency at a specific price and on a future date agreed
upon by the parties.
Generally, no commission charges or deposits are involved. At the time the Fund
enters into a forward contract, Fund assets with a value equal to the Fund's
obligation under the forward contract are segregated and are maintained until
the contract has been settled. The Fund will not enter into a forward contract
with a term of more than one year.
The Fund will generally enter into a forward contract to provide the proper
currency to settle a securities transaction at the time the transaction occurs
("trade date"). The period between trade date and settlement date will vary
between 24 hours and 30 days, depending upon local custom.
The Fund may also protect against the decline of a particular foreign currency
by entering into a forward contract to sell an amount of that currency
approximating the value of all or a portion of the Fund's assets denominated in
that currency ("hedging"). The success of this type of short-term hedging
strategy is highly uncertain due to the difficulties of predicting short-term
currency market movements and of precisely matching forward contract amounts and
the constantly changing value of the securities involved. Although the adviser
will consider the likelihood of changes in currency values when making
investment decisions, the adviser believes that it is important to be able to
enter into forward contracts when it believes the interests of the Fund will be
served. The Fund will not enter into forward contracts for hedging purposes in a
particular currency in an amount in
excess of the Fund's assets denominated in that currency. The Fund will not
invest more than 3% of its total assets in forward foreign currency exchange
contracts.
OPTIONS. The Fund may deal in options on foreign currencies, foreign currency
futures, securities, and securities indices, which options may be listed for
trading on a national securities exchange or traded over-the-counter. The Fund
will use options only to manage interest rate and currency risks. The Fund may
write covered call options to generate income. The Fund may write covered call
options and secured put options on up to 25 percent of its net assets and may
purchase put and call options provided that no more than 5 percent of the fair
market value of its net assets may be invested in premiums on such options.
A call option gives the purchaser the right to buy, and the writer the
obligation to sell, the underlying currency, security or other asset at the
exercise price during the option period. A put option gives the purchaser the
right to sell, and the writer the obligation to buy, the underlying currency,
security or other asset at the exercise price during the option period. The
writer of a covered call owns assets that are acceptable for escrow, and the
writer of a secured put invests an amount not less than the exercise price in
eligible assets to the extent that it is obligated as a writer. If a call
written by the Fund is exercised, the Fund foregoes any possible profit from an
increase in the market price of the underlying asset over the exercise price
plus the premium received. In writing puts, there is a risk that the Fund may be
required to take delivery of the underlying asset at a disadvantageous price.
Over-the-counter options ("OTC options") differ from exchange traded options in
several respects. They are transacted directly with dealers and not with a
clearing corporation, and there is a risk of non-performance by the dealer as a
result of the insolvency of such dealer or otherwise, in which event the Fund
may experience material losses. However, in writing options, the premium is paid
in advance by the dealer. OTC options, which may not be continuously liquid, are
available for a greater variety of assets and with a wider range of expiration
dates and exercise prices, than are exchange traded options.
FUTURES AND OPTIONS ON FUTURES. The Fund may purchase and sell futures
contracts to accommodate cash flows into and out of the Fund's portfolio and to
hedge against the effects of changes in the value of portfolio securities due to
anticipated changes in interest rates and market conditions. Interest rate
futures contracts call for the delivery of particular debt instruments at a
certain time in the future. The seller of the contract agrees to make delivery
of the type of instrument called for in the contract, and the buyer agrees to
take delivery of the instrument at the specified future time.
Stock index futures contracts are based on indexes that reflect the market value
of common stock of the firms included in the indexes. An index futures contract
is an agreement pursuant to which two parties agree to take or make delivery of
an amount of cash equal to the differences between the value of the index at the
close of the last trading day of the contract and the price at which the index
contract was originally written. The Fund may utilize stock index futures to
handle cash flows into and out of the Fund and to potentially reduce
transactional costs.
The Fund may also write call options and purchase put options on futures
contracts as a hedge to attempt to protect its portfolio securities against
decreases in value. When the Fund writes a call option on a futures contract, it
is undertaking the obligation of selling a futures contract at a fixed
price at any time during a specified period if the option is exercised.
Conversely, as purchaser of a put option on a futures contract, the Fund is
entitled (but not obligated) to sell a futures contract at the fixed price
during the life of the option.
The Fund may not purchase or sell futures contracts or related options if
immediately thereafter the sum of the amount of margin deposits on the Fund's
existing futures positions and premiums paid for related options would exceed 5
percent of the market value of the Fund's total assets. When the Fund purchases
futures contracts, an amount of cash and cash equivalents, equal to the
underlying commodity value of the futures contracts (less any related margin
deposits), will be deposited in a segregated account with the custodian (or the
broker, if legally permitted) to collateralize the position and thereby insure
that the use of such futures contracts are unleveraged. When the Fund sells
futures contracts, it will either own or have the right to receive the
underlying future or security or will make deposits to collateralize the
position as discussed above.
RISKS. When the Fund uses futures and options on futures as hedging
devices, there is a risk that the prices of the securities subject to the
futures contracts may not correlate perfectly with the prices of the
securities in the Fund's portfolio. This may cause the futures contract and
any related options to react differently than the portfolio securities to
market changes. In addition, the investment adviser could be incorrect in
its expectations about the direction or extent of market factors such as
stock price movements. In these events, the Fund may lose money on the
futures contract or option.
It is not certain that a secondary market for positions in futures
contracts or for options will exist at all times. Although the investment
adviser will consider liquidity before entering into these transactions,
there is no assurance that a liquid secondary market on an exchange or
otherwise will exist for any particular futures contract or option at any
particular time. The Fund's ability to establish and close out futures and
options positions depends on this secondary market.
PORTFOLIO TURNOVER. Although the Fund does not intend to invest for the purpose
of seeking short-term profits, securities in its portfolio will be sold whenever
the Fund's adviser believes it is appropriate to do so in light of the Fund's
investment objective, without regard to the length of time a particular security
may have been held. The Fund's rate of portfolio turnover may exceed that of
certain other mutual funds with the same investment objective. A higher rate of
portfolio turnover involves correspondingly greater transaction expenses which
must be borne directly by the Fund and, thus, indirectly by its shareholders. In
addition, a high rate of portfolio turnover may result in the realization of
larger amounts of capital gains which, when distributed to the Fund's
shareholders, are taxable to them. (Further information is contained in the
Fund's Statement of Additional Information within the sections "Brokerage
Transactions" and "Tax Status"). Nevertheless, transactions for the Fund's
portfolio will be based only upon investment considerations and will not be
limited by any other considerations when the Fund's adviser deems it appropriate
to make changes in the Fund's portfolio.
INVESTMENT LIMITATIONS
The Fund will not:
borrow money directly or through reverse repurchase agreements or pledge
securities except, under certain circumstances, the Fund may borrow up to
one-third of the value of its total assets and pledge up to 15 percent of
the value of those assets to secure such borrowings;
lend any securities except for portfolio securities; or
underwrite any issue of securities, except as it may be deemed to be an
underwriter under the Securities Act of 1933 in connection with the sale
of restricted securities which the Fund may purchase pursuant to its
investment objective, policies and limitations.
The above investment limitations cannot be changed without shareholder approval.
TRUST INFORMATION
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MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Trust's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. The Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Except as noted below with regard to the sub-adviser,
investment decisions for the Fund are made by Federated Management, the Fund's
investment adviser (the "Adviser"), subject to direction by the Trustees. The
Adviser continually conducts investment research and supervision for the Fund
and is responsible for the purchase or sale of portfolio instruments, for which
it receives an annual fee from the Fund.
ADVISORY FEES. The Fund's Adviser receives an annual investment advisory
fee equal to .75 of 1% of the Fund's average daily net assets. The fee paid
by the Fund, while higher than the advisory fee paid by other mutual funds
in general, is comparable to fees paid by other mutual funds with similar
objectives and policies. Under the advisory contract, which provides for
voluntary reimbursement of expenses by the Adviser, the Adviser may
voluntarily waive some or all of its fee. This does not include
reimbursement to the Fund of any expenses incurred by shareholders who use
the transfer agent's subaccounting facilities. The Adviser has also
undertaken to reimburse the Fund for operating expenses in excess of
limitations established by certain states.
ADVISER'S BACKGROUND. Federated Management, a Delaware business trust
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940.
SUB-ADVISER. Under the terms of the Sub-Advisory Agreement between the Adviser
and Federated Global Research Corp. (the "Sub-Adviser"), the Sub-Adviser will
provide the Adviser such investment advice, statistical and other factual
information as may, from time to time, be reasonably requested by the Adviser.
SUB-ADVISORY FEES. For its services under the Sub-Advisory Agreement, the
Sub-Adviser receives an allocable portion of the Fund's advisory fee. Such
allocation is based on the amount of foreign securities which the
Sub-Adviser manages for the Fund. This fee is paid by the Adviser out of
its resources and is not an incremental Fund expense.
SUB-ADVISER'S BACKGROUND. Federated Global Research Corp., incorporated in
Delaware on May 12, 1995, is a registered investment adviser under the
Investment Advisers Act of 1940. Prior to September 1995, the Sub-Adviser
had not served as an investment adviser to mutual funds.
The Adviser and Sub-Adviser are subsidiaries of Federated Investors. All of the
Class A (voting) shares of Federated Investors are owned by a trust, the
trustees of which are John F. Donahue, Chairman and Trustee of Federated
Investors, Mr. Donahue's wife, and Mr. Donahue's son,
J. Christopher Donahue, who is President and Trustee of Federated Investors.
Federated Management, Federated Global Research Corp. and other subsidiaries of
Federated Investors serve as investment advisers to a number of investment
companies and private accounts. Certain other subsidiaries also provide
administrative services to a number of investment companies. With over $80
billion invested across more than 250 funds under management and/or
administration by its subsidiaries, as of December 31, 1995, Federated Investors
is one of the largest mutual fund investment managers in the United States. With
more than 1,800 employees, Federated continues to be led by the management who
founded the company in 1955. Federated funds are presently at work in and
through 4,000 financial institutions nationwide. More than 100,000 investment
professionals have selected Federated funds for their clients.
The Trust, the Adviser, and the Sub-Adviser have adopted strict codes of ethics
governing the conduct of all employees who manage the Fund and its portfolio
securities. These codes recognize that such persons owe a fiduciary duty to the
Fund's shareholders and must place the interests of shareholders ahead of the
employees' own interest. Among other things, the codes: require preclearance and
periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered for
purchase or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less than sixty
days. Violations of the codes are subject to review by the Board of Trustees and
could result in severe penalties.
PORTFOLIO MANAGERS' BACKGROUNDS. Charles A. Ritter is the portfolio
manager for the Fund and performs the overall allocation of the assets of
the Fund among the various asset categories. He has performed these duties
since the Fund's inception. In allocating the Fund's assets, Mr. Ritter
evaluates the market environment and economic outlook, utilizing the
services of the Adviser 's economist and strategist. Mr. Ritter joined
Federated Investors in 1983 and has been a Vice President of the Fund's
Adviser since 1992. From 1988 until 1991, Mr. Ritter acted as an Assistant
Vice President. Mr. Ritter is a Chartered Financial Analyst and received
his M.B.A. in Finance from the University of Chicago and his M.S. in
Economics from Carnegie Mellon University.
The portfolio managers for each of the individual asset categories are as
follows:
Peter R. Anderson and Aash Shah are portfolio managers for the domestic
large company stocks asset category. Mr. Anderson has performed this duty
since the Fund's inception. Mr. Shah assumed his responsibilities in
December 1995. Mr. Anderson joined Federated Investors in 1972 and is
presently a Senior Vice President of the Fund's Adviser. Mr. Anderson is a
Chartered Financial Analyst and received his M.B.A. in Finance from the
University of Wisconsin. Mr. Shah joined Federated Investors in 1993 as an
Investment Analyst and has been an Assistant Vice President of the Fund's
Adviser since 1995. Mr. Shah was employed at Westinghouse Credit Corp. from
1990 to 1993 as an Investment Analyst. Mr. Shah received his M.S.I.A. from
Carnegie Mellon University with a concentration in finance and accounting.
Mr. Shah is a Chartered Financial Analyst.
James Grefenstette is the portfolio manager for the domestic small company
stocks asset category. He has served in this capacity since August 1994.
Mr. Grefenstette joined Federated Investors in 1992 and has been an
Assistant Vice President of the Fund's Adviser since 1994. From 1992 until
1994, Mr. Grefenstette acted as an investment analyst. Mr. Grefenstette was
a credit analyst at Westinghouse Credit Corp. from 1990 until 1992. Mr.
Grefenstette received his M.S.I.A. from Carnegie Mellon University.
Christopher H. Wiles is the portfolio manager for the utility stocks asset
category of all the portfolios of Managed Series Trust except for Federated
Managed Aggressive Growth Fund, and has been one of the Fund's portfolio
managers since its inception. Mr. Wiles joined Federated Investors in 1990
and has been a Vice President of the Fund's Adviser since 1992. Mr. Wiles
served as Assistant Vice President of the Fund's Adviser from 1990 until
1992. Mr. Wiles is a Chartered Financial Analyst and received his M.B.A. in
Finance from Cleveland State University.
Henry Frantzen, Drew Collins, Mark Kopinski, Frank Semack, and Alexandre de
Bethmann are portfolio managers for the foreign stocks asset category.
Henry A. Frantzen has been a portfolio manager of the Fund since November
1995. Mr. Frantzen joined Federated Investors in 1995 as an Executive Vice
President of the Fund's Sub-Adviser. Mr. Frantzen served as Chief
Investment Officer of international equities at Brown Brothers Harriman &
Co. from 1992 to 1995. He was the Executive Vice President and Director of
Equities at Oppenheimer Management Corporation from 1989 to 1991. Mr.
Frantzen received his B.S. in finance and marketing from the University of
North Dakota.
Drew J. Collins has been a portfolio manager of the Fund since November
1995. Mr. Collins joined Federated Investors in 1995 as a Senior Vice
President of the Fund's Sub-Adviser. Mr. Collins served as a Vice
President/Portfolio Manager of international equity portfolios at Arnhold
and S. Bleichroeder, Inc. from 1994 to 1995. He served as an Assistant Vice
President/ Portfolio Manager for international equities at the College
Retirement Equities Fund from 1986 to 1994. Mr. Collins is a Chartered
Financial Analyst and received his M.B.A. in finance from the University of
Pennsylvania.
Mark S. Kopinski has been a portfolio manager of the Fund since November
1995. Mr. Kopinski joined Federated Investors in 1995 as a Vice President
of the Fund's Sub-Adviser. Mr.
Kopinski served as Vice President/Portfolio Manager of international equity
funds at Twentieth Century Mutual Funds from 1990 to 1995. Mr. Kopinski
received his M.B.A. in Asian Studies from the University of Illinois.
Frank Semack has been a portfolio manager of the Fund since November 1995.
Mr. Semack joined Federated Investors in 1995 as a Vice President of the
Fund's Sub-Adviser. Mr. Semack served as an Investment Analyst at Omega
Advisers, Inc. from 1993 to 1994. He served as an Associate
Director/Portfolio Manager of Wardley Investment Services, Ltd. from 1987
to 1993. Mr. Semack received his M.Sc. in economics from the London School
of Economics.
Alexandre de Bethmann has been a portfolio manager of the Fund since
November 1995. Mr. de Bethmann joined Federated Investors in 1995 as a Vice
President of the Fund's Sub-Adviser. Mr. de Bethmann served as Assistant
Vice President/Portfolio Manager for Japanese and Korean equities at the
College Retirement Equities Fund from 1994 to 1995. He served as an
International Equities Analyst and then as an Assistant Portfolio Manager
at the College Retirement Equities Fund between 1987 and 1994. Mr. de
Bethmann received his M.B.A. in Finance from Duke University.
Henry Frantzen, Drew Collins, and Robert Kowit are portfolio managers for
the foreign bonds asset category. They have performed these duties since
November 1995.
Robert M. Kowit joined Federated Investors in 1995 as a Vice President of
the Fund's Sub-Adviser. Mr. Kowit served as a Managing Partner of
Copernicus Global Asset Management from January 1995 through October 1995.
From 1990 to 1994, he served as Senior Vice President of International
Fixed Income and Foreign Exchange for John Hancock Advisers. Mr. Kowit
received his M.B.A. from Iona College with a concentration in finance.
Susan M. Nason and Joseph M. Balestrino are portfolio managers for the U.S.
Treasury securities asset category. Ms. Nason has performed this duty since
the Fund's inception. Mr. Balestrino assumed his responsibilities on March
1, 1995. Ms. Nason joined Federated Investors in 1987 and has been a Vice
President of the Fund's Adviser since 1993. Ms. Nason served as an
Assistant Vice President of the Adviser from 1990 until 1992. Ms. Nason is
a Chartered Financial Analyst and received her M.S.I.A. in Finance from
Carnegie Mellon University. Mr. Balestrino joined Federated Investors in
1986 and has been Vice President of the Fund's Adviser since 1995. Mr.
Balestrino served as an Assistant Vice President from 1991 until 1995, and
as an investment analyst of the Adviser from 1989 until 1991. Mr.
Balestrino is a Chartered Financial Analyst and received his M.A. in Urban
and Regional Planning from the University of Pittsburgh.
Thomas M. Franks is the portfolio manager for the equity reserves asset
category. He has performed these duties since the Fund's inception. Mr.
Franks joined Federated Investors in 1985 and has been a Vice President of
the Fund's Adviser since 1990. Mr. Franks is a Chartered Financial Analyst
and received his M.S.I.A. in Business Administration from Carnegie Mellon
University.
Kathleen M. Foody-Malus and James D. Roberge are portfolio managers for the
mortgage-backed securities asset category. Ms. Foody-Malus has performed
this duty since the
Fund's inception. Mr. Roberge assumed his responsibilities on March 1,
1995. Ms. Foody-Malus joined Federated Investors in 1983 and has been a
Vice President of the Fund's Adviser since 1993. Ms. Foody-Malus served as
an Assistant Vice President of the Adviser from 1990 until 1992. Ms.
Foody-Malus received her M.B.A. in Accounting/Finance from the University
of Pittsburgh. Mr. Roberge joined Federated Investors in 1990 and has been
a Vice President of the Fund's Adviser since October, 1994. Prior to this,
Mr. Roberge served as an Assistant Vice President of the Fund's Adviser.
From 1990 until 1992, Mr. Roberge acted as an investment analyst. Mr.
Roberge is a Chartered Financial Analyst and received his M.B.A. in Finance
from the University of Pennsylvania.
Joseph M. Balestrino and Susan M. Nason are portfolio managers for the
investment-grade corporate bonds asset category. They have performed these
duties since the Fund's inception.
Mark E. Durbiano is the portfolio manager for the high yield corporate
bonds asset category. He has performed these duties since the Fund's
inception. Mr. Durbiano joined Federated Investors in 1982 and has been a
Senior Vice President of the Fund's Adviser since January 1996. Mr.
Durbiano was a Vice President of the Fund's Adviser from 1988 through 1995.
Mr. Durbiano is a Chartered Financial Analyst and received his M.B.A. in
Finance from the University of Pittsburgh.
DISTRIBUTION OF SELECT SHARES
Federated Securities Corp. is the principal distributor for Shares. It is a
Pennsylvania corporation organized on November 14, 1969, and is the principal
distributor for a number of investment companies. Federated Securities Corp. is
a subsidiary of Federated Investors.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES. Under a distribution plan adopted
in accordance with Investment Company Act Rule 12b-1 (the "Distribution Plan"),
the distributor may be paid a fee in an amount computed at an annual rate of .75
of 1% of the average daily net assets of Select Shares to finance any activity
which is principally intended to result in the sale of Shares subject to the
Distribution Plan. The distributor may select financial institutions such as
banks, fiduciaries, custodians for public funds, investment advisers, and
broker/dealers to provide sales services or distribution-related support
services as agents for their clients or customers.
The Distribution Plan is a compensation-type plan. As such, the Fund makes no
payments to the distributor except as described above. Therefore, the Fund does
not pay separately for unreimbursed expenses of the distributor, including
amounts expended by the distributor in excess of amounts received by it from the
Fund, interest, carrying or other financing charges in connection with excess
amounts expended, or the distributor's overhead expenses. However, the
distributor may be able to recover such amount or may earn a profit from
payments made by the Fund under the Distribution Plan.
In addition, the Fund has entered into a Shareholder Services Agreement with
Federated Shareholder Services, a subsidiary of Federated Investors, under which
the Fund may make payments up to .25 of 1% of the average daily net asset value
of the Select Shares to obtain certain personal services for shareholders and
for the maintenance of shareholder accounts. Under the Shareholder Services
Agreement, Federated Shareholder Services will either perform shareholder
services
directly or will select financial institutions to perform shareholder services.
Financial institutions will receive fees based upon Shares owned by their
clients or customers. The schedules of such fees and the basis upon which such
fees will be paid will be determined from time to time by the Fund and Federated
Shareholder Services.
SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS. In addition to receiving the
payments under the Distribution Plan and Shareholder Services Agreement,
Federated Securities Corp. and Federated Shareholder Services, from their own
assets, may pay financial institutions supplemental fees for the performance of
substantial sales services, distribution-related support services, or
shareholder services. The support may include sponsoring sales, educational and
training seminars for their employees, providing sales literature, and
engineering computer software programs that emphasize the attributes of the
Fund. Such assistance will be predicated upon the amount of Shares the financial
institution sells or may sell, and/or upon the type and nature of sales or
marketing support furnished by the financial institution. Any payments made by
the distributor may be reimbursed by the Fund's Adviser or its affiliates.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides administrative personnel and services (including
certain legal and financial reporting services) necessary to operate the Fund.
Federated Administrative Services provides these at an annual rate which relates
to the average aggregate daily net assets of all funds advised by subsidiaries
of Federated Investors ("Federated Funds") as specified below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE DAILY
ADMINISTRATIVE FEE NET ASSETS OF THE FEDERATED FUNDS
<S> <C>
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Administrative Services may choose voluntarily to waive a portion of
its fee.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the Adviser looks for prompt execution of the order at a favorable
price. In working with dealers, the Adviser will generally use those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. In selecting among firms
believed to meet these criteria, the Adviser may give consideration to those
firms which have sold or are selling shares of the Fund and other funds
distributed by Federated Securities Corp. The Adviser makes decisions on
portfolio transactions and selects brokers and dealers subject to review by the
Trustees.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund's net asset value per Share fluctuates. The net asset value for Shares
is determined by adding the interest of the Shares in the market value of all
securities and other assets of the Fund, subtracting the interest of the Shares
in the liabilities of the Fund and those attributable to Shares, and dividing
the remainder by the total number of Shares outstanding. The net asset value for
Institutional Shares may exceed that of Select Shares due to the variance in
daily net income realized by each class. Such variance will reflect only accrued
net income to which the shareholders of a particular class are entitled.
INVESTING IN SELECT SHARES
- --------------------------------------------------------------------------------
SHARE PURCHASES
Shares are sold on days on which the New York Stock Exchange is open for
business. Shares may be purchased through a financial institution which has a
sales agreement with the distributor or by wire or mail.
To purchase Shares, open an account by calling Federated Securities Corp.
Information needed to establish an account will be taken over the telephone. The
Fund reserves the right to reject any purchase request.
THROUGH A FINANCIAL INSTITUTION. An investor may call his financial institution
(such as a bank or an investment dealer) to place an order to purchase Shares.
Orders through a financial institution are considered received when the Fund is
notified of the purchase order. Purchase orders through a registered
broker/dealer must be received by the broker before 4:00 p.m. (Eastern time) and
must be transmitted by the broker to the Fund before 5:00 p.m. (Eastern time) in
order for Shares to be purchased at that day's price. Purchase orders through
other financial institutions must be received by the financial institution and
transmitted to the Fund before 4:00 p.m. (Eastern time) in order for Shares to
be purchased at that day's price. It is the financial institution's
responsibility to transmit orders promptly.
BY WIRE. To purchase Shares by Federal Reserve wire, call the Fund before 4:00
p.m. (Eastern time) to place an order. The order is considered received
immediately. Payment by federal funds must be received before 3:00 p.m. (Eastern
time) on the next business day following the order. Federal funds should be
wired as follows: Federated Services Company, c/o State Street Bank and Trust
Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit to: Federated
Managed Income Fund-- Select Shares; Fund Number (this number can be found on
the account statement or by contacting the Fund); Group Number or Wire Order
Number; Nominee or Institution Name; and ABA Number 011000028. Shares cannot be
purchased by wire on holidays when wire transfers are restricted. Questions on
wire purchases should be directed to your shareholder services representative at
the telephone number listed on your account statement.
BY MAIL. To purchase Shares by mail, send a check made payable to Federated
Managed Income Fund--Select Shares to: Federated Services Company, P.O. Box
8600, Boston, Massachusetts
02266-8600. Orders by mail are considered received when payment by check is
converted by State Street Bank into federal funds. This is normally the next
business day after State Street Bank receives the check.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in Shares is $1,500. Accounts established through
a non-affiliated bank or broker may be subject to a smaller minimum investment.
WHAT SHARES COST
Shares are sold at their net asset value next determined after an order is
received. There is no sales charge imposed by the Fund. Investors who purchase
Shares through a non-affiliated bank or broker may be charged an additional
service fee by that bank or broker.
The net asset value is determined as of the close of trading (normally 4:00 p.m.
Eastern time) on the New York Stock Exchange, Monday through Friday, except on:
(i) days on which there are not sufficient changes in the value of the Fund's
portfolio securities such that its net asset value might be materially affected;
(ii) days during which no Shares are tendered for redemption and no orders to
purchase Shares are received; and (iii) the following holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
SUBACCOUNTING SERVICES
Institutions are encouraged to open single master accounts. However, certain
institutions may wish to use the transfer agent's subaccounting system to
minimize their internal recordkeeping requirements. The transfer agent may
charge a fee based on the level of subaccounting services rendered. Institutions
holding Shares in a fiduciary, agency, custodial, or similar capacity may charge
or pass through subaccounting fees as part of or in addition to normal trust or
agency account fees. They may also charge fees for other services provided which
may be related to the ownership of Shares. This prospectus should, therefore, be
read together with any agreement between the customer and the institution with
regard to the services provided, the fees charged for those services, and any
restrictions and limitations imposed. State securities laws may require certain
financial institutions such as depository institutions to register as dealers.
SYSTEMATIC INVESTMENT PROGRAM
Once a Fund account has been opened, shareholders may add to their investment on
a regular basis. Under this program, funds may be automatically withdrawn
periodically from the shareholder's checking account and invested in Shares at
the net asset value next determined after an order is received by the Fund. A
shareholder may apply for participation in this program through Federated
Securities Corp.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the Fund.
Detailed confirmations of each purchase or redemption are sent to each
shareholder. Quarterly confirmations are sent to report dividends paid during
the quarter.
DIVIDENDS
Dividends are declared and paid monthly to all shareholders invested in the Fund
on the record date. Unless shareholders request cash payments by writing the
Fund, dividends are automatically reinvested in additional Shares of the Fund on
payment dates at the ex-dividend date net asset value without a sales charge.
CAPITAL GAINS
Capital gains realized by the Fund, if any, will be distributed at least once
every 12 months.
REDEEMING SELECT SHARES
- --------------------------------------------------------------------------------
The Fund redeems Shares at their net asset value next determined after the Fund
receives the redemption request. Redemptions will be made on days on which the
Fund computes its net asset value. Redemption requests must be received in
proper form and can be made through a financial institution, by telephone
request or by written request.
THROUGH A FINANCIAL INSTITUTION
A shareholder may redeem Shares by calling his financial institution (such as a
bank or an investment dealer) to request the redemption. Shares will be redeemed
at the net asset value next determined after the Fund receives the redemption
request from the financial institution. Redemption requests through a registered
broker/dealer must be received by the broker before 4:00 p.m. (Eastern time) and
must be transmitted by the broker to the Fund before 5:00 p.m. (Eastern time) in
order for Shares to be redeemed at that day's net asset value. Redemption
requests through other financial institutions must be received by the financial
institution and transmitted to the Fund before 4:00 p.m. (Eastern time) in order
for Shares to be redeemed at that day's net asset value. The financial
institution is responsible for promptly submitting redemption requests and
providing proper written redemption instructions to the Fund. The financial
institution may charge customary fees and commissions for this service.
TELEPHONE REDEMPTION
Shareholders may redeem their Shares by telephoning the Fund before 4:00 p.m.
(Eastern time). All proceeds will normally be wire transferred the following
business day, but in no event more than seven days, to the shareholder's account
at a domestic commercial bank that is a member of the Federal Reserve System.
Proceeds from redemption requests received on holidays when wire transfers are
restricted will be wired the following business day. Questions about telephone
redemptions on days when wire transfers are restricted should be directed to
your shareholder services representative at the telephone number listed on your
account statement. If at any time, the Fund shall determine it necessary to
terminate or modify this method of redemption, shareholders would be promptly
notified.
An authorization form permitting the Fund to accept telephone requests must
first be completed. Authorization forms and information on this service are
available from Federated Securities Corp.
Telephone redemption instructions may be recorded. If reasonable procedures are
not followed by the Fund, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "Written Requests", should be considered.
WRITTEN REQUESTS
Shares may be redeemed in any amount by mailing a written request to: Federated
Services Company, P.O. Box 8600, Boston, MA 02266-8600. If share certificates
have been issued, they should be sent unendorsed with the written request by
registered or certified mail to the address noted above.
SIGNATURES. Shareholders requesting a redemption of any amount to be sent to an
address other than that on record with the Fund, or a redemption payable other
than to the shareholder of record must have signatures on written redemption
requests guaranteed by:
a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund ("BIF"), which is administered by the Federal Deposit
Insurance Corporation ("FDIC");
a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;
a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund ("SAIF"), which is administered
by the FDIC; or
any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.
RECEIVING PAYMENT. Normally, a check for the proceeds is mailed within one
business day, but in no event more than seven days, after receipt of a proper
written redemption request, provided the Fund or its agents have received
payment for Shares from the shareholder.
SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive payments of a predetermined amount may take
advantage of the Systematic Withdrawal Program. Under this program, Shares are
redeemed to provide for periodic withdrawal payments in an amount directed by
the shareholder. Depending upon the amount of the withdrawal payments, the
amount of dividends paid and capital gains distributions with respect to Shares,
and the fluctuation of the net asset value of Shares redeemed under this
program, redemptions may reduce, and eventually use up, the shareholder's
investment in the Fund. For this reason, payments under this program should not
be considered as yield or income on the shareholder's investment in the Fund. To
be eligible to participate in this program, a shareholder must have an account
value of at least $10,000. A shareholder may apply for participation in this
program through Federated Securities Corp.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem Shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $1,500. This requirement
does not apply, however, if the balance falls below $1,500 because of changes in
the Fund's net asset value. Before Shares are redeemed to close an account, the
shareholder is notified in writing and allowed 30 days to purchase additional
Shares to meet the minimum requirement.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights except that, in matters
affecting only a particular fund or class, only shares of that fund or class are
entitled to vote. As a Massachusetts business trust, the Trust is not required
to hold annual shareholder meetings. Shareholder approval will be sought only
for certain changes in the Trust's or the Fund's operation and for the election
of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust entitled to vote.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code applicable to regulated investment companies and to
receive the special tax treatment afforded to such companies. Unless otherwise
exempt, shareholders are required to pay federal income tax on any dividends and
other distributions received. This applies whether dividends and distributions
are received in cash or as additional Shares.
STATE AND LOCAL TAXES
In the opinion of Houston, Houston & Donnelly, counsel to the Trust, Fund Shares
may be subject to personal property taxes imposed by counties, municipalities,
and school districts in Pennsylvania to the extent that the portfolio securities
in the Fund would be subject to such taxes if owned directly by residents of
those jurisdictions.
Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its total return and yield for Shares.
Total return represents the change, over a specified period of time, in the
value of an investment in Shares after reinvesting all income and capital gain
distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
The yield of Shares is calculated by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by Shares
over a thirty-day period by the maximum offering price per share of Shares on
the last day of the period. This number is then annualized using semi-annual
compounding. The yield does not necessarily reflect income actually earned by
Shares and, therefore, may not correlate to the dividends or other distributions
paid to shareholders.
Shares are sold without any sales load or other similar non-recurring charges.
Total return and yield will be calculated separately for Select Shares and
Institutional Shares.
From time to time, advertisements for the Fund's Select Shares may refer to
ratings, rankings, and other information in certain financial publications
and/or compare the Fund's Select Shares performance to certain indices.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
The Fund also offers another class of shares called Institutional Shares that
are sold at net asset value primarily to financial institutions acting in a
fiduciary or agency capacity and are subject to a minimum initial investment of
$25,000 over a 90-day period.
Institutional Shares are distributed with no 12b-1 Plan but are subject to
shareholder services fees.
Institutional Shares and Select Shares are subject to certain of the same
expenses. Expense differences, however, between Institutional Shares and Select
Shares may affect the performance of each class.
To obtain more information and a prospectus for Institutional Shares, investors
may call 1-800-235-4669.
FEDERATED MANAGED INCOME FUND
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
(FORMERLY INSTITUTIONAL SERVICE SHARES)
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 52.
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, NOVEMBER 30,
1995 1994(A)
<S> <C> <C>
- ---------------------------------------------------------------------------- ----------------- -----------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.76 $ 10.00
- ----------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------
Net investment income 0.62 0.31
- ----------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign
currency 0.78 (0.25)
- ---------------------------------------------------------------------------- ------- -------
Total from investment operations 1.40 0.06
- ---------------------------------------------------------------------------- ------- -------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------------
Distributions from net investment income (0.62) (0.30)
- ---------------------------------------------------------------------------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 10.54 $ 9.76
- ---------------------------------------------------------------------------- ------- -------
TOTAL RETURN (B) 14.74% 0.55%
- ----------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------
Expenses 0.75% 0.67%*
- ----------------------------------------------------------------------------
Net investment income 6.26% 6.02%*
- ----------------------------------------------------------------------------
Expense waiver/reimbursement (c) 1.06% 1.01%*
- ----------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------
Net assets, end of period (000 omitted) $50,852 $34,692
- ----------------------------------------------------------------------------
Portfolio turnover 165% 153%
- ----------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 25, 1994 (date of initial
public investment) to November 30, 1994. For the period from the start of
business, January 18, 1994 to May 24, 1994, the net investment income was
distributed to the Trust's adviser.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
Further information about the Fund's performance is contained in the Fund's
annual report for the fiscal year ended November 30, 1995, which can be obtained
free of charge.
FEDERATED MANAGED INCOME FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--10.4%
- ---------------------------------------------------------------------------------------------------
LARGE COMPANY--2.6%
----------------------------------------------------------------------------------
BASIC INDUSTRY--0.3%
----------------------------------------------------------------------------------
1,200 Allegheny Ludlum Corp. $ 22,350
----------------------------------------------------------------------------------
400 Aluminum Co. of America 23,400
----------------------------------------------------------------------------------
400 Du Pont (E.I.) de Nemours & Co. 26,600
----------------------------------------------------------------------------------
300 Eastman Chemical Co. 19,688
----------------------------------------------------------------------------------
500 International Paper Co. 19,063
----------------------------------------------------------------------------------
700 Phelps Dodge Corp. 47,513
----------------------------------------------------------------------------------
900 Praxair, Inc. 26,213
---------------------------------------------------------------------------------- -------------
Total 184,827
---------------------------------------------------------------------------------- -------------
CONSUMER DURABLES--0.1%
----------------------------------------------------------------------------------
600 Eastman Kodak Co. 40,800
----------------------------------------------------------------------------------
900 Mattel, Inc. 25,200
----------------------------------------------------------------------------------
800 Volvo AB, ADR 16,800
---------------------------------------------------------------------------------- -------------
Total 82,800
---------------------------------------------------------------------------------- -------------
CONSUMER NON-DURABLES--0.2%
----------------------------------------------------------------------------------
300 Avon Products, Inc. 21,788
----------------------------------------------------------------------------------
600 IBP, Inc. 37,500
----------------------------------------------------------------------------------
600 Philip Morris Cos., Inc. 52,650
----------------------------------------------------------------------------------
4,400 RJR Nabisco Holdings Corp., Conv. Pfd., Series C, $0.6012 25,850
----------------------------------------------------------------------------------
700 Reebok International Ltd. 18,200
---------------------------------------------------------------------------------- -------------
Total 155,988
---------------------------------------------------------------------------------- -------------
ENERGY MINERALS--0.2%
----------------------------------------------------------------------------------
700 Chevron Corp. 34,563
----------------------------------------------------------------------------------
700 Occidental Petroleum Corp. 15,488
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
LARGE COMPANY--CONTINUED
----------------------------------------------------------------------------------
ENERGY MINERALS--CONTINUED
----------------------------------------------------------------------------------
400 Texaco, Inc. $ 29,600
----------------------------------------------------------------------------------
1,200 USX-Marathon Group 22,050
---------------------------------------------------------------------------------- -------------
Total 101,701
---------------------------------------------------------------------------------- -------------
FINANCE--0.5%
----------------------------------------------------------------------------------
648 Allstate Corp. 26,568
----------------------------------------------------------------------------------
400 American Express Co. 17,000
----------------------------------------------------------------------------------
700 Bank of Boston Corp. 32,463
----------------------------------------------------------------------------------
300 CIGNA Corp. 33,000
----------------------------------------------------------------------------------
400 Chemical Banking Corp. 24,000
----------------------------------------------------------------------------------
600 Citicorp 42,450
----------------------------------------------------------------------------------
400 Dean Witter, Discover & Co. 20,400
----------------------------------------------------------------------------------
742 Mellon Bank Corp. 39,697
----------------------------------------------------------------------------------
400 Merrill Lynch & Co., Inc., STRYPES, $3.12 21,100
----------------------------------------------------------------------------------
400 Providian Corp. 16,050
----------------------------------------------------------------------------------
300 Sunamerica, Inc., Conv. Pfd., Series E, $3.10 20,100
----------------------------------------------------------------------------------
1,000 Travelers Group, Inc. 59,500
---------------------------------------------------------------------------------- -------------
Total 352,328
---------------------------------------------------------------------------------- -------------
HEALTH CARE--0.2%
----------------------------------------------------------------------------------
450 American Home Products Corp. 41,063
----------------------------------------------------------------------------------
400 Becton, Dickinson & Co. 27,900
----------------------------------------------------------------------------------
400 Bristol-Myers Squibb Co. 32,100
----------------------------------------------------------------------------------
400 Merck & Co., Inc. 24,750
---------------------------------------------------------------------------------- -------------
Total 125,813
---------------------------------------------------------------------------------- -------------
PRODUCER MANUFACTURING--0.3%
----------------------------------------------------------------------------------
400 (a)FMC Corp. 29,550
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
LARGE COMPANY--CONTINUED
----------------------------------------------------------------------------------
PRODUCER MANUFACTURING--CONTINUED
----------------------------------------------------------------------------------
400 General Electric Co. $ 26,900
----------------------------------------------------------------------------------
300 ITT Corp. 36,788
----------------------------------------------------------------------------------
200 Loews Corp. 30,700
----------------------------------------------------------------------------------
700 Textron, Inc. 53,638
----------------------------------------------------------------------------------
2,100 (b)Westinghouse Electric Corp., PEPS, Series C, $1.30 34,650
---------------------------------------------------------------------------------- -------------
Total 212,226
---------------------------------------------------------------------------------- -------------
RETAIL TRADE--0.1%
----------------------------------------------------------------------------------
900 American Stores Co. 23,625
----------------------------------------------------------------------------------
700 Sears, Roebuck & Co. 27,563
---------------------------------------------------------------------------------- -------------
Total 51,188
---------------------------------------------------------------------------------- -------------
SERVICES--0.1%
----------------------------------------------------------------------------------
1,000 Baker Hughes, Inc. 20,375
----------------------------------------------------------------------------------
200 Gannett Co., Inc. 12,200
----------------------------------------------------------------------------------
300 (a)Western Atlas, Inc. 14,363
---------------------------------------------------------------------------------- -------------
Total 46,938
---------------------------------------------------------------------------------- -------------
TECHNOLOGY--0.4%
----------------------------------------------------------------------------------
800 General Motors Corp., Class E 40,400
----------------------------------------------------------------------------------
400 Hewlett-Packard Co. 33,150
----------------------------------------------------------------------------------
400 Intel Corp. 24,350
----------------------------------------------------------------------------------
200 International Business Machines Corp. 19,325
----------------------------------------------------------------------------------
400 (a)Litton Industries, Inc. 17,950
----------------------------------------------------------------------------------
700 Lockheed Martin Corp. 51,363
----------------------------------------------------------------------------------
400 Raytheon Co. 17,800
----------------------------------------------------------------------------------
600 Rockwell International Corp. 29,400
---------------------------------------------------------------------------------- -------------
Total 233,738
---------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
LARGE COMPANY--CONTINUED
----------------------------------------------------------------------------------
TRANSPORTATION--0.0%
----------------------------------------------------------------------------------
300 Consolidated Rail Corp. $ 20,963
---------------------------------------------------------------------------------- -------------
(C)UTILITIES--0.2%
----------------------------------------------------------------------------------
700 AT&T Corp. 46,200
----------------------------------------------------------------------------------
400 (a)Columbia Gas System, Inc. 17,300
----------------------------------------------------------------------------------
400 Enron Corp. 15,000
----------------------------------------------------------------------------------
300 FPL Group, Inc. 13,013
----------------------------------------------------------------------------------
900 MCI Communications Corp. 24,075
---------------------------------------------------------------------------------- -------------
Total 115,588
---------------------------------------------------------------------------------- -------------
TOTAL LARGE COMPANY STOCKS 1,684,098
---------------------------------------------------------------------------------- -------------
(C)UTILITY STOCKS--7.8%
----------------------------------------------------------------------------------
ELECTRIC UTILITIES: CENTRAL--1.1%
----------------------------------------------------------------------------------
3,700 CMS Energy Corp. 100,825
----------------------------------------------------------------------------------
3,464 Cinergy Corp. 102,188
----------------------------------------------------------------------------------
4,200 DPL, Inc. 100,800
----------------------------------------------------------------------------------
3,600 Illinova Corp. 102,150
----------------------------------------------------------------------------------
2,800 NIPSCO Industries, Inc. 103,600
----------------------------------------------------------------------------------
3,500 Utilicorp United, Inc. 97,563
----------------------------------------------------------------------------------
3,100 Western Resources, Inc. 102,688
---------------------------------------------------------------------------------- -------------
Total 709,814
---------------------------------------------------------------------------------- -------------
ELECTRIC UTILITIES: EAST--0.6%
----------------------------------------------------------------------------------
3,800 Baltimore Gas & Electric Co. 101,175
----------------------------------------------------------------------------------
3,600 DQE, Inc. 103,950
----------------------------------------------------------------------------------
3,200 General Public Utilities 101,200
----------------------------------------------------------------------------------
3,500 Peco Energy Co. 101,500
---------------------------------------------------------------------------------- -------------
Total 407,825
---------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
(C)UTILITY STOCKS--CONTINUED
----------------------------------------------------------------------------------
ELECTRIC UTILITIES: SOUTH--0.8%
----------------------------------------------------------------------------------
2,300 Duke Power Co. $ 103,212
----------------------------------------------------------------------------------
2,100 FPL Group, Inc. 91,088
----------------------------------------------------------------------------------
2,950 Florida Progress Corp. 101,406
----------------------------------------------------------------------------------
4,300 Southern Co. 98,363
----------------------------------------------------------------------------------
2,700 Texas Utilities Co. 103,950
---------------------------------------------------------------------------------- -------------
Total 498,019
---------------------------------------------------------------------------------- -------------
ELECTRIC UTILITIES: WEST--0.5%
----------------------------------------------------------------------------------
5,300 Pacificorp 104,013
----------------------------------------------------------------------------------
3,700 Pinnacle West Capital Corp. 100,825
----------------------------------------------------------------------------------
5,500 SCE Corp. 85,938
---------------------------------------------------------------------------------- -------------
Total 290,776
---------------------------------------------------------------------------------- -------------
MAJOR U.S. TELECOMMUNICATIONS--4.1%
----------------------------------------------------------------------------------
4,000 AT&T Corp. 264,000
----------------------------------------------------------------------------------
5,500 Ameritech Corp. 302,500
----------------------------------------------------------------------------------
4,700 Bell Atlantic Corp. 296,100
----------------------------------------------------------------------------------
7,800 BellSouth Corp. 303,225
----------------------------------------------------------------------------------
7,200 GTE Corp. 306,900
----------------------------------------------------------------------------------
10,800 MCI Communications Corp. 288,900
----------------------------------------------------------------------------------
6,100 NYNEX Corp. 302,713
----------------------------------------------------------------------------------
5,600 SBC Communications, Inc. 302,400
----------------------------------------------------------------------------------
9,600 U.S. West Communications Group 300,000
---------------------------------------------------------------------------------- -------------
Total 2,666,738
---------------------------------------------------------------------------------- -------------
NATURAL GAS DISTRIBUTION--0.2%
----------------------------------------------------------------------------------
3,500 MCN Corp. 76,125
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN U.S.
SHARES DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
(C)UTILITY STOCKS--CONTINUED
----------------------------------------------------------------------------------
2,900 Pacific Enterprises $ 77,575
---------------------------------------------------------------------------------- -------------
Total 153,700
---------------------------------------------------------------------------------- -------------
OIL/GAS TRANSMISSION--0.5%
----------------------------------------------------------------------------------
1,700 Enron Corp. 63,750
----------------------------------------------------------------------------------
2,800 Panhandle Eastern Corp. 79,450
----------------------------------------------------------------------------------
2,400 Sonat, Inc. 77,400
----------------------------------------------------------------------------------
2,000 Williams Companies, Inc. 84,000
---------------------------------------------------------------------------------- -------------
Total 304,600
---------------------------------------------------------------------------------- -------------
SERVICES--0.0%
----------------------------------------------------------------------------------
500 (a)U.S. West Media Group 9,000
---------------------------------------------------------------------------------- -------------
TOTAL UTILITY STOCKS 5,040,472
---------------------------------------------------------------------------------- -------------
TOTAL STOCKS (IDENTIFIED COST $5,695,720) 6,724,570
---------------------------------------------------------------------------------- -------------
<CAPTION>
PRINCIPAL
AMOUNT
- --------------- ----------------------------------------------------------------------------------
BONDS--84.5%
- ---------------------------------------------------------------------------------------------------
TREASURY--40.5%
----------------------------------------------------------------------------------
$ 525,000 U.S. Treasury Bill 8/22/1996 505,181
----------------------------------------------------------------------------------
2,100,000 U.S. Treasury Note 6.50%, 9/30/1996 2,118,039
----------------------------------------------------------------------------------
600,000 U.S. Treasury Note 6.625%, 3/31/1997 609,582
----------------------------------------------------------------------------------
1,400,000 U.S. Treasury Note 6.875%, 04/30/1997 1,428,308
----------------------------------------------------------------------------------
970,000 U.S. Treasury Note 6.875%, 10/31/1996 982,484
----------------------------------------------------------------------------------
20,100,000 U.S. Treasury Note 7.50%, 01/31/1997 20,572,953
---------------------------------------------------------------------------------- -------------
TOTAL TREASURY 26,216,547
---------------------------------------------------------------------------------- -------------
MORTGAGE-BACKED SECURITIES--26.4%
----------------------------------------------------------------------------------
994,551 Federal Home Loan Mortgage Corp., 7.50%, 7/1/2025 1,013,179
----------------------------------------------------------------------------------
482,381 Federal Home Loan Mortgage Corp., 7.50%, 05/01/2024 488,401
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- ---------------------------------------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES--CONTINUED
----------------------------------------------------------------------------------
$ 260,611 Federal Home Loan Mortgage Corp., 7.00%, 07/01/2024 $ 259,629
----------------------------------------------------------------------------------
1,029,154 Federal Home Loan Mortgage Corp., 6.50%, 9/1/2025 1,008,561
----------------------------------------------------------------------------------
458,660 Federal Home Loan Mortgage Corp., 8.00%, 11/01/2009 473,704
----------------------------------------------------------------------------------
1,300,000 Federal Home Loan Mortgage Corp., 6.50%, 11/1/2010 1,297,543
----------------------------------------------------------------------------------
878,743 Federal Home Loan Mortgage Corp., 7.00%, 4/1/2009 889,718
----------------------------------------------------------------------------------
998,721 Federal National Mortgage Association, 7.50%, 7/1/2025 1,016,498
----------------------------------------------------------------------------------
566,289 Federal National Mortgage Association, 7.00%, 5/1/2001 575,129
----------------------------------------------------------------------------------
506,909 Federal National Mortgage Association, 7.00%, 7/1/2024 506,904
----------------------------------------------------------------------------------
835,760 Federal National Mortgage Association, 9.50%, 10/1/2024 885,370
----------------------------------------------------------------------------------
1,441,249 Federal National Mortgage Association, 8.00%, 8/1/2025 1,484,472
----------------------------------------------------------------------------------
214,678 Federal National Mortgage Association, 7.50%, 6/1/2009 219,772
----------------------------------------------------------------------------------
534,780 Federal National Mortgage Association, 6.50%, 6/1/2009 533,603
----------------------------------------------------------------------------------
484,739 Federal National Mortgage Association, 8.00%, 11/1/2024 499,276
----------------------------------------------------------------------------------
208,768 Federal National Mortgage Association, 8.50%, 2/1/2025 216,921
----------------------------------------------------------------------------------
1,016,147 Federal National Mortgage Association, 7.00%, 7/1/2025 1,016,137
----------------------------------------------------------------------------------
1,001,105 Federal National Mortgage Association, 6.50%, 10/1/2025 980,132
----------------------------------------------------------------------------------
230,872 Government National Mortgage Association, 7.50%, 05/15/2024 235,773
----------------------------------------------------------------------------------
1,226,985 Government National Mortgage Association, 9.00%, 4/15/2025 1,294,064
----------------------------------------------------------------------------------
802,562 Government National Mortgage Association, 8.50%, 10/15/2024 837,915
----------------------------------------------------------------------------------
826,896 Government National Mortgage Association, 7.00%, 7/15/2024 829,211
----------------------------------------------------------------------------------
505,454 Government National Mortgage Association, 8.00%, 7/15/2025 523,140
---------------------------------------------------------------------------------- -------------
TOTAL MORTGAGE BACKED SECURITIES 17,085,052
---------------------------------------------------------------------------------- -------------
HIGH YIELD BONDS--2.3%
----------------------------------------------------------------------------------
BANKING--0.1%
----------------------------------------------------------------------------------
50,000 First Nationwide Holdings, Sr. Note, 12.25%, 5/15/2001 57,062
---------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- ---------------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
----------------------------------------------------------------------------------
BROADCAST RADIO & TV--0.2%
----------------------------------------------------------------------------------
$ 75,000 SCI Television, Sr. Secd. Note, 11.00%, 6/30/2005 $ 79,500
----------------------------------------------------------------------------------
50,000 Sinclair Broadcast Group, Sr. Sub. Note, 10.00%, 9/30/2005 51,375
---------------------------------------------------------------------------------- -------------
Total 130,875
---------------------------------------------------------------------------------- -------------
CABLE TELEVISION--0.3%
----------------------------------------------------------------------------------
25,000 CAI Wireless Systems, Sr. Note, 12.25%, 9/15/2002 26,469
----------------------------------------------------------------------------------
75,000 Continental Cablevision, Sr. Deb., 9.50%, 8/1/2013 79,125
----------------------------------------------------------------------------------
100,000 TeleWest Plc, 0/11.00%, Sr. Disc. Deb., 10/1/2007 58,625
---------------------------------------------------------------------------------- -------------
Total 164,219
---------------------------------------------------------------------------------- -------------
CHEMICALS & PLASTICS--0.1%
----------------------------------------------------------------------------------
50,000 Arcadian Partners LP, Sr. Note, Series B, 10.75%, 5/1/2005 55,000
---------------------------------------------------------------------------------- -------------
CLOTHING & TEXTILES--0.2%
----------------------------------------------------------------------------------
100,000 Westpoint Stevens, Inc., Sr. Sub. Deb., 9.375%, 12/15/2005 101,500
---------------------------------------------------------------------------------- -------------
CONGLOMERATES--0.1%
----------------------------------------------------------------------------------
50,000 Sherritt Gordon Ltd., Sr. Note, 9.75%, 4/1/2003 52,250
---------------------------------------------------------------------------------- -------------
CONSUMER PRODUCTS--0.1%
----------------------------------------------------------------------------------
50,000 (b)Herff Jones, Inc., Sr. Sub. Note, 11.00%, 8/15/2005 52,875
----------------------------------------------------------------------------------
50,000 Playtex Family Products Corp., Sr. Sub. Note, 9.00%, 12/15/2003 44,250
---------------------------------------------------------------------------------- -------------
Total 97,125
---------------------------------------------------------------------------------- -------------
CONTAINER & GLASS PRODUCTS--0.2%
----------------------------------------------------------------------------------
75,000 Owens Illinois, Inc., Sr. Sub. Note, 9.75%, 8/15/2004 78,187
----------------------------------------------------------------------------------
50,000 Portola Packaging Inc., Sr. Note, 10.75%, 10/1/2005 51,625
---------------------------------------------------------------------------------- -------------
Total 129,812
---------------------------------------------------------------------------------- -------------
FOOD & DRUG RETAILERS--0.1%
----------------------------------------------------------------------------------
25,000 (b)Carr-Gottstein Foods, Sr. Sub. Note, 12.00%, 11/15/2005 25,062
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- ---------------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
----------------------------------------------------------------------------------
FOOD & DRUG RETAILERS--CONTINUED
----------------------------------------------------------------------------------
$ 50,000 Ralph's Grocery Co., Sr. Note, 10.45%, 6/15/2004 $ 49,375
---------------------------------------------------------------------------------- -------------
Total 74,437
---------------------------------------------------------------------------------- -------------
FOOD PRODUCTS--0.1%
----------------------------------------------------------------------------------
50,000 Specialty Foods Corp., Sr. Note, 11.125%, 10/1/2002 47,500
----------------------------------------------------------------------------------
25,000 (b)Van de Kamp's Inc., Sr. Sub. Note, 12.00%, 9/15/2005 25,812
---------------------------------------------------------------------------------- -------------
Total 73,312
---------------------------------------------------------------------------------- -------------
FOOD SERVICES--0.1%
----------------------------------------------------------------------------------
75,000 Flagstar Corp., Sr. Note, 10.875%, 12/1/2002 68,625
---------------------------------------------------------------------------------- -------------
FOREST PRODUCTS--0.1%
----------------------------------------------------------------------------------
50,000 Stone Container Corp., Sr. Note, 9.875%, 2/1/2001 48,687
---------------------------------------------------------------------------------- -------------
HEALTHCARE--0.1%
----------------------------------------------------------------------------------
50,000 Tenet Healthcare, Sr. Sub. Note, 10.125%, 3/1/2005 54,437
---------------------------------------------------------------------------------- -------------
OIL & GAS--0.1%
----------------------------------------------------------------------------------
50,000 Falcon Drilling Company, Sr. Note, 9.75%, 1/15/2001 50,750
---------------------------------------------------------------------------------- -------------
SERVICES--0.0%
----------------------------------------------------------------------------------
25,000 (b)Coinmach Corporation, Sr. Note, 11.75%, 11/15/2005 25,312
---------------------------------------------------------------------------------- -------------
STEEL--0.1%
----------------------------------------------------------------------------------
75,000 GS Technologies Operating Co., Inc., Sr. Note, 12.00%, 9/1/2004 74,250
---------------------------------------------------------------------------------- -------------
TELECOMMUNICATIONS & CELLULAR--0.3%
----------------------------------------------------------------------------------
25,000 (b)IXC Communications, Inc., Sr. Note, 12.50%, 10/1/2005 26,187
----------------------------------------------------------------------------------
50,000 Nextel Communications, Inc., Sr. Disc. Note, 0/11.50%, 9/1/2003 30,125
----------------------------------------------------------------------------------
50,000 Paging Network, Sr. Sub. Note, 10.125%, 8/1/2007 53,375
----------------------------------------------------------------------------------
75,000 Panamsat, L.P., Sr. Sub. Disc. Note, 0/11.375%, 8/1/2003 61,125
---------------------------------------------------------------------------------- -------------
Total 170,812
---------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- ---------------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
----------------------------------------------------------------------------------
UTILITIES--0.1%
----------------------------------------------------------------------------------
$ 75,000 California Energy Co., Sr. Disc. Note, 0/10.25%, 1/15/2004 $ 69,750
---------------------------------------------------------------------------------- -------------
TOTAL HIGH YIELD BONDS 1,498,215
---------------------------------------------------------------------------------- -------------
INVESTMENT GRADE BONDS--10.2%
----------------------------------------------------------------------------------
AEROSPACE & DEFENSE--0.4%
----------------------------------------------------------------------------------
250,000 McDonnell Douglas Finance, Note, 9.40%, 10/15/2001 278,087
---------------------------------------------------------------------------------- -------------
BANKING--0.4%
----------------------------------------------------------------------------------
250,000 Chase Manhattan, Sub. Note, 8.00%, 5/1/2005 261,165
---------------------------------------------------------------------------------- -------------
BEVERAGE & TOBACCO--0.8%
----------------------------------------------------------------------------------
250,000 Philip Morris Cos., Inc., Deb., 6.00%, 7/15/2001 246,300
----------------------------------------------------------------------------------
250,000 RJR Nabisco, Inc., Note, 9.25%, 8/15/2013 255,107
---------------------------------------------------------------------------------- -------------
Total 501,407
---------------------------------------------------------------------------------- -------------
CHEMICALS & PLASTICS--0.2%
----------------------------------------------------------------------------------
100,000 (b)Bayer Corp, Deb., 7.125%, 10/1/2015 104,090
---------------------------------------------------------------------------------- -------------
CONGLOMERATES--0.5%
----------------------------------------------------------------------------------
275,000 Leucadia National, Sr. Sub. Note, 8.25%, 6/15/2005 290,306
---------------------------------------------------------------------------------- -------------
FINANCE--AUTOMOTIVE--0.4%
----------------------------------------------------------------------------------
250,000 Ford Motor Credit Co., Note, 6.85%, 8/15/2000 258,045
---------------------------------------------------------------------------------- -------------
FINANCE--RETAIL--0.4%
----------------------------------------------------------------------------------
250,000 Household Finance, Deb., 6.45%, 2/1/2009 248,197
---------------------------------------------------------------------------------- -------------
FINANCIAL INTERMEDIARIES--0.8%
----------------------------------------------------------------------------------
250,000 Equitable Cos., Inc., Sr. Note, 9.00%, 12/15/2004 291,525
----------------------------------------------------------------------------------
200,000 Merrill Lynch, Medium Term Note, 7.25%, 6/14/2004 203,556
---------------------------------------------------------------------------------- -------------
Total 495,081
---------------------------------------------------------------------------------- -------------
FOOD & DRUG RETAILERS--0.4%
----------------------------------------------------------------------------------
225,000 Hook-Superx, Inc., Sr. Note, 10.125%, 6/1/2002 245,956
---------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- ---------------------------------------------------------------------------------------------------
INVESTMENT GRADE BONDS--CONTINUED
----------------------------------------------------------------------------------
GOVERNMENT AGENCY--0.9%
----------------------------------------------------------------------------------
$ 250,000 Federal National Mortgage Association 8.59%, 2/3/2005 $ 263,397
----------------------------------------------------------------------------------
300,000 Tennessee Valley Authority 7.318%, 5/31/1999 302,493
---------------------------------------------------------------------------------- -------------
Total 565,890
---------------------------------------------------------------------------------- -------------
INDUSTRIAL PRODUCTS & EQUIPMENT--0.4%
----------------------------------------------------------------------------------
250,000 Joy Technologies Inc, Sr. Note, 10.25%, 9/1/2003 282,452
---------------------------------------------------------------------------------- -------------
INSURANCE--0.4%
----------------------------------------------------------------------------------
250,000 Sunamerica Inc, Medium Term Note, 7.34%, 8/30/2005 262,984
---------------------------------------------------------------------------------- -------------
OIL & GAS--0.9%
----------------------------------------------------------------------------------
300,000 Occidental Petroleum Corp., Sr. Note, 11.75%, 3/15/2011 320,019
----------------------------------------------------------------------------------
250,000 USX Corp., Note, 6.375%, 7/15/1998 251,070
---------------------------------------------------------------------------------- -------------
Total 571,089
---------------------------------------------------------------------------------- -------------
PRINTING & PUBLISHING--0.4%
----------------------------------------------------------------------------------
250,000 News America Holdings, Sr. Note, 7.50%, 3/1/2000 262,037
---------------------------------------------------------------------------------- -------------
RETAILERS--0.5%
----------------------------------------------------------------------------------
250,000 J.C. Penney Co., S.F. Deb., 9.75%, 6/15/2021 293,717
---------------------------------------------------------------------------------- -------------
SOVEREIGN GOVERNMENT--1.1%
----------------------------------------------------------------------------------
300,000 (b)Freeport Terminal (Malta), Gtd. Global Note, 7.50%, 3/29/2009 317,289
----------------------------------------------------------------------------------
250,000 Quebec Province, Deb., 7.50%, 7/15/2023 256,913
----------------------------------------------------------------------------------
100,000 Republic of South Africa, Global Bond Deb., 9.625%, 12/15/1999 106,689
---------------------------------------------------------------------------------- -------------
Total 680,891
---------------------------------------------------------------------------------- -------------
TELECOMMUNICATIONS & CELLULAR--0.4%
----------------------------------------------------------------------------------
250,000 TCI Communications Inc, Note, 6.82%, 9/15/2010 253,167
---------------------------------------------------------------------------------- -------------
UTILITIES--1.2%
----------------------------------------------------------------------------------
300,000 Duke Power Co., 1st Mtg. Note, 7.00%, 9/1/2005 302,892
----------------------------------------------------------------------------------
300,000 Gulf States Utilities, FMB, 6.75%, 10/1/1998 303,261
----------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- ---------------------------------------------------------------------------------------------------
INVESTMENT GRADE BONDS--CONTINUED
----------------------------------------------------------------------------------
UTILITIES--CONTINUED
----------------------------------------------------------------------------------
$ 4,125,000 Pedernales Electric Coop, 10.875%, 9/01/17 $ 140,761
---------------------------------------------------------------------------------- -------------
Total 746,914
---------------------------------------------------------------------------------- -------------
TOTAL INVESTMENT GRADE BONDS 6,601,475
---------------------------------------------------------------------------------- -------------
FOREIGN
CURRENCY
PAR AMOUNT
- --------------- ----------------------------------------------------------------------------------
FOREIGN BONDS--5.1%
----------------------------------------------------------------------------------
AUSTRALIAN DOLLAR--0.1%
----------------------------------------------------------------------------------
100,000 State Bank of New South Wales, 12.25%, 2/26/2001 86,648
---------------------------------------------------------------------------------- -------------
BELGIUM FRANC--0.3%
----------------------------------------------------------------------------------
3,100,000 Belgian Gov't., Foreign Gov't. Guarantee, 10.00%, 4/5/1996 106,472
----------------------------------------------------------------------------------
2,000,000 Belgium Kingdom, 7.75%, 10/15/2004 71,887
---------------------------------------------------------------------------------- -------------
Total 178,359
---------------------------------------------------------------------------------- -------------
CANADIAN DOLLAR--0.3%
----------------------------------------------------------------------------------
200,000 Ontario Hydro, 9.00%, 6/24/2002 160,456
---------------------------------------------------------------------------------- -------------
DANISH KRONE--0.2%
----------------------------------------------------------------------------------
600,000 Denmark, 8.00%, 5/15/2003 112,685
---------------------------------------------------------------------------------- -------------
FRENCH FRANC--0.6%
----------------------------------------------------------------------------------
1,300,000 France O.A.T., 8.50%, 11/25/2002 287,274
----------------------------------------------------------------------------------
600,000 KFW International Finance, 7.00%, 5/12/2000 123,910
---------------------------------------------------------------------------------- -------------
Total 411,184
---------------------------------------------------------------------------------- -------------
DEUTSCHE MARK--0.8%
----------------------------------------------------------------------------------
700,000 Treuhandanstalt, 7.75%, 10/1/2002 535,007
---------------------------------------------------------------------------------- -------------
ITALIAN LIRA--0.4%
----------------------------------------------------------------------------------
425,000,000 Buoni Poliennali Del Tes, 9.50%, 1/1/2005 239,955
---------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN VALUE
CURRENCY IN U.S.
PAR AMOUNT DOLLARS
<C> <S> <C>
- --------------- ---------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- ---------------------------------------------------------------------------------------------------
FOREIGN BONDS--CONTINUED
----------------------------------------------------------------------------------
JAPANESE YEN--1.3%
----------------------------------------------------------------------------------
24,000,000 Export-Import Bank Japan, 4.375%, 10/1/2003 $ 264,472
----------------------------------------------------------------------------------
10,000,000 Interamerican Development, Deb., 7.25%, 5/15/2000 121,990
----------------------------------------------------------------------------------
38,000,000 KFW International Finance, 6.00%, 11/29/1999 440,688
---------------------------------------------------------------------------------- -------------
Total 827,150
---------------------------------------------------------------------------------- -------------
NETHERLANDS GUILDER--0.3%
----------------------------------------------------------------------------------
350,000 Netherlands Government, 5.75%, 1/15/2004 213,117
---------------------------------------------------------------------------------- -------------
SPANISH PESETA--0.2%
----------------------------------------------------------------------------------
20,000,000 Spanish Government, 10.00%, 2/28/2005 160,415
---------------------------------------------------------------------------------- -------------
SWEDISH KRONA--0.2%
----------------------------------------------------------------------------------
800,000 Sweden, 6.00%, 2/9/2005 101,793
---------------------------------------------------------------------------------- -------------
UNITED KINGDOM POUND--0.4%
----------------------------------------------------------------------------------
175,000 UK Conversion, 9.00%, 3/3/2000 288,341
---------------------------------------------------------------------------------- -------------
TOTAL FOREIGN BONDS 3,315,110
---------------------------------------------------------------------------------- -------------
TOTAL BONDS (IDENTIFIED COST $53,888,169) 54,716,399
---------------------------------------------------------------------------------- -------------
PRINCIPAL
AMOUNT
- --------------- ----------------------------------------------------------------------------------
(D)REPURCHASE AGREEMENT--3.8%
- ---------------------------------------------------------------------------------------------------
$ 2,430,000 J.P. Morgan & Co., Inc., 5.930%, dated 11/30/1995, due 12/1/1995 2,430,000
---------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST $62,013,889)(E) $ 63,870,969
---------------------------------------------------------------------------------- -------------
</TABLE>
(a) Non-income producing security.
(b) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. These securities have been determined to be
liquid under criteria established by the Board of Trustees. At the end of
the period, these securities amounted to ($611,277) which represents 0.9%
of net assets.
(c) The utilities are shown in the asset category in which they were purchased.
The funds total exposure to utility stocks is 8% of net assets.
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
(d) 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 joint
accounts with other Federated Funds.
(e) The cost of investments for federal tax purposes amounts to $62,017,320.
The net unrealized appreciation of investments on a federal tax basis
amounts to $1,853,649 which is comprised of $1,989,524 appreciation and
$135,875 depreciation at November 30, 1995.
Note: The categories of investments are shown as a percentage of net assets
($64,779,572) at November 30, 1995.
The following acronym(s) are used throughout this portfolio:
ADR -- American Depository Receipt
GTD -- Guaranty
LP -- Limited Partnership
PEPS -- Participating Equity Preferred Stock
PLC -- Public Limited Company
STRYPES -- Structured Yield Product Exchangeable for Stock
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ----------------------------------------------------------------------------------------------------
Total investments in securities, at value (identified cost $62,013,889 and tax cost $62,017,320) $ 63,870,969
- ----------------------------------------------------------------------------------------------------
Cash denominated in foreign currencies (identified cost $22,479) 22,408
- ----------------------------------------------------------------------------------------------------
Income receivable 949,051
- ----------------------------------------------------------------------------------------------------
Receivable for shares sold 150,548
- ----------------------------------------------------------------------------------------------------
Deferred expenses 38,394
- ---------------------------------------------------------------------------------------------------- ------------
Total assets 65,031,370
- ----------------------------------------------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------------------------------
Payable for investments purchased $ 48,158
- -----------------------------------------------------------------------------------------
Payable for shares redeemed 26,874
- -----------------------------------------------------------------------------------------
Payable to Bank 135,128
- -----------------------------------------------------------------------------------------
Payable for taxes withheld 384
- -----------------------------------------------------------------------------------------
Accrued expenses 41,254
- ----------------------------------------------------------------------------------------- ---------
Total liabilities 251,798
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSETS for 6,148,777 shares outstanding $ 64,779,572
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSETS CONSIST OF:
- ----------------------------------------------------------------------------------------------------
Paid in capital $ 62,198,271
- ----------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments, translation of assets and liabilities in foreign
currency, and futures contracts 1,871,638
- ----------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments, foreign currency transactions, and futures contracts 404,304
- ----------------------------------------------------------------------------------------------------
Undistributed net investment income 305,359
- ---------------------------------------------------------------------------------------------------- ------------
Total Net Assets $ 64,779,572
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ----------------------------------------------------------------------------------------------------
Institutional Shares $50,852,336 / 4,826,791 shares outstanding $10.54
- ---------------------------------------------------------------------------------------------------- ------------
Select Shares $13,927,236 / 1,321,986 shares outstanding $10.54
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED INCOME FUND
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ------------------------------------------------------------------------------------------------------
Dividends (net of foreign taxes withheld of $153) $ 208,643
- ------------------------------------------------------------------------------------------------------
Interest (net of foreign taxes withheld of $832) 3,111,665
- ------------------------------------------------------------------------------------------------------ ---------
Total income 3,320,308
- ------------------------------------------------------------------------------------------------------
EXPENSES:
- ------------------------------------------------------------------------------------------------------
Investment advisory fee $ 354,801
- -------------------------------------------------------------------------------------------
Administrative personnel and services fee 155,000
- -------------------------------------------------------------------------------------------
Custodian fees 61,257
- -------------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 44,652
- -------------------------------------------------------------------------------------------
Directors'/Trustees' fees 1,859
- -------------------------------------------------------------------------------------------
Auditing fees 12,407
- -------------------------------------------------------------------------------------------
Legal fees 2,995
- -------------------------------------------------------------------------------------------
Portfolio accounting fees 31,725
- -------------------------------------------------------------------------------------------
Distribution services fee--Select Shares 55,959
- -------------------------------------------------------------------------------------------
Shareholder services fee--Institutional Shares 99,614
- -------------------------------------------------------------------------------------------
Shareholder services fee--Select Shares 18,653
- -------------------------------------------------------------------------------------------
Share registration costs 22,997
- -------------------------------------------------------------------------------------------
Printing and postage 32,697
- -------------------------------------------------------------------------------------------
Insurance premiums 4,503
- -------------------------------------------------------------------------------------------
Taxes 109
- -------------------------------------------------------------------------------------------
Miscellaneous 12,513
- ------------------------------------------------------------------------------------------- ---------
Total expenses 911,741
- -------------------------------------------------------------------------------------------
Waivers and reimbursements--
- --------------------------------------------------------------------------------
Waiver of investment advisory fee $(354,801)
- --------------------------------------------------------------------------------
Waiver of distribution services fee--Select Shares (18,653)
- --------------------------------------------------------------------------------
Waiver of shareholder services fee--Institutional Shares (99,614)
- --------------------------------------------------------------------------------
Reimbursement of other operating expenses (26,732)
- -------------------------------------------------------------------------------- ---------
Total waivers and reimbursements (499,800)
- ------------------------------------------------------------------------------------------- ---------
Net expenses 411,941
- ------------------------------------------------------------------------------------------------------ ---------
Net investment income 2,908,367
- ------------------------------------------------------------------------------------------------------ ---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FOREIGN CURRENCY, AND FUTURES CONTRACTS:
- ------------------------------------------------------------------------------------------------------
Net realized gain on investments, foreign currency transactions, and futures contracts 911,082
- ------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments, translation of assets and liabilities in foreign
currency, and futures contracts 2,481,101
- ------------------------------------------------------------------------------------------------------ ---------
Net realized and unrealized gain on investments, foreign currency, and futures contracts 3,392,183
- ------------------------------------------------------------------------------------------------------ ---------
Change in net assets resulting from operations $6,300,550
- ------------------------------------------------------------------------------------------------------ ---------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, 1995 NOVEMBER 30, 1994*
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- --------------------------------------------------------------------
OPERATIONS--
- --------------------------------------------------------------------
Net investment income $ 2,908,367 $ 999,639
- --------------------------------------------------------------------
Net realized gain (loss) on investments, foreign currency
transactions, and future contracts ($729,136 net gain and $305,808
net loss, respectively, as computed for federal tax purposes) 911,082 (311,738)
- --------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments,
translation of assets and liabilities in foreign currency, and
futures contracts 2,481,101 (609,463)
- -------------------------------------------------------------------- -------------------- ---------------------
Change in net assets resulting from operations 6,300,550 78,438
- -------------------------------------------------------------------- -------------------- ---------------------
DISTRIBUTIONS TO SHAREHOLDERS--
- --------------------------------------------------------------------
Distributions from net investment income
- --------------------------------------------------------------------
Institutional Shares (2,431,427) (883,551)
- --------------------------------------------------------------------
Select Shares (394,936) (87,664)
- -------------------------------------------------------------------- -------------------- ---------------------
Change in net assets resulting from distributions to
shareholders (2,826,363) (971,215)
- -------------------------------------------------------------------- -------------------- ---------------------
SHARE TRANSACTIONS--
- --------------------------------------------------------------------
Proceeds from sale of shares 36,889,780 42,977,477
- --------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 900,372 228,430
- --------------------------------------------------------------------
Cost of shares redeemed (14,374,680) (4,523,217)
- -------------------------------------------------------------------- -------------------- ---------------------
Change in net assets resulting from share transactions 23,415,472 38,682,690
- -------------------------------------------------------------------- -------------------- ---------------------
Change in net assets 26,889,659 37,789,913
- --------------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------------
Beginning of period 37,889,913 100,000
- -------------------------------------------------------------------- -------------------- ---------------------
End of period (including undistributed net investment income of
$305,359 and $45,969, respectively) $ 64,779,572 $ 37,889,913
- -------------------------------------------------------------------- -------------------- ---------------------
</TABLE>
* For the period from January 18, 1994 (start of business) to November 30, 1994.
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED INCOME FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Managed Series Trust (the "Trust") is registered under the Investment Company
Act of 1940, as amended (the "Act") as an open-end, management investment
company. The Trust consists of four diversified portfolios. The financial
statements included herein are only those of Federated Managed Income Fund (the
"Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held.
The Fund offers two classes of shares: Institutional Shares (formerly,
Institutional Service Shares) and Select Shares. The Institutional Service
Shares changed its name to Institutional Shares effective June 30, 1995.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Short-term securities with remaining maturities of
sixty days or less at the time of purchase may be valued at amortized cost,
which approximates fair market value. Listed equity securities are valued
at the last sale price reported on national security exchanges. All other
securities are valued at prices provided by an independent pricing source.
REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risk 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
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
Revenue Code, as amended (the "Code"). Dividend income and distributions to
shareholders are recorded on the ex-dividend date. Income and capital gain
distributions are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles. These
differences are primarily due to differing treatments for foreign currency
transactions. As a result of these differences, the following required
reclassifications have been made to the current year financial statements.
<TABLE>
<CAPTION>
INCREASE (DECREASE)
<S> <C>
ACCUMULATED
NET REALIZED UNDISTRIBUTED NET
GAIN/LOSS INVESTMENT INCOME
($177,386) $177,386
</TABLE>
Net investment income, net realized gains/losses, and net assets were not
affected by this reclassification.
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.
However, federal taxes may be imposed on the Fund upon the disposition of
certain investments in passive foreign investment companies. Withholding
taxes on foreign interest and dividends have been provided for in
accordance with the Fund's understanding of the applicable country's tax
rules and rates.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized using the straight-line method over a period of five years from
the Fund's commencement date.
CONCENTRATION OF CREDIT RISK--The Fund invests in securities of non-U.S.
issuers. Although the Fund maintains a diversified investment portfolio,
the political or economic developments within a particular country or
region may have an adverse effect on the ability of domiciled issuers to
meet their obligations. Additionally, political or economic developments
may have an effect on the liquidity and volatility of portfolio securities
and currency holdings.
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
At November 30, 1995, the industry diversification of foreign securities
was as follows:
<TABLE>
<CAPTION>
INDUSTRIES % OF NET ASSETS
<S> <C>
Agency 1.34%
Sovereign 3.46%
State/Provincial 0.13%
Supranational 0.19%
</TABLE>
FUTURES CONTRACTS--The Fund may purchase and sell futures contracts to
accommodate cash flows into and out of the Fund's portfolio and to hedge
against the effects of changes in the value of portfolio securities due to
anticipated changes in interest rates and market conditions. Upon entering
into a stock futures contract with a broker, the Fund is required to
deposit in a segregated account an amount of cash or U.S. government
securities. Futures contracts are valued daily and unrealized gains or
losses are recorded in a "variation margin" account. Daily the fund
receives from or pays to the broker a specified amount of cash based upon
changes in the variation margin account. When a contract is closed, the
Fund recognizes a realized gain or loss. Futures contracts have market
risks, including the risk that the change in the value of the contract may
not correlate with changes in the value of the underlying securities. For
the period ended November 30, 1995, the Fund had realized gains of $14,814
on future contracts. At November 30, 1995, the Fund had no outstanding
futures contracts.
FOREIGN CURRENCY COMMITMENTS--The Fund may enter into foreign currency
commitments for the delayed delivery of securities or foreign currency
exchange transactions. Risks may arise upon entering these transactions
from the potential inability of counterparties to meet the terms of their
commitments and from unanticipated movements in security prices or foreign
exchange rates. The foreign currency transactions are adjusted by the daily
exchange rate of the underlying currency and any gains or losses are
recorded for financial statement purpose as unrealized until the settlement
date. At November 30, 1995, the Fund had no outstanding foreign currency
commitments.
FOREIGN CURRENCY TRANSLATION--The accounting records of the Fund are
maintained in U.S. dollars. All assets and liabilities denominated in
foreign currencies ("FC") are translated into U.S. dollars based on the
rate of exchange of such currencies against U.S. dollars on the date of
valuation. Purchases and sales of securities, income and expenses are
translated at the rate of exchange quoted on the respective date that such
transactions are recorded. Differences between income and expense amounts
recorded and collected or paid are adjusted when reported by the custodian
bank. The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales
of FCs, currency gains or losses realized
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
between the trade and settlement dates on securities transactions, the
difference between the amounts of dividends, interest, and foreign
withholding taxes recorded on the Fund's books, and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in the value of assets and
liabilities other than investments in securities at fiscal year end,
resulting from changes in the exchange rate.
DOLLAR ROLL TRANSACTIONS--The Fund enters into dollar roll transactions,
with respect to mortgage securities issued by GNMA, FNMA and FHLMC, in
which the Fund sells mortgage securities to financial institutions and
simultaneously agrees to accept substantially similar (same type, coupon
and maturity) securities at a later date at an agreed upon price. Dollar
roll transactions are short-term financing arrangements which will not
exceed twelve months. The Fund will use the proceeds generated from the
transactions to invest in short-term investments, which may enhance the
Fund's current yield and total return.
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 Trustees. 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 November 30,
1995 is as follows:
<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE ACQUISITION COST
<S> <C> <C>
Bayer Corp., Deb 11/9/95 $ 102,315
Carr-Goldstein Foods Sr. Sub Note 11/9/95 25,000
Coinmach Corporation, Sr. Note 11/14/95 25,000
Freeport Terminal (Malta), Gtd. Global Note 7/19/94 284,196
Herff Jones Inc., Sr. Sub Note 9/14/95 51,750
IXC Communications, Inc., Sr. Note 9/25/95 24,320
Van De Kamp's Inc., Sr. Sub Note 9/14/95 25,000
Westinghouse Electric Corp., PEPS 9/27/95-9/28/95 32,025
</TABLE>
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares.
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, 1995 NOVEMBER 30, 1994*
<S> <C> <C> <C> <C>
INSTITUTIONAL SHARES SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------- ----------- ------------- ----------- -------------
Shares sold 2,449,773 $ 25,139,690 3,801,238 $ 37,969,931
- --------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 68,764 702,502 21,807 216,633
- --------------------------------------------------------
Shares redeemed (1,244,562) (12,651,519) (280,229) (2,787,738)
- -------------------------------------------------------- ----------- ------------- ----------- -------------
Net change resulting from Institutional Service
share transactions 1,273,975 $ 13,190,673 3,542,816 $ 35,398,826
- -------------------------------------------------------- ----------- ------------- ----------- -------------
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, 1995 NOVEMBER 30, 1994**
SELECT SHARES SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
- -------------------------------------------------------- ----------- ------------- ----------- -------------
Shares sold 1,144,376 $ 11,750,090 501,463 $ 5,007,546
- --------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 19,145 197,870 1,189 11,797
- --------------------------------------------------------
Shares redeemed (168,971) (1,723,161) (175,216) (1,735,479)
- -------------------------------------------------------- ----------- ------------- ----------- -------------
Net change resulting from Select share transactions 994,550 $ 10,224,799 327,436 $ 3,283,864
- -------------------------------------------------------- ----------- ------------- ----------- -------------
Net change resulting from share transactions 2,268,525 $ 23,415,472 3,870,252 $ 38,682,690
- -------------------------------------------------------- ----------- ------------- ----------- -------------
</TABLE>
*For the period from January 18, 1994 (start of business) to November 30, 1994.
**For the period from January 27, 1994 (start of business) to November 30, 1994.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser,
(the "Adviser"), receives for its services an annual investment advisory fee
equal to .75 of 1% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive any portion of its fee and/or reimburse certain
operating expenses of the Fund. The Adviser can modify or terminate this
voluntary waiver and/or reimbursement at any time at its sole discretion.
Under the terms of the sub-advisory agreement between the Adviser and Federated
Global Research Corp., Federated Global Research Corp., receives an allocable
portion of the Fund's advisory fee. Such allocation is based on the amount of
foreign securities which the Sub-Adviser
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
manages for the Fund. This fee is paid by the Adviser out of its resources and
is not an incremental Fund expense.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. This fee 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 Select shares. The Plan provides that the Fund may incur
distribution expenses of up to .75 of 1% of average daily net assets of Select
shares, annually to compensate FSC. The distributor may voluntarily choose to
waive any portion of its fee. The distributor can modify or terminate this
voluntary waiver at any time at its sole discretion.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of
1% of average daily net assets of the Fund for the period. This fee is to obtain
certain services for shareholders and to maintain shareholder accounts. FSS may
voluntarily choose to waive any portion of its fee. FSS can modify or terminate
this voluntary waiver at any time at its sole discretion. For the fiscal year
ended November 30, 1995, the Institutional Shares fully waived its shareholder
service fee.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Fund. This
fee is based on the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expense ($52,265) and start-up
administrative service expenses of ($39,068) were borne initially by Adviser.
The Fund has agreed to reimburse Adviser for the organizational and start-up
administrative expenses during the five year period following effective date.
For the period ended November 30, 1995, the Fund paid $8,414 and $4,992,
respectively, pursuant to this agreement.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended
November 30, 1995, were as follows:
<TABLE>
<S> <C>
PURCHASES $ 96,151,262
- --------------------------------------------------------------------------------------------------- -------------
SALES $ 75,605,276
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
MANAGED SERIES TRUST
(Federated Managed Income Fund):
We have audited the accompanying statement of assets and liabilities of
Federated Managed Growth Fund (an investment portfolio of Managed
Series Trust, a Massachusetts business trust), including the schedule of
portfolio of investments, as of November 30, 1995, the related statement of
operations for the year then ended, and the statement of changes in net assets
and the financial highlights (see pages 2 and 27 of the prospectus) for the
periods presented. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Federated Managed Income Fund (an investment portfolio of Managed
Series Trust) as of November 30, 1995, and the results of its operations for the
year then ended, and the changes in its net assets and its financial highlights
for the periods presented, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
January 18, 1996
APPENDIX
- --------------------------------------------------------------------------------
STANDARD AND POOR'S RATINGS GROUP LONG-TERM DEBT RATINGS
AAA--Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.
A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB--Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.
B--Debt rated B has greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or
BB- rating.
CCC--Debt rated CCC has currently identifiable vulnerability to default and is
dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating.
CC--The rating CC typically is applied to debt subordinated to senior debt that
is assigned an actual or implied CCC debt rating.
C--The rating C typically is applied to debt subordinated to senior debt which
is assigned an actual or implied CCC- debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.
CI--The rating CI is reserved for income bonds on which no interest is being
paid.
D--Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D
rating also will be used upon the filing of a bankruptcy petition if debt
service payments are jeopardized.
MOODY'S INVESTORS SERVICE, INC., CORPORATE BOND RATINGS
Aaa--Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment some time in the future.
Baa--Bonds which are rated Baa are considered as medium-grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well.
Ba--Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca--Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C--Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
FITCH INVESTORS SERVICE, INC., LONG-TERM DEBT RATINGS
AAA--Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA--Bonds considered to be investment grade and of very high quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F-1+.
A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB--Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds and, therefore, impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.
BB--Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.
B--Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.
CCC--Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.
CC--Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C--Bonds are in imminent default in payment of interest or principal.
DDD, DD, AND D--Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. DDD
represents the highest potential for recovery on these bonds, and D represents
the lowest potential for recovery.
NR--NR indicates that Fitch does not rate the specific issue.
PLUS (+) OR MINUS (-): Plus or minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the AAA category.
ADDRESSES
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<TABLE>
<S> <C> <C>
Federated Managed Income Fund
Select Shares Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
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Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
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Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
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Sub-Adviser
Federated Global Research Corp. 175 Water Street
New York, New York 10038-4965
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Custodian
State Street Bank and P.O. Box 8600
Trust Company Boston, Massachusetts 02266-8600
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Transfer Agent and Dividend Disbursing Agent
Federated Services Company P.O. Box 8600
Boston, Massachusetts 02266-8600
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Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
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</TABLE>
FEDERATED MANAGED
INCOME FUND
SELECT SHARES
PROSPECTUS
A Diversified Portfolio
of Managed Series Trust,
an Open-End Management
Investment Company
Prospectus dated January 31, 1996
[LOGO] FEDERATED SECURITIES CORP.
---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
Cusip 56166K206
3122012A-SEL (1/96)
Lifecycle Investing
MANAGED SERIES TRUST
From Federated Investors
[Logo}
FEDERATED MANAGED INCOME FUND
FEDERATED MANAGED GROWTH AND INCOME FUND
FEDERATED MANAGED GROWTH FUND
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
(PORTFOLIOS OF MANAGED SERIES TRUST)
INSTITUTIONAL SHARES
(FORMERLY, INSTITUTIONAL SERVICE SHARES)
SELECT SHARES
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the respective
prospectuses for Institutional Shares and Select Shares of Federated
Managed Income Fund, Federated Managed Growth and Income Fund, Federated
Managed Growth Fund and Federated Managed Aggressive Growth Fund, all dated
January 31, 1995. This Statement is not a prospectus itself. You may
request a copy of a prospectus or a paper copy of this Statement, if you
have received it electronically, free of charge by calling 1-800-235-4669.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Statement dated January 31, 1996
FEDERATED SECURITIES CORP.
Distributor
A subsidiary of FEDERATED INVESTORS
GENERAL INFORMATION ABOUT THE TRUST 4
INVESTMENT OBJECTIVES AND POLICIES 4
Small Company Stocks 4
Mortgage-Backed Securities 5
Corporate Debt Obligations 6
Foreign Debt Obligations 2
Warrants 6
Futures and Options Transactions 7
Foreign Currency Transactions 12
Repurchase Agreements 6
Reverse Repurchase Agreements 6
When-Issued and Delayed Delivery
Transactions 6
Lending of Portfolio Securities 6
Restricted and Illiquid Securities 7
Portfolio Turnover 7
Weighted Average Portfolio Duration 7
INVESTMENT LIMITATIONS 8
MANAGED SERIES TRUST MANAGEMENT 11
Trust Ownership 16
Trustees Compensation 17
Trustee Liability 17
INVESTMENT ADVISORY SERVICES 18
Adviser to the Trust 18
Advisory Fees 18
BROKERAGE TRANSACTIONS 18
OTHER SERVICES 19
Fund Administration 19
Custodian 19
Transfer Agent and Dividend
Disbursing Agent 19
Independent Public Accountants 19
PURCHASING SHARES 19
DISTRIBUTION PLAN AND SHAREHOLDER
SERVICES AGREEMENT 20
Conversion to Federal Funds 20
DETERMINING NET ASSET VALUE 20
Determining Market Value of
Securities 21
Trading in Foreign Securities 21
REDEEMING SHARES 21
Redemption in Kind 21
MASSACHUSETTS PARTNERSHIP LAW 22
TAX STATUS 22
The Portfolios' Tax Status 22
Foreign Taxes 22
Shareholders' Tax Status 22
TOTAL RETURN 22
YIELD 23
PERFORMANCE COMPARISONS 23
ABOUT FEDERATED INVESTORS 25
Mutual Fund Market 26
Institutional Clients 26
Trust Organizations 26
Broker/Dealers and Bank Broker/Dealer
Subsidiaries 26
GENERAL INFORMATION ABOUT THE TRUST
Managed Series Trust (the "Trust") was established as a Massachusetts business
trust on November 15, 1993. As of the date of this Statement, the Trust
consists of the following four separate portfolios of securities
(collectively, the "Portfolios" and each individually, the "Portfolio"):
Federated Managed Income Fund; Federated Managed Growth and Income Fund;
Federated Managed Growth Fund; and Federated Managed Aggressive Growth Fund.
Each Portfolio has two classes of shares of beneficial interest, Institutional
Shares and Select Shares. Prior to June 30, 1995, the Institutional Shares of
each portfolio of the Trust were known as Institutional Service Shares.
INVESTMENT OBJECTIVES AND POLICIES
The prospectuses discuss the objectives of the Portfolios and the policies
that each employs to achieve those objectives. The following discussion
supplements the description of the Portfolios' investment policies set forth
in the prospectuses. The Portfolios' respective investment objectives cannot
be changed without approval of shareholders. Except as noted, the investment
policies described below may be changed by the Board of Trustees ("Trustees")
without shareholder approval. Shareholders will be notified before any
material change in these policies becomes effective.
SMALL COMPANY STOCKS
Stocks in the small capitalization sector of the United States equity market
have historically been more volatile in price than larger capitalization
stocks, such as those included in the Standard & Poor's 500 Index. This is
because, among other things, small companies have less certain growth
prospects than larger companies; have a lower degree of liquidity in the
equity market; and tend to have a greater sensitivity to changing economic
conditions. Further, in addition to exhibiting greater volatility, the stocks
of small companies may, to some degree, fluctuate independently of the stocks
of large companies; that is, the stocks of small companies may decline in
price as the price of large company stocks rises or vice versa.
MORTGAGE-BACKED SECURITIES
PRIVATELY ISSUED MORTGAGE-RELATED SECURITIES
The privately issued mortgage-related securities purchased by the
Portfolios generally represent an ownership interest in federal agency
mortgage pass-through securities, such as those issued by Government
National Mortgage Association ("GNMA"). The terms and characteristics of
the mortgage instruments may vary among pass-through mortgage loan pools.
Privately issued mortgage-related securities generally pay back principal
and interest over the life of the security. At the time the Portfolios
reinvest the payments and any unscheduled prepayments of principal
received, the Portfolios may receive a rate of interest which is actually
lower than the rate of interest paid on these securities ("prepayment
risks"). Privately issued mortgage-related securities are subject to
higher prepayment risks than most other types of debt instruments with
prepayment risks because the underlying mortgage loans may be prepaid
without penalty or premium. Prepayment risks on privately issued
mortgage-related securities tend to increase during periods of declining
mortgage interest rates because many borrowers refinance their mortgages
to take advantage of the more favorable rates. Prepayments on privately
issued mortgage-related securities are also affected by other factors,
such as the frequency with which people sell their homes or elect to make
unscheduled payments on their mortgages.
The market for privately issued mortgage-related securities has expanded
considerably since its inception. The size of the primary issuance market
and the active participation in the secondary market by securities
dealers and other investors make government-related pools highly liquid.
CORPORATE DEBT OBLIGATIONS
The corporate debt obligations in which the Portfolios invest may bear fixed,
floating, floating and contingent, or increasing rates of interest. The
Portfolios may invest in investment-grade corporate debt obligations (which
are rated BBB or higher by nationally recognized statistical rating
organizations) or high yield corporate debt obligations (which are rated BB or
lower by nationally recognized statistical rating organizations).
FOREIGN DEBT OBLIGATIONS
The Portfolios may invest in investment-grade debt securities (which are rated
BBB or higher by nationally recognized statistical rating organizations) of
countries other than the United States.
WARRANTS
The Portfolios may invest in warrants. Warrants are basically options to
purchase common stock at a specific price (usually at a premium above the
market value of the optioned common stock at issuance) valid for a specific
period of time. Warrants may have a life ranging from less than one year to
twenty years, or they may be perpetual. However, most warrants have expiration
dates after which they are worthless. In addition, a warrant is worthless if
the market price of the common stock does not exceed the warrant's exercise
price during the life of the warrant. Warrants have no voting rights, pay no
dividends, and have no rights with respect to the assets of the corporation
issuing them. The percentage increase or decrease in the market price of the
warrant may tend to be greater than the percentage increase or decrease in the
market price of the optioned common stock. A Portfolio will not invest more
than 5% of the value of its total assets in warrants. No more than 2% of this
5% may be warrants which are not listed on the New York or American Stock
Exchanges. Warrants acquired in units or attached to securities may be deemed
to be without value for purposes of this policy.
FUTURES AND OPTIONS TRANSACTIONS
The Portfolios may attempt to hedge all or a portion of its portfolio by
buying and selling futures contracts and options on futures contracts.
FUTURES CONTRACTS
A futures contract is a firm commitment by two parties, the seller who
agrees to make delivery of the specific type of security called for in
the contract ("going short") and the buyer who agrees to take delivery of
the security ("going long") at a certain time in the future. However, a
stock index futures contract is an agreement pursuant to which two
parties agree to take or make delivery of an amount of cash equal to the
difference between the value of the index at the close of the last
trading day of the contract and the price at which the index was
originally written. No physical delivery of the underlying security in
the index is made.
The purpose of the acquisition or sale of a futures contact by the
Portfolios is to protect the Portfolios from fluctuations in the value of
their securities caused by anticipated changes in interest rates or
market conditions. For example, in the fixed-income securities market,
price moves inversely to interest rates. A rise in rates results in a
drop in price. Conversely, a drop in rates results in a rise in price. In
order to hedge its holdings of fixed income securities against a rise in
market interest rates, a Portfolio could enter into contracts to deliver
securities at a predetermined price (i.e., "go short") to protect itself
against the possibility that the prices of its fixed-income securities
may decline during the Portfolio's anticipated holding period. A
Portfolio would agree to purchase securities in the future at a
predetermined price (i.e., "go long") to hedge against a decline in
market interest rates.
PURCHASING PUT OPTIONS ON FUTURES CONTRACTS
The Portfolios may purchase listed put options or over-the-counter put
options on futures contracts. Unlike entering directly into a futures
contract, which requires the purchaser to buy a financial instrument on a
set date at a specified price, the purchase of a put option on a futures
contract entitles (but does not obligate) its purchaser to decide on or
before a future date whether to assume a short position at the specified
price. A Portfolio would purchase put options on futures contracts to
protect its portfolio securities against decreases in value resulting
from market factors such as an anticipated increase in interest rates.
Generally, if the hedged portfolio securities decrease in value during
the term of an option, the related futures contracts will also decrease
in value and the option will increase in value. In such an event, a
Portfolio will normally close out its option by selling an identical
option. If the hedge is successful, the proceeds received by a Portfolio
upon the sale of the second option may be large enough to offset both the
premium paid by the Portfolio for the original option plus the decrease
in value of the hedged securities.
Alternatively, a Portfolio may exercise its put option to close out the
position. To do so, it would simultaneously enter into a futures contract
of the type underlying the option (for a price less than the strike price
of the option) and exercise the option. The Portfolio would then deliver
the futures contract in return for payment of the strike price. If a
Portfolio neither closes out nor exercises an option, the option will
expire on the date provided in the option contract, and only the premium
paid for the contract will be lost.
WRITING PUT OPTIONS ON FUTURES CONTRACTS
The Portfolios may write listed put options on financial futures
contracts to hedge its portfolio against a decrease in market interest
rates. When a Portfolio writes a put option on a futures contract, it
receives a premium for undertaking the obligation to assume a long
futures position (buying a futures contract) at a fixed price at any time
during the life of the option. As market interest rates decrease, the
market price of the underlying futures contract normally increases.
As the market value of the underlying futures contract increases, the
buyer of the put option has less reason to exercise the put because the
buyer can sell the same futures contract at a higher price in the market.
The premium received by a Portfolio can then be used to offset the higher
prices of portfolio securities to be purchased in the future due to the
decrease in market interest rates.
Prior to the expiration of the put option, or its exercise by the buyer,
a Portfolio may close out the option by buying an identical option. If
the hedge is successful, the cost of buying the second option will be
less than the premium received by a Portfolio for the initial option.
PURCHASING CALL OPTIONS ON FUTURES CONTRACTS
An additional way in which the Portfolios may hedge against decreases in
market interest rates is to buy a listed call option on a financial
futures contract. When a Portfolio purchases a call option on a futures
contract, it is purchasing the right (not the obligation) to assume a
long futures position (buy a futures contract) at a fixed price at any
time during the life of the option. As market interest rates fall, the
value of the underlying futures contract will normally increase,
resulting in an increase in value of a Portfolio's option position. When
the market price of the underlying futures contract increases above the
strike price plus premium paid, a Portfolio could exercise its option and
buy the futures contract below market price.
Prior to the exercise or expiration of the call option, a Portfolio could
sell an identical call option and close out its position. If the premium
received upon selling the offsetting call is greater than the premium
originally paid, a Portfolio has completed a successful hedge.
WRITING CALL OPTIONS ON FUTURES CONTRACTS
The Portfolios may write listed call options or over-the-counter call
options on futures contracts to hedge against, for example, an increase
in market interest rates. When a Portfolio writes a call option on a
futures contract, it is undertaking the obligation of assuming a short
futures position (selling a futures contract) at the strike price at any
time during the life of the option if the option is exercised. As market
interest rates rise or as stock prices fall, causing the prices of
futures to go down, a Portfolio's obligation under a call option on a
future (to sell a futures contract) costs less to fulfill, causing the
value of a Portfolio's call option position to increase.
In other words, as the underlying future's price falls below the strike
price, the buyer of the option has no reason to exercise the call, so
that a Portfolio keeps the premium received for the option. This premium
can help substantially to offset the drop in value of a Portfolio's
portfolio securities.
Prior to the expiration of a call written by a Portfolio, or exercise of
it by the buyer, a Portfolio may close out the option by buying an
identical option. If the hedge is successful, the cost of the second
option will be less than the premium received by a Portfolio for the
initial option. The net premium income of a Portfolio will then
substantially offset the decrease in value of the hedged securities.
LIMITATION ON OPEN FUTURES POSITIONS
A Portfolio will not maintain open positions in futures contracts it has
sold or options it has written on futures contracts if, in the aggregate,
the value of the open positions (marked to market) exceeds the current
market value of its securities portfolio plus or minus the unrealized
gain or loss on those open positions, adjusted for the correlation of
volatility between the hedged securities and the futures contracts. If
this limitation is exceeded at any time, a Portfolio will take prompt
action to close out a sufficient number of open contracts to bring its
open futures and options positions within this limitation.
"MARGIN" IN FUTURES TRANSACTIONS
Unlike the purchase or sale of a security, the Portfolios do not pay or
receive money upon the purchase or sale of a futures contract. Rather, a
Portfolio is required to deposit an amount of "initial margin" in cash or
U.S. Treasury bills with the custodian (or the broker, if legally
permitted). The nature of initial margin in futures transactions is
different from that of margin in securities transactions in that futures
contracts initial margin does not involve a borrowing by a Portfolio to
finance the transactions. Initial margin is in the nature of a
performance bond or good-faith deposit on the contract which is returned
to a Portfolio upon termination of the futures contract, assuming all
contractual obligations have been satisfied.
A futures contract held by a Portfolio is valued daily at the official
settlement price of the exchange on which it is traded. Each day a
Portfolio pays or receives cash, called "variation margin," equal to the
daily change in value of the futures contract. This process is known as
"marking to market." Variation margin does not represent a borrowing or
loan by a Portfolio but is instead settlement between a Portfolio and the
broker of an amount one would owe the other if the futures contract
expired. In computing its daily net asset value, a Portfolio will mark to
market its open futures positions.
The Portfolios are also required to deposit and maintain margin when they
write call options on futures contracts.
PURCHASING AND WRITING OVER-THE-COUNTER OPTIONS
The Portfolios may purchase and write over-the-counter options on
portfolio securities in negotiated transactions with the buyers or
writers of the options for those options on portfolio securities held by
a Portfolio and not traded on an exchange.
Over-the-counter options are two-party contracts with price and terms
negotiated between buyer and seller. In contrast, exchange-traded options
are third-party contracts with standardized strike prices and expiration
dates and are purchased from a clearing corporation. Exchange-traded
options have a continuous liquid market while over-the-counter options
may not.
FOREIGN CURRENCY TRANSACTIONS
CURRENCY RISKS
The exchange rates between the U.S. dollar and foreign currencies are a
function of such factors as supply and demand in the currency exchange
markets, international balances of payments, governmental intervention,
speculation and other economic and political conditions. Although the
Portfolios value their assets daily in U.S. dollars, the Portfolios may
not convert their holdings of foreign currencies to U.S. dollars daily.
The Portfolios may incur conversion costs when they convert their
holdings to another currency. Foreign exchange dealers may realize a
profit on the difference between the price at which the Portfolios buy
and sell currencies.
The Portfolios will engage in foreign currency exchange transactions in
connection with their investments in the securities. The Portfolios will
conduct their foreign currency exchange transactions either on a spot
(i.e., cash) basis at the spot rate prevailing in the foreign currency
exchange market or through forward contracts to purchase or sell foreign
currencies.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Portfolios may enter into forward foreign currency exchange contracts
in order to protect themselves against a possible loss resulting from an
adverse change in the relationship between the U.S. dollar and a foreign
currency involved in an underlying transaction. However, forward foreign
currency exchange contracts may limit potential gains which could result
from a positive change in such currency relationships. The Portfolios'
investment adviser believes that it is important to have the flexibility
to enter into forward foreign currency exchange contracts whenever it
determines that it is in the Portfolios' best interest to do so. The
Portfolios will not speculate in foreign currency exchange.
The Portfolios will not enter into forward foreign currency exchange
contracts or maintain a net exposure in such contracts when they would be
obligated to deliver an amount of foreign currency in excess of the value
of their portfolio securities or other assets denominated in that
currency or, in the case of a "cross-hedge" denominated in a currency or
currencies that the Portfolios' investment adviser believes will tend to
be closely correlated with that currency with regard to price movements.
Generally, the Portfolios will not enter into a forward foreign currency
exchange contract with a term longer than one year.
FOREIGN CURRENCY OPTIONS
A foreign currency option provides the option buyer with the right to buy
or sell a stated amount of foreign currency at the exercise price on a
specified date or during the option period. The owner of a call option
has the right, but not the obligation, to buy the currency. Conversely,
the owner of a put option has the right, but not the obligation, to sell
the currency.
When the option is exercised, the seller (i.e., writer) of the option is
obligated to fulfill the terms of the sold option. However, either the
seller or the buyer may, in the secondary market, close its position
during the option period at any time prior to expiration.
A call option on foreign currency generally rises in value if the
underlying currency appreciates in value, and a put option on foreign
currency generally falls in value if the underlying currency depreciates
in value. Although purchasing a foreign currency option can protect a
Portfolio against an adverse movement in the value of a foreign currency,
the option will not limit the movement in the value of such currency. For
example, if a Portfolio were holding securities denominated in a foreign
currency that was appreciating and had purchased a foreign currency put
to hedge against a decline in the value of the currency, the Portfolio
would not have to exercise their put option. Likewise, if a Portfolio
were to enter into a contract to purchase a security denominated in
foreign currency and, in conjunction with that purchase, were to purchase
a foreign currency call option to hedge against a rise in value of the
currency, and if the value of the currency instead depreciated between
the date of purchase and the settlement date, the Portfolio would not
have to exercise its call. Instead, the Portfolio could acquire in the
spot market the amount of foreign currency needed for settlement.
SPECIAL RISKS ASSOCIATED WITH FOREIGN CURRENCY OPTIONS
Buyers and sellers of foreign currency options are subject to the same
risks that apply to options generally. In addition, there are certain
additional risks associated with foreign currency options. The markets in
foreign currency options are relatively new, and the Portfolios' ability
to establish and close out positions on such options is subject to the
maintenance of a liquid secondary market. Although the Portfolios will
not purchase or write such options unless and until, in the opinion of
the Portfolios' investment adviser, the market for them has developed
sufficiently to ensure that the risks in connection with such options are
not greater than the risks in connection with the underlying currency,
there can be no assurance that a liquid secondary market will exist for a
particular option at any specific time.
In addition, options on foreign currencies are affected by all of those
factors that influence foreign exchange rates and investments generally.
The value of a foreign currency option depends upon the value of the
underlying currency relative to the U.S. dollar. As a result, the price
of the option position may vary with changes in the value of either or
both currencies and may have no relationship to the investment merits of
a foreign security. Because foreign currency transactions occurring in
the interbank market involve substantially larger amounts than those that
may be involved in the use of foreign currency options, investors may be
disadvantaged by having to deal in an odd lot market (generally
consisting of transactions of less than $1 million) for the underlying
foreign currencies at prices that are less favorable than for round lots.
There is no systematic reporting of last sale information for foreign
currencies or any regulatory requirement that quotations available
through dealers or other market sources be firm or revised on a timely
basis. Available quotation information is generally representative of
very large transactions in the interbank market and thus may not reflect
relatively smaller transactions (i.e., less than $1 million) where rates
may be less favorable. The interbank market in foreign currencies is a
global, around-the-clock market. To the extent that the U.S. option
markets are closed while the markets for the underlying currencies remain
open, significant price and rate movements may take place in the
underlying markets that cannot be reflected in the options markets until
they reopen.
FOREIGN CURRENCY FUTURES TRANSACTIONS
By using foreign currency futures contracts and options on such
contracts, the Portfolios may be able to achieve many of the same
objectives as they would through the use of forward foreign currency
exchange contracts. The Portfolios may be able to achieve these
objectives possibly more effectively and at a lower cost by using futures
transactions instead of forward foreign currency exchange contracts.
SPECIAL RISKS ASSOCIATED WITH FOREIGN CURRENCY FUTURES CONTRACTS AND RELATED
OPTIONS
Buyers and sellers of foreign currency futures contracts are subject to
the same risks that apply to the use of futures generally. In addition,
there are risks assocated with foreign currency futures contracts and
their use as a hedging device similar to those associated with options on
futures currencies, as described above.
Options on foreign currency futures contracts may involve certain
additional risks. Trading options on foreign currency foreign currency
futures contracts is relatively new. The ability to establish and close
out positions on such options is subject to the maintenance of a liquid
secondary market. To reduce this risk, the Portfolios will not purchase
or write options on foreign currency futures contracts unless and until,
in the opinion of the Portfolios' investment adviser, the market for such
options has developed sufficiently that the risks in connection with such
options are not greater than the risks in connection with transactions in
the underlying foreign currency futures contracts. Compared to the
purchase or sale of foreign currency futures contracts, the purchase of
call or put options on futures contracts involves less potential risk to
the Fund because the maximum amount at risk is the premium paid for the
option (plus transaction costs). However, there may be circumstances when
the purchase of a call or put option on a futures contract would result
in a loss, such as when there is no movement in the price of the
underlying currency or futures contract.
REPURCHASE AGREEMENTS
The Portfolios or their custodian will take possession of the securities
subject to repurchase agreements and these securities will be marked to market
daily. To the extent that the original seller does not repurchase the
securities from the Portfolio, the Portfolio could receive less than the
repurchase price in any sale of such securities. In the event that a
defaulting seller files for bankruptcy or becomes insolvent, disposition of
such securities by a Portfolio might be delayed pending court action. The
Portfolios believe that under the regular procedures normally in effect for
custody of a Portfolio's portfolio securities subject to repurchase
agreements, a court of competent jurisdiction would rule in favor of a
Portfolio and allow retention or disposition of such securities. The
Portfolios will only enter into repurchase agreements with banks and other
recognized financial institutions such as broker/dealers which are deemed by
the Portfolios' investment adviser to be creditworthy pursuant to guidelines
established by the Trustees.
REVERSE REPURCHASE AGREEMENTS
The Portfolios may also enter into reverse repurchase agreements. These
transactions are similar to borrowing cash. In a reverse repurchase agreement,
a Portfolio transfers possession of a portfolio instrument to another person,
such as a financial institution, broker, or dealer, in return for a percentage
of the instrument's market value in cash, and agrees that on a stipulated date
in the future the Portfolio will repurchase the portfolio instrument by
remitting the original consideration plus interest at an agreed upon rate. The
use of reverse repurchase agreements may enable a Portfolio to avoid selling
portfolio instruments at a time when a sale may be deemed to be
disadvantageous, but the ability to enter into reverse repurchase agreements
does not ensure that a Portfolio will be able to avoid selling portfolio
instruments at a disadvantageous time.
When effecting reverse repurchase agreements, liquid assets of a Portfolio, in
a dollar amount sufficient to make payment for the obligations to be
purchased, are segregated at the trade date. These securities are marked to
market daily and are maintained until the transaction is settled.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an advantageous
price or yield for the Portfolios. No fees or other expenses, other than
normal transaction costs, are incurred. However, liquid assets of the
Portfolios sufficient to make payment for the securities to be purchased are
segregated on a Portfolio's records at the trade date. These assets are marked
to market daily and are maintained until the transaction has been settled. The
Portfolio do not intend to engage in when-issued and delayed delivery
transactions to an extent that would cause the segregation of more than 20% of
the total value of a Portfolio's assets.
LENDING OF PORTFOLIO SECURITIES
The collateral received when the Portfolios lend portfolio securities must be
valued daily and, should the market value of the loaned securities increase,
the borrower must furnish additional collateral to the particular Portfolio.
During the time portfolio securities are on loan, the borrower pays the
Portfolios any dividends or interest paid on such securities. Loans are
subject to termination at the option of the Portfolios or the borrower. The
Portfolios may pay reasonable administrative and custodial fees in connection
with a loan and may pay a negotiated portion of the interest earned on the
cash or equivalent collateral to the borrower or placing broker.
RESTRICTED AND ILLIQUID SECURITIES
The Portfolios may invest in commercial paper issued in reliance on the
exemption from registration afforded by Section 4(2) of the Securities Act of
1933. Section 4(2) commercial paper is restricted as to disposition under
federal securities law and is generally sold to institutional investors, such
as the Portfolios, who agree that they are purchasing paper for investment
purposes and not with a view to public distribution. Any resale by the
purchaser must be in an exempt transaction. Section 4(2) commercial paper is
normally resold to other institutional investors like the Portfolios through
or with the assistance of the issuer or investment dealers who make a market
in Section 4(2) commercial paper, thus providing liquidity. The Portfolios
believe that Section 4(2) commercial paper and possibly certain other
restricted securities which meet the criteria for liquidity established by the
Trustees are quite liquid. The Portfolios intend, therefore, to treat the
restricted securities which meet the criteria for liquidity established by the
Trustees, including Section 4(2) commercial paper, as determined by the
Portfolios' investment adviser, as liquid and not subject to the investment
limitation applicable to illiquid securities. In addition, because Section
4(2) commercial paper is liquid, the Portfolios intend to not subject such
paper to the limitation applicable to restricted securities.
The ability of the Trustees to determine the liquidity of certain restricted
securities is permitted under the Securities and Exchange commission ("SEC")
Staff position set forth in the adopting release for Rule 144A under the
Securities Act of 1933 (the "Rule"). The Rule is a non-exclusive safe harbor
for certain secondary market transactions involving securities subject to
restrictions on resale under federal securities laws. The Rule provides an
exemption from registration for resales of otherwise restricted securities to
qualified institutional buyers. The Rule was expected to further enhance the
liquidity of the secondary market for securities eligible for resale under
Rule 144A. The Portfolios believe that the Staff of the SEC has left the
question of determining the liquidity of all restricted securities to the
Trustees. The Trustees consider the following criteria in determining the
liquidity of certain restricted securities:
o the frequency of trades and quotes for the security;
o the number of dealers willing to purchase or sell the security and the
number of other potential buyers;
o dealer undertakings to make a market in the security; and
o the nature of the security and the nature of the marketplace trades.
PORTFOLIO TURNOVER
The Portfolios' investment adviser does not anticipate that portfolio turnover
will result in adverse tax consequences. However, relatively high portfolio
turnover may result in high transaction costs to the Portfolios. For the
fiscal year ended November 30, 1995, and for the period from May 25, 1994
(date of initial public investment) to November 30, 1994, the portfolio
turnover rates for Federated Managed Income Fund, Federated Managed Growth and
Income Fund, Federated Managed Growth Fund, and Federated Managed Aggressive
Growth Fund were 165% and 153%, 157% and 132%, 106% and 71%, and 139% and 77%,
respectively.
WEIGHTED AVERAGE PORTFOLIO DURATION
Duration is a commonly used measure of the potential volatility of the price
of a debt security, or the aggregate market value of a portfolio of debt
securities, prior to maturity. Duration measures the magnitude of the change
in the price of a debt security relative to a given change in the market rate
of interest. The duration of a debt security depends on three primary
variables: the security's coupon rate, maturity date, and level of market
interest rates for similar debt securities. Generally, debt securities with
lower coupons or longer maturities will have a longer duration than securities
with higher coupons or shorter maturities.
Duration is calculated by dividing the sum of the time-weighted values of cash
flows of a security or portfolio of securities, including principal and
interest payments, by the sum of the present values of the cash flows. Certain
debt securities, such as asset-backed securities, may be subject to prepayment
at irregular intervals. The duration of these instruments will be calculated
based upon assumptions established by the investment adviser as to the
probable amount and sequence of principal prepayments.
Mathematically, duration is measured as follows:
Duration = PVCF1(1) + PVCF2(2) + PVCF3(3) + ... + PVCFn(n)
PVTCF PVTCF PVTCF PVTCF
where
PVCFt = the present value of the cash flow in period t discounted at the
prevailing yield-to-maturity
t = the period when the cash flow is received
n = remaining number of periods until maturity total present value of the
cash flow from the bond where the present value is determined using
the prevailing
PVTCF = yield-to-maturity
INVESTMENT LIMITATIONS
ISSUING SENIOR SECURITIES AND BORROWING MONEY
A Portfolio will not issue senior securities, except that it may borrow
money directly or through reverse repurchase agreements in amounts up to
one-third of the value of its total assets, including the amount
borrowed, and except to the extent that a Portfolio may enter into
futures contracts.
A Portfolio will not borrow money or engage in reverse repurchase
agreements except as a temporary, extraordinary, or emergency measure or
to facilitate management of the Portfolio by enabling it to meet
redemption requests when the liquidation of portfolio securities is
deemed to be inconvenient or disadvantageous. A Portfolio will not
purchase any securities while any borrowings in excess of 5% of its total
assets are outstanding.
INVESTING IN COMMODITIES
The Portfolios will not invest in commodities, except that the Portfolios
reserve the right to engage in transactions involving financial futures
contracts, options, and forward contracts with respect to foreign
securities or currencies.
INVESTING IN REAL ESTATE
The Portfolios will not purchase or sell real estate, including limited
partnership interests, although the Portfolios may invest in securities
of issuers whose business involves the purchase or sale of real estate or
in securities which are secured by real estate or which represent
interests in real estate.
CONCENTRATION OF INVESTMENTS
A Portfolio will not invest 25% or more of the value of its total assets
in any one industry (other than securities issued by the U.S. government,
its agencies, or instrumentalities).
UNDERWRITING
A Portfolio will not underwrite any issue of securities, except as it may
be deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of securities which the Portfolio may purchase
in accordance with its investment objective, policies, and limitations.
SELLING SHORT AND BUYING ON MARGIN
The Portfolios will not sell any securities short or purchase any
securities on margin, but may obtain such short-term credits as may be
necessary for clearance of purchases and sales of portfolio securities. A
deposit or payment by a Portfolio of initial or variation margin in
connection with financial futures contracts or related options
transactions is not considered the purchase of a security on margin.
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its total
assets, a Portfolio will not purchase securities issued by any one issuer
(other than cash, cash items or securities issued or guaranteed by the
government of the United States or its agencies or instrumentalities and
repurchase agreements collateralized by such securities) if as a result
more than 5% of the value of its total assets would be invested in the
securities of that issuer or if it would own more than 10% of the
outstanding voting securities of such issuer.
PLEDGING ASSETS
The Portfolios will not mortgage, pledge, or hypothecate any assets
except to secure permitted borrowings. In those cases, a Portfolio may
pledge assets having a market value not exceeding the lesser of the
dollar amounts borrowed or 15% of the value of total assets at the time
of the pledge. For purposes of this limitation, the following are not
deemed to be pledges: margin deposits for the purchase and sale of
financial futures contracts and related options; and segregation of
collateral arrangements made in connection with options activities or the
purchase of securities on a when-issued basis.
LENDING CASH OR SECURITIES
A Portfolio will not lend any of its assets except portfolio securities.
This shall not prevent the purchase or holding of U.S. government
obligations, corporate bonds, debentures, notes, certificates of
indebtedness, or other debt securities of any issuer, repurchase
agreements, or other transactions which are permitted by the Portfolios'
respective investment objectives, policies, or Declaration of Trust.
The above investment limitations cannot be changed with respect to a Portfolio
without approval of that Portfolio's shareholders. The following limitations
may be changed by the Trustees without shareholder approval. Shareholders will
be notified before any material change in these limitations becomes effective.
INVESTING IN RESTRICTED SECURITIES
A Portfolio will not invest more than 10% of its total assets in
securities subject to restrictions on resale under the Securities Act of
1933, except for commercial paper issued under Section 4(2) of the
Securities Act of 1933 and certain other restricted securities which meet
the criteria for liquidity as established by the Trustees. In order to
comply with registration requirements of a certain state, each Portfolio
has agreed to limit its investment in restricted securities to 5% of its
total assets. If state requirements change, this policy may be changed
without notice to shareholders.
INVESTING IN ILLIQUID SECURITIES
A Portfolio will not invest more than 15% of the value of its net assets
in illiquid securities, including repurchase agreements providing for
settlement in more than seven days after notice, over-the-counter
options, and certain securities not determined by the Trustees to be
liquid.
INVESTING IN MINERALS
The Portfolios will not purchase interests in oil, gas, or other mineral
exploration or development programs or leases, except they may purchase
the securities of issuers which invest in or sponsor such programs.
INVESTING IN WARRANTS
A Portfolio will not invest more than 5% of its net assets in warrants,
including those acquired in units or attached to other securities. To
comply with certain state restrictions, each Portfolio will limit its
investments in such warrants not listed on the New York or American Stock
Exchanges to 2% of its net assets. (If state restrictions change, this
latter restriction may be revised without notice to shareholder.) For
purposes of this investment restriction, warrants will be valued at the
lower of cost or market, except that warrants acquired by a Portfolio in
units with or attached to securities may be deemed to be without value.
INVESTING IN PUT OPTIONS
A Portfolio will not purchase put options on securities, unless the
securities are held in the Portfolio's portfolio or unless the Portfolio
is entitled to them in deliverable form without further payment or after
segregating cash in the amount of any further payment.
WRITING COVERED CALL OPTIONS
A Portfolio will not write call options on securities unless the
securities are held in the Portfolio's portfolio or unless the Portfolio
is entitled to them in deliverable form without further payment or after
segregating cash in the amount of any further payment.
INVESTMENT IN SECURITIES OF OTHER INVESTMENT COMPANIES
A Portfolio will limit its investment in other investment companies to no
more than 3% of the total outstanding voting stock of any investment
company, will invest no more than 5% of total assets in any one
investment company, and will invest no more than 10% of its total assets
in investment companies in general. A Portfolio will purchase securities
of closed-end investment companies only in open-market transactions
involving only customary broker's commissions. However, these limitations
are not applicable if the securities are acquired in a merger,
consolidation, reorganization, or acquisition of assets. It should be
noted that investment companies incur certain expenses such as management
fees, and, therefore, any investment by a Portfolio in shares of another
investment company would be subject to such duplicate expenses.
INVESTING IN NEW ISSUERS
A Portfolio will not invest more than 5% of the value of its total assets
in securities of issuers which have records of less than three years of
continuous operations, including the operation of any predecessor.
INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS AND TRUSTEES OF
THE TRUST
A Portfolio will not purchase or retain the securities of any issuer if
the officers and Trustees of the Trust, the investment adviser, or a sub-
adviser owning individually more than 1/2 of 1% of the issuer's
securities, together own more than 5% of the issuer's securities.
Except with respect to borrowing money, if a percentage limitation is adhered
to at the time of investment, a later increase or decrease in percentage
resulting from any change in value or net assets will not result in a
violation of such restriction.
No Portfolio expects to borrow money in excess of 5% of the value of its net
assets during the coming fiscal year.
For purposes of its policies and limitations, the Portfolios consider
certificates of deposit and demand and time deposits issued by a U.S. branch
of a domestic bank or savings association having capital, surplus, and
undivided profits in excess of $100,000,000 at the time of investment to be
"cash items."
MANAGED SERIES TRUST MANAGEMENT
Officers and Trustees are listed with their addresses, birthdates, present
positions with Managed Series Trust, and principal occupations.
John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated Research
Corp. and Federated Global Research Corp.; Chairman, Passport Research, Ltd.;
Chief Executive Officer and Director, Trustee, or Managing General Partner of
the Funds. Mr. Donahue is the father of J. Christopher Donahue, Executive Vice
President of the Trust .
Thomas G. Bigley
28th Floor, One Oxford Centre
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Director, Oberg Manufacturing Co.; Chairman of the Board, Children's Hospital
of Pittsburgh; Director, Trustee, or Managing General Partner of the Funds;
formerly, Senior Partner, Ernst & Young LLP.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Trustee
President, Investment Properties Corporation; Senior Vice-President, John R.
Wood and Associates, Inc., Realtors; President, Northgate Village Development
Corporation; Partner or Trustee in private real estate ventures in Southwest
Florida; Director, Trustee, or Managing General Partner of the Funds;
formerly, President, Naples Property Management, Inc.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Trustee
Director and Member of the Executive Committee, Michael Baker, Inc.; Director,
Trustee, or Managing General Partner of the Funds; formerly, Vice Chairman and
Director, PNC Bank, N.A., and PNC Bank Corp. and Director, Ryan Homes, Inc.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director, Trustee,
or Managing General Partner of the Funds.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine and Member, Board of Trustees, University of Pittsburgh;
Medical Director, University of Pittsburgh Medical Center - Downtown; Member,
Board of Directors, University of Pittsburgh Medical Center; formerly,
Hematologist, Oncologist, and Internist, Presbyterian and Montefiore
Hospitals; Director, Trustee, or Managing General Partner of the Funds.
Edward L. Flaherty, Jr.@
Henny, Kochuba, Meyer and Flaherty
Two Gateway Center - Suite 674
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney-at-law; Shareholder, Henny, Kochuba, Meyer and Flaherty; Director,
Eat'N Park Restaurants, Inc., and Statewide Settlement Agency, Inc.; Director,
Trustee, or Managing General Partner of the Funds; formerly, Counsel, Horizon
Financial, F.A., Western Region.
Glen R. Johnson *
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 2, 1929
President and Trustee
Trustee, Federated Investors; President and/or Trustee of some of the Funds;
staff member, Federated Securities Corp. and Federated Administrative
Services.
Peter E. Madden
Seacliff
562 Bellevue Avenue
Newport, RI
Birthdate: March 16, 1942
Trustee
Consultant; State Representative, Commonwealth of Massachusetts; Director,
Trustee, or Managing General Partner of the Funds; formerly, President, State
Street Bank and Trust Company and State Street Boston Corporation.
Gregor F. Meyer
Henny, Kochuba, Meyer and Flaherty
Two Gateway Center - Suite 674
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee
Attorney-at-law; Shareholder, Henny, Kochuba, Meyer and Flaherty; Chairman,
Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Director, Trustee, or
Managing General Partner of the Funds.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting Partner, Mollica,
Murray and Hogue; Director, Trustee or Managing General Partner of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, International Politics and Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer Library
Center, Inc., and U.S. Space Foundation; Chairman, Czecho Management Center;
Director, Trustee, or Managing General Partner of the Funds; President
Emeritus, University of Pittsburgh; founding Chairman, National Advisory
Council for Environmental Policy and Technology and Federal Emergency
Management Advisory Board.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public relations/marketing consultant; Conference Coordinator, Non-profit
entities; Director, Trustee, or Managing General Partner of the Funds.
J. Christopher Donahue
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
Executive Vice President
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated Research
Corp. and Federated Global Research Corp.; President, Passport Research, Ltd.;
Trustee, Federated Administrative Services, Federated Services Company, and
Federated Shareholder Services; President or Vice President of the Funds;
Director, Trustee, or Managing General Partner of some of the Funds. Mr.
Donahue is the son of John F. Donahue, Chairman of the Company.
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
Executive Vice President
Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice President,
Federated Advisers, Federated Management, Federated Research, Federated
Research Corp., Federated Global Research Corp. and Passport Research, Ltd.;
Executive Vice President and Director, Federated Securities Corp.; Trustee,
Federated Services Company; Chairman, Treasurer, and Trustee, Federated
Administrative Services; Trustee or Director of some of the Funds; President,
Executive Vice President and Treasurer of some of the Funds.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Chairman and
Director, Federated Securities Corp.; President or Vice President of some of
the Funds; Director or Trustee of some of the Funds.
David M. Taylor
Federated Investors Tower
Pittsburgh, PA
Birthdate: January 13, 1947
Treasurer
Senior Vice President, Controller, and Trustee, Federated Investors;
Controller, Federated Advisers, Federated Management, Federated Research,
Federated Research Corp., and Passport Research, Ltd.; Senior Vice President,
Federated Shareholder Services; Vice President, Federated Administrative
Services; Treasurer of some of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President and Secretary
Executive Vice President, Secretary, General Counsel, and Trustee, Federated
Investors; Trustee, Federated Advisers, Federated Management, and Federated
Research; Director, Federated Research Corp. and Federated Global Research
Corp.; Trustee, Federated Services Company; Executive Vice President,
Secretary, and Trustee, Federated Administrative Services; President and
Trustee, Federated Shareholder Services; Director, Federated Securities Corp.;
Executive Vice President and Secretary of the Funds.
* This Trustee is deemed to be an "interested person" as defined in the
Investment Company Act of 1940.
@ Member of the Executive Committee. The Executive Committee of the Board
of Trustees handles the responsibilities of the Board of Trustees
between meetings of the Board.
As used in the table above, "The Funds" and "Funds" mean the following
investment companies: American Leaders Fund, Inc.; Annuity Management Series;
Arrow Funds; Automated Government Money Trust; Blanchard Funds; Blanchard
Precious Metals, Inc.; Cash Trust Series II; Cash Trust Series, Inc.; DG
Investor Series; Edward D. Jones & Co. Daily Passport Cash Trust; Federated
ARMs Fund; Federated Equity Funds; Federated Exchange Fund, Ltd.; Federated
GNMA Trust; Federated Government Trust; Federated High Yield Trust; Federated
Income Securities Trust; Federated Income Trust; Federated Index Trust;
Federated Institutional Trust; Federated Master Trust; Federated Municipal
Trust; Federated Short-Term Municipal Trust; Federated Short-Term U.S.
Government Trust; Federated Stock Trust; Federated Tax-Free Trust; Federated
Total Return Series, Inc.; Federated U.S. Government Bond Fund; Federated U.S.
Government Securities Fund: 1-3 Years; Federated U.S. Government Securities
Fund: 3-5 Years; First Priority Funds; Fixed Income Securities, Inc.; Fortress
Adjustable Rate U.S. Government Fund, Inc.; Fortress Municipal Income Fund,
Inc.; Fortress Utility Fund, Inc.; Fund for U.S. Government Securities, Inc.;
Government Income Securities, Inc.; High Yield Cash Trust; Insurance
Management Series; Intermediate Municipal Trust; International Series, Inc.;
Investment Series Funds, Inc.; Investment Series Trust; Liberty Equity Income
Fund, Inc.; Liberty High Income Bond Fund, Inc.; Liberty Municipal Securities
Fund, Inc.; Liberty U.S. Government Money Market Trust; Liberty Term Trust,
Inc. - 1999; Liberty Utility Fund, Inc.; Liquid Cash Trust; Managed Series
Trust; Money Market Management, Inc.; Money Market Obligations Trust; Money
Market Trust; Municipal Securities Income Trust; Newpoint Funds; 111 Corcoran
Funds; Peachtree Funds; The Planters Funds; RIMCO Monument Funds; The Shawmut
Funds; Star Funds; The Starburst Funds; The Starburst Funds II; Stock and Bond
Fund, Inc.; Sunburst Funds; Targeted Duration Trust; Tax-Free Instruments
Trust; Trademark Funds; Trust for Financial Institutions; Trust For Government
Cash Reserves; Trust for Short-Term U.S. Government Securities; Trust for U.S.
Treasury Obligations; The Virtus Funds; World Investment Series, Inc.
TRUST OWNERSHIP
Officers and Trustees as a group owned 1.45% of the Trust's outstanding shares
as of January 2, 1996.
As of January 2, 1996, the following shareholder of record owned 5% or more of
the outstanding Institutional Shares of Federated Managed Income Fund: Western
Bank, Medford, OR, 10.37%.
As of January 2, 1996, the following shareholders of record owned 5% or more
of the outstanding Select Shares of Federated Managed Income Fund: IU & Co.,
Columbus, IN, 8.67%; The Farmers Company, Lititz, PA, 7.11%; Boht & Company,
Hanover, PA, 5.75%; Union National Bank & Trust Co., Souderton, PA, 7.37%; and
Tokai Trust Co. of New York, New York, NY, 11.45%.
As of January 2, 1996, the following shareholders of record owned 5% or more
of the outstanding Institutional Shares of Federated Managed Growth and Income
Fund: Western Bank, Medford, OR, 7.74%; CARECO, Salina, KS, 6.91%; and Lasalle
National Trust NA, Chicago, IL, 5.91%.
As of January 2, 1996, the following shareholders of record owned 5% or more
of the outstanding Select Shares of Federated Managed Growth and Income Fund:
IU & Co., Columbus, IN, 5.05%; ENB Trust, Marysville, KS, 9.23%; Union
National Bank & Trust Co., Souderton, PA, 6.73%; and Keith Co., Monroe, LA,
13.55%.
As of January 2, 1996, the following shareholders of record owned 5% or more
of the outstanding Institutional Shares of Federated Managed Growth Fund:
CARECO, Salina, KS, 6.40% and TRUCOJO, St. Joseph, MO, 5.45%.
As of January 2, 1996, the following shareholders of record owned 5% or more
of the outstanding Select Shares of Federated Managed Growth Fund: ENB Trust,
Marysville, KS, 9.86% and Keith Co., Monroe, LA, 14.88%.
As of January 2, 1996, no shareholder of record owned 5% or more of the
outstanding Institutional Shares of Federated Managed Aggressive Growth Fund.
As of January 2, 1996, the following shareholders of record owned 5% or more
of the outstanding Select Shares of Federated Managed Aggressive Growth Fund:
FM Co., Zeeland, MI, 5.61%; Union National Bank & Trust Co., Souderton, PA,
15.79%; and Tokai Trust Co. of New York, New York, NY, 10.95%.
TRUSTEES COMPENSATION
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
TRUST TRUST*# FROM FUND COMPLEX +
John F. Donahue $0 $0 for the Trust and
Chairman and Trustee 59 other investment companies in the
Fund Complex
Thomas G. Bigley++ $1,152 $86,331 for the Trust and
Trustee 54 other investment companies in the Fund
Complex
John T. Conroy, Jr. $1,259 $115,760 for the Trust and
Trustee 54 other investment companies in the Fund
Complex
William J. Copeland $1,259 $115,760 for the Trust and
Trustee 54 other investment companies in the Fund
Complex
Glen R. Johnson $0 $0 for the Trust and
President and Trustee 9 other investment companies in the
Fund Complex
James E. Dowd $1,259 $115,760 for the Trust and
Trustee 54 other investment companies in the Fund
Complex
Lawrence D. Ellis, M.D. $1,152 $104,898 for the Trust and
Trustee 54 other investment companies in the Fund
Complex
Edward L. Flaherty, Jr. $1,259 $115,760 for the Trust and
Trustee 54 other investment companies in the Fund
Complex
Peter E. Madden $1,152 $104,898 for the Trust and
Trustee 54 other investment companies in the Fund
Complex
Gregor F. Meyer $1,152 $104,898 for the Trust and
Trustee 54 other investment companies in the Fund
Complex
John E. Murray, Jr., $1,152 $104,898 for the Trust and
Trustee 54 other investment companies in the Fund
Complex
Wesley W. Posvar $1,152 $104,898 for the Trust and
Trustee 54 other investment companies in the Fund
Complex
Marjorie P. Smuts $1,152 $104,898 for the Trust and
Trustee 54 other investment companies in the Fund
Complex
*Information is furnished for the fiscal year ended November 30, 1995.
#The aggregate compensation is provided for the Trust which is comprised of
four portfolios.
+The information is provided for the last calendar year.
++Mr. Bigley served on 39 investment companies in the Federated Funds Complex
from January 1 through September 30, 1995. On October 1, 1995, he was
appointed a Trustee on 15 additional Federated Funds.
TRUSTEE LIABILITY
The Trust's Declaration of Trust provides that the Trustees will not be liable
for errors of judgment or mistakes of fact or law. However, they are not
protected against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office.
INVESTMENT ADVISORY SERVICES
ADVISER TO THE TRUST
The Trust's investment adviser is Federated Management (the "Adviser") and the
Trust's sub-adviser is Federated Global Research Corporation ( the "Sub-
Adviser"). They are subsidiaries of Federated Investors. All the voting
securities of Federated Investors are owned by a trust, the trustees of which
are John F. Donahue, his wife and his son, J. Christopher Donahue.
ADVISORY FEES
For their advisory services, the Adviser and Sub-Adviser receive an annual
investment advisory fee as described in the prospectus of each Portfolio.
For the fiscal year ended November 30, 1995, and for the period from January
18, 1994 (start of business) to November 30, 1994, the Adviser for Federated
Managed Income Fund earned advisory fees of $354,801 and $126,272,
respectively, all of which were waived. For the fiscal year ended November 30,
1995, and for the period from January 27, 1994 (start of business) to November
30, 1994, the Adviser for Federated Managed Growth and Income Fund, Federated
Managed Growth Fund, and Federated Managed Aggressive Growth Fund earned
advisory fees of $606,491 and $154,964, $434,181 and $97,226, and $183,693 and
$50,507, respectively, of which $243,174 and $121,127, $294,373 and $97,226
and $183,693 and $50,507 were waived, respectively.
For the period from November 20, 1995 to November 30, 1995, the Sub-Adviser
for Federated Managed Income Fund, Federated Managed Growth and Income Fund,
Federated Managed Growth Fund, and Federated Managed Aggressive Growth Fund
earned advisory fees of $886, $2,518, $3,587, and $0, respectively, none of
which were waived.
STATE EXPENSE LIMITATIONS
The Adviser has undertaken to comply with the expense limitations
established by certain states for investment companies whose shares are
registered for sale in those states. If a Portfolio's normal operating
expenses (including the investment advisory fee, but not including
brokerage commissions, interest, taxes, and extraordinary expenses)
exceed 2-1/2% per year of the first $30 million of average net assets, 2%
per year of the next $70 million of average net assets, and 1-1/2% per
year of the remaining average net assets, the Adviser will reimburse the
Portfolio for its expenses over the limitation.
If the Portfolios' monthly projected operating expenses exceed this
limitation, the investment advisory fee paid will be reduced by the
amount of the excess, subject to an annual adjustment. If the expense
limitation is exceeded, the amount to be reimbursed by the Adviser will
be limited, in any single fiscal year, by the amount of the investment
advisory fee.
This arrangement is not part of the advisory contract and may be amended
or rescinded in the future.
BROKERAGE TRANSACTIONS
The Adviser may select brokers and dealers who offer brokerage and research
services. These services may be furnished directly to the Fund or to the
Adviser and may include: advice as to the advisability of investing in
securities; security analysis and reports; economic studies; industry studies;
receipt of quotations for portfolio evaluations; and similar services.
Research services provided by brokers and dealers may be used by the Adviser
or its affiliates in advising the Fund and other accounts. To the extent that
receipt of these services may supplant services for which the Adviser or its
affiliates might otherwise have paid, it would tend to reduce their expenses.
The Adviser and its affiliates exercise reasonable business judgment in
selecting brokers who offer brokerage and research services to execute
securities transactions. They determine in good faith that commissions charged
by such persons are reasonable in relationship to the value of the brokerage
and research services provided. For the fiscal year ended November 30, 1995,
and for the period from May 25, 1994 (date of initial public investment) to
November 30, 1994, Federated Managed Income Fund, Federated Managed Growth and
Income Fund, Federated Managed Growth Fund, and Federated Managed Aggressive
Growth Fund paid total brokerage commissions of $10,473 and $13,743, $82,752
and $37,993, $104,808 and $38,358, and $70,266 and $28,757, respectively.
Although investment decisions for the Fund are made independently from those
of any other accounts managed by the Adviser, investments of the type the Fund
may make may also be made by those other accounts. When the Fund and one or
more other accounts managed by the Adviser are prepared to invest in, or
desire to dispose of, the same security, available investments or
opportunities for sales will be allocated in a manner believed by the Adviser
to be equitable to each. In some cases, this procedure may adversely affect
the price paid or received by the Fund or the size of the position obtained or
disposed of by the Fund. In other cases, however, it is believed that
coordination and the ability to participate in volume transactions will be to
the benefit of the Fund.
OTHER SERVICES
Affiliates of the Adviser may, from time to time, provide certain electronic
equipment and software to institutional customers in order to facilitate the
purchase of shares of funds offered by Federated Securities Corp.
FUND ADMINISTRATION
Federated Administrative Services, a subsidiary of Federated Investors,
provides administrative personnel and services to the Portfolios for a fee as
described in the prospectus of each Portfolio. Prior to March 1, 1994,
Federated Administrative Services, Inc., also a subsidiary of Federated
Investors, served as the Fund's Administrator. (For purposes of this Statement
of Additional Information, Federated Administrative Services and Federated
Administrative Services, Inc. may hereinafter collectively be referred to as
the "Administrators".) For the fiscal year ended November 30, 1995, Federated
Administrative Services earned $155,000 in regard to Federated Managed Income
Fund. For the period from January 18, 1994 (start of business) to November 30,
1994, the Administrators collectively earned $41,192 in regard to Federated
Managed Income Fund. For the fiscal year ended November 30, 1995, Federated
Administrative Services earned $155,000 in regard to Federated Managed Growth
and Income Fund. For the period from January 27, 1994 (start of business) to
November 30, 1994, the Administrators collectively earned $42,041 in regard to
Federated Managed Growth and Income Fund. For the fiscal year ended November
30, 1995, Federated Administrative Services earned $155,000 in regard to
Federated Managed Growth Fund. For the period from January 27, 1994 (start of
business) to November 30, 1994, the Administrators collectively earned $42,466
in regard to Federated Managed Growth Fund. For the fiscal year ended November
30, 1995, Federated Administrative Services earned $155,000 in regard to
Federated Managed Aggressive Growth Fund. For the period from January 27, 1994
(start of business) to November 30, 1994, the Administrators collectively
earned $41,617 in regard to Federated Managed Aggressive Growth Fund.
Dr. Henry J. Gailliot, an officer of Federated Management, the Adviser to the
Fund, holds approximately 20% of the outstanding common stock and serves as a
director of Commercial Data Services, Inc., a company which provides computer
processing services to Federated Administrative Services.
CUSTODIAN
State Street Bank and Trust Company, Boston, Massachusetts, is custodian for
the securities and cash of the Portfolios.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Services Company, Boston, Massachusetts, is transfer agent for the
shares of the Portfolios and dividend disbursing agent for the Portfolios. The
fee paid to the transfer agent is based upon the size, type and number of
accounts and transactions made by shareholders.
Federated Services Company also maintains each Portfolio's accounting records.
The fee paid for this service is based upon the level of the Portfolio's
average net assets for the period plus out-of-pocket expenses.
INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accountants for the Portfolios are Arthur Andersen LLP,
Pittsburgh, Pennsylvania.
PURCHASING SHARES
Shares of the Portfolios are sold at the net asset value on days that the New
York Stock Exchange is open for business. The procedure for purchasing shares
of the Portfolios is explained in each Portfolio's respective prospectus under
"Investing in Institutional Shares" or "Investing in Select Shares."
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES AGREEMENT
With respect to Select Shares, the Fund has adopted a Distribution Plan in
accordance with Investment Company Act Rule 12b-1. Additionally, the Fund has
adopted a Shareholder Services Agreement with respect to both Select Shares
and Institutional Shares.
These arrangements permit the payment of fees to financial institutions, the
distributor, and Federated Shareholder Services, to stimulate distribution
activities and to cause services to be provided to shareholders by a
representative who has knowledge of the shareholder's particular circumstances
and goals. These activities and services may include, but are not limited to,
marketing efforts; providing office space, equipment, telephone facilities,
and various clerical, supervisory, computer, and other personnel as necessary
or beneficial to establish and maintain shareholder accounts and records;
processing purchase and redemption transactions and automatic investments of
client account cash balances; answering routine client inquiries; and
assisting clients in changing dividend options, account designations, and
addresses.
By adopting the Distribution Plan, the Trustees expect that the Portfolios
will be able to achieve a more predictable flow of cash for investment
purposes and to meet redemptions. This will facilitate more efficient
portfolio management and assist the Portfolios in pursuing their investment
objectives. By identifying potential investors whose needs are served by the
Portfolios' objectives, and properly servicing these accounts, it may be
possible to curb sharp fluctuations in rates of redemptions and sales.
Other benefits, which may be realized under either arrangement, may include:
(1) providing personal services to shareholders; (2) investing shareholder
assets with a minimum of delay and administrative detail; (3) enhancing
shareholder recordkeeping systems; and (4) responding promptly to
shareholders' requests and inquiries concerning their accounts.
For the fiscal year ended November 30, 1995, and for the period from January
27, 1994 (start of business) to November 30, 1994, the Select Shares of
Federated Managed Income Fund, Federated Managed Growth and Income Fund,
Federated Managed Growth Fund, and Federated Managed Aggressive Growth Fund
incurred $55,959 and $13,223, $82,559 and $10,942, $87,921 and $7,223 and
$40,751 and $4,543, respectively, in distribution services fees, of which
$18,653 and $4,407, $27,520 and $3,647, $29,307 and $2,408, and $13,584 and
$1514 were waived, respectively.
In addition, for the fiscal year ended November 30, 1995, and for the period
from January 18, 1994 (start of business) to November 30, 1994, the Select
Shares and Institutional Shares of Federated Managed Income Fund paid
shareholder services fees in the amount of $18,653 and $4,404, and $99,614 and
$0, respectively, of which $0 and $0, and $99,614 and $0 were waived,
respectively. For the fiscal year ended November 30, 1995, and for the period
from January 27, 1994 (start of business) to November 30, 1994, the Select
Shares and Institutional Shares of Federated Managed Growth and Income Fund
paid shareholder services fees in the amount of $27,520 and $3,647, and
$174,647 and $0, respectively, of which $0 and $0, and $174,647 and $0 were
waived, respectively. For the fiscal year ended November 30, 1995, and for the
period from January 27, 1994 (start of business) to November 30, 1994, the
Select Shares and Institutional Shares of Federated Managed Growth Fund paid
shareholder services fees in the amount of $29,307 and $2,408, and $115,420
and $0, respectively, of which $0 and $0, and $115,420 and $0 were waived,
respectively. For the fiscal year ended November 30, 1995, and for the period
from January 27, 1994 (start of business) to November 30, 1994, the Select
Shares and Institutional Shares of Federated Managed Aggressive Growth Fund
paid shareholder services fees in the amount of $13,584 and $1,514, and
$47,647 and $0, respectively, of which $0 and $0, and $47,647 and $0 were
waived, respectively.
CONVERSION TO FEDERAL FUNDS
It is each Portfolio's policy to be as fully invested as possible so that
maximum income may be earned. To this end, all payments from shareholders must
be in federal funds or be converted into federal funds. State Street Bank and
Trust Company acts as the shareholder's agent in depositing checks and
converting them to federal funds.
DETERMINING NET ASSET VALUE
Net asset value generally changes each day. The days on which net asset value
is calculated by each Portfolio are described in the prospectus. Net asset
value will not be calculated on days on which the New York Stock Exchange is
closed.
DETERMINING MARKET VALUE OF SECURITIES
Market values of each Portfolio's portfolio securities are determined as
follows:
o for equity securities, according to the last sale price in the market in
which they are primarily traded (either a national securities exchange or
the over-the-counter market), if available;
o in the absence of recorded sales for equity securities, according to the
mean between the last closing bid and asked prices;
o for bonds and other fixed-income securities, as determined by an
independent pricing service;
o for short-term obligations, according to the prices as furnished by an
independent pricing service;
o for short-term obligations with remaining maturities of 60 days or less
at the time of purchase, at amortized cost, or at fair value as
determined in good faith by the Trustees; and
o for all other securities, at fair value as determined in good faith by
the Trustees.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may consider yield, quality, coupon
rate, maturity, type of issue, trading characteristics, and other market data.
The Portfolios will value futures contracts, options, and put options on
futures at their market values established by the exchanges at the close of
option trading on such exchanges unless the Trustees determines in good faith
that another method of valuing option positions is necessary to appraise their
fair market value.
TRADING IN FOREIGN SECURITIES
Trading in foreign securities may be completed at times which vary from the
closing of the New York Stock Exchange. In computing the net asset value, the
Portfolios value foreign securities at the latest closing price on the
exchange on which they are traded immediately prior to the closing of the New
York Stock Exchange. Certain foreign currency exchange rates may also be
determined at the latest rate prior to the closing of the New York Stock
Exchange. Foreign securities quoted in foreign currencies are translated into
U.S. dollars at current rates. Occasionally, events that affect these values
and exchange rates may occur between the times at which they are determined
and the closing of the New York Stock Exchange. If such events materially
affect the value of portfolio securities, these securities may be valued at
their fair value as determined in good faith by the Trustees, although the
actual calculation may be done by others.
REDEEMING SHARES
The Portfolios redeem shares at the next computed net asset value after the
particular Portfolio receives the redemption request. Redemption procedures
are explained in the prospectuses under the section entitled "Redeeming
Institutional Shares" or "Redeeming Select Shares."
Because portfolio securities of the Portfolios may be traded on foreign
exchanges which trade on Saturdays or on holidays on which the Portfolios will
not make redemptions, the net asset value of Shares of the Portfolios may be
significantly affected on days when shareholders do not have an opportunity to
redeem their Shares.
REDEMPTION IN KIND
Although the Trust intends to redeem shares in cash, it reserves the right
under certain circumstances to pay the redemption price in whole or in part by
a distribution of securities from the respective Portfolio's investment
portfolio. To the extent available, such securities will be readily
marketable.
Redemption in kind will be made in conformity with applicable SEC rules,
taking such securities at the same value employed in determining net asset
value and selecting the securities in a manner that the Trustees determine to
be fair and equitable.
The Trust has elected to be governed by Rule 18f-1 of the Investment Company
Act of 1940, under which, with respect to each Portfolio, the Trust is
obligated to redeem shares for any one shareholder in cash only up to the
lesser of $250,000 or 1% of the respective class's net asset value during any
90-day period.
Redemption in kind is not as liquid as a cash redemption. If redemption is
made in kind, shareholders receiving their securities and selling them before
their maturity could receive less than the redemption value of their
securities and could incur certain transaction costs.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations
of the Trust. These documents require notice of this disclaimer to be given in
each agreement, obligation, or instrument the Trust or its Trustees enter into
or sign.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Trust will
defend any claim made and pay any judgment against a shareholder for any act
or obligation of the Trust. Therefore, financial loss resulting from liability
as a shareholder will occur only if the Trust itself cannot meet its
obligations to indemnify shareholders and pay judgments against them.
TAX STATUS
THE PORTFOLIOS' TAX STATUS
The Portfolios expect to pay no federal income tax because they expect to meet
the requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies and to receive the special tax treatment
afforded to such companies. To qualify for this treatment, each Portfolio
must, among other requirements:
o derive at least 90% of its gross income from dividends, interest and
gains from the sale of securities;
o derive less than 30% of its gross income from the sale of securities held
less than three months;
o invest in securities within certain statutory limits; and
o distribute to its shareholders at least 90% of its net income earned
during the year.
However, the Portfolios may invest in the stock of certain foreign
corporations which would constitute a Passive Foreign Investment Company
(PFIC). Federal income taxes may be imposed on the Portfolios upon disposition
of PFIC investments.
Each Portfolio will be treated as a single, separate entity for federal income
tax purposes so that income and losses (including capital gains and losses)
realized by a Portfolio will not be combined for tax purposes with income and
losses realized by any of the other Portfolios.
FOREIGN TAXES
Investment income on certain foreign securities in which the Portfolios may
invest may be subject to foreign withholding or other taxes that could reduce
the return on these securities. Tax treaties between the United States and
foreign countries, however, may reduce or eliminate the amount of foreign
taxes to which the Portfolios would be subject.
SHAREHOLDERS' TAX STATUS
Shareholders are subject to federal income tax on dividends and capital gains
received as cash or additional shares. The dividends received deduction for
corporations will apply to ordinary income distributions to the extent the
distribution represents amounts that would qualify for the dividends received
deduction to a particular fund if that fund were a regular corporation and to
the extent designated by a fund as so qualifying. These dividends, and any
short-term capital gains, are taxable as ordinary income.
CAPITAL GAINS
Shareholders will pay federal tax on long-term capital gains distributed
to them regardless of how long they have held the shares of the
particular Portfolio.
TOTAL RETURN
The average annual total return for the Portfolios is the average compounded
rate of return for a given period that would equate a $1,000 initial
investment to the ending redeemable value of that investment. The ending
redeemable value is compounded by multiplying the number of shares owned at
the end of the period by the net asset value per share at the end of the
period. The number of shares owned at the end of the period is based on the
number of shares purchased at the beginning of the period with $1,000,
adjusted over the period by any additional shares, assuming the monthly
reinvestment of all dividends and distributions.
For the one-year period ended November 30, 1995, and for the period from May
25, 1994 (date of initial public investment) through November 30, 1995, the
average annual total returns for Federated Managed Income Fund were 14.74% and
9.87%, respectively, for Institutional Shares, and were 13.76% and 9.05%,
respectively, for Select Shares.
For the one-year period ended November 30, 1995, and for the period from May
25, 1994 (date of initial public investment) through November 30, 1995, the
average annual total returns for Federated Managed Growth and Income Fund were
18.51% and 11.85%, respectively, for Institutional Shares, and were 17.76% and
11.08%, respectively, for Select Shares.
For the one-year period ended November 30, 1995, and for the period from May
25, 1994 (date of initial public investment) through November 30, 1995, the
average annual total returns for Federated Managed Growth Fund were 21.79% and
13.43%, respectively, for Institutional Shares, and were 20.95% and 12.68%,
respectively, for Select Shares.
For the one-year period ended November 30, 1995, and for the period from May
25, 1994 (date of initial public investment) through November 30, 1995, the
average annual total returns for Federated Managed Aggressive Growth Fund were
21.96% and 13.32% respectively, for Institutional Shares, and were 21.36% and
12.71%, respectively, for Select Shares.
YIELD
The yield for both classes of each Portfolio is determined by dividing the net
investment income per share (as defined by the SEC) earned by the particular
Portfolio over a thirty-day period by the maximum offering price per share of
the particular Portfolio on the last day of the period. This value is then
annualized using semi-annual compounding. This means that the amount of income
generated during the thirty-day period is assumed to be generated each month
over a twelve month period and is reinvested every six months. The yield does
not necessarily reflect income actually earned by the particular Portfolio
because of certain adjustments required by the SEC and, therefore, may not
correlate to the dividends or other distributions paid to shareholders.
To the extent that financial institutions charge fees in connection with
services provided in conjunction with an investment in a Portfolio, the
performance will be reduced for those shareholders paying those fees.
Federated Managed Income Fund's 30-day SEC yields for Institutional Shares and
Select Shares were 5.77% and 5.02%, respectively, for the 30-day period ended
November 30, 1995.
Federated Managed Growth and Income Fund's 30-day SEC yields for
Institutional Shares and Select Shares were 4.62% and 3.86%, respectively, for
the 30-day period ended November 30, 1995.
Federated Managed Growth Fund's 30-day SEC yields for Institutional Shares and
Select Shares were 3.94% and 3.20%, respectively, for the 30-day period ended
November 30, 1995.
Federated Managed Aggressive Growth Fund's 30-day SEC yields for
Institutional Shares and Select Shares were 3.30% and 2.56%, respectively, for
the 30-day period ended November 30, 1995.
PERFORMANCE COMPARISONS
Each Portfolio's performance of both classes of shares depends upon such
variables as:
o portfolio quality;
o average portfolio maturity;
o type of instruments in which the particular Portfolio is invested;
o changes in the expenses of the Trust, the particular Portfolio or either
class of shares; and
o various other factors.
Each Portfolio's performance fluctuates on a daily basis largely because net
earnings and offering price per share fluctuate daily. Both net earnings and
offering price per share are factors in the computation of yield and total
return for each class of the Portfolios.
Investors may use financial publications and/or indices to obtain a more
complete view of a Portfolio's performance of either class of shares. When
comparing performance of either class of shares, investors should consider all
relevant factors such as the composition of any index used, prevailing market
conditions, portfolio compositions of other funds, and methods used to value
portfolio securities and compute offering price. The financial publications
and/or indices which a Portfolio uses in advertising may include:
o LIPPER ANALYTICAL SERVICES, INC., ranks funds in various fund categories
by making competitive calculations using total return. Total return
assumes the reinvestment of all capital gains distributions and income
dividends and takes into account any change in net asset value over a
specified period of time. From time to time, a Portfolio will quote its
Lipper ranking in advertising and sales literature.
o STANDARD & POOR'S RATINGS GROUP UTILITY INDEX is an unmanaged index of
common stocks from forty different utilities. This index indicates daily
changes in the price of the stocks. The index also provides figures for
changes in price from the beginning of the year to date and for a twelve-
month period.
o STANDARD & POOR'S RATINGS GROUP DAILY STOCK PRICE INDEX OF 500 COMMON
STOCKS, a composite index of common stocks in industry, transportation,
and financial and public utility companies, can be used to compare to the
total returns of funds whose portfolios are invested primarily in common
stocks. In addition, the Standard & Poor's index assumes reinvestments of
all dividends paid by stocks listed on its index. Taxes due on any of
these distributions are not included, nor are brokerage or other fees
calculated in the Standard & Poor's figures.
o STANDARD & POOR'S RATINGS GROUP SMALL STOCK INDEX, is a broadly
diversified index consisting of approximately 600 small capitalization
common stocks that can be used to compare to the total returns of funds
whose portfolios are invested primarily in small capitalization common
stocks.
o EUROPE, AUSTRALIA, AND FAR EAST (EAFE) is a market capitalization
weighted foreign securities index, which is widely used to measure the
performance of European, Australian, New Zealand and Far Eastern stock
markets. The index covers approximately 1,020 companies drawn from 18
countries in the above regions. The index values its securities daily in
both U.S. dollars and local currency and calculates total returns
monthly. EAFE U.S. dollar total return is a net dividend figure less
Luxembourg withholding tax. The EAFE is monitored by Capital
International, S.A., Geneva, Switzerland.
o RUSSELL 2000 INDEX is a broadly diversified index consisting of
approximately 2,000 small capitalization common stocks that can be used
to compare to the total returns of funds whose portfolios are invested
primarily in small capitalization common stocks.
o LEHMAN BROTHERS TREASURY INTERMEDIATE BOND INDEX (U.S. DOLLARS) is an
index composed of all bonds covered by the Lehman Brothers Treasury Bond
Index with maturities between one and 9.9 years. Total return comprises
price appreciation/depreciation and income as a percentage of the
original investment. Indexes are rebalanced monthly by market
capitalization.
o LEHMAN BROTHERS TREASURY LONG-TERM BOND INDEX (U.S. DOLLARS) is an index
composed of all bonds covered by the Lehman Brothers Treasury Bond Index
with maturities of 10 years or greater. Total return comprises price
appreciation/depreciation and income as a percentage of the original
investment. Indexes are rebalanced monthly by market capitalization.
o J.P. MORGAN GLOBAL NON-U.S. GOVERNMENT BOND INDEX is a total return,
market capitalization weighted index, rebalanced monthly consisting of
the following countries: Australia, Belgium, Canada, Denmark, France,
Germany, Italy, Japan, Netherlands, Spain, Sweden and United Kingdom.
o LEHMAN BROTHERS CORPORATE INTERMEDIATE BOND INDEX (U.S. DOLLARS) is a
subset of the Lehman Brothers Corporate Bond Index covering all
corporate, publicly issued, fixed-rate, nonconvertible U.S. debt issues
rated at least Baa with at least $50 million principal outstanding and
maturity less than 10 years.
o LEHMAN BROTHERS CORPORATE B INDEX is an index composed of all bonds
covered by Lehman Brothers High Yield Index rated "B" by Moody's
Investors Service. Bonds have a minimum amount outstanding of $100
million and at least one year to maturity. Total return comprises price
appreciation/depreciation and income as a percentage of the original
investment. Indexes are rebalanced monthly by market capitalization.
o LEHMAN BROTHERS MORTGAGE-BACKED SECURITIES INDEX includes 15- and 30-year
fixed-rate securities backed by mortgage pools of the Government National
Mortgage Association (GNMA), Federal Home Loan Mortgage Corporation
(FHLMC), and Federal National Mortgage Corporation (FNMA). Graduated
payment mortgages (GPMs) and balloons are included in the index.
o LEHMAN BROTHERS GOVERNMENT/CORPORATE (TOTAL) INDEX is comprised of
approximately 5,000 issues which include non-convertible bonds publicly
issued by the U.S. government or its agencies; corporate bonds guaranteed
by the U.S. government and quasi-federal corporations; and publicly
issued, fixed rate, non-convertible domestic bonds of companies in
industry, public utilities and finance. The average maturity of these
bonds approximates nine years. Tracked by Lehman Brothers, Inc., the
index calculates total returns for one month, three month, twelve month
and ten year periods and year-to-date.
o LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/CORPORATE BOND INDEX is an
unmanaged index comprised of all the bonds issued by the Lehman Brothers
Government/Corporate Bond Index with maturities between 1 and 9.99 years.
Total return is based on price appreciation/depreciation and income as a
percentage of the original investment. Indices are rebalanced monthly by
market capitalization.
o MORNINGSTAR, INC., an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for
two weeks.
Advertisements and other sales literature for both classes of shares of the
Portfolios may quote total returns which are calculated on non-standardized
base periods. The total returns represent the historic change in the value of
an investment in either class of shares of the Portfolios based on monthly or
quarterly, as applicable, reinvestment of dividends over a specified period of
time.
ABOUT FEDERATED INVESTORS
Federated Investors is dedicated to meeting investor needs which is reflected
in its investment decision making-structured, straightforward, and consistent.
This has resulted in a history of competitive performance with a range of
competitive investment products that have gained the confidence of thousands
of clients and their customers.
The company's disciplined security selection process is firmly rooted in sound
methodologies backed by fundamental and technical research. Investment
decisions are made and executed by teams of portfolio managers, analysts, and
traders dedicated to specific market sectors.
In the equity sector, Federated Investors has more than 25 years experience.
As of December 31, 1994, Federated Investors managed 15 equity funds totaling
approximately $4 billion in assets across growth, value, equity income,
international, index, and sector (i.e. utility) styles. Federated Investor's
value-oriented management style combines quantitative and qualitative analysis
and features a structured, computer-assisted composite modeling system that
was developed in the 1970s.
In the corporate bond sector, as of December 31, 1994, Federated Investors
managed 8 money market funds, 5 investment grade and 4 high yield bond funds
with assets approximating $7.4 billion, $.9 billion and $.8 billion,
respectively. Federated Investors' corporate bond decision making--based on
intensive, diligent credit analysis--is backed by over 20 years of experience
in the corporate bond sector. In 1972, Federated Investors introduced one of
the first high-yield bond funds in the industry. In 17 years ending December
1994, Federated Investors' high-yield portfolios experienced a default rate of
just 1.86%, versus 3.10% for the market as a whole. In 1983, Federated
Investors was one of the first fund managers to participate in the asset-
backed securities market, a market totaling more than $200 billion.
In the government sector, as of December 31, 1994, Federated Investors managed
9 mortgage-backed, 4 government/agency and 17 government money market mutual
funds, with assets approximating $8.5 billion, $1.6 billion and $17 billion,
respectively. Federated Investors trades approximately $300 million in U.S.
government and mortgage-backed securities daily and places approximately $13
billion in repurchase agreements each day. Federated Investors introduced the
first U.S. government fund to invest in U.S. government bond securities in
1969. Federated Investors has been a major force in the short- and
intermediate-term government markets since 1982 and currently manages nearly
$10 billion in government funds within these maturity ranges.
J. Thomas Madden, Executive Vice President, oversees Federated Investors'
equity and high yield corporate bond management while William D. Dawson,
Executive Vice President, oversees Federated Investors' domestic fixed income
management. Henry A. Frantzen, Executive Vice President, oversees the
management of Federated Investors' international portfolios.
MUTUAL FUND MARKET
Twenty-seven percent of American households are pursuing their financial goals
through mutual funds. These investors, as well as businesses and institutions,
have entrusted over $2 trillion to the more than 5,500 funds available.*
Federated Investors, through its subsidiaries, distributes mutual funds for a
variety of investment applications. Specific markets include:
INSTITUTIONAL CLIENTS
Federated Investors meets the needs of more than 4,000 institutional clients
nationwide by managing and servicing separate accounts and mutual funds for a
variety of applications, including defined benefit and defined contribution
programs, cash management, and asset/liability management. Institutional
clients include corporations, pension funds, tax-exempt entities,
foundations/endowments, insurance companies, and investment and financial
advisors. The marketing effort to these institutional clients is headed by
John B. Fisher, President, Institutional Sales Division.
TRUST ORGANIZATIONS
Other institutional clients include close relationships with more than 1,500
banks and trust organizations. Virtually all of the trust divisions of the top
100 bank holding companies use Federated funds in their clients'portfolios.
The marketing effort to trust clients is headed by Mark R. Gensheimer,
Executive Vice President, Bank Marketing & Sales.
*Source: Investment Company Institute
BROKER/DEALERS AND BANK BROKER/DEALER SUBSIDIARIES
Federated funds are available to consumers through major brokerage firms
nationwide--including 200 New York Stock Exchange firms--supported by more
wholesalers than any other mutual fund distributor. The marketing effort to
these firms is headed by James F. Getz, President, Broker/Dealer Division.
Cusip 56166K 800
Cusip 56166K 701
Cusip 56166K 404
Cusip 56166K 305
Cusip 56166K 602
PART C. OTHER INFORMATION.
Item 24. Financial Statements and Exhibits:
(a) Financial Statements (Included in Part A).
(b) Exhibits:
(1) (i)...............Conformed Copy of Declaration of Trust of
the Registrant (1);
(ii)...............Conformed Copy of Amendment No. 1 to
Declaration of Trust (1);
(iii)...............Conformed Copy of Amendment No. 2 to
Declaration of Trust (2);
(iv)...............Conformed Copy of Amendment No. 4 to
Declaration of Trust;+
(2) Copy of By-Laws of the Registrant (1);
(3) Not applicable;
(4) Copy of Specimen Certificates for Shares of Beneficial Interest
of the Registrant (2);
(5) Conformed Copy of Investment Advisory Contract of the
Registrant (3);
(6) Conformed Copy of Distributor's Contract of the Registrant (3);
(7) Not applicable;
(8) Conformed Copy of Custodian Agreement of the Registrant (4);
(9) (i)...............Conformed Copy of Transfer Agency and
Service Agreement of the Registrant (4);
(ii)...............Conformed Copy of Former Shareholder
Services Plan of the Registrant dated December 1, 1993
(4);
(iii)...............The Registrant incorporates the conformed
copy of the specimen Mutual Funds Sales and Services
Agreement; Mutual Fund Services Agreement and Plan Trustee
Mutual Funds Services Agreement from Item 24(b)(6) of the
Cash Trust Series II Registration Statement filed with the
Commission on July 24, 1995. (File Numbers 33-38550 and
811-6269);+
(iv)...............Conformed Copy of Shareholder Services
Agreement of the Registrant (4);
(v)...............The response and exhibits described in Item
24(b)(6) are hereby incorporated by reference;
(vi)...............Conformed Copy of Administrative Services
Agreement of the Registrant (4);
(10) Conformed copy of Opinion and Consent of Counsel as to legality
of shares being registered (2);
(11) Conformed Copy of Consent of Independent Public Accountants;+
+ All exhibits have been filed electronically.
(1) Response is incorporated by reference to Registrant's Initial
Registration Statement on Form N-1A filed December 2, 1993 (File Nos. 33-
51247 and 811-7129).
(2) Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A filed February 11, 1994 (File Nos. 33-51247
and 811-7129).
(3) Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 2 on Form N-1A filed March 2, 1994 (File Nos. 33-51247 and
811-7129).
(4) Response is incorporated by reference to Registrant's Post Effective
Amendment No. 1 on Form N-1A filed September 30, 1994 (File Nos. 33-51247
and 811-7129)
(12) Not applicable;
(13) Conformed Copy of Initial Capital Understanding (2);
(14) Not applicable;
(15) (i) Conformed Copy of Distribution Plan (4);
(ii) Copy of 12b-1 Agreement (2);
(16) Copy of Schedules for Computation of Fund Performance Data (4);
(17) Copy of Financial Data Schedules;+
(18) The Registrant hereby incorporates the conformed copy of the
specimen Multiple Class Plan from Item 24(b)(18) of the World
Investment Series, Inc. Registration Statement on Form N-1A,
filed with the Commission on January 26, 1996 (File Nos. 33-
52149 and 811-07141;+
(19) Conformed Copy of Power of Attorney.+
Item 25. Persons Controlled by or Under Common Control with Registrant: None.
Item 26. Number of Holders of Securities:
Number of Record
Holders
Title of Class as of January 4, 1996
- -
Shares of beneficial interest
(no par value)
Federated Managed Income Fund
Institutional Shares 545
Select Shares 343
Federated Managed Growth and Income Fund
Institutional Shares 1,039
Select Shares 606
Federated Managed Growth Fund
Institutional Shares 1,038
Select Shares 703
Federated Managed Aggressive Growth Fund
Institutional Shares 761
Select Shares 519
Item 27. Indemnification: (2)
+ All exhibits have been filed electronically.
(2) Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A filed February 11, 1994 (File Nos. 33-51247
and 811-7129).
(4) Response is incorporated by reference to Registrant's Post Effective
Amendment No. 1 on Form N-1A filed September 30, 1994 (File Nos. 33-51247
and 811-7129)
Item 28. Business and Other Connections of Investment Adviser:
(a)For a description of the other business of the investment
adviser, see the section entitled "Trust Information - Management
of the Trust" in Part A. The affiliations with the Registrant of
four of the Trustees and one of the Officers of the investment
adviser are included in Part B of this Registration Statement
under "Managed Series Trust Management - Officers and Trustees."
The remaining Trustee
of the investment adviser, his position with the investment
adviser, and, in parentheses, his principal occupation is: Mark
D. Olson (Partner, Wilson, Halbrook & Bayard), 107 W. Market
Street, Georgetown, Delaware 19947.
The remaining Officers of the investment adviser are: William D.
Dawson, J. Thomas Madden, and Mark L. Mallon, Executive Vice
Presidents; Henry J. Gailliot, Senior Vice President-Economist;
Peter R. Anderson, Drew J. Collins, Jonathan C. Conley, Mark E.
Durbiano, and J. Alan Minteer, Senior Vice Presidents; J. Scott
Albrecht, Randall A. Bauer, Joseph M. Balestrino, Randall S.
Bauer, David A. Briggs, Kenneth J. Cody, Deborah A. Cunningham,
Michael P. Donnelly, Linda A. Duessel, Kathleen M. Foody-Malus,
Thomas M. Franks, Edward C. Gonzales, Timothy E. Keefe, Stephen
A. Keen, Mark S. Kopinski, Jeff A. Kozemchak, Marian R. Marinack,
John W. McGonigle, Susan M. Nason, Mary Jo Ochson, Robert J.
Ostrowski, Frederick L. Plautz, Jr., Charles A. Ritter, James D.
Roberge, Frank Semack, William F. Stotz, Sandra L. Weber, and
Christopher H. Wiles, Vice Presidents; Edward C. Gonzales,
Treasurer; and John W. McGonigle, Secretary. The business
address of each of the Officers of the investment adviser is
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779.
These individuals are also officers of a majority of the
investment advisers to the Funds listed in Part B of this
Registration Statement under "The Funds."
Item 29. Principal Underwriters:
(a)Federated Securities Corp., the Distributor for shares of the
Registrant, also acts as principal underwriter for the following
open-end investment companies: American Leaders Fund, Inc.;
Annuity Management Series; Arrow Funds; Automated Government
Money Trust; BayFunds; The Biltmore Funds; The Biltmore
Municipal Funds; Blanchard Funds; Blanchard Precious Metals Fund,
Inc.; Cash Trust Series, Inc.; Cash Trust Series II; DG Investor
Series; Edward D. Jones & Co. Daily Passport Cash Trust;
Federated ARMs Fund; Federated Equity Funds; Federated Exchange
Fund, Ltd.; Federated GNMA Trust; Federated Government Trust;
Federated High Yield Trust; Federated Income Securities Trust;
Federated Income Trust; Federated Index Trust; Federated
Institutional Trust; Federated Master Trust; Federated Municipal
Trust; Federated Short-Term Municipal Trust; Federated Short-Term
U.S. Government Trust; Federated Stock Trust; Federated Tax-Free
Trust; Federated Total Return Series, Inc.; Federated U.S.
Government Bond Fund; Federated U.S. Government Securities Fund:
1-3 Years; Federated U.S. Government Securities Fund: 3-5 Years;
Federated U.S. Government Securities Fund: 5-10 Years;First
Priority Funds; Fixed Income Securities, Inc.; Fortress
Adjustable Rate U.S. Government Fund, Inc.; Fortress Municipal
Income Fund, Inc.; Fortress Utility Fund, Inc.; Fund for U.S.
Government Securities, Inc.; Government Income Securities, Inc.;
High Yield Cash Trust; Independence One Mutual Funds; Insurance
Management Series; Intermediate Municipal Trust; International
Series Inc.; Investment Series Funds, Inc.; Investment Series
Trust; Liberty Equity Income Fund, Inc.; Liberty High Income Bond
Fund, Inc.; Liberty Municipal Securities Fund, Inc.; Liberty U.S.
Government Money Market Trust; Liberty Utility Fund, Inc.; Liquid
Cash Trust; Managed Series Trust; Marshall Funds, Inc.; Money
Market Management, Inc.; Money Market Obligations Trust; Money
Market Trust; The Monitor Funds; Municipal Securities Income
Trust; Newpoint Funds; 111 Corcoran Funds; Peachtree Funds; The
Planters Funds; RIMCO Monument Funds; SouthTrust Vulcan Funds;
Star Funds; The Starburst Funds; The Starburst Funds II; Stock
and Bond Fund, Inc.; Targeted Duration Trust; Tax-Free
Instruments Trust; Tower Mutual Funds; Trust for Financial
Institutions; Trust for Government Cash Reserves; Trust for
Short-Term U.S. Government Securities; Trust for U.S. Treasury
Obligations; The Virtus Funds; Vision Group of Funds, Inc.; and
World Investment Series, Inc.
Federated Securities Corp. also acts as principal underwriter for
the following closed-end investment company: Liberty Term Trust,
Inc.- 1999.
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Richard B. Fisher Director, Chairman, Chief Vice President
Federated Investors Tower Executive Officer, Chief
Pittsburgh, PA 15222-3779 Operating Officer, Asst.
Secretary, and Asst.
Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive ViceExecutive Vice
Federated Investors Tower President, Federated, President
Pittsburgh, PA 15222-3779 Securities Corp.
John W. McGonigle Director, Federated Executive Vice
Federated Investors Tower Securities Corp. President and
Pittsburgh, PA 15222-3779 Secretary
John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark R. Gensheimer Executive Vice President of --
Federated Investors Tower Bank/Trust, Federated
Pittsburgh, PA 15222-3779 Securities Corp.
Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard W. Boyd Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Solon A. Person, IV Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp
Pittsburgh, PA 15222-3779
John B. Bohnet Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Byron F. Bowman Vice President, Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Kevin J. Crenny Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Daniel T. Culbertson Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
G. Michael Cullen Vice President, --
Federated Investors Tower Federated Securites Corp.
Pittsburgh, PA 15222-3779
Laura M. Deger Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael D. Fitzgerald Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Craig S. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Scott A. Hutton Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
H. Joeseph Kenedy Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William E. Kugler Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Steven A. La Versa Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Mihm Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
J. Michael Miller Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. O'Brien Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert D. Oehlschlager Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John C. Shelar, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jamie M. Teschner Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul A. Uhlman Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. Wolff Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Charlene H. Jennings Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
J. Timothy Radcliff Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Denis McAuley Treasurer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas R. Donahue Asstistant Secretary, --
Federated Investors Tower Assistant Treasurer,
Pittsburgh, PA 15222-3779 Federated Securities Corp.
Joseph M. Huber Assistant Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David M. Taylor Assistant Secretary, Treasurer
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(c) Not applicable.
Item 30. Location of Accounts and Records:
All accounts and records required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and Rules 31a-1 through 31a-3 promulgated
thereunder are maintained at one of the following locations:
Registrant Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Services Company P.O. Box 8600
("Transfer Agent and Dividend Boston, MA 02266-8600
Disbursing Agent")
Federated Adminstrative ServicesFederated Investors Tower
("Administrator") Pittsburgh, PA 15222-3779
Federated Management Federated Investors Tower
("Adviser") Pittsburgh, PA 15222-3779
State Street Bank and Trust Company P.O. Box 8600
("Custodian") Boston, MA 02266-8600
Item 31. Management Services: Not applicable.
Item 32. Undertakings:
Registrant hereby undertakes to comply with the provisions of
Section 16(c) of the 1940 Act with respect to the removal of
Trustees and the calling of special shareholder meetings by
shareholders.
Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, MANAGED SERIES TRUST,
certifies that it meets all of the requirements for effectiveness of this
Amendment to its Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to its Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Pittsburgh and Commonwealth of Pennsylvania, on the
26th day of January, 1996.
MANAGED SERIES TRUST
BY: /s/ Karen M. Brownlee
Karen M. Brownlee, Assistant Secretary
Attorney in Fact for John F. Donahue
January 26, 1996
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to its Registration Statement has been signed below by the following person in
the capacity and on the date indicated:
NAME TITLE DATE
By:/s/ Karen M. Brownlee
Karen M. Brownlee Attorney In Fact January 26, 1996
ASSISTANT SECRETARY For the Persons
Listed Below
NAME TITLE
John F. Donahue* Chairman and Trustee
(Chief Executive Officer)
Glen R. Johnson* President and Trustee
David M. Taylor* Treasurer
(Principal Financial and
Accounting Officer)
Thomas G. Bigley * Trustee
John T. Conroy, Jr.* Trustee
William J. Copeland* Trustee
James E. Dowd* Trustee
Lawrence D. Ellis, M.D.* Trustee
Edward L. Flaherty, Jr.* Trustee
Peter E. Madden* Trustee
Gregor F. Meyer* Trustee
John E. Murray, Jr. Trustee
Wesley W. Posvar* Trustee
Marjorie P. Smuts* Trustee
Exhibit 1 (iv)
MANAGED SERIES TRUST
Amendment No. 4
DECLARATION OF TRUST
dated November 15, 1994
THIS Declaration of Trust is amended as follows:
Delete the first paragraph of Section 5 in Article III and substitute
in its place the following:
Section 5. Establishment and Designation of Series or Class.
Without limiting the authority of the Trustees set forth in
Article XII, Section 8, inter alia, to establish and designate any
additional Series or Class or to modify the rights and preferences
of any existing Series or Class, the Series and Classes of the
Trust shall be and are established and designated as:
Federated Managed Aggressive Growth Fund
Institutional Shares
Select Shares
Federated Managed Growth and Income Fund
Institutional Shares
Select Shares
Federated Managed Growth Fund
Institutional Shares
Select Shares
Federated Managed Income Fund
Institutional Shares
Select Shares
The undersigned Assistant Secretary of Managed Series Trust hereby
certifies that the above stated Amendment is true and correct Amendment to
the Declaration of Trust, as adopted by the Board of Trustees of the Trust
as of the 30th day of June, 1995.
WITNESS the due execution hereof this 30th day of June, 1995.
/s/ G. Andrew Bonnewell
G. Andrew Bonnewell
Exhibit (11) under N-1A
Exhibit 23 under Item 601/Reg SK
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use in Post-
Effective Amendment No. 5 to Form N-1A Registration Statement of Managed
Series Trust of our report dated January 18, 1996, on the financial
statements of Federated Managed Aggressive Growth Fund, Federated Managed
Growth Fund, Federated Managed Growth and Income Fund, and Federated Income
Fund (four of the portfolios comprising the Managed Series Trust), included
in or made a part of this registration statement.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania,
January 25, 1996
EXHIBIT 19
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints the Secretary and Assistant Secretary of MANAGED SERIES TRUST and
the Deputy General Counsel of Federated Investors, and each of them, their
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution for them and in their names, place and stead, in any and
all capacities, to sign any and all documents to be filed with the Securities
and Exchange Commission pursuant to the Securities Act of 1933, the
Securities Exchange Act of 1934 and the Investment Company Act of 1940, by
means of the Securities and Exchange Commission's electronic disclosure
system known as EDGAR; and to file the same, with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to sign and perform each and every act and
thing requisite and necessary to be done in connection therewith, as fully to
all intents and purposes as each of them might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any
of them, or their or his substitute or substitutes, may lawfully do or cause
to be done by virtue thereof.
SIGNATURES TITLE DATE
/S/John F. Donahue Chairman
John F. Donahue (Chief Executive Officer) January 5, 1996
/s/Glen R. Johnson President and Trustee January 5, 1996
Glen R. Johnson
/s/David M. Taylor Treasurer January 5, 1996
David M. Taylor (Principal Financial and
Accounting Officer)
/s/Thomas G. Bigley Trustee January 5, 1996
Thomas G. Bigley
/s/John T. Conroy, Jr. Trustee January 5, 1996
John T. Conroy, Jr.
/s/William J. Copeland Trustee January 5, 1996
William J. Copeland
SIGNATURES TITLE DATE
/s/James E. Dowd Trustee January 5, 1996
James E. Dowd
/s/Lawrence D. Ellis, M.D. Trustee January 5, 1996
Lawrence D. Ellis, M.D.
/s/Edward L. Flaherty, Jr. Trustee January 5, 1996
Edward L. Flaherty, Jr.
/s/Peter E. Madden Trustee January 5, 1996
Peter E. Madden
/s/Gregor F. Meyer Trustee January 5, 1996
Gregor F. Meyer
/s/John E. Murray, Jr. Trustee January 5, 1996
John E. Murray, Jr.
/s/Wesley W. Posvar Trustee January 5, 1996
Wesley W. Posvar
/s/Marjorie P. Smuts Trustee January 5, 1996
Marjorie P. Smuts
Sworn to and subscribed before me this 5th day of January, 1996
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 031
<NAME> Managed Series Trust
Federated Managed Growth Fund
Institutional Shares
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Nov-30-1995
<PERIOD-END> Nov-30-1995
<INVESTMENTS-AT-COST> 89,469,509
<INVESTMENTS-AT-VALUE> 95,014,668
<RECEIVABLES> 1,624,600
<ASSETS-OTHER> 135,188
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 96,774,456
<PAYABLE-FOR-SECURITIES> 466,002
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 637,839
<TOTAL-LIABILITIES> 1,103,841
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 87,285,933
<SHARES-COMMON-STOCK> 5,929,677
<SHARES-COMMON-PRIOR> 2,950,782
<ACCUMULATED-NII-CURRENT> 885,488
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,577,280
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,921,914
<NET-ASSETS> 68,312,920
<DIVIDEND-INCOME> 515,991
<INTEREST-INCOME> 2,541,077
<OTHER-INCOME> 0
<EXPENSES-NET> 668,459
<NET-INVESTMENT-INCOME> 2,388,609
<REALIZED-GAINS-CURRENT> 1,792,344
<APPREC-INCREASE-CURRENT> 6,797,361
<NET-CHANGE-FROM-OPS> 10,978,314
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,589,524
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,678,939
<NUMBER-OF-SHARES-REDEEMED> 772,807
<SHARES-REINVESTED> 72,763
<NET-CHANGE-IN-ASSETS> 63,745,452
<ACCUMULATED-NII-PRIOR> 252,009
<ACCUMULATED-GAINS-PRIOR> (61,697)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 434,181
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,107,559
<AVERAGE-NET-ASSETS> 58,592,267
<PER-SHARE-NAV-BEGIN> 9.820
<PER-SHARE-NII> 0.400
<PER-SHARE-GAIN-APPREC> 1.700
<PER-SHARE-DIVIDEND> 0.400
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 11.520
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 032
<NAME> Managed Series Trust
Federated Managed Growth Fund
Select Shares
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Nov-30-1995
<PERIOD-END> Nov-30-1995
<INVESTMENTS-AT-COST> 89,469,509
<INVESTMENTS-AT-VALUE> 95,014,668
<RECEIVABLES> 1,624,600
<ASSETS-OTHER> 135,188
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 96,774,456
<PAYABLE-FOR-SECURITIES> 466,002
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 637,839
<TOTAL-LIABILITIES> 1,103,841
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 87,285,933
<SHARES-COMMON-STOCK> 2,379,438
<SHARES-COMMON-PRIOR> 301,010
<ACCUMULATED-NII-CURRENT> 885,488
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,577,280
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,921,914
<NET-ASSETS> 27,357,695
<DIVIDEND-INCOME> 515,991
<INTEREST-INCOME> 2,541,077
<OTHER-INCOME> 0
<EXPENSES-NET> 668,459
<NET-INVESTMENT-INCOME> 2,388,609
<REALIZED-GAINS-CURRENT> 1,792,344
<APPREC-INCREASE-CURRENT> 6,797,361
<NET-CHANGE-FROM-OPS> 10,978,314
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 320,621
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,233,281
<NUMBER-OF-SHARES-REDEEMED> 177,462
<SHARES-REINVESTED> 22,609
<NET-CHANGE-IN-ASSETS> 63,745,452
<ACCUMULATED-NII-PRIOR> 252,009
<ACCUMULATED-GAINS-PRIOR> (61,697)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 434,181
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,107,559
<AVERAGE-NET-ASSETS> 58,592,267
<PER-SHARE-NAV-BEGIN> 9.810
<PER-SHARE-NII> 0.230
<PER-SHARE-GAIN-APPREC> 1.790
<PER-SHARE-DIVIDEND> 0.330
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 11.500
<EXPENSE-RATIO> 1.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 041
<NAME> Managed Series Trust
Federated Managed Aggressive Growth Fund
Institutional Shares
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Nov-30-1995
<PERIOD-END> Nov-30-1995
<INVESTMENTS-AT-COST> 35,356,167
<INVESTMENTS-AT-VALUE> 37,789,085
<RECEIVABLES> 629,559
<ASSETS-OTHER> 88,939
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 38,507,583
<PAYABLE-FOR-SECURITIES> 282,297
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 271,796
<TOTAL-LIABILITIES> 554,093
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 34,324,214
<SHARES-COMMON-STOCK> 2,209,617
<SHARES-COMMON-PRIOR> 1,597,720
<ACCUMULATED-NII-CURRENT> 342,257
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 608,988
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,678,031
<NET-ASSETS> 25,611,107
<DIVIDEND-INCOME> 239,488
<INTEREST-INCOME> 841,801
<OTHER-INCOME> 0
<EXPENSES-NET> 286,327
<NET-INVESTMENT-INCOME> 794,962
<REALIZED-GAINS-CURRENT> 651,763
<APPREC-INCREASE-CURRENT> 3,244,417
<NET-CHANGE-FROM-OPS> 4,691,142
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 547,698
<DISTRIBUTIONS-OF-GAINS> 28,086
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,317,111
<NUMBER-OF-SHARES-REDEEMED> 744,515
<SHARES-REINVESTED> 39,301
<NET-CHANGE-IN-ASSETS> 20,584,735
<ACCUMULATED-NII-PRIOR> 120,335
<ACCUMULATED-GAINS-PRIOR> 63,908
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 183,693
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 704,249
<AVERAGE-NET-ASSETS> 24,866,762
<PER-SHARE-NAV-BEGIN> 9.820
<PER-SHARE-NII> 0.350
<PER-SHARE-GAIN-APPREC> 1.770
<PER-SHARE-DIVIDEND> 0.330
<PER-SHARE-DISTRIBUTIONS> 0.020
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 11.590
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 042
<NAME> Managed Series Trust
Federated Managed Aggressive Growth Fund
Select Shares
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Nov-30-1995
<PERIOD-END> Nov-30-1995
<INVESTMENTS-AT-COST> 35,356,167
<INVESTMENTS-AT-VALUE> 37,789,085
<RECEIVABLES> 629,559
<ASSETS-OTHER> 88,939
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 38,507,583
<PAYABLE-FOR-SECURITIES> 282,297
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 271,796
<TOTAL-LIABILITIES> 554,093
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 34,324,214
<SHARES-COMMON-STOCK> 1,065,312
<SHARES-COMMON-PRIOR> 170,737
<ACCUMULATED-NII-CURRENT> 342,257
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 608,988
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,678,031
<NET-ASSETS> 12,342,383
<DIVIDEND-INCOME> 239,488
<INTEREST-INCOME> 841,801
<OTHER-INCOME> 0
<EXPENSES-NET> 286,327
<NET-INVESTMENT-INCOME> 794,962
<REALIZED-GAINS-CURRENT> 651,763
<APPREC-INCREASE-CURRENT> 3,244,417
<NET-CHANGE-FROM-OPS> 4,691,142
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 101,587
<DISTRIBUTIONS-OF-GAINS> 3,092
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 970,853
<NUMBER-OF-SHARES-REDEEMED> 83,687
<SHARES-REINVESTED> 7,409
<NET-CHANGE-IN-ASSETS> 20,584,735
<ACCUMULATED-NII-PRIOR> 120,335
<ACCUMULATED-GAINS-PRIOR> 63,908
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 183,693
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 704,249
<AVERAGE-NET-ASSETS> 24,866,762
<PER-SHARE-NAV-BEGIN> 9.800
<PER-SHARE-NII> 0.170
<PER-SHARE-GAIN-APPREC> 1.890
<PER-SHARE-DIVIDEND> 0.250
<PER-SHARE-DISTRIBUTIONS> 0.020
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 11.590
<EXPENSE-RATIO> 1.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 021
<NAME> Managed Series Trust
Federated Managed Growth and Income Fund
Institutional Shares
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Nov-30-1995
<PERIOD-END> Nov-30-1995
<INVESTMENTS-AT-COST> 120,985,908
<INVESTMENTS-AT-VALUE> 126,905,232
<RECEIVABLES> 2,244,794
<ASSETS-OTHER> 119,648
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 129,269,674
<PAYABLE-FOR-SECURITIES> 352,976
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 414,780
<TOTAL-LIABILITIES> 767,756
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 119,471,067
<SHARES-COMMON-STOCK> 9,308,790
<SHARES-COMMON-PRIOR> 4,447,084
<ACCUMULATED-NII-CURRENT> 1,288,552
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,612,126
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6,130,173
<NET-ASSETS> 103,714,993
<DIVIDEND-INCOME> 640,159
<INTEREST-INCOME> 4,300,586
<OTHER-INCOME> 0
<EXPENSES-NET> 893,472
<NET-INVESTMENT-INCOME> 4,047,273
<REALIZED-GAINS-CURRENT> 2,155,646
<APPREC-INCREASE-CURRENT> 6,986,534
<NET-CHANGE-FROM-OPS> 13,189,453
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,937,306
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,226,565
<NUMBER-OF-SHARES-REDEEMED> 1,487,709
<SHARES-REINVESTED> 122,850
<NET-CHANGE-IN-ASSETS> 81,011,640
<ACCUMULATED-NII-PRIOR> 455,224
<ACCUMULATED-GAINS-PRIOR> (447,919)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 606,491
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,338,813
<AVERAGE-NET-ASSETS> 80,912,356
<PER-SHARE-NAV-BEGIN> 9.850
<PER-SHARE-NII> 0.500
<PER-SHARE-GAIN-APPREC> 1.280
<PER-SHARE-DIVIDEND> 0.490
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 11.140
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 022
<NAME> Managed Series Trust
Federated Managed Growth and Income Fund
Select Shares
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Nov-30-1995
<PERIOD-END> Nov-30-1995
<INVESTMENTS-AT-COST> 120,985,908
<INVESTMENTS-AT-VALUE> 126,905,232
<RECEIVABLES> 2,244,794
<ASSETS-OTHER> 119,648
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 129,269,674
<PAYABLE-FOR-SECURITIES> 352,976
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 414,780
<TOTAL-LIABILITIES> 767,756
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 119,471,067
<SHARES-COMMON-STOCK> 2,228,749
<SHARES-COMMON-PRIOR> 376,032
<ACCUMULATED-NII-CURRENT> 1,288,552
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,612,126
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6,130,173
<NET-ASSETS> 24,786,925
<DIVIDEND-INCOME> 640,159
<INTEREST-INCOME> 4,300,586
<OTHER-INCOME> 0
<EXPENSES-NET> 893,472
<NET-INVESTMENT-INCOME> 4,047,273
<REALIZED-GAINS-CURRENT> 2,155,646
<APPREC-INCREASE-CURRENT> 6,986,534
<NET-CHANGE-FROM-OPS> 13,189,453
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 373,022
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,065,372
<NUMBER-OF-SHARES-REDEEMED> 238,977
<SHARES-REINVESTED> 26,322
<NET-CHANGE-IN-ASSETS> 81,011,640
<ACCUMULATED-NII-PRIOR> 455,224
<ACCUMULATED-GAINS-PRIOR> (447,919)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 606,491
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,338,813
<AVERAGE-NET-ASSETS> 80,912,356
<PER-SHARE-NAV-BEGIN> 9.830
<PER-SHARE-NII> 0.370
<PER-SHARE-GAIN-APPREC> 1.340
<PER-SHARE-DIVIDEND> 0.420
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 11.120
<EXPENSE-RATIO> 1.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 011
<NAME> Managed Series Trust
Federated Managed Income Fund
Institutional Shares
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Nov-30-1995
<PERIOD-END> Nov-30-1995
<INVESTMENTS-AT-COST> 62,013,889
<INVESTMENTS-AT-VALUE> 63,870,969
<RECEIVABLES> 1,099,599
<ASSETS-OTHER> 60,802
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 65,031,370
<PAYABLE-FOR-SECURITIES> 48,158
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 203,640
<TOTAL-LIABILITIES> 251,798
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 62,198,271
<SHARES-COMMON-STOCK> 4,826,791
<SHARES-COMMON-PRIOR> 3,552,816
<ACCUMULATED-NII-CURRENT> 305,359
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 404,304
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,871,638
<NET-ASSETS> 50,852,236
<DIVIDEND-INCOME> 208,643
<INTEREST-INCOME> 3,111,665
<OTHER-INCOME> 0
<EXPENSES-NET> 411,941
<NET-INVESTMENT-INCOME> 2,908,367
<REALIZED-GAINS-CURRENT> 911,082
<APPREC-INCREASE-CURRENT> 2,481,101
<NET-CHANGE-FROM-OPS> 6,300,550
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,431,427
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,449,773
<NUMBER-OF-SHARES-REDEEMED> 1,244,562
<SHARES-REINVESTED> 68,764
<NET-CHANGE-IN-ASSETS> 26,889,659
<ACCUMULATED-NII-PRIOR> 45,969
<ACCUMULATED-GAINS-PRIOR> (329,392)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 354,801
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 911,741
<AVERAGE-NET-ASSETS> 47,736,308
<PER-SHARE-NAV-BEGIN> 9.760
<PER-SHARE-NII> 0.620
<PER-SHARE-GAIN-APPREC> 0.780
<PER-SHARE-DIVIDEND> 0.620
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 10.540
<EXPENSE-RATIO> 0.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 012
<NAME> Managed Series Trust
Federated Managed Income Fund
Select Shares
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Nov-30-1995
<PERIOD-END> Nov-30-1995
<INVESTMENTS-AT-COST> 62,013,889
<INVESTMENTS-AT-VALUE> 63,870,969
<RECEIVABLES> 1,099,599
<ASSETS-OTHER> 60,802
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 65,031,370
<PAYABLE-FOR-SECURITIES> 48,158
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 203,640
<TOTAL-LIABILITIES> 251,798
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 62,198,271
<SHARES-COMMON-STOCK> 1,321,986
<SHARES-COMMON-PRIOR> 327,436
<ACCUMULATED-NII-CURRENT> 305,359
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 404,304
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,871,638
<NET-ASSETS> 13,927,236
<DIVIDEND-INCOME> 208,643
<INTEREST-INCOME> 3,111,665
<OTHER-INCOME> 0
<EXPENSES-NET> 411,941
<NET-INVESTMENT-INCOME> 2,908,367
<REALIZED-GAINS-CURRENT> 911,082
<APPREC-INCREASE-CURRENT> 2,481,101
<NET-CHANGE-FROM-OPS> 6,300,550
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 394,936
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,144,376
<NUMBER-OF-SHARES-REDEEMED> 168,971
<SHARES-REINVESTED> 19,145
<NET-CHANGE-IN-ASSETS> 26,889,659
<ACCUMULATED-NII-PRIOR> 45,969
<ACCUMULATED-GAINS-PRIOR> (329,392)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 354,801
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 911,741
<AVERAGE-NET-ASSETS> 47,736,308
<PER-SHARE-NAV-BEGIN> 9.770
<PER-SHARE-NII> 0.480
<PER-SHARE-GAIN-APPREC> 0.830
<PER-SHARE-DIVIDEND> 0.540
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 10.540
<EXPENSE-RATIO> 1.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
