FEDERATED MANAGED AGGRESSIVE GROWTH FUND
Lifecycle Investing
MANAGED SERIES TRUST
From Federated Investors
INSTITUTIONAL SHARES
Federated Managed Aggressive 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.
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FEDERATED SECURITIES CORP.
Distributor
A subsidiary of Federated Investors
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Recycled Paper
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
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SUMMARY OF FUND EXPENSES 1
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FINANCIAL HIGHLIGHTS--INSTITUTIONAL 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 Institutional Shares 19
Administration of the Fund 19
Brokerage Transactions 20
NET ASSET VALUE 20
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INVESTING IN INSTITUTIONAL SHARES 20
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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
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Through a Financial Institution 23
Telephone Redemption 23
Written Requests 23
Systematic Withdrawal Program 24
Accounts with Low Balances 24
SHAREHOLDER INFORMATION 25
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Voting Rights 25
TAX INFORMATION 25
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Federal Income Tax 25
State and Local Taxes 25
PERFORMANCE INFORMATION 25
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OTHER CLASSES OF SHARES 26
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FINANCIAL HIGHLIGHTS--SELECT SHARES 27
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FINANCIAL STATEMENTS 28
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 62
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APPENDIX 63
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ADDRESSES 66
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SUMMARY OF FUND EXPENSES
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<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)
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(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
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INCOME FROM INVESTMENT OPERATIONS
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Net investment income 0.35 0.17
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Net realized and unrealized gain (loss) on investments,
foreign currency, and futures contracts 1.77 (0.25)
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Total from investment operations 2.12 (0.08)
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LESS DISTRIBUTIONS
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Distributions from net investment income (0.33) (0.10)
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Distributions from net realized gain on investments,
foreign currency transactions, and futures contracts (0.02) --
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Total distributions (0.35) (0.10)
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NET ASSET VALUE, END OF PERIOD $ 11.59 $ 9.82
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TOTAL RETURN (B) 21.96% (0.87%)
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RATIOS TO AVERAGE NET ASSETS
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Expenses 1.00% 0.89%*
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Net investment income 3.42% 3.42%*
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Expense waiver/reimbursement 1.71%(c) 1.72%*(d)
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SUPPLEMENTAL DATA
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Net assets, end of period (000 omitted) $25,611 $15,696
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Portfolio turnover 139% 77%
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</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
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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
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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
- --------------------------------------------------------------------------------
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 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
<CAPTION>
- -------------------------------------------------------------------------------------------------
<C> <S> <C>
(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
<CAPTION>
- -------------------------------------------------------------------------------------------------
<C> <S> <C>
(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
<CAPTION>
- -------------------------------------------------------------------------------------------------
<C> <S> <C>
(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
<CAPTION>
- -------------------------------------------------------------------------------------------------
<C> <S> <C>
(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
<CAPTION>
- -------------------------------------------------------------------------------------------------
<C> <S> <C>
(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
<CAPTION>
- -------------------------------------------------------------------------------------------------
<C> <S> <C>
(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
<CAPTION>
- -------------------------------------------------------------------------------------------------
<C> <S> <C>
(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
<CAPTION>
- -------------------------------------------------------------------------------------------------
<C> <S> <C>
(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
<CAPTION>
- -------------------------------------------------------------------------------------------------
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
<CAPTION>
- -------------------------------------------------------------------------------------------------
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
<CAPTION>
- -------------------------------------------------------------------------------------------------
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
<CAPTION>
- -------------------------------------------------------------------------------------------------
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
<CAPTION>
- -------------------------------------------------------------------------------------------------
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
<CAPTION>
- -------------------------------------------------------------------------------------------------
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
<CAPTION>
- -------------------------------------------------------------------------------------------------
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
<CAPTION>
- -------------------------------------------------------------------------------------------------
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
--------------------------------------------------------------------------------- -------------
<CAPTION>
FOREIGN
CURRENCY
PAR
AMOUNT
- -------------- ---------------------------------------------------------------------------------
<C> <S> <C>
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. 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 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)
INSTITUTIONAL SHARES SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
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)
SELECT SHARES SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
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
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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
- --------------------------------------------------------------------------------
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
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Sub-Adviser
Federated Global Research Corp.
175 Water Street
New York, NY 10038-4965
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Custodian
State Street Bank and Trust Company
P.O. Box 8600
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
- -------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP
2100 One PPG Place
Pittsburgh, Pennsylvania 15222
- ------------------------------------------------------------------------------
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-IS (1/96)
[LOGO]
