1933 Act File No. 33-51247
1940 Act File No. 811-7129
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No. ..........
Post-Effective Amendment No. 6 ............ X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 7 ........................... X
MANAGED SERIES TRUST
(Exact Name of Registrant as Specified in Charter)
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
John W. McGonigle, Esquire,
Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
X on January 31, 1997 pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a) (i)
on pursuant to paragraph (a) (i)
75 days after filing pursuant to paragraph (a)(ii)
on pursuant to paragraph (a)(ii) of Rule 485
-----------------
If appropriate, check the following box:
This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has filed with the Securities and Exchange Commission a
declaration pursuant to Rule 24f-2 under the Investment Company Act of
1940, and:
X filed the Notice required by that Rule on January 15, 1997; or
intends to file the Notice required by that Rule on or about; or
during the most recent fiscal year did not sell any securities pursuant
to Rule 24f-2 under the Investment Company Act of 1940, and, pursuant
to Rule 24f-2(b)(2), need not file the Notice.
Copies to: Matthew G. Maloney, Esquire
Dickstein Shapiro Morin & Oshinsky LLP
2101 L. Street, N.W.
Washington, DC 20037
CROSS-REFERENCE SHEET
This Amendment to the Registration Statement of MANAGED SERIES TRUST
(formerly, Allocation Series Trust), which consists of four portfolios: (1)
Federated Managed Income Fund (formerly, Managed Income Fund), (2)
Federated Managed Growth and Income Fund (formerly, Managed Growth and
Income Fund), (3) Federated Managed Growth Fund (formerly, Managed Growth
Fund), and (4) Federated Managed Aggressive Growth Fund (formerly, Managed
Aggressive Growth Fund), each having two classes of shares, (a)
Institutional Shares and (b) Select Shares, is comprised of the following:
PART A. INFORMATION REQUIRED IN A PROSPECTUS.
Prospectus Heading
(Rule 404(c) Cross Reference)
Item 1. Cover Page...............(1-4) Cover Page.
Item 2. Synopsis.................(1-4) Summary of Fund Expenses.
Item 3. Condensed Financial
Information..............(1-4) Financial Highlights; (1-4)
Performance Information.
Item 4. General Description of
Registrant...............(1-4) General Information; (1-4)
Investment Information; (1-4) Investment
Objective; (1-4) Investment Policies;
(1-4) Acceptable Investments; (1-4)
Investment Limitations.
Item 5. Management of the Fund...(1-4) Trust Information; (1-4)
Management of the Trust; (1-4)
Administration of the Fund; (1-4)
Administrative Services; (1-4) Brokerage
Transactions.
Item 6. Capital Stock and Other
Securities...............(1-4) Dividends; (1-4) Capital Gains;
(1-4) Shareholder Information; (1-4)
Voting Rights; (1-4) Tax Information;
(1-4) Federal Income Tax; (1-4) State
and Local Taxes; (1-4) Other Classes of
Shares.
Item 7. Purchase of Securities Being
Offered..................(1-4) Net Asset Value; (1a-4a) Investing
in Institutional Shares; (1b-4b)
Investing in Select Shares; (1-4) Share
Purchases; (1-4) Minimum Investment
Required; (1-4) What Shares Cost; (1-4)
Subaccounting Services; (1a-4a)
Distribution of Institutional Shares;
(1b-4b) Distribution of Select Shares;
(1a-4a) Shareholder Services; (1b-4b)
Distribution Plan and Shareholder
Services; (1-4) Other Payments to
Financial Institutions; (1-4) Systematic
Investment Plan; (1-4) Certificates and
Confirmations.
Item 8. Redemption or Repurchase.(1a-4a) Redeeming Institutional Shares;
(1b-4b) Redeeming Select Shares; (1-4)
Through a Financial Institution; (1-4)
Telephone Redemption; (1-4) Written
Requests; (1-4) Systematic Withdrawal
Program; (1-4) Accounts with Low
Balances.
Item 9. Pending Legal Proceedings None.
PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION.
Item 10. Cover Page...............(1-4) Cover Page.
Item 11. Table of Contents........(1-4) Table of Contents.
Item 12. General Information and
History..................(1-4) General Information About the
Trust.
Item 13. Investment Objectives and
Policies.................(1-4) Investment Objectives and
Policies; (1-4) Investment Limitations.
Item 14. Management of the Fund...(1-4) Managed Series Trust Management.
Item 15. Control Persons and Principal
Holders of Securities....(1-4) Trust Ownership.
Item 16. Investment Advisory and Other
Services.................(1-4) Investment Advisory Services; (1-
4) Other Services.
Item 17. Brokerage Allocation.....(1-4) Brokerage Transactions.
Item 18. Capital Stock and Other
Securities...............(1-4) Massachusetts Partnership Law.
Item 19. Purchase, Redemption and
Pricing of Securities
Being Offered............(1-4) Purchasing Shares; (1-4)
Determining Net Asset Value; (1-4)
Redeeming Shares.
Item 20. Tax Status...............(1-4) Tax Status.
Item 21. Underwriters.............(1-4) Distribution Plan and Shareholder
Services.
Item 22. Calculation of Performance
Data.....................(1-4) Total Return; (1-4) Yield;
(1-4) Performance Comparisons.
Item 23. Financial Statements (1-4) Filed in Part A.
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
(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, 1997,
with the Securities and Exchange Commission ("SEC"). The information contained
in the Statement of Additional Information is incorporated by reference into
this prospectus. You may request a copy of the Statement of Additional
Information or a paper copy of this prospectus, if you have received your
prospectus electronically, free of charge by calling 1-800-341-7400. To obtain
other information or to make inquiries about the Fund, contact the Fund at the
address listed in the back of this prospectus. The Statement of Additional
Information, material incorporated by reference into this document, and other
information regarding the Fund are maintained electronically with the SEC at
Internet Web site (http:// www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
Prospectus dated January 31, 1997
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--
INSTITUTIONAL SHARES 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Investment Limitations 14
TRUST INFORMATION 15
- ------------------------------------------------------
Management of the Trust 15
Distribution of Institutional Shares 19
Administration of the Fund 19
Brokerage Transactions 20
NET ASSET VALUE 20
- ------------------------------------------------------
INVESTING IN INSTITUTIONAL SHARES 20
- ------------------------------------------------------
Share Purchases 20
Minimum Investment Required 21
What Shares Cost 21
Systematic Investment Program 22
Certificates and Confirmations 22
Dividends 22
Capital Gains 22
REDEEMING INSTITUTIONAL SHARES 22
- ------------------------------------------------------
Through a Financial Institution 22
Telephone Redemption 23
Written Requests 23
Systematic Withdrawal Program 24
Accounts with Low Balances 24
SHAREHOLDER INFORMATION 24
- ------------------------------------------------------
Voting Rights 24
TAX INFORMATION 24
- ------------------------------------------------------
Federal Income Tax 24
State and Local Taxes 25
PERFORMANCE INFORMATION 25
- ------------------------------------------------------
OTHER CLASSES OF SHARES 25
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--SELECT SHARES 26
- ------------------------------------------------------
FINANCIAL STATEMENTS 27
- ------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 78
- ------------------------------------------------------
APPENDIX 79
- ------------------------------------------------------
ADDRESSES 82
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price)............................ None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price).................................................................... None
Contingent Deferred Sales Charge (as a percentage of original purchase
price or redemption proceeds, as applicable)........................................................... None
Redemption Fee (as a percentage of amount redeemed, if applicable)....................................... None
Exchange Fee............................................................................................. None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver) (1)........................................................................ 0.07%
12b-1 Fee................................................................................................ None
Total Other Expenses..................................................................................... 0.93%
Shareholder Services Fee (after waiver) (2).............................................. 0.05%
Total Operating Expenses (3)................................................................... 1.00%
</TABLE>
- ------------
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.75%.
(2) The shareholder services fee has been reduced to reflect the voluntary
waiver of a portion of the shareholders services fee. The shareholder
service provider can terminate this voluntary waiver at any time at its sole
discretion. The maximum shareholder services fee is 0.25%.
(3) The total operating expenses in the table above are based on expenses
expected during the fiscal year ending November 30, 1997. The total
operating expenses were 1.05% for the fiscal year ended November 30, 1996
and would have been 1.93% absent the voluntary waivers of portions of the
management fee and shareholder services fee.
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of Institutional Shares of the
Fund will bear, either directly or indirectly. For more complete descriptions of
the various costs and expenses, see "Investing in Institutional Shares" and
"Trust Information." Wire-transferred redemptions of less than $5,000 may be
subject to additional fees.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment assuming
(1) 5% annual return and (2) redemption at the end of each time
period................................................................ $10 $32 $55 $122
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 78.
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1996 1995 1994(A)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.59 $ 9.82 $ 10.00
- -----------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------
Net investment income 0.33 0.35 0.17
- -----------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments, foreign currency, and
futures contracts 1.24 1.77 (0.25)
- ----------------------------------------------------------------------------------- --------- --------- -----------
Total from investment operations 1.57 2.12 (0.08)
- ----------------------------------------------------------------------------------- --------- --------- -----------
LESS DISTRIBUTIONS
- -----------------------------------------------------------------------------------
Distributions from net investment income (0.38) (0.33) (0.10)
- -----------------------------------------------------------------------------------
Distributions from net realized gain on investments,
foreign currency transactions, and futures contracts (0.26) (0.02) --
- ----------------------------------------------------------------------------------- --------- --------- -----------
Total distributions (0.64) (0.35) (0.10)
- ----------------------------------------------------------------------------------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 12.52 $ 11.59 $ 9.82
- ----------------------------------------------------------------------------------- --------- --------- -----------
TOTAL RETURN (B) 14.13% 21.96% (0.87%)
- -----------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------------------------------
Expenses 1.05% 1.00% 0.89%*
- -----------------------------------------------------------------------------------
Net investment income 2.96% 3.42% 3.42%*
- -----------------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.88% 1.71% 1.72%*(d)
- -----------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $49,715 $25,611 $15,696
- -----------------------------------------------------------------------------------
Average commission rate paid $0.0037
- -----------------------------------------------------------------------------------
Portfolio turnover 86% 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 Advisor 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.
Further information about the Fund's performance is contained in the Fund's
annual report for the fiscal year ended November 30, 1996, which can be obtained
free of charge.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated November 15, 1993. The Declaration of Trust permits the Trust to
offer separate series of shares of beneficial interest representing interest in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. As of the date of this prospectus, the Board of
Trustees ("Trustees") have established two classes of shares of the Fund, known
as Institutional Shares and Select Shares. This prospectus relates only to
Institutional Shares.
Institutional Shares ("Shares") of the Fund are designed to give institutions,
individuals, and financial institutions acting in a fiduciary or agency capacity
a convenient means of accumulating an interest in a professionally managed,
diversified investment portfolio. A minimum initial investment of $25,000 over a
90-day period is required.
Shares are currently sold and redeemed at net asset value without a sales charge
imposed by the Fund.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is to seek capital appreciation. There can
be, of course, no assurance that the Fund will achieve its investment objective.
The Fund's investment objective cannot be changed without the approval of
shareholders. Unless otherwise noted, the Fund's investment policies may be
changed by the Trustees without shareholder approval.
INVESTMENT POLICIES
ASSET ALLOCATION. The Fund will primarily invest in two types of assets:
equities and bonds. The Fund's investment approach is based on the conviction
that, over time, the choice of investment asset categories and their relative
long-term weightings within the portfolio will have the primary impact on its
investment performance. Of secondary importance to the Fund's performance are
the shifting of money among asset categories and the selection of securities
within asset categories. Therefore, the Fund will pursue its investment
objective in the following manner: (1) by setting long-term ranges for each
asset category; (2) by moving money among asset categories within those defined
ranges; and (3) by actively selecting securities within each of the asset
categories. The Fund attempts to minimize risk by allocating its assets in such
a fashion.
Within each of these types of investments, the Fund has designated asset
categories. As a matter of investment policy, ranges have been set for each
asset category's portfolio commitment.
The Fund will invest between 60 and 100 percent of its assets in equities. The
equities asset categories are large company stocks, small company stocks,
foreign stocks, and equity reserves.
The Fund will invest between 0 and 40 percent of its assets in bonds. The
Fund's adviser believes that bonds offer opportunities for growth of capital or
otherwise may be desirable under prevailing market or economic conditions. The
bond asset categories are U.S. Treasury securities, mortgage- backed
securities, investment-grade corporate bonds, high yield corporate bonds and
foreign bonds.
The following is a summary of the asset categories and the amount of the Fund's
total assets which may be invested in each asset category:
<TABLE>
<CAPTION>
ASSET CATEGORY RANGE
<S> <C>
EQUITIES 60-100%
Large Cap Stocks 0-100%
Small Cap Stocks 0-40%
Foreign Equities 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. The Fund invests in non-U.S. equity securities. A
substantial portion of these will be equity securities of established
companies in economically developed countries. 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 securites. The average duration of the Fund's Bond Assets
will be not less than three nor more than nine years. Duration is a commonly
used measure of the potential volatility of the price of a debt security, or
the aggregate market value of a portfolio of debt securities, prior to
maturity. Securities with shorter durations generally have less volatile prices
than securities of comparable quality with longer durations. The Fund should be
expected to maintain a higher average duration during periods of lower expected
market volatility, and a lower average duration during periods of higher
expected market volatility.
U.S. TREASURY SECURITIES. U.S. Treasury securities are direct obligations
of the U.S. Treasury, such as U.S. Treasury bills, notes, and bonds. The
Fund may invest up to 32.5 percent of its total assets in U.S. Treasury
securities. The Fund may invest in other U.S. government securities if, in
the judgment of the adviser, other U.S. government securities are more
attractive than U.S. Treasury securities.
MORTGAGE-BACKED SECURITIES. Mortgage-backed securities represent an
undivided interest in a pool of residential mortgages or may be
collateralized by a pool of residential mortgages. Mortgage-backed
securities are generally either issued or guaranteed by the Government
National Mortgage Association ("GNMA"), Federal National Mortgage
Association ("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC") or
other U.S. government agencies or instrumentalities. Mortgage-backed
securities may also be issued by single-purpose, stand-alone finance
subsidiaries or trusts of financial institutions, government agencies,
investment bankers, or companies related to the construction industry. The
Fund may invest up to 12.5 percent of its total assets in mortgage-backed
securities.
INVESTMENT-GRADE CORPORATE BONDS. Investment-grade corporate bonds are
corporate debt obligations having fixed or floating rates of interest and
which are rated BBB or higher by a nationally recognized statistical rating
organization ("NRSRO"). The Fund may invest up to 12.5 percent of its total
assets in investment-grade corporate bonds. In certain cases, the Fund's
adviser may choose bonds which are unrated if it determines that such bonds
are of comparable quality or have similar characteristics to the
investment-grade bonds described above. Yankee bonds, which are U.S.
dollar-denominated bonds issued and traded in the United States by foreign
issuers, are treated as investment-grade corporate bonds for purposes of
the asset category ranges.
HIGH YIELD CORPORATE BONDS. High yield corporate bonds are corporate debt
obligations having fixed or floating rates of interest and which are rated
BB or lower by NRSROs (commonly known as junk bonds). The Fund may invest
up to 16 percent of its total assets in high yield corporate bonds. There
is no minimal acceptable rating for a security to be purchased or held in
the Fund's portfolio, and the Fund may, from time to time, purchase or hold
securities rated in the lowest rating category. (See "Appendix.") In
certain cases the Fund's adviser may choose bonds which are unrated if it
determines that such bonds are of comparable quality or have similar
characteristics to the high yield bonds described above.
INVESTMENT RISKS. Lower-rated securities will usually offer higher
yields than higher-rated securities. However, there is more risk
associated with these investments. This is because of reduced
creditworthiness and increased risk of default. Lower-rated securities
generally tend to reflect short-term corporate and market developments
to a greater extent than higher-rated securities which react primarily
to fluctuations in the general level of interest rates. Short-term
corporate and market developments affecting the price or liquidity of
lower-rated securities could include adverse news affecting major
issuers, underwriters, or dealers of lower-rated corporate debt
obligations. In addition, since there are fewer investors in
lower-rated securities, it may be harder to sell the securities at an
optimum time. As a result of these factors, lower-rated securities
tend to have more price volatility and carry more risk to principal
than higher-rated securities.
Many corporate debt obligations, including many lower-rated bonds,
permit the issuers to call the security and thereby redeem their
obligations earlier than the stated maturity dates. Issuers are more
likely to call bonds during periods of declining interest rates. In
these cases, if the Fund owns a bond which is called, the Fund will
receive its return of principal earlier than expected and would likely
be required to reinvest the proceeds at lower interest rates, thus
reducing income to the Fund.
FOREIGN BONDS. Foreign bonds are high-quality debt securities of countries
other than the United States. The Fund's portfolio of foreign bonds will be
comprised mainly of foreign government, foreign governmental agency or
supranational institution bonds. The Fund will also invest in high-quality
debt securities issued by established corporations located primarily in
economically developed 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 would 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;
notes, bonds, and discount notes issued or guaranteed by U.S. government
agencies and instrumentalities supported by the full faith and credit of
the United States;
notes, bonds, and discount notes of U.S. government agencies or
instrumentalities which receive or have access to federal funding;
and notes, bonds, and discount notes of other U.S. government
instrumentalities supported only by the credit of the instrumentalities.
The Fund may also purchase U.S. Treasury securities and the U.S. government
securities noted above pursuant to repurchase agreements.
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. Under criteria
established by the Trustees, certain restricted securities are determined to be
liquid. To the extent that restricted securities are not determined to be
liquid, the Fund will limit their purchase, together with other illiquid
securities including 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.
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.
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.
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.
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 consideration when the Fund's adviser deems it appropriate
to make changes in the Fund's portfolio.
INVESTMENT LIMITATIONS
The Fund will not:
borrow money directly or through reverse repurchase agreements or pledge
securities except, under certain circumstances, the Fund may borrow up to
one-third of the value of its total assets and pledge up to 15 percent of
the value of those assets to secure such borrowings;
lend any securities except for portfolio securities; or
underwrite any issue of securities, except as it may be deemed to be an
underwriter under the Securities Act of 1933 in connection with the sale
of restricted securities which the Fund may purchase pursuant to its
investment objective, policies and limitations.
The above investment limitations cannot be changed without shareholder approval.
TRUST INFORMATION
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MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Trust's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. The Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Except as noted below with regard to the sub-adviser,
investment decisions for the Fund are made by Federated Management, the Fund's
investment adviser (the "Adviser"), subject to direction by the Trustees. The
Adviser continually conducts investment research and supervision for the Fund
and is responsible for the purchase or sale of portfolio instruments, for which
it receives an annual fee from the Fund.
ADVISORY FEES. The Adviser receives an annual investment advisory fee
equal to.75% of 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.
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.
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 $76
billion invested across more than 338 funds under management and/or
administration by its subsidiaries, as of December 31, 1996, Federated Investors
is one of the largest mutual fund investment managers in the United States. With
more than 2,000 employees, Federated continues to be led by the management who
founded the company in 1955. Federated funds are presently at work in and
through 4,500 financial institutions nationwide.
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 Investment Strategy Committee. 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:
Scott B. Schermerhorn and Peter R. Anderson are the portfolio managers for
the domestic large company stocks asset category.
Scott B. Schermerhorn has been the Fund's portfolio manager since July 1,
1996. Mr. Schermerhorn joined Federated Investors in 1996 as a Vice
President of the Fund's Adviser. From 1990 through 1996, Mr. Schermerhorn
was a Senior Vice President and Senior Investment Officer at J W Seligman &
Co., Inc. Mr. Schermerhorn received his M.B.A. in Finance and International
Business from Seton Hall University.
Peter R. Anderson has been the Fund's portfolio manager since the Fund's
inception. 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.
Aash M. Shah and James E. Grefenstette are the portfolio managers for the
domestic small company stocks asset category.
Aash M. Shah has been the Fund's portfolio manager since December 1995. 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. in Industrial Administration
from Carnegie Mellon University with a concentration in finance and
accounting. Mr. Shah is a Chartered Financial Analyst.
James E. Grefenstette has been the Fund's portfolio manager since August
1994. Mr. Grefenstette joined Federated Investors in 1992 and has been a
Vice President since July 1996. Mr. Grefenstette served as an Assistant
Vice President of the Fund's Adviser from 1994 to 1996, and an investment
analyst from 1992 to 1994. Mr. Grefenstette was a credit analyst at
Westinghouse Credit Corp. from 1990 until 1992. Mr. Grefenstette received
his M.S. in Industrial Administration from Carnegie Mellon University.
Henry A. Frantzen, Drew J. Collins, Mark S. Kopinski, Frank Semack, and
Alexandre de Bethmann are portfolio managers for the foreign stocks asset
category.
Henry A. Frantzen has been the Fund's portfolio manager 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.
Drew J. Collins has been the Fund's portfolio manager 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 the Fund's portfolio manager 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 the Fund's portfolio manager 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 1980 to 1993. Mr. Semack
received his M.Sc. in economics from the London School of Economics.
Alexandre de Bethmann has been the Fund's portfolio manager 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 A. Frantzen, Drew J. Collins, Robert M. Kowit and Micheal W. Casey
are portfolio managers for the foreign bonds asset category. Messrs.
Frantzen, Collins and Kowit 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.
Micheal W. Casey, Ph.D. has been the Fund's portfolio manager since January
1, 1997. Mr. Casey joined Federated Investors in 1996 as an Assistant Vice
President. Mr. Casey served as an International Economist and Portfolio
Strategist for Maria Fiorini Ramirez Inc. from 1990 to 1996. Mr. Casey
earned a Ph.D. concentrating in economics from The New School for Social
Research and a M.Sc. from the London School of Economics.
Susan M. Nason and Joseph M. Balestrino are portfolio managers for the U.S.
Treasury securities asset category.
Susan M. Nason has been the Fund's portfolio manager since the Fund's
inception. 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. in Industrial
Administration from Carnegie Mellon University.
Joseph M. Balestrino has been the Fund's portfolio manager since March
1995. 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. 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. in Industrial Administration from Carnegie Mellon
University.
Kathleen M. Foody-Malus is the portfolio manager for the mortgage-backed
securities asset category. Ms. Foody-Malus has performed this duty since
the Fund's inception. 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.
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 Services Company, a subsidiary of Federated
Investors, provides administrative personnel and services (including certain
legal and financial reporting services) necessary to operate the Fund. Federated
Services Company 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>
.151% on the first $250 million
.125% on the next $250 million
.10% on the next $250 million
.075% 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 Services Company 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 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 utilize those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. In selecting among firms
believed to meet these criteria, the 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 Shareholder 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 Shareholder
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 financial intermediary 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 financial intermediary may be charged an additional service fee
by that financial intermediary.
The net asset value is determined as of the close of trading (normally 4:00
p.m., Eastern time) on the New York Stock Exchange, Monday through Friday,
except on (i) days on which there are not sufficient changes in the value of the
Fund's portfolio securities 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.
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 Shareholder Services Company maintains
a share account for each shareholder. Share certificates are not issued unless
requested by contacting the Fund.
Detailed confirmations of each purchase or redemption are sent to each
shareholder. Quarterly confirmations are sent to report dividends paid during
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. Investors who redeem Shares through a financial
intermediary may be charged a service fee by that financial intermediary.
Redemptions will be made on days on which the Fund computes its net asset value.
Redemption requests must be received in proper form and can be made 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
REDEEMING SHARES BY MAIL. Shares may be redeemed in any amount by mailing a
-
written request to: Federated Shareholder Services Company, P.O. Box 8600,
Boston, MA 02266-8600. If Share certificates have been issued, they should be
sent unendorsed with the written request by registered or certified mail to the
address noted above.
The written request should state: the Fund name and the class designation; the
account name as registered with the Fund; the account number; and the number of
shares to be redeemed or the dollar amount requested. All owners of the account
must sign the request exactly as the shares are registered. Normally, a check
for the proceeds is mailed within one business day, but in no event more than
seven days, after the receipt of a proper written redemption request. Dividends
are paid up to and including the day that a redemption request is processed.
Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Fund or a redemption payable other than to
the shareholder of record must have their signatures guaranteed by a commercial
or savings bank, trust company or savings association whose deposits are insured
by an organization which is administered by the Federal Deposit Insurance
Corporation; a member firm of a domestic stock exchange; 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.
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, other than retirement accounts subject to
required minimum distributions. 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, Donnelly and Meck, counsel to the Trust, Fund shares
may be subject to personal property taxes imposed by counties, municipalities,
and school districts in Pennsylvania to the extent that the portfolio securities
in the Fund would be subject to such taxes if owned directly by residents of
those jurisdictions.
Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its total return and yield for Shares.
Total return represents the change, over a specified period of time, in the
value of an investment in Shares 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 1-800-341-7400.
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 78.
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1996 1995 1994(A)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.59 $ 9.80 $ 10.00
- -----------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------
Net investment income 0.28 0.17 0.13
- -----------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency, and
futures contracts 1.19 1.89 (0.25)
- ----------------------------------------------------------------------------------- --------- --------- -----------
Total from investment operations 1.47 2.06 (0.12)
- ----------------------------------------------------------------------------------- --------- --------- -----------
LESS DISTRIBUTIONS
- -----------------------------------------------------------------------------------
Distributions from net investment income (0.30) (0.25) (0.08)
- -----------------------------------------------------------------------------------
Distributions from net realized gain on investments, foreign currency
transactions, and futures contracts (0.26) (0.02) --
- ----------------------------------------------------------------------------------- --------- --------- -----------
Total distributions (0.56) (0.27) (0.08)
- ----------------------------------------------------------------------------------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 12.50 $ 11.59 $ 9.80
- ----------------------------------------------------------------------------------- --------- --------- -----------
TOTAL RETURN (B) 13.22% 21.36% (1.20%)
- -----------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------------------------------
Expenses 1.75% 1.75% 1.64%*
- -----------------------------------------------------------------------------------
Net investment income 2.26% 2.65% 2.67%*
- -----------------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.93% 1.71% 1.97%*(d)
- -----------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $31,390 $12,342 $1,673
- -----------------------------------------------------------------------------------
Average commission rate paid $0.0037
- -----------------------------------------------------------------------------------
Portfolio turnover 86% 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 Advisor 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.
Further information about the Fund's performance is contained in the Fund's
annual report for the fiscal year ended November 30, 1996, which can be obtained
free of charge.
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--60.1%
- -----------------------------------------------------------------------------------------------
LARGE-CAP STOCKS--25.1%
-------------------------------------------------------------------------------
BASIC INDUSTRY--1.8%
-------------------------------------------------------------------------------
12,400 Allegheny Teledyne, Inc. $ 289,850
-------------------------------------------------------------------------------
4,100 Betz Laboratories, Inc. 237,288
-------------------------------------------------------------------------------
2,200 Du Pont (E.I.) de Nemours & Co. 207,350
-------------------------------------------------------------------------------
4,000 Great Lakes Chemical Corp. 214,500
-------------------------------------------------------------------------------
19,500 LTV Corporation 209,625
-------------------------------------------------------------------------------
7,000 Morton International, Inc. 282,625
------------------------------------------------------------------------------- -------------
Total 1,441,238
------------------------------------------------------------------------------- -------------
CONSUMER DURABLES--1.0%
-------------------------------------------------------------------------------
5,500 General Motors Corp., Class H 299,750
-------------------------------------------------------------------------------
3,000 General Motors Corp. 172,875
-------------------------------------------------------------------------------
3,900 Martin Marietta Materials 91,650
-------------------------------------------------------------------------------
9,000 Rubbermaid, Inc. 216,000
------------------------------------------------------------------------------- -------------
Total 780,275
------------------------------------------------------------------------------- -------------
CONSUMER NON-DURABLES--3.5%
-------------------------------------------------------------------------------
3,700 Avon Products, Inc. 206,275
-------------------------------------------------------------------------------
2,500 CPC International, Inc. 208,125
-------------------------------------------------------------------------------
4,100 Dole Food, Inc., ACES, $2.7475 163,488
-------------------------------------------------------------------------------
3,500 Heinz (H.J.) Co. 132,563
-------------------------------------------------------------------------------
13,300 IBP, Inc. 329,175
-------------------------------------------------------------------------------
2,400 Kimberly-Clark Corp. 234,600
-------------------------------------------------------------------------------
5,250 Philip Morris Cos., Inc. 541,406
-------------------------------------------------------------------------------
5,900 Tambrands, Inc. 252,225
-------------------------------------------------------------------------------
3,100 Unilever N.V. 536,688
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
<CAPTION>
- -----------------------------------------------------------------------------------------------
<C> <S> <C>
LARGE-CAP STOCKS--CONTINUED
-------------------------------------------------------------------------------
CONSUMER NON-DURABLES--CONTINUED
-------------------------------------------------------------------------------
3,100 V.F. Corp. $ 210,413
------------------------------------------------------------------------------- -------------
Total 2,814,958
------------------------------------------------------------------------------- -------------
ENERGY MINERALS--2.9%
-------------------------------------------------------------------------------
6,100 Baker Hughes, Inc. 223,413
-------------------------------------------------------------------------------
5,000 Chevron Corp. 335,000
-------------------------------------------------------------------------------
3,100 Exxon Corp. 293,338
-------------------------------------------------------------------------------
9,000 Occidental Petroleum Corp. 216,000
-------------------------------------------------------------------------------
1,100 Royal Dutch Petroleum Co. 186,863
-------------------------------------------------------------------------------
3,500 Texaco, Inc. 346,938
-------------------------------------------------------------------------------
13,100 USX-Marathon Group 299,663
-------------------------------------------------------------------------------
9,032 Union Pacific Resources Group, Inc. 269,831
-------------------------------------------------------------------------------
3,000 (a)Western Atlas, Inc. 211,500
------------------------------------------------------------------------------- -------------
Total 2,382,546
------------------------------------------------------------------------------- -------------
FINANCE--3.7%
-------------------------------------------------------------------------------
5,646 Allstate Corp. 340,172
-------------------------------------------------------------------------------
3,400 CIGNA Corp. 480,675
-------------------------------------------------------------------------------
3,400 Chase Manhattan Corp. 321,300
-------------------------------------------------------------------------------
2,200 Citicorp 240,350
-------------------------------------------------------------------------------
2,900 Dean Witter, Discover & Co. 198,288
-------------------------------------------------------------------------------
8,600 Federal National Mortgage Association 354,750
-------------------------------------------------------------------------------
3,900 Marsh & McLennan Cos., Inc. 442,163
-------------------------------------------------------------------------------
4,600 National City Corp. 213,325
-------------------------------------------------------------------------------
4,100 Providian Corp. 219,350
-------------------------------------------------------------------------------
5,000 Travelers Group, Inc. 225,000
------------------------------------------------------------------------------- -------------
Total 3,035,373
------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
LARGE-CAP STOCKS--CONTINUED
-------------------------------------------------------------------------------
HEALTH CARE--3.0%
-------------------------------------------------------------------------------
5,700 Abbott Laboratories $ 317,775
-------------------------------------------------------------------------------
4,800 (a)American Home Products Corp. 308,400
-------------------------------------------------------------------------------
8,700 Bard (C.R.), Inc. 243,600
-------------------------------------------------------------------------------
10,000 (a)Biomet, Inc. 165,000
-------------------------------------------------------------------------------
3,300 Bristol-Myers Squibb Co. 375,375
-------------------------------------------------------------------------------
4,800 Columbia/HCA Healthcare Corp. 192,000
-------------------------------------------------------------------------------
12,400 (a)Healthsource, Inc. 139,500
-------------------------------------------------------------------------------
2,800 Merck & Co., Inc. 232,400
-------------------------------------------------------------------------------
2,900 Smithkline Beecham, ADR 199,738
-------------------------------------------------------------------------------
5,300 United Healthcare Corp. 228,563
------------------------------------------------------------------------------- -------------
Total 2,402,351
------------------------------------------------------------------------------- -------------
PRODUCER MANUFACTURING--1.8%
-------------------------------------------------------------------------------
2,600 (a)FMC Corp. 200,850
-------------------------------------------------------------------------------
2,700 General Electric Co. 280,800
-------------------------------------------------------------------------------
3,200 Loews Corp. 296,800
-------------------------------------------------------------------------------
3,900 Textron, Inc. 371,963
-------------------------------------------------------------------------------
17,100 (b)Westinghouse Electric Corp., PEPS, Series C, $1.30 292,307
------------------------------------------------------------------------------- -------------
Total 1,442,720
------------------------------------------------------------------------------- -------------
RETAIL TRADE--1.1%
-------------------------------------------------------------------------------
6,900 Dayton-Hudson Corp. 268,238
-------------------------------------------------------------------------------
6,900 Sears, Roebuck & Co. 343,275
-------------------------------------------------------------------------------
14,300 Wal-Mart Stores, Inc. 364,650
------------------------------------------------------------------------------- -------------
Total 976,163
------------------------------------------------------------------------------- -------------
SERVICES--1.0%
-------------------------------------------------------------------------------
7,500 Block (H&R), Inc. 219,375
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
LARGE-CAP STOCKS--CONTINUED
-------------------------------------------------------------------------------
SERVICES--CONTINUED
-------------------------------------------------------------------------------
11,300 Browning-Ferris Industries, Inc. $ 303,688
-------------------------------------------------------------------------------
3,300 Gannett Co., Inc. 259,050
------------------------------------------------------------------------------- -------------
Total 782,113
------------------------------------------------------------------------------- -------------
TECHNOLOGY--2.1%
-------------------------------------------------------------------------------
5,000 (a)Analog Devices, Inc. 160,625
-------------------------------------------------------------------------------
6,400 Electronic Data Systems Corp. 309,600
-------------------------------------------------------------------------------
2,400 Intel Corp. 304,500
-------------------------------------------------------------------------------
800 International Business Machines Corp. 127,500
-------------------------------------------------------------------------------
1,723 Lockheed Martin Corp. 156,147
-------------------------------------------------------------------------------
1,879 Lucent Technologies, Inc. 96,299
-------------------------------------------------------------------------------
3,400 Raytheon Co. 173,864
-------------------------------------------------------------------------------
4,500 (a)Rockwell International Corp. 289,125
------------------------------------------------------------------------------- -------------
Total 1,617,660
------------------------------------------------------------------------------- -------------
TRANSPORTATION--0.3%
-------------------------------------------------------------------------------
8,300 (a)KLM Royal Dutch Airlines 216,838
------------------------------------------------------------------------------- -------------
UTILITIES--2.9%
-------------------------------------------------------------------------------
5,800 AT&T Corp. 227,650
-------------------------------------------------------------------------------
5,900 CMS Energy Corp. 191,750
-------------------------------------------------------------------------------
4,000 (a)Columbia Gas System, Inc. 258,500
-------------------------------------------------------------------------------
6,100 Enron Corp. 279,075
-------------------------------------------------------------------------------
4,000 FPL Group, Inc. 184,500
-------------------------------------------------------------------------------
7,200 GTE Corp. 323,100
-------------------------------------------------------------------------------
15,200 MCI Communications Corp. 463,600
-------------------------------------------------------------------------------
8,000 Pacific Gas & Electric Co. 193,000
-------------------------------------------------------------------------------
7,700 Southern Co. 171,325
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
LARGE-CAP STOCKS--CONTINUED
-------------------------------------------------------------------------------
UTILITIES--CONTINUED
-------------------------------------------------------------------------------
6,900 TECO Energy, Inc. $ 168,188
------------------------------------------------------------------------------- -------------
Total 2,460,688
------------------------------------------------------------------------------- -------------
TOTAL LARGE-CAP STOCKS 20,352,923
------------------------------------------------------------------------------- -------------
SMALL-CAP STOCKS--15.0%
-------------------------------------------------------------------------------
BASIC INDUSTRY--1.1%
-------------------------------------------------------------------------------
8,400 (a)Chirex, Inc. 90,300
-------------------------------------------------------------------------------
2,900 Donaldson Company, Inc. 88,450
-------------------------------------------------------------------------------
5,300 (a)Fibreboard Corp. 183,513
-------------------------------------------------------------------------------
6,300 (a)Royal Plastics Group Ltd. 113,400
-------------------------------------------------------------------------------
9,700 Spartech Corp. 103,063
-------------------------------------------------------------------------------
9,200 (a)Synthetech, Inc. 75,900
-------------------------------------------------------------------------------
1,600 Texas Industries, Inc. 91,000
-------------------------------------------------------------------------------
3,300 (a)Titanium Metals Corp. 110,550
------------------------------------------------------------------------------- -------------
Total 856,176
------------------------------------------------------------------------------- -------------
CONSUMER DURABLES--1.1%
-------------------------------------------------------------------------------
6,200 Action Performance Companies, Inc. 106,175
-------------------------------------------------------------------------------
1,700 Carlisle Cos., Inc. 97,750
-------------------------------------------------------------------------------
4,625 Cavalier Homes, Inc. 52,031
-------------------------------------------------------------------------------
4,800 (a)Champion Enterprises, Inc. 100,200
-------------------------------------------------------------------------------
4,000 Coachmen Industries, Inc. 102,000
-------------------------------------------------------------------------------
5,300 (a)Equity Marketing, Inc. 121,900
-------------------------------------------------------------------------------
2,600 (a)K2, Inc. 67,600
-------------------------------------------------------------------------------
3,500 Lewis Galoob Toys, Inc. 101,938
-------------------------------------------------------------------------------
4,700 Norwood Promotional Products 75,788
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
SMALL-CAP STOCKS--CONTINUED
-------------------------------------------------------------------------------
CONSUMER DURABLES--CONTINUED
-------------------------------------------------------------------------------
1,900 Wynns International, Inc. $ 55,338
------------------------------------------------------------------------------- -------------
Total 880,720
------------------------------------------------------------------------------- -------------
CONSUMER NON-DURABLES--0.6%
-------------------------------------------------------------------------------
5,300 (a)Helen of Troy Ltd. 113,950
-------------------------------------------------------------------------------
8,600 (a)Morningstar Group, Inc. 148,350
-------------------------------------------------------------------------------
2,200 (a)Mossimo, Inc. 33,275
-------------------------------------------------------------------------------
2,200 Natures Sunshine Products, Inc. 44,550
-------------------------------------------------------------------------------
6,200 (a)Sport-Haley Inc. 91,450
-------------------------------------------------------------------------------
3,400 Worthington Foods, Inc. 86,700
------------------------------------------------------------------------------- -------------
Total 518,275
------------------------------------------------------------------------------- -------------
ENERGY MINERALS--0.6%
-------------------------------------------------------------------------------
3,300 (a)Belden & Blake Corp. 83,325
-------------------------------------------------------------------------------
1,700 (a)Cliffs Drilling Co. 88,400
-------------------------------------------------------------------------------
1,800 (a)Energy Ventures, Inc. 88,425
-------------------------------------------------------------------------------
6,100 (a)Key Production Co. 77,013
-------------------------------------------------------------------------------
5,200 Lomak Petroleum, Inc. 85,150
-------------------------------------------------------------------------------
4,500 (a)Pool Energy Services Co. 66,375
------------------------------------------------------------------------------- -------------
Total 488,688
------------------------------------------------------------------------------- -------------
FINANCE--2.2%
-------------------------------------------------------------------------------
6,900 (a)ACC Consumer Finance Corp. 62,963
-------------------------------------------------------------------------------
2,600 Aames Financial Corp 111,475
-------------------------------------------------------------------------------
1,500 CMAC Investment Corp. 114,375
-------------------------------------------------------------------------------
2,500 Capital Re Corp. 95,938
-------------------------------------------------------------------------------
8,000 Commonwealth Bancorp 116,000
-------------------------------------------------------------------------------
9,000 (a)Consumer Portfolio Services 115,875
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
SMALL-CAP STOCKS--CONTINUED
-------------------------------------------------------------------------------
FINANCE--CONTINUED
-------------------------------------------------------------------------------
3,500 (a)Delphi Financial Group, Inc., Class A $ 98,875
-------------------------------------------------------------------------------
2,600 (a)Delta Financial Corp. 59,475
-------------------------------------------------------------------------------
2,900 Donegal Group, Inc. 56,188
-------------------------------------------------------------------------------
3,900 (a)Electro Rent Corp. 93,600
-------------------------------------------------------------------------------
4,800 (a)Everen Capital Corp. 108,000
-------------------------------------------------------------------------------
3,500 Executive Risk, Inc. 140,000
-------------------------------------------------------------------------------
3,300 (a)First Merchants Acceptance Corp. 69,300
-------------------------------------------------------------------------------
2,600 Frontier Insurance Group, Inc. 99,450
-------------------------------------------------------------------------------
1,900 (a)Insignia Financial Group, Inc., Class A 43,225
-------------------------------------------------------------------------------
500 (a)Markel Corp. 42,500
-------------------------------------------------------------------------------
3,400 Penn-America Group, Inc. 53,975
-------------------------------------------------------------------------------
5,800 (a)Southern Pacific Funding 184,150
-------------------------------------------------------------------------------
2,900 (a)UICI 81,200
-------------------------------------------------------------------------------
3,600 Vesta Insurance Group, Inc. 116,100
------------------------------------------------------------------------------- -------------
Total 1,862,664
------------------------------------------------------------------------------- -------------
HEALTH CARE--1.6%
-------------------------------------------------------------------------------
4,100 (a)American HomePatient, Inc. 94,813
-------------------------------------------------------------------------------
2,850 (a)Bio Rad Laboratories, Inc., Class A 85,144
-------------------------------------------------------------------------------
7,600 (a)Biosource International, Inc. 53,675
-------------------------------------------------------------------------------
3,400 Chad Therapeutics Inc. 53,550
-------------------------------------------------------------------------------
4,500 (a)Curative Technologies, Inc. 117,000
-------------------------------------------------------------------------------
10,800 (a)Diagnostic Health Services, Inc. 75,600
-------------------------------------------------------------------------------
2,800 (a)Geltex Pharmaceuticals, Inc. 50,050
-------------------------------------------------------------------------------
3,400 (a)Genesis Health Ventures, Inc. 94,775
-------------------------------------------------------------------------------
1,300 (a)Medicis Pharmaceutical Corp., Class A 57,038
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
SMALL-CAP STOCKS--CONTINUED
-------------------------------------------------------------------------------
HEALTH CARE--CONTINUED
-------------------------------------------------------------------------------
6,400 (a)OrthoLogic Corp. $ 39,200
-------------------------------------------------------------------------------
7,900 (a)Physician Computer Network, Inc. 65,175
-------------------------------------------------------------------------------
7,100 (a)Prime Medical Services 82,538
-------------------------------------------------------------------------------
6,300 (a)Rotech Medical Corp. 107,100
-------------------------------------------------------------------------------
1,700 (a)Safeskin Corp. 87,975
-------------------------------------------------------------------------------
2,800 (a)Sierra Health Services, Inc. 68,950
-------------------------------------------------------------------------------
3,000 (a)Universal Health Services, Inc., Class B 84,750
-------------------------------------------------------------------------------
3,900 (a)UroCor, Inc. 37,538
-------------------------------------------------------------------------------
4,800 (a)Veterinary Centers of America 51,000
------------------------------------------------------------------------------- -------------
Total 1,305,871
------------------------------------------------------------------------------- -------------
PRODUCER MANUFACTURING--0.6%
-------------------------------------------------------------------------------
2,300 (a)Cable Design Technologies, Class A 67,275
-------------------------------------------------------------------------------
4,300 (a)Maverick Tube Corp. 68,263
-------------------------------------------------------------------------------
2,300 (a)NCI Building System, Inc. 66,125
-------------------------------------------------------------------------------
2,500 (a)Reliance Steel & Aluminum Co. 93,750
-------------------------------------------------------------------------------
2,700 (a)Sinter Metals, Inc. 67,500
-------------------------------------------------------------------------------
3,600 (a)US Office Products Co. 111,600
------------------------------------------------------------------------------- -------------
Total 474,513
------------------------------------------------------------------------------- -------------
RETAIL TRADE--1.1%
-------------------------------------------------------------------------------
6,000 (a)Amrion, Inc. 137,250
-------------------------------------------------------------------------------
1,900 (a)MSC Industrial Direct Co. 71,013
-------------------------------------------------------------------------------
5,200 (a)Microage, Inc. 117,650
-------------------------------------------------------------------------------
4,100 (a)Pacific Sunwear of California 110,700
-------------------------------------------------------------------------------
6,800 (a)Paul Harris Stores, Inc. 124,100
-------------------------------------------------------------------------------
4,000 (a)Pomeroy Computer Resources 109,500
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
SMALL-CAP STOCKS--CONTINUED
-------------------------------------------------------------------------------
RETAIL TRADE--CONTINUED
-------------------------------------------------------------------------------
2,600 (a)Regis Corp. Minnesota $ 65,000
-------------------------------------------------------------------------------
3,400 Riser Foods, Inc. 103,700
-------------------------------------------------------------------------------
3,100 (a)Stein Mart, Inc. 59,288
------------------------------------------------------------------------------- -------------
Total 898,201
------------------------------------------------------------------------------- -------------
SERVICES--2.0%
-------------------------------------------------------------------------------
5,700 (a)ATC Communications, Inc. 87,638
-------------------------------------------------------------------------------
1,900 American List Corp. 56,050
-------------------------------------------------------------------------------
3,200 (a)BARRA, Inc. 83,200
-------------------------------------------------------------------------------
3,300 (a)CDI Corp. 96,113
-------------------------------------------------------------------------------
1,400 (a)Caribiner International, Inc. 61,775
-------------------------------------------------------------------------------
1,800 (a)Catalina Marketing Corp. 91,800
-------------------------------------------------------------------------------
3,800 (a)Consolidated Graphics, Inc. 172,900
-------------------------------------------------------------------------------
5,800 Employee Solutions, Inc. 107,300
-------------------------------------------------------------------------------
5,600 FactSet Research Systems 131,600
-------------------------------------------------------------------------------
3,000 HA-LO Industries, Inc. 115,500
-------------------------------------------------------------------------------
5,400 (a)National Education Corp. 76,275
-------------------------------------------------------------------------------
2,800 (a)Newpark Resources, Inc. 98,000
-------------------------------------------------------------------------------
3,500 (a)Personnel Group of America, Inc. 79,188
-------------------------------------------------------------------------------
2,400 (a)Premier Parks, Inc. 77,100
-------------------------------------------------------------------------------
6,500 (a)Prepaid Legal Services, Inc. 90,188
-------------------------------------------------------------------------------
6,000 (a)Prime Hospitality Corp. 99,750
-------------------------------------------------------------------------------
4,200 (a)Right Management Consultants 81,375
-------------------------------------------------------------------------------
1,000 (a)Univision Communications, Inc., Class A 39,750
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
SMALL-CAP STOCKS--CONTINUED
-------------------------------------------------------------------------------
SERVICES--CONTINUED
-------------------------------------------------------------------------------
1,200 (a)Volt Information Science, Inc. $ 42,000
------------------------------------------------------------------------------- -------------
Total 1,687,502
------------------------------------------------------------------------------- -------------
TECHNOLOGY--3.2%
-------------------------------------------------------------------------------
7,400 (a)Alphanet Solutions, Inc. 90,650
-------------------------------------------------------------------------------
10,100 (a)Award Software International, Inc. 90,900
-------------------------------------------------------------------------------
2,700 (a)Burr Brown Corp. 70,200
-------------------------------------------------------------------------------
1,300 (a)Claremont Technology Group 31,850
-------------------------------------------------------------------------------
5,800 (a)Cognex Corp. 114,550
-------------------------------------------------------------------------------
3,000 Computer Task Group, Inc. 125,625
-------------------------------------------------------------------------------
5,900 (a)Digital Systems Int., Inc. 90,713
-------------------------------------------------------------------------------
3,200 (a)Ducommun, Inc. 70,800
-------------------------------------------------------------------------------
1,900 (a)Dupont Photomasks, Inc. 78,850
-------------------------------------------------------------------------------
6,100 (a)EIS International, Inc. 53,375
-------------------------------------------------------------------------------
5,800 (a)ESS Technology, Inc. 114,550
-------------------------------------------------------------------------------
3,900 (a)Elexsys International, Inc. 64,838
-------------------------------------------------------------------------------
6,600 (a)Firearms Training Systems, Inc. 91,163
-------------------------------------------------------------------------------
2,200 (a)IA Corporation I 12,375
-------------------------------------------------------------------------------
5,100 (a)II-VI, Inc. 134,513
-------------------------------------------------------------------------------
4,400 Innovex, Inc. 178,750
-------------------------------------------------------------------------------
3,600 (a)Integrated Measurement Systems, Inc 63,900
-------------------------------------------------------------------------------
4,500 (a)Intervoice, Inc. 56,813
-------------------------------------------------------------------------------
2,700 (a)Perceptron, Inc. 93,488
-------------------------------------------------------------------------------
4,000 (a)Photronic Labs, Inc. 126,000
-------------------------------------------------------------------------------
7,600 (a)Raster Graphics Inc. 79,800
-------------------------------------------------------------------------------
4,500 (a)Sandisk Corp. 61,875
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
SMALL-CAP STOCKS--CONTINUED
-------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
-------------------------------------------------------------------------------
7,900 (a)StorMedia, Inc. $ 100,725
-------------------------------------------------------------------------------
4,300 (a)Stratasys, Inc. 71,488
-------------------------------------------------------------------------------
1,900 (a)Supertex, Inc. 36,100
-------------------------------------------------------------------------------
3,200 (a)Tollgrade Communications, Inc. 77,600
-------------------------------------------------------------------------------
3,300 (a)Tracor, Inc. 72,600
-------------------------------------------------------------------------------
4,300 (a)Trident International, Inc. 84,925
-------------------------------------------------------------------------------
5,600 (a)Trusted Information Systems 67,200
-------------------------------------------------------------------------------
2,800 (a)USCS International, Inc. 46,900
-------------------------------------------------------------------------------
4,800 (a)Voxware, Inc. 37,200
-------------------------------------------------------------------------------
1,900 Wyle Labs 68,400
------------------------------------------------------------------------------- -------------
Total 2,558,716
------------------------------------------------------------------------------- -------------
TRANSPORTATION--0.4%
-------------------------------------------------------------------------------
2,500 Airlines Express International Corp. 81,719
-------------------------------------------------------------------------------
1,700 (a)Alaska Air Group, Inc. 41,013
-------------------------------------------------------------------------------
1,600 Expeditors International Washington, Inc. 71,200
-------------------------------------------------------------------------------
3,600 USFreightways Corp. 93,375
------------------------------------------------------------------------------- -------------
Total 287,307
------------------------------------------------------------------------------- -------------
UTILITIES--0.5%
-------------------------------------------------------------------------------
2,400 (a)Atlantic Telephone Network, Inc. 45,300
-------------------------------------------------------------------------------
1,000 (a)Columbia Gas System, Inc. 64,625
-------------------------------------------------------------------------------
2,200 Leviathan Gas Pipe Line, Inc. 100,100
-------------------------------------------------------------------------------
3,400 (b)NGC Corp. 73,950
-------------------------------------------------------------------------------
2,400 TNP Enterprises, Inc. 61,200
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
SMALL-CAP STOCKS--CONTINUED
-------------------------------------------------------------------------------
UTILITIES--CONTINUED
-------------------------------------------------------------------------------
2,600 Trescomm International, Inc. $ 26,975
------------------------------------------------------------------------------- -------------
Total 372,150
------------------------------------------------------------------------------- -------------
TOTAL SMALL-CAP STOCKS 12,190,783
------------------------------------------------------------------------------- -------------
FOREIGN EQUITY--20.0%
-------------------------------------------------------------------------------
ARGENTINA--0.0%
-------------------------------------------------------------------------------
1,025 Banco Frances del Rio de la Plata S.A., ADR 31,006
-------------------------------------------------------------------------------
4,056 Compania Naviera Perez Companc S.A., Class B 27,754
-------------------------------------------------------------------------------
802 (a)IRSA Inversiones y Representaciones S.A., GDR 24,862
-------------------------------------------------------------------------------
1,000 YPF Sociedad Anonima, ADR 23,250
------------------------------------------------------------------------------- -------------
Total 106,872
------------------------------------------------------------------------------- -------------
AUSTRALIA--0.4%
-------------------------------------------------------------------------------
13,000 (a)Aristocrat Leisure Ltd. 36,822
-------------------------------------------------------------------------------
5,250 (a)Commonwealth Installment 33,160
-------------------------------------------------------------------------------
6,600 Lend Lease Corp., Ltd. 122,481
-------------------------------------------------------------------------------
20,000 News Corp., Ltd. 106,463
-------------------------------------------------------------------------------
15,000 Woodside Petroleum Ltd. 105,364
------------------------------------------------------------------------------- -------------
Total 404,290
------------------------------------------------------------------------------- -------------
AUSTRIA--0.0%
-------------------------------------------------------------------------------
220 Vae Eisenbahnsysteme AG 20,330
------------------------------------------------------------------------------- -------------
BELGIUM--0.1%
-------------------------------------------------------------------------------
1,800 Delhaize-Le Lion 105,648
------------------------------------------------------------------------------- -------------
BRAZIL--0.4%
-------------------------------------------------------------------------------
3,348,000 Banco Bradesco S.A., Preference 24,467
-------------------------------------------------------------------------------
66,000 Banco Itau S.A., Preference 25,876
-------------------------------------------------------------------------------
140,000 Centrais Eletricas Brasileiras, Preference, Series B 45,944
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
FOREIGN EQUITY--CONTINUED
-------------------------------------------------------------------------------
BRAZIL--CONTINUED
-------------------------------------------------------------------------------
2,700 (a)Cofap-Cia Fab Peca, Preference $ 22,086
-------------------------------------------------------------------------------
937,000 Companhia Energetica de Minas Gerais, Preference 30,205
-------------------------------------------------------------------------------
12,000 (a)Cosipa Pnb 10,920
-------------------------------------------------------------------------------
2,600 (a)(b)Elevadores Atlas 27,938
-------------------------------------------------------------------------------
100,000 (a)Light Participacoes S.A. 18,790
-------------------------------------------------------------------------------
714,000 Lojas Renner S.A., Preference 35,250
-------------------------------------------------------------------------------
230,000 (a)Petroleo Brasileiro S.A., Preference 31,616
-------------------------------------------------------------------------------
550 Telecomunicacoes Brasileras, ADR 41,663
-------------------------------------------------------------------------------
140,000 (a)Telecomunicacoes de Sao Paulo S.A., Preference 24,801
-------------------------------------------------------------------------------
11,014,000 (a)Usinas Siderurgicas de Minas Gerais, Pfd. 10,981
------------------------------------------------------------------------------- -------------
Total 350,537
------------------------------------------------------------------------------- -------------
CHILE--0.0%
-------------------------------------------------------------------------------
500 (a)Banco BHIF, ADR 8,438
-------------------------------------------------------------------------------
400 (a)Banco de A. Edwards, ADR 7,400
-------------------------------------------------------------------------------
200 (a)(b)Chilectra S.A., ADR 11,000
-------------------------------------------------------------------------------
100 Compania Telecomunicacion Chile, ADR 9,513
-------------------------------------------------------------------------------
300 (a)Santa Isabel S.A., ADR 7,538
-------------------------------------------------------------------------------
200 Sociedad Quimica Y Minera De Chile, ADR 10,400
------------------------------------------------------------------------------- -------------
Total 54,289
------------------------------------------------------------------------------- -------------
COLOMBIA--0.0%
-------------------------------------------------------------------------------
800 Banco Ganadero S.A., ADR 19,800
-------------------------------------------------------------------------------
900 Banco Industrial Colombiano, ADR 14,513
------------------------------------------------------------------------------- -------------
Total 34,313
------------------------------------------------------------------------------- -------------
FRANCE--1.4%
-------------------------------------------------------------------------------
918 AXA 55,163
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
FOREIGN EQUITY--CONTINUED
-------------------------------------------------------------------------------
FRANCE--CONTINUED
-------------------------------------------------------------------------------
482 Accor SA $ 61,821
-------------------------------------------------------------------------------
1,100 Casino Ord 49,801
-------------------------------------------------------------------------------
1,037 Compagnie Financiere de Paribas, Class A 71,247
-------------------------------------------------------------------------------
450 Compagnie de Saint Gobain 64,694
-------------------------------------------------------------------------------
1,529 Credit Commerical De France 74,053
-------------------------------------------------------------------------------
1,410 Credit Local de France 127,644
-------------------------------------------------------------------------------
500 Groupe Danon BSN SA 73,605
-------------------------------------------------------------------------------
960 Havas SA 67,996
-------------------------------------------------------------------------------
400 LVMH (Moet-Hennessy) 101,382
-------------------------------------------------------------------------------
1,130 Lafarge-Coppee 71,385
-------------------------------------------------------------------------------
721 Lyonnaise des Eaux SA 68,625
-------------------------------------------------------------------------------
660 Peugeot SA 81,113
-------------------------------------------------------------------------------
660 Rhone-Poulenc Rorer, Inc. 49,088
-------------------------------------------------------------------------------
1,680 Schneider SA 79,919
-------------------------------------------------------------------------------
531 Total SA-B 42,459
------------------------------------------------------------------------------- -------------
Total 1,139,995
------------------------------------------------------------------------------- -------------
GERMANY, FEDERAL REPUBLIC OF--1.4%
-------------------------------------------------------------------------------
2,490 BASF AG 92,098
-------------------------------------------------------------------------------
1,900 Bayer AG 76,452
-------------------------------------------------------------------------------
2,200 (a)Commerzbank AG, Frankfurt 54,067
-------------------------------------------------------------------------------
2,260 (a)Daimler Benz AG 147,596
-------------------------------------------------------------------------------
1,380 Deutsche Bank, AG 65,766
-------------------------------------------------------------------------------
2,400 Dresdner Bank AG, Frankfurt 71,231
-------------------------------------------------------------------------------
181 Gea AG, Vorzugsaktien 54,249
-------------------------------------------------------------------------------
215 (a)Henkel KGAA 10,484
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
FOREIGN EQUITY--CONTINUED
-------------------------------------------------------------------------------
GERMANY, FEDERAL REPUBLIC OF--CONTINUED
-------------------------------------------------------------------------------
935 Henkel KGAA, Pfd. $ 46,565
-------------------------------------------------------------------------------
70 Linde AG 42,507
-------------------------------------------------------------------------------
174 Mannesmann AG 72,571
-------------------------------------------------------------------------------
1,400 RWE AG 61,895
-------------------------------------------------------------------------------
4,300 (a)Rofin-Sinar Technologies, Inc. 55,363
-------------------------------------------------------------------------------
800 Schering AG 65,691
-------------------------------------------------------------------------------
945 Schwarz Pharma 70,348
-------------------------------------------------------------------------------
1,250 Siemens AG 60,220
-------------------------------------------------------------------------------
1,100 Veba AG 64,329
------------------------------------------------------------------------------- -------------
Total 1,111,432
------------------------------------------------------------------------------- -------------
HONG KONG--1.4%
-------------------------------------------------------------------------------
140,000 Aeon Credit Service 47,077
-------------------------------------------------------------------------------
63,500 Amoy Properties Ltd. 88,696
-------------------------------------------------------------------------------
9,000 Cheung Kong 79,152
-------------------------------------------------------------------------------
24,000 (a)(b)Cheung Kong Infrastructure 58,355
-------------------------------------------------------------------------------
12,000 (a)(b)China Resources Bejing Land 7,450
-------------------------------------------------------------------------------
2,429 HSBC Holdings PLC 50,578
-------------------------------------------------------------------------------
70,000 Henderson Investment Ltd. 85,101
-------------------------------------------------------------------------------
32,000 Hong Kong Telecom 55,458
-------------------------------------------------------------------------------
11,000 Hutchison Whampoa 85,004
-------------------------------------------------------------------------------
8,000 New World Development Co. Ltd. 54,061
-------------------------------------------------------------------------------
114,000 Oriental Press Group 64,136
-------------------------------------------------------------------------------
43,000 Peregrine Investments 79,527
-------------------------------------------------------------------------------
30,000 (a)(b)Shanghai Industrial Holdings Ltd. 97,581
-------------------------------------------------------------------------------
5,000 Sun Hung Kai Properties 62,080
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-------------------------------------------------------------------------------
HONG KONG--CONTINUED
-------------------------------------------------------------------------------
41,000 (a)Winsor Property Holdings Ltd. $ 61,776
------------------------------------------------------------------------------- -------------
Total 976,032
------------------------------------------------------------------------------- -------------
INDIA--0.0%
-------------------------------------------------------------------------------
1,700 (a)(b)Bombay Suburban Electric Supply, GDR 33,575
-------------------------------------------------------------------------------
4,600 (a)(b)Crompton Greaves Ltd., GDR 14,950
-------------------------------------------------------------------------------
1,200 (a)Hindalco Industries, GDR 24,480
-------------------------------------------------------------------------------
2,000 (a)(b)Larsen & Toubro Ltd., GDR 29,000
-------------------------------------------------------------------------------
2,600 (a)(b)Mahindra and Mahindra , GDR 27,300
-------------------------------------------------------------------------------
1,600 (a)(b)Steel Authority of India, GDR 13,600
------------------------------------------------------------------------------- -------------
Total 142,905
------------------------------------------------------------------------------- -------------
INDONESIA--0.0%
-------------------------------------------------------------------------------
41,000 (a)Bank Negara Indonesia 20,544
-------------------------------------------------------------------------------
23,000 Citra Marga Nusaphala Persada 19,371
-------------------------------------------------------------------------------
5,000 Gudang Garam 21,269
-------------------------------------------------------------------------------
14,000 Modern Photo Film Co. 35,075
-------------------------------------------------------------------------------
10,000 Semen Gresik 30,490
-------------------------------------------------------------------------------
29,467 Steady Safe 34,556
-------------------------------------------------------------------------------
38,720 Pab K Tjiwi Kimia 37,151
-------------------------------------------------------------------------------
12,000 Tambang Timah 18,934
------------------------------------------------------------------------------- -------------
Total 217,390
------------------------------------------------------------------------------- -------------
ITALY--0.4%
-------------------------------------------------------------------------------
8,000 Banca Popolare Milano 40,898
-------------------------------------------------------------------------------
10,300 Eni 54,219
-------------------------------------------------------------------------------
5,100 Imi Istituto Mobiliare 42,843
-------------------------------------------------------------------------------
595 (a)La Rinascente S.P.A. Warrants, 12/31/1999 279
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
FOREIGN EQUITY--CONTINUED
-------------------------------------------------------------------------------
ITALY--CONTINUED
-------------------------------------------------------------------------------
42,000 Telecom Italia Mobile $ 98,770
-------------------------------------------------------------------------------
6,000 (a)Unicem S.P.A. 40,489
------------------------------------------------------------------------------- -------------
Total 277,498
------------------------------------------------------------------------------- -------------
JAPAN--5.4%
-------------------------------------------------------------------------------
16,000 Amada Co 133,731
-------------------------------------------------------------------------------
200 Asahi Broadcasting Corp. 21,949
-------------------------------------------------------------------------------
3,000 Canare Electric Co. Ltd. 63,213
-------------------------------------------------------------------------------
13,000 Casio Computer Co 105,461
-------------------------------------------------------------------------------
23 DDI Corp. 164,574
-------------------------------------------------------------------------------
9,000 Dai Nippon Printing Co. Ltd. 164,355
-------------------------------------------------------------------------------
12,000 Daito Trust Construction 156,980
-------------------------------------------------------------------------------
6,000 Fuji Photo Film Co. 188,060
-------------------------------------------------------------------------------
2,000 Hirose Electric Co 121,159
-------------------------------------------------------------------------------
8,000 Hitachi Maxell 165,057
-------------------------------------------------------------------------------
7,000 Ikegami Tsushinki 46,708
-------------------------------------------------------------------------------
10,000 JGC Corp. 92,186
-------------------------------------------------------------------------------
3,000 Japan Cash Machine Co. Ltd. 53,468
-------------------------------------------------------------------------------
5,000 Japan Radio Co. 61,018
-------------------------------------------------------------------------------
16 (a)(b)Japan Tobacco 113,924
-------------------------------------------------------------------------------
5,000 Konami Co 170,764
-------------------------------------------------------------------------------
6,000 Matsushita Kotobuk Electric 153,819
-------------------------------------------------------------------------------
4,000 (a)Meiwa Estate 116,594
-------------------------------------------------------------------------------
24,000 Minolta Co 151,080
-------------------------------------------------------------------------------
23,000 Mitsubishi Heavy Industries Ltd. 187,796
-------------------------------------------------------------------------------
10,000 Mycal Corp. 149,254
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-------------------------------------------------------------------------------
JAPAN--CONTINUED
-------------------------------------------------------------------------------
2,000 Nintendo Corp. Ltd. $ 141,352
-------------------------------------------------------------------------------
5,000 Nippon Comsys Corp. 62,335
-------------------------------------------------------------------------------
1,000 Nissei ASB Machine Co. 13,960
-------------------------------------------------------------------------------
3,000 Pioneer Electronic Corp 64,530
-------------------------------------------------------------------------------
3,000 Promise Co. Ltd. 150,132
-------------------------------------------------------------------------------
2 (b)Sakura Finance (Bermuda), Conv. Pfd. 113,664
-------------------------------------------------------------------------------
5,000 Sankyo Co. 133,889
-------------------------------------------------------------------------------
12,000 Shiseido Co. 144,337
-------------------------------------------------------------------------------
14,000 Shochiku Co. 130,290
-------------------------------------------------------------------------------
2,000 Sony Corp. 128,007
-------------------------------------------------------------------------------
3,000,000 (b)Sumitomo Bank International, Conv. Bond, .75%, 5/31/2001 28,611
-------------------------------------------------------------------------------
7,000 Sumitomo Trust & Banking 77,436
-------------------------------------------------------------------------------
8,000 Taisho Pharmaceutical Co. 178,402
-------------------------------------------------------------------------------
6,000 Takashimaya Co. 80,070
-------------------------------------------------------------------------------
9,000 Tokio Marine and Fire Insurance Co. 99,561
-------------------------------------------------------------------------------
30,000 (a)Tokyo Tatemono Co., Ltd. 137,489
-------------------------------------------------------------------------------
10,000 Tsubakimoto Chain Co. 58,911
------------------------------------------------------------------------------- -------------
Total 4,324,126
------------------------------------------------------------------------------- -------------
KOREA, REPUBLIC OF--0.0%
-------------------------------------------------------------------------------
1,500 Chonggu Housing & Construction 34,381
-------------------------------------------------------------------------------
1,500 Dongkuk Steel Mill Co. 29,133
-------------------------------------------------------------------------------
1,100 Hankuk Paper Manufacturing Co. 24,947
-------------------------------------------------------------------------------
3,000 Korea Exchange Bank 28,228
-------------------------------------------------------------------------------
2,700 (a)Korea Mobile Telecomm Corp., ADR 35,100
-------------------------------------------------------------------------------
1,700 Pacific Corporation 31,787
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-------------------------------------------------------------------------------
KOREA, REPUBLIC OF--CONTINUED
-------------------------------------------------------------------------------
960 Shinhan Bank $ 16,954
------------------------------------------------------------------------------- -------------
Total 200,530
------------------------------------------------------------------------------- -------------
MALAYSIA--0.6%
-------------------------------------------------------------------------------
26,000 Eastern and Oriental 56,589
-------------------------------------------------------------------------------
3,000 (a)Kentucky Fried Chicken 3,657
-------------------------------------------------------------------------------
15,000 Kentucky Fried Chicken 66,482
-------------------------------------------------------------------------------
4,000 Malayan Banking 39,573
-------------------------------------------------------------------------------
1,000 Malayan United Industries 748
-------------------------------------------------------------------------------
34,000 Malaysian Industrial Development 69,964
-------------------------------------------------------------------------------
12,000 Malaysian Pacific Industries 48,912
-------------------------------------------------------------------------------
14,000 Metacorp 43,213
-------------------------------------------------------------------------------
15,000 UMW Holdings 71,231
------------------------------------------------------------------------------- -------------
Total 400,369
------------------------------------------------------------------------------- -------------
MEXICO--0.1%
-------------------------------------------------------------------------------
900 (a)(b)Acer, Inc., ADR 16,425
-------------------------------------------------------------------------------
3,300 (a)Cemex S.A., Class B, ADR 23,822
-------------------------------------------------------------------------------
15,000 (a)Cifra S.A. de C.V., Class B 20,692
-------------------------------------------------------------------------------
2,000 (a)Empresas ICA Sociedad Controladora S.A., ADR 28,750
-------------------------------------------------------------------------------
13,000 Fomento Economico Mexicano, S.A. de C.V., Class B 44,421
-------------------------------------------------------------------------------
18,000 (a)Grupo Corvi S.A., Class UBL 15,063
-------------------------------------------------------------------------------
3,100 (a)(b)Grupo Financiero Bancomer, S.A. de C.V., Class B, ADR 24,974
-------------------------------------------------------------------------------
600 Pan American Beverage, Class A 28,050
-------------------------------------------------------------------------------
700 Telefonos de Mexico, Class L, ADR 21,263
-------------------------------------------------------------------------------
1,800 (a)Tubos de Acero de Mexico S.A., ADR 24,525
------------------------------------------------------------------------------- -------------
Total 247,985
------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
<CAPTION>
- -----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-------------------------------------------------------------------------------
NETHERLANDS--0.8%
-------------------------------------------------------------------------------
2,100 ABN Amro Holding $ 136,038
-------------------------------------------------------------------------------
900 (a)ASM Lithography Holding N.V. 39,616
-------------------------------------------------------------------------------
610 Akzo Nobel N.V. 80,977
-------------------------------------------------------------------------------
3,900 Boskalis Westminster N.V. 77,353
-------------------------------------------------------------------------------
990 Hunter Douglas N.V. 64,764
-------------------------------------------------------------------------------
1,907 ING Groep, N.V. 66,800
-------------------------------------------------------------------------------
1,900 Vendex International A 82,532
-------------------------------------------------------------------------------
500 Wolters Kluwer N.V. 65,389
------------------------------------------------------------------------------- -------------
Total 613,469
------------------------------------------------------------------------------- -------------
NEW ZEALAND--0.3%
-------------------------------------------------------------------------------
22,000 Air New Zealand Ltd., Class B 57,895
-------------------------------------------------------------------------------
21,000 Fletcher Challenge Building 58,997
-------------------------------------------------------------------------------
70,000 Wrightson Ltd. 62,233
------------------------------------------------------------------------------- -------------
Total 179,125
------------------------------------------------------------------------------- -------------
NORWAY--0.2%
-------------------------------------------------------------------------------
3,670 Elkem A/S, Class A 57,183
-------------------------------------------------------------------------------
9,800 (a)Storebrand ASA 58,482
------------------------------------------------------------------------------- -------------
Total 115,665
------------------------------------------------------------------------------- -------------
PAKISTAN--0.0%
-------------------------------------------------------------------------------
400 (a)Hub Power Co., GDR 8,600
------------------------------------------------------------------------------- -------------
PHILIPPINES--0.0%
-------------------------------------------------------------------------------
114,000 (a)Belle Corp. 30,358
-------------------------------------------------------------------------------
55,282 (a)Davao Union Cement Corp., Class B 18,087
-------------------------------------------------------------------------------
66,600 (a)Filinvest Land, Inc. 23,563
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-------------------------------------------------------------------------------
PHILIPPINES--CONTINUED
-------------------------------------------------------------------------------
1,600 Philippine Commercial International Bank $ 21,304
------------------------------------------------------------------------------- -------------
Total 93,312
------------------------------------------------------------------------------- -------------
SINGAPORE--0.5%
-------------------------------------------------------------------------------
7,000 City Developments 61,889
-------------------------------------------------------------------------------
10,000 Hong Leong Finance Ltd. 34,652
-------------------------------------------------------------------------------
85,000 Roly International Holdings 56,100
-------------------------------------------------------------------------------
10,000 Sembawang Corp. Ltd. 54,189
-------------------------------------------------------------------------------
2,000 Singapore Press Holdings Ltd. 37,790
-------------------------------------------------------------------------------
10,000 Straits Steamship Land Ltd. 31,943
-------------------------------------------------------------------------------
2,500 (a)Straits Steamship Land Ltd. Warrants, 12/12/2000 2,799
-------------------------------------------------------------------------------
6,000 United Overseas Bank Ltd. 63,743
-------------------------------------------------------------------------------
17,000 Wing Tai Holdings, Ltd. 46,545
------------------------------------------------------------------------------- -------------
Total 389,650
------------------------------------------------------------------------------- -------------
SPAIN--0.7%
-------------------------------------------------------------------------------
1,200 Empresa Nac De Electridad 81,056
-------------------------------------------------------------------------------
870 Fomento de Construcciones Contratas SA 73,541
-------------------------------------------------------------------------------
7,100 Iberdrola SA 81,940
-------------------------------------------------------------------------------
1,400 Mapfre (corporacion) 74,031
-------------------------------------------------------------------------------
1,500 Repsol SA 55,523
-------------------------------------------------------------------------------
3,750 Telefonica de Espana 82,214
-------------------------------------------------------------------------------
693 Zardoya-Otis SA 73,826
------------------------------------------------------------------------------- -------------
Total 522,131
------------------------------------------------------------------------------- -------------
SWEDEN--0.2%
-------------------------------------------------------------------------------
7,900 Avesta Sheffield 81,169
-------------------------------------------------------------------------------
1,420 Skandia Forsakrings AB 40,492
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-------------------------------------------------------------------------------
SWEDEN--CONTINUED
-------------------------------------------------------------------------------
5,000 Stora Kopparbergs, Class A $ 68,497
------------------------------------------------------------------------------- -------------
Total 190,158
------------------------------------------------------------------------------- -------------
SWITZERLAND--1.1%
-------------------------------------------------------------------------------
60 ABB AG 75,075
-------------------------------------------------------------------------------
800 CS Holding AG-Registered 85,155
-------------------------------------------------------------------------------
60 Ciba-Giegy AG-Registered 74,246
-------------------------------------------------------------------------------
65 Nestle SA 70,560
-------------------------------------------------------------------------------
450 (a)Oerlikon-Buhrle Holding AG 46,433
-------------------------------------------------------------------------------
32 Reiseburo Kuoni AG, Class B 71,193
-------------------------------------------------------------------------------
12 Roche Holding AG 92,244
-------------------------------------------------------------------------------
49 Sandoz AG-R 56,988
-------------------------------------------------------------------------------
75 Sulzer AG-Reg 43,153
-------------------------------------------------------------------------------
66 (a)Swissair AG 50,127
-------------------------------------------------------------------------------
165 Zurich Versicherungsgesellschaft 46,835
------------------------------------------------------------------------------- -------------
Total 712,009
------------------------------------------------------------------------------- -------------
THAILAND--0.0%
-------------------------------------------------------------------------------
1,200 Bangkok Bank Public Co., Ltd. 13,719
-------------------------------------------------------------------------------
12,700 Industrial Finance Corporation of Thailand 40,029
-------------------------------------------------------------------------------
3,200 Krung Thai Bank PLC 9,146
-------------------------------------------------------------------------------
1,400 PTT Exploration and Production Public Co. 20,610
-------------------------------------------------------------------------------
30,000 Siam City Bank, 35,238
------------------------------------------------------------------------------- -------------
Total 118,742
------------------------------------------------------------------------------- -------------
UNITED KINGDOM--4.6%
-------------------------------------------------------------------------------
20,000 Asda Group 39,845
-------------------------------------------------------------------------------
8,520 BAA PLC 70,188
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-------------------------------------------------------------------------------
UNITED KINGDOM--CONTINUED
-------------------------------------------------------------------------------
16,000 BTR PLC $ 64,291
-------------------------------------------------------------------------------
4,393 Barclays PLC 75,555
-------------------------------------------------------------------------------
2,536 Boc Group PLC 37,776
-------------------------------------------------------------------------------
3,800 Boots Co. PLC 40,504
-------------------------------------------------------------------------------
3,219 British Aerospace PLC 62,616
-------------------------------------------------------------------------------
6,539 British Petroleum Co. PLC 75,609
-------------------------------------------------------------------------------
7,400 British Telecommunication PLC 46,841
-------------------------------------------------------------------------------
17,549 Bunzl PLC 65,499
-------------------------------------------------------------------------------
8,500 Cadbury Schweppes PLC 73,096
-------------------------------------------------------------------------------
15,100 Caradon PLC 60,547
-------------------------------------------------------------------------------
6,250 Carlton Communications PLC 52,854
-------------------------------------------------------------------------------
6,614 Chubb Security 38,141
-------------------------------------------------------------------------------
7,800 Compass Group 79,534
-------------------------------------------------------------------------------
23,370 Cookson Group 88,797
-------------------------------------------------------------------------------
12,000 Cowie Group PLC 79,892
-------------------------------------------------------------------------------
19,710 David S. Smith (Holdings) PLC 104,548
-------------------------------------------------------------------------------
11,600 Delta PLC 70,891
-------------------------------------------------------------------------------
3,235 EMI Group PLC 74,729
-------------------------------------------------------------------------------
21,900 FKI PLC 79,345
-------------------------------------------------------------------------------
6,280 General Accident 77,339
-------------------------------------------------------------------------------
10,890 General Electric Co. PLC 68,200
-------------------------------------------------------------------------------
3,400 Glaxo Wellcome PLC 55,919
-------------------------------------------------------------------------------
8,272 Grand Metropolitan PLC 64,599
-------------------------------------------------------------------------------
17,213 Guardian Royal Exchange 77,557
-------------------------------------------------------------------------------
3,960 Imperial Chemical Industries PLC 51,364
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-------------------------------------------------------------------------------
UNITED KINGDOM--CONTINUED
-------------------------------------------------------------------------------
9,100 Inchcape PLC $ 41,231
-------------------------------------------------------------------------------
13,353 Ladbroke Group PLC 46,022
-------------------------------------------------------------------------------
8,500 Marks & Spencer PLC 72,310
-------------------------------------------------------------------------------
20,600 Mirror Group PLC 79,657
-------------------------------------------------------------------------------
10,000 Morgan Crucible Co 76,833
-------------------------------------------------------------------------------
10,600 National Power Co. PLC 82,155
-------------------------------------------------------------------------------
11,000 (a)(b)Pace Micro Technology PLC 43,830
-------------------------------------------------------------------------------
4,600 Pearson 56,843
-------------------------------------------------------------------------------
4,909 Peninsular & Oriental Steam Navigation Co. 48,818
-------------------------------------------------------------------------------
5,500 Powergen PLC 53,631
-------------------------------------------------------------------------------
6,700 Premier Farnell PLC 80,202
-------------------------------------------------------------------------------
2,632 RTZ Corp. PLC 44,250
-------------------------------------------------------------------------------
4,800 Rank Group PLC 35,104
-------------------------------------------------------------------------------
4,655 Reckitt & Colman PLC 54,861
-------------------------------------------------------------------------------
7,191 Redland PLC 44,732
-------------------------------------------------------------------------------
5,100 Reed International PLC 98,819
-------------------------------------------------------------------------------
11,400 Rexam 64,781
-------------------------------------------------------------------------------
31,600 Rugby Group PLC 51,002
-------------------------------------------------------------------------------
6,300 Safeway PLC 41,308
-------------------------------------------------------------------------------
27,500 Sedgwick Group PLC 58,024
-------------------------------------------------------------------------------
2,928 Siebe PLC 46,741
-------------------------------------------------------------------------------
3,491 Smithkline Beecham PLC 48,127
-------------------------------------------------------------------------------
12,700 Tomkins PLC 53,059
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES,
UNITS OR VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
BONDS--CONTINUED
- -----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-------------------------------------------------------------------------------
UNITED KINGDOM--CONTINUED
-------------------------------------------------------------------------------
2,720 Zeneca Group $ 74,997
------------------------------------------------------------------------------- -------------
Total 3,173,413
------------------------------------------------------------------------------- -------------
TOTAL FOREIGN EQUITY 16,230,815
------------------------------------------------------------------------------- -------------
TOTAL STOCKS (IDENTIFIED COST $43,144,819) 48,774,521
------------------------------------------------------------------------------- -------------
BONDS--29.1%
- -----------------------------------------------------------------------------------------------
TREASURY--9.0%
-------------------------------------------------------------------------------
$ 635,000 United States Treasury Note, 5.000%, 2/15/1999 627,075
-------------------------------------------------------------------------------
500,000 United States Treasury Note, 6.250%, 2/15/2003 508,835
-------------------------------------------------------------------------------
500,000 United States Treasury Note, 6.375%, 3/31/2001 510,950
-------------------------------------------------------------------------------
1,605,000 United States Treasury Note, 6.375%, 8/15/2002 1,645,029
-------------------------------------------------------------------------------
1,300,000 United States Treasury Note, 6.375%, 9/30/2001 1,329,315
-------------------------------------------------------------------------------
2,025,000 United States Treasury Note, 6.500%, 5/15/2005 2,087,370
-------------------------------------------------------------------------------
200,000 United States Treasury Note, 6.875%, 5/15/2006 211,448
-------------------------------------------------------------------------------
350,000 United States Treasury Note, 7.500%, 2/15/2005 383,040
------------------------------------------------------------------------------- -------------
TOTAL TREASURY 7,303,062
------------------------------------------------------------------------------- -------------
MORTGAGE-BACKED SECURITIES--4.9%
-------------------------------------------------------------------------------
GOVERNMENT AGENCY--4.9%
-------------------------------------------------------------------------------
354,799 Federal Home Loan Mortgage Corp. 7.500%, 30 Year, 10/1/2025 359,670
-------------------------------------------------------------------------------
167,053 Federal Home Loan Mortgage Corp. 7.000%, 15 Year,
4/1/2009 168,616
-------------------------------------------------------------------------------
481,909 Federal Home Loan Mortgage Corp., 6.500%, 15 Year, 10/1/2010 479,779
-------------------------------------------------------------------------------
84,820 Federal National Mortgage Association, 7.000%, 30 Year, 5/1/2001 86,436
-------------------------------------------------------------------------------
211,801 Federal National Mortgage Association, 8.000%, 30 Year, 7/1/2023 218,814
-------------------------------------------------------------------------------
475,081 Federal National Mortgage Association, 7.000%, 15 Year, 8/1/2011 478,934
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
BONDS--CONTINUED
- -----------------------------------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES--CONTINUED
-------------------------------------------------------------------------------
GOVERNMENT AGENCY--CONTINUED
-------------------------------------------------------------------------------
$ 528,192 Federal National Mortgage Association, 6.500%, 30 Year, 7/1/2026 $ 512,996
-------------------------------------------------------------------------------
498,937 Federal National Mortgage Association, 7.500%, 30 Year, 8/1/2026 505,638
-------------------------------------------------------------------------------
218,069 Government National Mortgage Association, 9.000%, 30 Year,
10/15/2019 235,035
-------------------------------------------------------------------------------
441,897 Government National Mortgage Association, 8.500%, 30 Year,
10/15/2022 464,124
-------------------------------------------------------------------------------
470,320 Government National Mortgage Association, 8.000%, 30 Year,
7/15/2025 485,601
------------------------------------------------------------------------------- -------------
TOTAL MORTGAGE-BACKED SECURITIES 3,995,643
------------------------------------------------------------------------------- -------------
INVESTMENT GRADE BONDS--2.4%
-------------------------------------------------------------------------------
BANKING--0.3%
-------------------------------------------------------------------------------
250,000 Bank Of Montreal, Sub. Note, 7.80%, 4/1/2007 270,648
------------------------------------------------------------------------------- -------------
CABLE TELEVISION--0.3%
-------------------------------------------------------------------------------
230,000 Continental Cablevision, Sr. Deb., 9.50%, 8/1/2013 270,393
------------------------------------------------------------------------------- -------------
CHEMICALS & PLASTICS--0.3%
-------------------------------------------------------------------------------
250,000 (b)Bayer Corp., Deb., 6.50%, 10/1/2002 253,930
------------------------------------------------------------------------------- -------------
FINANCIAL INTERMEDIARIES--0.6%
-------------------------------------------------------------------------------
100,000 American General Corp., S.F. Deb., 9.625%, 2/1/2018 108,199
-------------------------------------------------------------------------------
150,000 DLJ, Note, 6.875%, 11/1/2005 150,399
-------------------------------------------------------------------------------
200,000 Green Tree Financial Corp, Sr. Sub. Note, 10.25%, 6/1/2002 235,520
------------------------------------------------------------------------------- -------------
Total 494,118
------------------------------------------------------------------------------- -------------
FOOD & DRUG RETAILERS--0.3%
-------------------------------------------------------------------------------
250,000 Hook-Superx, Inc., Sr. Note, 10.125%, 6/1/2002 266,478
------------------------------------------------------------------------------- -------------
INDUSTRIAL PRODUCTS & EQUIPMENT--0.3%
-------------------------------------------------------------------------------
250,000 Joy Technologies Inc., Sr. Note, 10.25%, 9/1/2003 276,850
------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
BONDS--CONTINUED
- -----------------------------------------------------------------------------------------------
INVESTMENT GRADE BONDS--CONTINUED
-------------------------------------------------------------------------------
SOVEREIGN GOVERNMENT--0.3%
-------------------------------------------------------------------------------
$ 250,000 Republic of Colombia, Note, 7.25%, 2/15/2003 $ 248,668
------------------------------------------------------------------------------- -------------
TOTAL INVESTMENT GRADE BONDS 2,081,085
------------------------------------------------------------------------------- -------------
HIGH YIELD BONDS--5.3%
-------------------------------------------------------------------------------
AUTOMOTIVE--0.2%
-------------------------------------------------------------------------------
50,000 (b)Blue Bird Body Co., Sr. Sub. Note, 10.75%, 11/15/2006 51,875
-------------------------------------------------------------------------------
25,000 Collins & Aikman Products, Sr. Sub. Note, 11.50%, 4/15/2006 26,813
-------------------------------------------------------------------------------
50,000 Exide Corp., Sr. Note, 10.00%, 4/15/2005 52,375
------------------------------------------------------------------------------- -------------
Total 131,063
------------------------------------------------------------------------------- -------------
BANKING--0.0%
-------------------------------------------------------------------------------
25,000 (b)First Nationwide Escrow, Sr. Sub. Note, 10.625%, 10/1/2003 26,750
-------------------------------------------------------------------------------
25,000 First Nationwide Holdings, Sr. Note, 12.25%, 5/15/2001 28,188
------------------------------------------------------------------------------- -------------
Total 54,938
------------------------------------------------------------------------------- -------------
BEVERAGE & TOBACCO--0.0%
-------------------------------------------------------------------------------
25,000 Dr Pep Btlg Hldgs, Sr. Disc. Note, 0/11.625%, 2/15/2003 23,250
------------------------------------------------------------------------------- -------------
BROADCAST RADIO & TV--0.6%
-------------------------------------------------------------------------------
37,000 Chancellor Broadcasting Co., Sr. Sub. Note, 12.50%, 10/1/2004 41,255
-------------------------------------------------------------------------------
25,000 Granite Broadcasting Corp, Sr. Sub. Note, 9.375%, 12/1/2005 23,938
-------------------------------------------------------------------------------
50,000 Heritage Media Corp., Sr. Sub. Note, 8.75%, 2/15/2006 48,500
-------------------------------------------------------------------------------
25,000 Pegasus Media , Note, 12.50%, 7/1/2005 27,125
-------------------------------------------------------------------------------
50,000 SCI Television, Sr. Secd. Note, 11.00%, 6/30/2005 53,875
-------------------------------------------------------------------------------
50,000 SFX Broadcasting, Inc., Sr. Sub. Note, 10.75%, 5/15/2006 52,625
-------------------------------------------------------------------------------
50,000 Sinclair Broadcast Group, Sr. Sub. Note, 10.00%, 9/30/2005 50,375
-------------------------------------------------------------------------------
50,000 Young Broadcasting Corp., Sr. Sub. Note, 10.125%, 2/15/2005 50,500
------------------------------------------------------------------------------- -------------
Total 348,193
------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
BONDS--CONTINUED
- -----------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
-------------------------------------------------------------------------------
BUSINESS EQUIPMENT & SERVICES--0.1%
-------------------------------------------------------------------------------
$ 50,000 Knoll, Inc., Sr. Sub. Note, 10.875%, 3/15/2006 $ 54,750
-------------------------------------------------------------------------------
25,000 Monarch Acquisition Corp., Sr. Note, 12.50%, 7/1/2003 27,875
-------------------------------------------------------------------------------
25,000 United Stationers Supply, Sr. Sub. Note, 12.75%, 5/1/2005 27,719
------------------------------------------------------------------------------- -------------
Total 110,344
------------------------------------------------------------------------------- -------------
CABLE TELEVISION--0.4%
-------------------------------------------------------------------------------
25,000 (b)Australis Holdings Pty, Unit, 0/15.000%, 11/1/2002 14,188
-------------------------------------------------------------------------------
50,000 Bell Cablemedia PLC, Sr. Disc. Note, 0/11.950%, 7/15/2004 43,250
-------------------------------------------------------------------------------
50,000 CF Cable TV Inc., Sr. Secd. 2nd Priority Note, 11.625%, 2/15/2005 58,250
-------------------------------------------------------------------------------
25,000 Cablevision Systems Corp., Sr. Sub. Note, 9.875%, 5/15/2006 25,313
-------------------------------------------------------------------------------
50,000 Charter Communication Southeast, Sr. Note, 11.25%, 3/15/2006 51,750
-------------------------------------------------------------------------------
50,000 Comcast UK Cable, Deb., 0/11.200%, 11/15/2007 34,875
-------------------------------------------------------------------------------
100,000 (b)CS Wireless Systems, Inc., Unit, 0/11.375%, 3/1/2006 38,500
-------------------------------------------------------------------------------
25,000 Echostar Satellite Broadcasting Corp. Sr. Disc. Note, 0/13.125%,
3/15/2004 19,125
-------------------------------------------------------------------------------
100,000 International Cabletel, Sr. Disc. Note, 0/12.750%, 4/15/2005 72,000
-------------------------------------------------------------------------------
25,000 Telewest PLC, Sr. Disc. Deb., 0/11.000%, 10/1/2007 17,125
-------------------------------------------------------------------------------
25,000 Uih Australia/Pacific, Sr. Disc. Note, 0/14.000%, 5/15/2006 13,375
------------------------------------------------------------------------------- -------------
Total 387,751
------------------------------------------------------------------------------- -------------
CHEMICALS & PLASTICS--0.4%
-------------------------------------------------------------------------------
25,000 Arcadian Partners LP, Sr. Note, Series B, 10.75%, 5/1/2005 27,688
-------------------------------------------------------------------------------
50,000 (b)Astor Corp., Sr. Sub. Note, 10.50%, 10/15/2006 51,000
-------------------------------------------------------------------------------
25,000 Crain Industries Inc., Sr. Sub. Note, 13.50%, 8/15/2005 28,188
-------------------------------------------------------------------------------
50,000 Harris Chemical, Sr. Note, 10.25%, 7/15/2001 51,625
-------------------------------------------------------------------------------
33,000 Polymer Group, Sr. Note, 12.250%, 7/15/2002 35,805
-------------------------------------------------------------------------------
25,000 RBX Corp., Sr. Sub. Note, Series B, 11.25%, 10/15/2005 21,625
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
BONDS--CONTINUED
- -----------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
-------------------------------------------------------------------------------
CHEMICALS & PLASTICS--CONTINUED
-------------------------------------------------------------------------------
$ 50,000 Sterling Chemicals, Inc., Sr. Sub. Note, 11.75%, 8/15/2006 $ 51,875
-------------------------------------------------------------------------------
50,000 Viridian Inc., Note, 9.75%, 4/1/2003 54,743
------------------------------------------------------------------------------- -------------
Total 322,549
------------------------------------------------------------------------------- -------------
CLOTHING & TEXTILES--0.1%
-------------------------------------------------------------------------------
50,000 Westpoint Stevens, Inc., Sr. Sub. Deb., 9.375%, 12/15/2005 51,625
------------------------------------------------------------------------------- -------------
CONSUMER PRODUCTS--0.2%
-------------------------------------------------------------------------------
50,000 Herff Jones, Inc., Sr. Sub. Note, 11.00%, 8/15/2005 53,750
-------------------------------------------------------------------------------
50,000 (b)ICON Fitness Corp., Sr. Disc. Note, 0/14.00%, 11/15/2006 26,125
-------------------------------------------------------------------------------
50,000 Playtex Family Products Corp., Sr. Sub. Note, 9.00%, 12/15/2003 49,750
-------------------------------------------------------------------------------
25,000 Simmons Co., Sr. Sub. Note, 10.75%, 4/15/2006 26,125
------------------------------------------------------------------------------- -------------
Total 155,750
------------------------------------------------------------------------------- -------------
CONTAINER & GLASS PRODUCTS--0.1%
-------------------------------------------------------------------------------
50,000 Owens Illinois, Inc., Sr. Sub. Note, 9.75%, 8/15/2004 52,250
-------------------------------------------------------------------------------
25,000 Packaging Resources Inc., Sr. Note, 11.625%, 5/1/2003 26,375
------------------------------------------------------------------------------- -------------
Total 78,625
------------------------------------------------------------------------------- -------------
ECOLOGICAL SERVICES & EQUIPMENT--0.1%
-------------------------------------------------------------------------------
50,000 (b)Allied Waste, Sr. Sub. Note, 10.25%, 12/1/2006 51,313
-------------------------------------------------------------------------------
25,000 **(a)Mid-American Waste System, Sr. Sub. Note, 12.25%, 2/15/2003 10,250
------------------------------------------------------------------------------- -------------
Total 61,563
------------------------------------------------------------------------------- -------------
ELECTRONICS--0.1%
-------------------------------------------------------------------------------
50,000 Advanced Micro Devices, Sr. Secd. Note, 11.00%, 8/1/2003 54,438
------------------------------------------------------------------------------- -------------
FOOD & DRUG RETAILERS--0.1%
-------------------------------------------------------------------------------
25,000 Carr Gottstein Foods Co., Sr. Sub. Note, 12.00%, 11/15/2005 26,750
-------------------------------------------------------------------------------
Grand Union Co., 884 Common Shares 5,083
-------------------------------------------------------------------------------
50,000 Ralph's Grocery Co., Sr. Note, 10.45%, 6/15/2004 51,938
-------------------------------------------------------------------------------
</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
-------------------------------------------------------------------------------
$ 25,000 Smith's Food & Drug , Sr. Sub. Note, 11.25%, 5/15/2007 $ 27,500
------------------------------------------------------------------------------- -------------
Total 111,271
------------------------------------------------------------------------------- -------------
FOOD PRODUCTS--0.1%
-------------------------------------------------------------------------------
50,000 (b)International Home Foods, Sr. Sub. Note, 10.375%, 11/1/2006 51,375
-------------------------------------------------------------------------------
25,000 Specialty Foods, Sr. Sub. Note, 11.250%, 8/15/2003 21,375
-------------------------------------------------------------------------------
25,000 Van De Kamp's, Inc., Sr. Sub. Note, 12.00%, 9/15/2005 27,500
------------------------------------------------------------------------------- -------------
Total 100,250
------------------------------------------------------------------------------- -------------
FOREST PRODUCTS--0.3%
-------------------------------------------------------------------------------
25,000 Four M Corp., Sr. Note, 12.00%, 6/1/2006 25,813
-------------------------------------------------------------------------------
50,000 Repap New Brunswick, 2nd Priority Sr. Secd. Note, 10.625%,
4/15/2005 48,750
-------------------------------------------------------------------------------
50,000 Riverwood International, Sr. Sub. Note, 10.875%, 4/1/2008 45,500
-------------------------------------------------------------------------------
50,000 Stone Container, Sr. Note, 11.50%, 10/1/2004 52,750
------------------------------------------------------------------------------- -------------
Total 172,813
------------------------------------------------------------------------------- -------------
HEALTHCARE--0.2%
-------------------------------------------------------------------------------
25,000 (b)Dade International, Inc., Sr. Sub. Note, 11.125%, 5/1/2006 27,125
-------------------------------------------------------------------------------
50,000 (b)Prime Succession Acq., Sr. Sub. Note, 10.75%, 8/15/2004 54,250
-------------------------------------------------------------------------------
50,000 Tenet Healthcare, Sr. Sub. Note, 10.125%, 3/1/2005 55,500
------------------------------------------------------------------------------- -------------
Total 136,875
------------------------------------------------------------------------------- -------------
HOTELS, MOTELS, INNS & CASINOS--0.1%
-------------------------------------------------------------------------------
50,000 Courtyard By Marriott, Sr. Note, 10.75%, 2/1/2008 53,000
------------------------------------------------------------------------------- -------------
INDUSTRIAL PRODUCTS & EQUIPMENT--0.3%
-------------------------------------------------------------------------------
25,000 Cabot Safety Corp., Sr. Sub. Note, 12.50%, 7/15/2005 28,063
-------------------------------------------------------------------------------
50,000 (b)Euramax International PLC, Sr. Sub. Note, 11.25%, 10/1/2006 51,500
-------------------------------------------------------------------------------
50,000 Mettler-Toledo, Inc., Sr. Sub. Note, 9.75%, 10/1/2006 52,625
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
BONDS--CONTINUED
- -----------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
-------------------------------------------------------------------------------
INDUSTRIAL PRODUCTS & EQUIPMENT--CONTINUED
-------------------------------------------------------------------------------
$ 50,000 Unifrax Investment Corp., Sr. Note, 10.50%, 11/1/2003 $ 51,500
------------------------------------------------------------------------------- -------------
Total 183,688
------------------------------------------------------------------------------- -------------
LEISURE & ENTERTAINMENT--0.2%
-------------------------------------------------------------------------------
100,000 Amf Group, Inc., Sr. Sub. Disc. Note, 0/12.250%, 3/15/2006 63,750
-------------------------------------------------------------------------------
25,000 Cobblestone Golf, Sr. Note, 11.50%, 6/1/2003 26,188
-------------------------------------------------------------------------------
50,000 Six Flags Theme Parks, Sr. Sub. Disc. Note, 0/12.250%, 6/15/2005 46,250
------------------------------------------------------------------------------- -------------
Total 136,188
------------------------------------------------------------------------------- -------------
MACHINERY & EQUIPMENT--0.2%
-------------------------------------------------------------------------------
50,000 Alvey Systems, Sr. Sub. Note, 11.375%, 1/31/2003 52,500
-------------------------------------------------------------------------------
50,000 (b)Clark Material, Sr. Note, 10.75%, 11/15/2006 51,375
-------------------------------------------------------------------------------
17,000 Primeco Inc., Sr. Sub. Note, 12.75%, 3/1/2005 19,380
-------------------------------------------------------------------------------
25,000 (b)Tokheim Corporation, Sr. Sub. Note, 11.50%, 8/1/2006 26,438
------------------------------------------------------------------------------- -------------
Total 149,693
------------------------------------------------------------------------------- -------------
METALS & MINING--0.1%
-------------------------------------------------------------------------------
50,000 Royal Oak Mines, Sr. Sub. Note, 11.00%, 8/15/2006 51,125
------------------------------------------------------------------------------- -------------
OIL & GAS--0.3%
-------------------------------------------------------------------------------
50,000 (b)Abraxas Petroleum Corp., Sr. Note, 11.50%, 11/1/2004 51,875
-------------------------------------------------------------------------------
50,000 Falcon Drilling Company, Sr. Note, 9.75%, 1/15/2001 52,500
-------------------------------------------------------------------------------
50,000 Mesa Operating Company, Sr. Sub. Note, 10.625%, 7/1/2006 54,125
------------------------------------------------------------------------------- -------------
Total 158,500
------------------------------------------------------------------------------- -------------
PRINTING & PUBLISHING--0.3%
-------------------------------------------------------------------------------
50,000 Garden State Newspapers, Inc., Sr. Sub. Note, 12.00%, 7/1/2004 53,625
-------------------------------------------------------------------------------
K-III Communications Corp., 500 Pfd Shares, Series D, $10.00 47,000
-------------------------------------------------------------------------------
50,000 (b)Petersen Publishing, Sr. Sub. Note, 11.125%, 11/15/2006 51,313
------------------------------------------------------------------------------- -------------
Total 151,938
------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
BONDS--CONTINUED
- -----------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
-------------------------------------------------------------------------------
SERVICES--0.1%
-------------------------------------------------------------------------------
$ 25,000 Coinmach Corp., Sr. Note, 11.75%, 11/15/2005 $ 27,125
-------------------------------------------------------------------------------
50,000 (b)Ryder TRS, Inc., Sr. Sub. Note, 10.00%, 12/1/2006 51,188
------------------------------------------------------------------------------- -------------
Total 78,313
------------------------------------------------------------------------------- -------------
STEEL--0.1%
-------------------------------------------------------------------------------
25,000 Bayou Steel Corp., 1st Mtg. Note, 10.25%, 3/1/2001 23,375
-------------------------------------------------------------------------------
25,000 EnviroSource, Inc., Sr. Note, 9.75%, 6/15/2003 23,355
-------------------------------------------------------------------------------
50,000 GS Technologies Operating Co., Inc., Sr. Note, 12.00%, 9/1/2004 51,750
-------------------------------------------------------------------------------
25,000 Republic Engineered Steel, 1st Mtg. Note, 9.875%, 12/15/2001 22,844
------------------------------------------------------------------------------- -------------
Total 121,324
------------------------------------------------------------------------------- -------------
SURFACE TRANSPORTATION--0.2%
-------------------------------------------------------------------------------
25,000 Ameritruck Distribution, Sr. Sub. Note, 12.25%, 11/15/2005 24,875
-------------------------------------------------------------------------------
50,000 Gearbulk Holding Limited, Sr. Note, 11.25%, 12/1/2004 54,500
-------------------------------------------------------------------------------
25,000 Great Dane Holdings, Sr. Sub. Deb., 12.75%, 8/1/2001 25,125
-------------------------------------------------------------------------------
50,000 (b)Statia Terminals, 1st Mtg. Note, 11.75%, 11/15/2003 50,750
-------------------------------------------------------------------------------
25,000 Stena AB, Sr. Note, 10.50%, 12/15/2005 26,781
------------------------------------------------------------------------------- -------------
Total 182,031
------------------------------------------------------------------------------- -------------
TELECOMMUNICATIONS & CELLULAR--0.2%
-------------------------------------------------------------------------------
50,000 American Communications , Sr. Disc. Note, 0/12.750%, 4/1/2006 27,375
-------------------------------------------------------------------------------
50,000 Arch Communications, Sr. Disc. Note, 0/10.875%, 3/15/2008 29,125
-------------------------------------------------------------------------------
100,000 Brooks Fiber Properties, Inc. Sr. Disc. Note, 0/10.875%, 3/1/2006 66,500
-------------------------------------------------------------------------------
25,000 Fonorola, Inc., Sr. Secd. Note, 12.50%, 8/15/2002 27,313
-------------------------------------------------------------------------------
50,000 Intermedia Communications, Sr. Disc. Note, 0/12.500%, 5/15/2006 33,125
-------------------------------------------------------------------------------
50,000 Millicom International , Sr. Disc. Note, 13.50%, 6/1/2006 29,625
-------------------------------------------------------------------------------
25,000 (a)Mobilemedia Communication, Sr. Sub. Note, 9.375%, 11/1/2007 13,750
-------------------------------------------------------------------------------
50,000 Nextel Communications, Inc., Sr. Disc. Note, 0/11.50%, 9/1/2003 37,875
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OR
FOREIGN
CURRENCY VALUE
PAR IN U.S.
AMOUNT DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
BONDS--CONTINUED
- -----------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
-------------------------------------------------------------------------------
TELECOMMUNICATIONS & CELLULAR--CONTINUED
-------------------------------------------------------------------------------
$ 25,000 Paging Network, Sr. Sub. Note, 10.125%, 8/1/2007 $ 25,156
-------------------------------------------------------------------------------
25,000 Sygnet Wireless, Inc., Sr. Note, 11.50%, 10/1/2006 25,250
-------------------------------------------------------------------------------
50,000 Teleport Communications, Sr. Disc. Note, 0/11.125%, 7/1/2007 34,250
-------------------------------------------------------------------------------
50,000 Vanguard Cellular Systems, Deb., 9.375%, 4/15/2006 50,375
------------------------------------------------------------------------------- -------------
Total 399,719
------------------------------------------------------------------------------- -------------
UTILITIES--0.2%
-------------------------------------------------------------------------------
50,000 California Energy Co., Sr. Disc. Note, 0/10.250%, 1/15/2004 52,375
-------------------------------------------------------------------------------
El Paso Electric Co., 542 PIK Pfd Shares, Series A, 11.40% 59,756
------------------------------------------------------------------------------- -------------
Total 112,131
------------------------------------------------------------------------------- -------------
TOTAL HIGH YIELD BONDS 4,078,948
------------------------------------------------------------------------------- -------------
FOREIGN BONDS--7.5%
-------------------------------------------------------------------------------
AUSTRALIA DOLLAR--0.3%
-------------------------------------------------------------------------------
89,000 Queensland Treas Global, Local Government Guarantee, 8.00%,
5/14/2003 76,017
-------------------------------------------------------------------------------
57,000 Queensland Treas Global, Local Government Guarantee, 8.00%,
8/14/2001 48,232
-------------------------------------------------------------------------------
60,000 State Bank Of New South Wales, 12.25%, 2/26/2001 57,840
------------------------------------------------------------------------------- -------------
Total 182,089
------------------------------------------------------------------------------- -------------
BELGIUM FRANC--0.2%
-------------------------------------------------------------------------------
514,000 Belgian Government, Bond, 6.50%, 3/31/2005 17,107
-------------------------------------------------------------------------------
4,000,000 Belgium Kingdom, 7.75%, 10/15/2004 143,667
------------------------------------------------------------------------------- -------------
Total 160,774
------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN VALUE
CURRENCY IN
PAR U.S.
AMOUNT DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
BONDS--CONTINUED
- -----------------------------------------------------------------------------------------------
FOREIGN BONDS--CONTINUED
-------------------------------------------------------------------------------
CANADA DOLLAR--0.4%
-------------------------------------------------------------------------------
204,000 Canada Government, Deb., 6.50%, 6/1/2004 $ 158,142
-------------------------------------------------------------------------------
155,000 Ontario Hydro, 9.00%, 6/24/2002 134,257
------------------------------------------------------------------------------- -------------
Total 292,399
------------------------------------------------------------------------------- -------------
DANISH KRONE--0.5%
-------------------------------------------------------------------------------
1,927,000 Denmark--Bullet, Bond, 8.00%, 3/15/2006 356,900
-------------------------------------------------------------------------------
500,000 Denmark, 8.00%, 5/15/2003 93,649
------------------------------------------------------------------------------- -------------
Total 450,549
------------------------------------------------------------------------------- -------------
DEUTSCHE MARK--1.4%
-------------------------------------------------------------------------------
150,000 Bundesobligationen, Deb., 7.25%, 10/20/1997 100,848
-------------------------------------------------------------------------------
188,000 Deutschland Republic, Deb., 6.25%, 1/4/2024 116,973
-------------------------------------------------------------------------------
20,000,000 KFW International Finance, 6.00%, 11/29/1999 201,053
-------------------------------------------------------------------------------
150,000 KFW International Finance, Bank Guarantee, 6.75%, 6/20/2005 104,193
-------------------------------------------------------------------------------
600,000 KFW International Finance, 7.00%, 5/12/2000 124,263
-------------------------------------------------------------------------------
435,000 Treuhandanstalt, 7.75%, 10/1/2002 320,290
-------------------------------------------------------------------------------
288,000 Treuhandanstalt, Foreign Government Guarantee, 6.875%,
6/11/2003 203,384
------------------------------------------------------------------------------- -------------
Total 1,171,004
------------------------------------------------------------------------------- -------------
FRENCH FRANC--0.4%
-------------------------------------------------------------------------------
324,000 France O.a.t., Bond, 7.25%, 4/25/2006 69,529
-------------------------------------------------------------------------------
187,500 France O.a.t., Bond, 7.50%, 4/25/2005 259,614
------------------------------------------------------------------------------- -------------
Total 329,143
------------------------------------------------------------------------------- -------------
IRISH POUND--0.4%
-------------------------------------------------------------------------------
92,000 Irish Government, Bond, 6.50%, 10/18/2001 158,773
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN VALUE
CURRENCY IN
PAR U.S.
AMOUNT DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
BONDS--CONTINUED
- -----------------------------------------------------------------------------------------------
FOREIGN BONDS--CONTINUED
-------------------------------------------------------------------------------
IRISH POUND--CONTINUED
-------------------------------------------------------------------------------
92,000 Treasury, Deb., 6.25%, 4/1/1999 $ 156,375
------------------------------------------------------------------------------- -------------
Total 315,148
------------------------------------------------------------------------------- -------------
ITALIAN LIRA--0.4%
-------------------------------------------------------------------------------
150,000,000 Btps, Bond, 10.50%, 11/1/2000 111,425
-------------------------------------------------------------------------------
380,000,000 Buoni Poliennali Del Tes, 9.50%, 1/1/2005 281,398
------------------------------------------------------------------------------- -------------
Total 392,823
------------------------------------------------------------------------------- -------------
JAPANESE YEN--0.4%
-------------------------------------------------------------------------------
28,000,000 Export-Import Bank Japan, 4.375%, 10/1/2003 279,938
-------------------------------------------------------------------------------
11,000,000 Interamerican Development, Deb., 7.25%, 5/15/2000 116,012
------------------------------------------------------------------------------- -------------
Total 395,950
------------------------------------------------------------------------------- -------------
NETHERLANDS GUILDER--0.6%
-------------------------------------------------------------------------------
255,000 Bank Ned Gemeenten, Bond, 6.375%, 1/4/2006 154,332
-------------------------------------------------------------------------------
130,000 Lkb-global Bd, Bank Guarantee, 6.00%, 1/25/2006 85,196
-------------------------------------------------------------------------------
250,000 Netherlands Government, 5.75%, 1/15/2004 148,611
-------------------------------------------------------------------------------
90,000 Netherlands Government, 6.00%, 1/15/2006 53,657
------------------------------------------------------------------------------- -------------
Total 441,796
------------------------------------------------------------------------------- -------------
NEW ZEALAND DOLLAR--0.1%
-------------------------------------------------------------------------------
61,000 New Zealand Government, 8.00%, 2/15/2001 45,119
-------------------------------------------------------------------------------
55,000 New Zealand Government, Bond, 8.00%, 7/15/1998 39,782
------------------------------------------------------------------------------- -------------
Total 84,901
------------------------------------------------------------------------------- -------------
NORWEGIAN KRONE--0.2%
-------------------------------------------------------------------------------
641,000 NGB 9.00%, 1/31/1999 108,664
-------------------------------------------------------------------------------
330,000 Norwegian Government, Bond, 7.00%, 5/31/2001 54,796
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN VALUE
CURRENCY IN
PAR U.S.
AMOUNT DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
BONDS--CONTINUED
- -----------------------------------------------------------------------------------------------
FOREIGN BONDS--CONTINUED
-------------------------------------------------------------------------------
NORWEGIAN KRONE--CONTINUED
-------------------------------------------------------------------------------
247,000 Norwegian Government Foreign Government Guarantee, 5.75%,
11/30/2004 $ 37,804
------------------------------------------------------------------------------- -------------
Total 201,264
------------------------------------------------------------------------------- -------------
PORTUGUESE ESCUDO--0.3%
-------------------------------------------------------------------------------
29,250,000 Portuguese Ot's, Bond, 11.875%, 2/23/2000 218,574
------------------------------------------------------------------------------- -------------
SPANISH PESETA--0.6%
-------------------------------------------------------------------------------
16,000,000 Spanish Government, 10.00%, 2/28/2005 146,759
-------------------------------------------------------------------------------
29,000,000 Spanish Government, Bond, 8.80%, 4/30/2006 246,368
-------------------------------------------------------------------------------
3,410,000 Spanish Government, Bond, 9.40%, 4/30/1999 28,303
-------------------------------------------------------------------------------
8,540,000 Spanish Government, Deb., 10.10%, 2/28/2001 75,287
------------------------------------------------------------------------------- -------------
Total 496,717
------------------------------------------------------------------------------- -------------
SWEDISH KRONA--0.1%
-------------------------------------------------------------------------------
800,000 Sweden, 6.00%, 2/9/2005 112,835
------------------------------------------------------------------------------- -------------
UNITED KINGDOM POUND--1.2%
-------------------------------------------------------------------------------
187,000 British Gas PLC, 8.875%, 7/8/2008 330,307
-------------------------------------------------------------------------------
38,000 U.K. Treasury, Deb., 8.50%, 12/7/2005 68,778
-------------------------------------------------------------------------------
160,000 U.K. Conversion, 9.00%, 3/3/2000 285,054
-------------------------------------------------------------------------------
30,000 U.K. Treasury, Bond, 8.00%, 12/7/2015 52,927
-------------------------------------------------------------------------------
92,000 United Kingdom Treasury, Bond, 7.50%, 12/7/2006 154,480
------------------------------------------------------------------------------- -------------
Total 891,546
------------------------------------------------------------------------------- -------------
TOTAL FOREIGN BONDS 6,137,512
------------------------------------------------------------------------------- -------------
TOTAL BONDS (IDENTIFIED COST $22,839,601) 23,596,250
------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
IN
PRINCIPAL U.S.
AMOUNT DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
CASH EQUIVALENTS--11.3%
- -----------------------------------------------------------------------------------------------
(C)REPURCHASE AGREEMENT--11.3%
-------------------------------------------------------------------------------
$ 9,145,000 BT Securities Corporation, 5.720%, dated 11/29/1996, due 12/2/1996 (AT
AMORTIZED COST) $ 9,145,000
------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST $75,129,420)(D) $ 81,515,771
------------------------------------------------------------------------------- -------------
</TABLE>
(a) Non-income producing security.
(b) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. At November 30, 1996, these securities
amounted to $2,009,304 which represents 2.48% of net assets.
(c) 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.
(d) The cost of investments for federal tax purposes amounts to $75,155,640. The
net unrealized appreciation of investments on a federal tax basis amounts to
$6,360,131 which is comprised of $7,739,574 appreciation and $1,379,443
depreciation at November 30, 1996.
Note: The categories of investments are shown as a percentage of net assets
($81,105,195) at November 30, 1996.
The following acronyms are used throughout this portfolio:
ACES--Adjustable Convertible Extendable Securities
ADR--American Depository Receipt
GDR--Global Depository Receipt
LP--Limited Partnership
PEPS--Participating Equity Preferred Stock
PIK--Payment in Kind
PLC--Public Limited Company
*MOBILEMEDIA COMMUNICATIONS.
On November 1, 1996, MobileMedia Communications failed to make its scheduled
interest payment. Subsequent to November 30, 1996 holdings in these securities
have been sold.
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
**MID-AMERICAN WASTE SYSTEM, INC.
On February 15, 1996 and August 15, 1996 Mid-American Waste Systems failed to
make its scheduled interest payment. Currently, the company is in negotiations
with its debt holders and has retained an investment bank to evaluate its
options. The unofficial subordinated bondholders group has retained legal
counsel and financial advisors and is monitoring the situation closely.
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------------
Investment in repurchase agreement $ 9,145,000
- --------------------------------------------------------------------------------------
Investments in securities 72,370,771
- -------------------------------------------------------------------------------------- ------------
Total investments in securities, at value (identified cost: $75,129,420
and tax cost: $75,155,640) $ 81,515,771
- ----------------------------------------------------------------------------------------------------
Cash denominated in foreign currencies (identified cost: $259) 259
- ----------------------------------------------------------------------------------------------------
Income receivable 556,361
- ----------------------------------------------------------------------------------------------------
Receivable for investments sold 164,898
- ----------------------------------------------------------------------------------------------------
Receivable for shares sold 139,742
- ----------------------------------------------------------------------------------------------------
Deferred expenses 20,825
- ---------------------------------------------------------------------------------------------------- ------------
Total assets 82,397,856
- ----------------------------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------------
Payable for investments purchased $ 970,394
- --------------------------------------------------------------------------------------
Payable for shares redeemed 168,474
- --------------------------------------------------------------------------------------
Payable to Bank 55,061
- --------------------------------------------------------------------------------------
Payable for foreign taxes withheld 3,889
- --------------------------------------------------------------------------------------
Payable for foreign currency exchange contracts 591
- --------------------------------------------------------------------------------------
Accrued expenses 94,252
- -------------------------------------------------------------------------------------- ------------
Total liabilities 1,292,661
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSETS for 6,482,221 shares outstanding $ 81,105,195
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSETS CONSIST OF:
- ----------------------------------------------------------------------------------------------------
Paid in capital $ 72,046,365
- ----------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and translation
of assets and liabilities in foreign currency 6,386,347
- ----------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments, foreign currency transactions,
and futures contracts 2,386,770
- ----------------------------------------------------------------------------------------------------
Undistributed net investment income 285,713
- ---------------------------------------------------------------------------------------------------- ------------
Total Net Assets $ 81,105,195
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PROCEEDS PER SHARE:
- ----------------------------------------------------------------------------------------------------
Institutional Shares: $49,715,145/3,970,973 shares outstanding $12.52
- ---------------------------------------------------------------------------------------------------- ------------
Select Shares: $31,390,050/2,511,248 shares outstanding $12.50
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -----------------------------------------------------------------------------------------------------
Dividends (net of foreign taxes withheld of $31,692) $ 575,142
- -----------------------------------------------------------------------------------------------------
Interest (net of dollar roll expense of $5,892) (net of foreign taxes withheld of $1,486) 1,749,683
- ----------------------------------------------------------------------------------------------------- ---------
Total income 2,324,825
- -----------------------------------------------------------------------------------------------------
EXPENSES:
- ------------------------------------------------------------------------------------------
Investment advisory fee $ 434,558
- ------------------------------------------------------------------------------------------
Administrative personnel and services fee 155,001
- ------------------------------------------------------------------------------------------
Custodian fees 108,600
- ------------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 76,039
- ------------------------------------------------------------------------------------------
Directors'/Trustees' fees 3,854
- ------------------------------------------------------------------------------------------
Auditing fees 14,621
- ------------------------------------------------------------------------------------------
Legal fees 3,942
- ------------------------------------------------------------------------------------------
Portfolio accounting fees 75,129
- ------------------------------------------------------------------------------------------
Distribution services fee--Select Shares 163,831
- ------------------------------------------------------------------------------------------
Shareholder services fee--Institutional Shares 90,242
- ------------------------------------------------------------------------------------------
Shareholder services fee--Select Shares 54,610
- ------------------------------------------------------------------------------------------
Share registration costs 44,290
- ------------------------------------------------------------------------------------------
Printing and postage 38,097
- ------------------------------------------------------------------------------------------
Insurance premiums 4,493
- ------------------------------------------------------------------------------------------
Taxes 1,018
- ------------------------------------------------------------------------------------------
Miscellaneous 15,391
- ------------------------------------------------------------------------------------------ ---------
Total expenses 1,283,716
- ------------------------------------------------------------------------------------------
Waivers--
- -------------------------------------------------------------------------------
Waiver of investment advisory fee $(393,073)
- -------------------------------------------------------------------------------
Waiver of distribution services fee--Select Shares (54,610)
- -------------------------------------------------------------------------------
Waiver of shareholder services fee--Institutional Shares (72,194)
- ------------------------------------------------------------------------------- ---------
Total waivers (519,877)
- ------------------------------------------------------------------------------------------ ---------
Net expenses 763,839
- ----------------------------------------------------------------------------------------------------- ---------
Net investment income 1,560,986
- ----------------------------------------------------------------------------------------------------- ---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FOREIGN CURRENCY, AND FUTURES CONTRACTS:
- -----------------------------------------------------------------------------------------------------
Net realized gain on investments, foreign currency transactions, and futures contracts 2,610,405
- -----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments, translation of assets
and liabilities in foreign currency, and futures contracts 3,708,316
- ----------------------------------------------------------------------------------------------------- ---------
Net realized and unrealized gain on investments, foreign currency, and futures contracts 6,318,721
- ----------------------------------------------------------------------------------------------------- ---------
Change in net assets resulting from operations $7,879,707
- ----------------------------------------------------------------------------------------------------- ---------
</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 YEAR ENDED
NOVEMBER 30, NOVEMBER 30,
1996 1995
------------ ------------
<S> <C> <C>
- ------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------------------------------------------------
OPERATIONS--
- ------------------------------------------------------------------------------
Net investment income $ 1,560,986 $ 794,962
- ------------------------------------------------------------------------------
Net realized gain (loss) on investments, foreign currency
transactions, and futures contracts ($2,395,283 and $888,863, respectively, as
computed for federal tax purposes) 2,610,405 651,763
- ------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of
investments, translation of assets and liabilities in
foreign currency, and futures contracts 3,708,316 3,244,417
- ------------------------------------------------------------------------------ --------------- ---------------
Change in net assets resulting from operations 7,879,707 4,691,142
- ------------------------------------------------------------------------------ --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ------------------------------------------------------------------------------
Distributions from net investment income:
- ------------------------------------------------------------------------------
Institutional Shares (1,071,156) (547,698)
- ------------------------------------------------------------------------------
Select Shares (489,212) (101,587)
- ------------------------------------------------------------------------------
Distributions from net realized gain on investments,
foreign currency transactions, and futures contracts
- ------------------------------------------------------------------------------
Institutional Shares (600,532) (28,086)
- ------------------------------------------------------------------------------
Select Shares (289,253) (3,092)
- ------------------------------------------------------------------------------ --------------- ---------------
Change in net assets resulting
from distributions to shareholders (2,450,153) (680,463)
- ------------------------------------------------------------------------------ --------------- ---------------
SHARE TRANSACTIONS--
- ------------------------------------------------------------------------------
Proceeds from sale of shares 51,526,045 24,745,587
- ------------------------------------------------------------------------------
Net asset value of shares issued to shareholders
in payment of distributions declared 2,029,232 492,403
- ------------------------------------------------------------------------------
Cost of shares redeemed (15,833,126) (8,663,934)
- ------------------------------------------------------------------------------ --------------- ---------------
Change in net assets resulting from share transactions 37,722,151 16,574,056
- ------------------------------------------------------------------------------ --------------- ---------------
Change in net assets 43,151,705 20,584,735
- ------------------------------------------------------------------------------
NET ASSETS:
- ------------------------------------------------------------------------------
Beginning of period 37,953,490 17,368,755
- ------------------------------------------------------------------------------ --------------- ---------------
End of period (including undistributed net investment
income of $285,713 and $342,257 respectively) $ 81,105,195 $ 37,953,490
- ------------------------------------------------------------------------------ --------------- ---------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
(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 portfolios. The financial statements
included herein are only those of Federated Managed Aggressive Growth Fund (the
"Fund"), a diversified portfolio. The financial statements of the other
portfolios are presented separately. The assets of each portfolio are segregated
and a shareholder's interest is limited to the portfolio in which shares are
held. The investment objective of the Fund is to seek capital appreciation.
The Fund offers two classes of shares: Institutional Shares and Select Shares.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Listed equity securities are valued at the last sale
price reported on a national securities exchange. U.S. government
securities, listed corporate bonds, (other fixed income and asset-backed
securities), and unlisted securities and private placement securities are
generally valued at the mean of the latest bid and asked price as furnished
by an independent pricing service. Short-term securities are valued at the
prices provided by an independent pricing service. However, short-term
securities with remaining maturities of sixty days or less at the time of
purchase may be valued at amortized cost, which approximates fair market
value.
With respect to valuation of foreign securities, trading in foreign
countries may be completed at times which vary from the closing of the New
York Stock Exchange. Therefore, foreign securities are valued at the latest
closing price on the exchange on which they are traded prior to the closing
of the New York Stock Exchange. Foreign securities quoted in foreign
currencies are translated into U.S. dollars at the foreign exchange rate in
effect at noon, eastern time, on the day the value of the foreign security
is determined.
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.
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral
securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code"). Dividend
income and distributions to shareholders are recorded on the ex-dividend
date.
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 passive foreign investment company
transactions. The following reclassifications have been made to the
financial statements.
<TABLE>
<CAPTION>
INCREASE (DECREASE)
<S> <C>
ACCUMULATED
NET REALIZED UNDISTRIBUTED NET
GAIN/LOSS INVESTMENT INCOME
$57,162 ($57,162)
</TABLE>
Net investment income, net realized gains/losses, and net assets were not
affected by this reclassification.
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
However, federal taxes may be imposed on the Fund upon the disposition of
certain investments in passive foreign investment companies. Withholding
taxes on foreign interest and dividends have been provided for in
accordance with the Fund's understanding of the applicable country's tax
rules and rates.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized over a period not to exceed five years from the Fund's
commencement date.
FUTURES CONTRACTS--The Fund purchases stock index futures contracts to
manage cashflows, enhance yield, and to potentially reduce transaction
costs. Upon entering into a stock index futures contract with a broker, the
Fund is required to deposit in a segregated account a specified amount of
cash or U.S. government securities. Futures contracts are valued daily and
unrealized gains or losses are recorded in a "variation margin" account.
Daily, the Fund receives from or pays to the broker a specified amount of
cash based upon changes in the variation margin account. When a contract is
closed, the Fund recognizes a realized gain or loss. 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 year ended November 30, 1996, the Fund had realized
gains of $532,453 on future contracts. As of November 30, 1996, the Fund
had no outstanding futures contracts.
FOREIGN EXCHANGE CONTRACTS--The Fund may enter into foreign currency
contracts for the delayed delivery of securities or foreign currency
exchange transactions. These contracts are used to hedge the Fund's
securities against currency fluctuations. Risks may arise upon entering
these transactions from the potential inability of counter-parties 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 purposes as unrealized
until the settlement date.
At November 30, 1996, the Fund had outstanding foreign currency commitments
as set forth below:
<TABLE>
<CAPTION>
UNREALIZED
SETTLEMENT CONTRACTS TO IN EXCHANGE CONTRACTS AT APPRECIATION
CONTRACTS SOLD DATE DELIVER/RECEIVE FOR VALUE (DEPRECIATION)
<S> <C> <C> <C> <C> <C>
New Zealand Dollar 12/3/1996 81,620 $57,461 $ 58,051 ($ 591)
</TABLE>
FOREIGN CURRENCY TRANSLATION--The accounting records of the Fund are
maintained in U.S. dollars. All assets and liabilities denominated in
foreign currencies ("FC") are translated into U.S. dollars based on the
rate of exchange of such currencies against U.S. dollars on the date of
valuation. Purchases and sales of securities, income and expenses are
translated at the rate of exchange quoted on the respective date that such
transactions are recorded. Differences between income and expense amounts
recorded and collected or paid are adjusted when reported by the custodian
bank. The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales
of FCs, currency gains or losses realized between the trade and settlement
dates on securities transactions, the difference between the amounts of
dividends, interest, and foreign withholding taxes recorded on the Fund's
books, and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes
in the value of assets and liabilities other than investments in securities
at fiscal year end, resulting from changes in the exchange rate.
RESTRICTED SECURITIES--Restricted securities are securities that may only
be resold upon registration under federal securities laws or in
transactions exempt from such registration. In some cases, the issuer of
restricted securities has agreed to register such securities for resale, at
the issuer's expense either upon demand by the Fund or in connection with
another registered offering of the securities. Many restricted securities
may be resold in the secondary market in transactions exempt from
registration. Such restricted securities may be determined to be liquid
under criteria established by the Trustees. The Fund will not incur any
registration costs upon such resales. The Fund's restricted securities are
valued at the price provided by dealers in the secondary market or, if no
market prices are available, at the fair value as determined by the Fund's
pricing committee.
Additional information on each restricted security held at November 30,
1996 is as follows:
<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE ACQUISITION COST
<S> <C> <C>
Abraxas Petroleum Corp., Sr. Note 11/05/1996 $ 50,000
Acer, Inc. 07/19/1996 12,975
Allied Waste, Sr. Sub. Note 11/25/1996 50,000
Astor Corp., Sr. Sub. Note 10/02/1996 49,750
Australis Holdings Pty, Unit 10/29/1996 14,219
Bayer Corp., Deb. 05/21/1996 245,903
Blue Bird Body Co., Sr. Sub. Note 11/13/1996 49,848
Bombay Suburban Electric Supply 02/29/1996 24,480
Cheung Kong Infrastructure 07/11/1996-08/22/1996 39,925
Chilectra S.A., ADR 02/28/1996 10,856
China Resources Bejing Land 11/05/1996 3,700
Clark Material, Sr. Note 11/22/1996 50,000
Crompton Greaves Ltd 07/01/1996-07/02/1996 38,295
CS Wireless Systems, Inc., Unit 02/16/1996 62,600
Dade International, Inc., Sr. Sub. Note 04/30/1996 25,000
Elevadores Atlas 09/25/1996 28,045
Euramax International Plc, Sr. Sub. Note 09/18/1996 $ 50,000
First Nationwide Escrow, Sr. Sub. Note 09/13/1996 25,625
Grupo Financiero Bancomer, S.A. de C.V. Class B 11/06/1995-01/17/1996 18,055
ICON Fitness Corp., Sr. Disc. Note 11/15/1996 25,612
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE ACQUISITION COST
<S> <C> <C>
International Home Foods, Sr. Sub. Note 10/29/1996 50,000
Japan Tobacco 06/17/1996-01/08/1996 121,236
Larsen & Toubro Ltd 06/05/1996 39,800
Mahindra and Mahindra 01/22/1996-02/02/1996 19,450
Pace Micro Technology 08/23/1996 38,874
Petersen Publishing, Sr. Sub. Note 11/20/1996 50,000
Prime Succession Acq., Sr. Sub. Note 08/13/1996 50,000
Ryder TRS, Inc., Sr. Sub. Note 11/20/1996 50,000
Sakura Finance (Bermuda), Conv. Pfd. 09/12/1996 108,794
Shanghai Industrial Holdings LTD 05/23/1996 28,522
Statia Terminals, 1st Mtg. Note 11/22/1996 50,000
Steel Authority of India 04/22/1996-04/23/1996 25,024
Sumitomo Bank International, Conv. Bond 06/06/1996 27,540
Tokheim Corporation, Sr. Sub. Note 08/16/1996 25,000
Westinghouse Electric Corp., PEPS, Series C 09/27/1995-03/14/1996 285,688
NGC Corp. 11/15/1996 63,089
</TABLE>
DOLLAR ROLL TRANSACTIONS--The Fund enters into dollar roll transactions,
with respect to mortgage securities issued by GNMA, FNMA and FHLMC, in
which the Fund sells mortgage securities to financial institutions and
simultaneously agrees to accept substantially similar (same type, coupon
and maturity) securities at a later date at an agreed upon price. Dollar
roll transactions are short-term financing arrangements which will not
exceed twelve months. The Fund will use the proceeds generated from the
transactions to invest in short-term investments, which may enhance the
Fund's current yield and total return.
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. Transactions in shares were as follows:
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
NOVEMBER 30, 1996 NOVEMBER 30, 1995
-------------------------- -------------------------
INSTITUTIONAL SHARES SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------- ---------- -------------- ---------- -------------
<S> <C> <C> <C> <C>
Shares sold 2,592,730 $ 30,626,600 1,317,111 $ 14,153,127
- ---------------------------------------------------------
Shares issued to shareholders in payment of distributions
declared 115,076 1,330,109 39,301 411,923
- ---------------------------------------------------------
Shares redeemed (946,450) (11,216,939) (744,515) (7,759,093)
- --------------------------------------------------------- ---------- -------------- ---------- -------------
Net change resulting from
Institutional share transactions 1,761,356 $ 20,739,770 611,897 $ 6,805,957
- --------------------------------------------------------- ---------- -------------- ---------- -------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
NOVEMBER 30, 1996 NOVEMBER 30, 1995
------------------------ -------------------------
SELECT SHARES SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------- ---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Shares sold 1,775,082 $ 20,899,445 970,853 $ 10,592,460
- ---------------------------------------------------------
Shares issued to shareholders in payment of distributions
declared 60,465 699,123 7,409 80,480
- ---------------------------------------------------------
Shares redeemed (389,611) (4,616,187) (83,687) (904,841)
- --------------------------------------------------------- ---------- ------------- ---------- -------------
Net change resulting from
Select share transactions 1,445,936 $ 16,982,381 894,575 $ 9,768,099
- --------------------------------------------------------- ---------- ------------- ---------- -------------
Net change resulting from share transactions 3,207,292 $ 37,722,151 1,506,472 $ 16,574,056
- --------------------------------------------------------- ---------- ------------- ---------- -------------
</TABLE>
(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 0.75% 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. (the "Sub-Adviser"), 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.
ADMINISTRATIVE FEE--Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ is based on the level of average
aggregate daily net assets of all funds advised by subsidiaries of Federated
Investors for the period. The administrative fee received during the period of
the Administrative Services Agreement shall be at least $125,000 per portfolio
and $30,000 per each additional class of shares.
DISTRIBUTION SERVICES FEE--The Fund has adopted a Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will
compensate Federated Securities Corp. ("FSC"), the principal distributor, from
the net assets of the Fund to finance activities intended to result in the sale
of the Fund's Select Shares. The Plan provides that the Fund may incur
distribution expenses up to 0.75% of average daily net assets of Select Shares
annually, to compensate FSC. The distributor may voluntarily choose to waive any
portion of its fee. The distributor can modify or terminate this voluntary
waiver at any time at its sole discretion.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25%
of average daily net assets of the Fund shares for the period. The fee paid to
FSS is used to finance certain services for shareholders and to maintain
shareholder accounts. FSS may voluntarily choose to waive any portion of its
fee. FSS can modify or terminate this voluntary waiver at any time at its sole
discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--FServ, through its
subsidiary, Federated Shareholder Services Company ("FSSC") serves as transfer
and dividend disbursing agent for the Fund. The fee paid to FSSC is based on the
size, type, and number of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses of $88,333 were borne initially
by Adviser.The Fund has agreed to reimburse Adviser for the organizational
expenses during the five year period following effective date. For the period
ended November 30, 1996, the Fund paid $12,835 pursuant to this agreement.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended November 30, 1996, were as follows:
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------------
PURCHASES $ 79,404,582
- --------------------------------------------------------------------------------------------------- -------------
SALES $ 44,470,061
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
(6) CONCENTRATION OF CREDIT RISK
The Fund invests in securities of non-U.S. issuers. Although the Fund maintains
a diversified investment portfolio, the political or economic developments
within a particular country or region may have an adverse effect on the ability
of domiciled issuers to meet their obligations. Additionally, political or
economic developments may have an effect on the liquidity and volatility of
portfolio securities and currency holdings.
At November 30, 1996, the diversification of industries was as follows:
<TABLE>
<CAPTION>
INDUSTRY % OF NET ASSETS
- ----------------------------------------- -------------------
<S> <C>
Aerospace & Military Technology 0.1%
Agency 1.6
Automotive 0.6
Banking 2.2
Basic Industry 2.8
Beverage & Tobacco 0.2
Broadcast Radio & TV 0.4
Broadcasting & Publishing 0.9
Building Materials & Construction 0.4
Business & Public Services 0.4
Business Equipment & Services 0.1
Cable Television 0.8
Chemicals & Plastics 1.2
Clothing & Textiles 0.1
Construction & Housing 0.6
Consumer Durables 2.0
Consumer Non-Durables 4.1
Consumer Products 0.2
Container & Glass Products 0.1
Data Processing & Reproduction 0.0
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY % OF NET ASSETS
- -------------------------------------------- -------------------
<S> <C>
Ecological Services & Equipment 0.1%
Electrical & Electronics 1.0
Electronics 1.0
Energy--Oil & Gas 0.1
Energy Equipment & Services 0.1
Energy Minerals 3.5
Energy Sources 0.5
Financial 17.3
Financial Intermediaries 0.6
Financial Services 0.8
Food & Drug Retailers 0.5
Food & Household Products 0.6
Food Processing 0.1
Food Products 0.1
Forest Products 0.2
Forest Products & Paper 0.4
Government Agency 4.9
Health & Personal Care 1.0
Healthcare 4.7
Hotels, Motels, Inns & Casinos 0.1
Industrial Components 0.1
Industrial Products & Equipment 0.6
Insurance 0.7
Leisure & Entertainment 0.2
Leisure & Tourism 0.5
Machinery & Engineering 1.2
Machinery & Equipment 0.2
Manufacturing 0.4
Merchandising 0.9
Metals & Mining 0.1
Metals--Steel 0.4
Mining 0.0
Miscellaneous Materials & Commodities 0.3
Multi-Industry 0.6
Oil & Gas 0.2
Pharmaceutical 0.4
Printing & Publishing 0.2
Producer Manufacturing 2.4
Real Estate 1.3
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY % OF NET ASSETS
- -------------------------------------------- -------------------
<S> <C>
Recreation, Other Consumer Goods 0.8%
Retail Trade 2.3
Services 3.1
Sovereign Government 5.5
State/Provincial 0.2
Steel 0.1
Supranational 0.1
Surface Transportation 0.2
Tobacco 0.2
Technology 5.1
Telecommunications 0.8
Telecommunications & Cellular 0.5
Transportation 0.9
Treasury Securities 9.0
Utilities 4.7
Wholesale & International Trade 0.1
</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, 1996, and 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 26 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, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Federated Managed Aggressive Growth Fund, an investment portfolio of Managed
Series Trust, as of November 30, 1996, 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 15, 1997
APPENDIX
- --------------------------------------------------------------------------------
STANDARD AND POOR'S RATINGS GROUP LONG-TERM DEBT RATINGS
AAA--Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.
A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB--Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.
B--Debt rated B has greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or
BB- rating.
CCC--Debt rated CCC has currently identifiable vulnerability to default and is
dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating.
CC--The rating CC typically is applied to debt subordinated to senior debt that
is assigned an actual or implied CCC debt rating.
C--The rating C typically is applied to debt subordinated to senior debt which
is assigned an actual or implied CCC- debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.
CI--The rating CI is reserved for income bonds on which no interest is being
paid.
D--Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D rating also will be used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.
MOODY'S INVESTORS SERVICE, INC., CORPORATE BOND RATINGS
Aaa--Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment some time in the future.
Baa--Bonds which are rated Baa are considered as medium-grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well.
Ba--Bonds which are Ba are judged to have speculative elements; their future
cannot be considered as well-assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca--Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C--Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
FITCH INVESTORS SERVICE, INC., LONG-TERM DEBT RATINGS
AAA--Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA--Bonds considered to be investment grade and of very high quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F-1+.
A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB--Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds and, therefore, impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.
BB--Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.
B--Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.
CCC--Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.
CC--Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C--Bonds are in imminent default in payment of interest or principal.
DDD, DD, AND D--Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. DDD
represents the highest potential for recovery on these bonds, and D represents
the lowest potential for recovery.
NR--NR indicates that Fitch does not rate the specific issue.
PLUS (+) OR MINUS (-): Plus or minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the AAA category.
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Federated Managed Aggressive Growth Fund
Institutional Shares Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Sub-Adviser
Federated Global 175 Water Street
Research Corp. New York, NY 10038-4965
- ---------------------------------------------------------------------------------------------------------------------
Custodian
State Street Bank and P.O. Box 8600
Trust Company Boston, Massachusetts 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Shareholder Services Company P.O. Box 8600
Boston,
- ---------------------------------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
THIS PAGE INTENTIONALLY LEFT BLANK
THIS PAGE INTENTIONALLY LEFT BLANK
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, 1997
[LOGO] FEDERATED INVESTORS
Since 1955
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.
[LOGO]
RECYCLED
PAPER
Cusip 56166K701
3122009A-IS
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
(A PORTFOLIO OF MANAGED SERIES TRUST)
SELECT SHARES
PROSPECTUS
The Select Shares of Federated Managed Aggressive Growth Fund (the "Fund")
offered by this prospectus represent interests in the Fund, which is a
diversified investment portfolio of Managed Series Trust (the "Trust"). The
Trust is an open-end management investment company (a mutual fund).
The investment objective of the Fund is to seek capital appreciation. The Fund
invests in both bonds and stocks. Select Shares are sold at net asset value.
THE SELECT SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF
ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THESE SELECT SHARES INVOLVES INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
This prospectus contains the information you should read and know before you
invest in Select Shares of the Fund. Keep this prospectus for future reference.
The Fund has also filed a Statement of Additional Information for Select Shares
and Institutional Shares of all portfolios of the Trust dated January 31, 1997
with the Securities and Exchange Commission ("SEC"). The information contained
in the Statement of Additional Information is incorporated by reference into
this prospectus. You may request a copy of the Statement of Additional
Information or a paper copy of this prospectus, if you have received your
prospectus electronically, free of charge by calling 1-800-341-7400. To obtain
other information or to make inquiries about the Fund, contact the Fund at the
address listed in the back of this prospectus. The Statement of Additional
Information, material incorporated by reference into this document, and other
information regarding the Fund are maintained electronically with the SEC at
Internet Web site (http:// www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
Prospectus dated January 31, 1997
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--SELECT SHARES 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Investment Limitations 14
TRUST INFORMATION 15
- ------------------------------------------------------
Management of the Trust 15
Distribution of Select Shares 19
Administration of the Fund 20
Brokerage Transactions 20
NET ASSET VALUE 20
- ------------------------------------------------------
INVESTING IN SELECT SHARES 21
- ------------------------------------------------------
Share Purchases 21
Minimum Investment Required 21
What Shares Cost 22
Systematic Investment Program 22
Certificates and Confirmations 22
Dividends 22
Capital Gains 22
REDEEMING SELECT SHARES 22
- ------------------------------------------------------
Through a Financial Institution 23
Telephone Redemption 23
Written Requests 23
Systematic Withdrawal Program 24
Accounts with Low Balances 24
SHAREHOLDER INFORMATION 24
- ------------------------------------------------------
Voting Rights 24
TAX INFORMATION 25
- ------------------------------------------------------
Federal Income Tax 25
State and Local Taxes 25
PERFORMANCE INFORMATION 25
- ------------------------------------------------------
OTHER CLASSES OF SHARES 26
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES 27
- ------------------------------------------------------
FINANCIAL STATEMENTS 28
- ------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 79
- ------------------------------------------------------
APPENDIX 80
- ------------------------------------------------------
ADDRESSES 83
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
SELECT SHARES
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C>
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)........................................................................ 0.07%
12b-1 Fee (after waiver) (2)............................................................................. 0.50%
Total Other Expenses..................................................................................... 1.18%
Shareholder Services Fee................................................................. 0.25%
Total Operating Expenses (3)................................................................... 1.75%
</TABLE>
- ------------
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.75%.
(2) The 12b-1 fee has been reduced to reflect the voluntary waiver of a portion
of 12b-1 fee. The distributor can terminate the voluntary waiver at any time
at its sole discretion. The maximum 12b-1 fee is 0.75%.
(3) The total operating expenses would have been 2.68% absent the voluntary
waivers of portions of the management fee and the 12b-1 fee.
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Select Shares of the Fund
will bear, either directly or indirectly. For more complete descriptions of the
various costs and expenses, see "Investing in Select Shares" and "Trust
Information". Wire-transferred redemptions of less than $5,000 may be subject to
additional fees.
LONG-TERM SHAREHOLDERS MAY PAY MORE THAN THE ECONOMIC EQUIVALENT OF THE
MAXIMUM FRONT-END SALES CHARGES PERMITTED UNDER THE RULES OF THE NATIONAL
ASSOCATION OF SECURITIES DEALERS, INC.
<TABLE>
EXAMPLE 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment assuming
(1) 5% annual return and (2) redemption at the end of each time
period................................................................ $18 $55 $95 $206
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
FINANCIAL HIGHLIGHTS--SELECT SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 79.
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1996 1995 1994(A)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.59 $ 9.80 $ 10.00
- -----------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------
Net investment income 0.28 0.17 0.13
- -----------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments, foreign currency, and
futures contracts 1.19 1.89 (0.25)
- ----------------------------------------------------------------------------------- --------- --------- -----------
Total from investment operations 1.47 2.06 (0.12)
- ----------------------------------------------------------------------------------- --------- --------- -----------
LESS DISTRIBUTIONS
- -----------------------------------------------------------------------------------
Distributions from net investment income (0.30) (0.25) (0.08)
- -----------------------------------------------------------------------------------
Distributions from net realized gain on investments,
foreign currency transactions, and futures contracts (0.26) (0.02) --
- ----------------------------------------------------------------------------------- --------- --------- -----------
Total distributions (0.56) (0.27) (0.08)
- ----------------------------------------------------------------------------------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 12.50 $ 11.59 $ 9.80
- ----------------------------------------------------------------------------------- --------- --------- -----------
TOTAL RETURN (B) 13.22% 21.36% (1.20%)
- -----------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------------------------------
Expenses 1.75% 1.75% 1.64%*
- -----------------------------------------------------------------------------------
Net investment income 2.26% 2.65% 2.67%*
- -----------------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.93% 1.71% 1.97%*(d)
- -----------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $31,390 $12,342 $1,673
- -----------------------------------------------------------------------------------
Average commission rate paid $0.0037
- -----------------------------------------------------------------------------------
Portfolio turnover 86% 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 Advisor 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.
Further information about the Fund's performance is contained in the Fund's
annual report for the fiscal year ended November 30, 1996, which can be obtained
free of charge.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated November 15, 1993. The Declaration of Trust permits the Trust to
offer separate series of shares of beneficial interest representing interests in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. As of the date of this prospectus, the Board of
Trustees ("Trustees") have established two classes of shares of the Fund, known
as Select Shares and Institutional Shares. This prospectus relates only to
Select Shares.
Select Shares ("Shares") of the Fund are designed primarily for retail and
private banking customers of financial institutions as a convenient means of
accumulating an interest in a professionally managed, diversified portfolio of
bonds and equities. A minimum initial investment of $1,500 is required.
Shares are currently sold and redeemed at net asset value without a sales charge
imposed by the Fund.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is to seek capital appreciation. There can
be, of course, no assurance that the Fund will achieve its investment objective.
The Fund's investment objective cannot be changed without the approval of
shareholders. Unless otherwise noted, the Fund's investment policies may be
changed by the Trustees without shareholder approval.
INVESTMENT POLICIES
ASSET ALLOCATION. The Fund will primarily invest in two types of assets:
equities and bonds. The Fund's investment approach is based on the conviction
that, over time, the choice of investment asset categories and their relative
long-term weightings within the portfolio will have the primary impact on its
investment performance. Of secondary importance to the Fund's performance are
the shifting of money among asset categories and the selection of securities
within asset categories. Therefore, the Fund will pursue its investment
objective in the following manner: (1) by setting long-term ranges for each
asset category; (2) by moving money among asset categories within those defined
ranges; and (3) by actively selecting securities within each of the asset
categories. The Fund attempts to minimize risk by allocating its assets in such
a fashion.
Within each of these types of investments, the Fund has designated asset
categories. As a matter of investment policy, ranges have been set for each
asset category's portfolio commitment.
The Fund will invest between 60 and 100 percent of its assets in equities. The
equities asset categories are large company stocks, small company stocks,
foreign stocks, and equity reserves.
The Fund will invest between 0 and 40 percent of its assets in bonds. The Fund's
adviser believes that bonds offer opportunities for growth of capital or
otherwise may be desirable under prevailing market or economic conditions. The
bond asset categories are U.S. Treasury securities, mortgage-
backed securities, investment-grade corporate bonds, high yield corporate bonds
and foreign bonds.
The following is a summary of the asset categories and the amount of the Fund's
total assets which may be invested in each asset category:
<TABLE>
<CAPTION>
ASSET CATEGORY RANGE
<S> <C>
EQUITIES 60-100%
Large Company Stocks 0-100%
Small Company Stocks 0-40%
Foreign Stocks 0-40%
Equity Reserves 0-20%
BONDS 0-40%
U.S. Treasury Securities 0-32.5%
Mortgage-Backed Securities 0-12.5%
Investment-Grade Corporate Bonds 0-12.5%
High Yield Corporate Bonds 0-16%
Foreign Bonds 0-16%
</TABLE>
The Fund's adviser will regularly review the Fund's allocation among the asset
categories and make any changes, within the ranges established for each asset
category, that it believes will provide the most favorable outlook for achieving
the Fund's investment objective. The Fund's adviser will attempt to exploit
inefficiencies among the various asset categories. If, for example, foreign
stocks are judged to be unusually attractive relative to other asset categories,
the allocation for foreign stocks may be moved to its upper limit. At other
times, when foreign stocks appear to be overvalued, the commitment may be moved
down to a lesser allocation. There is no assurance, however, that the adviser's
attempts to pursue this strategy will result in a benefit to the Fund.
Each asset category within the Fund will be a managed portfolio. The Fund will
seek superior investment performance through security selection in addition to
determining the percentage of its assets to allocate to each of the asset
categories.
EQUITY ASSET CATEGORIES. The portion of the Fund's assets which is invested in
equities will be allocated among the following asset categories within the
ranges specified:
LARGE COMPANY STOCKS. Large company stocks are common stocks and
securities convertible into or exchangeable for common stocks, such as
rights and warrants, of high-quality companies selected by the Fund's
adviser. Ordinarily, these companies will be in the top 25 percent of their
industries with regard to revenues and have a market capitalization of
$500,000,000 or more. However, other factors, such as a company's product
position, market share, current earnings and/or dividend and earnings
growth prospects, will be considered by the Fund's adviser and may outweigh
revenues. The Fund may invest up to 100 percent of its total assets in
large company stocks.
SMALL COMPANY STOCKS. Small company stocks are common stocks and
securities convertible into or exchangeable for common stocks, such as
rights and warrants, of companies with a
market capitalization (market price 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. The Fund invests in non-U.S. equity securities. A
substantial portion of these will be equity securities of established
companies in economically developed countries. These securities may be
either dollar-denominated or denominated in foreign currencies. American
Depository Receipts ("ADRs"), including dollar denominated ADRs which are
issued by domestic banks and traded in the United States on exchanges or
over-the-counter, are treated as foreign stocks for purposes of the asset
category ranges. The Fund may invest up to 40 percent of its total assets
in foreign stocks.
EQUITY RESERVES. When the adviser believes that a temporary defensive
position is desirable, the Fund may invest in equity reserves. Equity
reserves will be used to adjust the risk level of the equity portion of the
Fund in response to market conditions. Equity reserves will consist of U.S.
and foreign short-term money market instruments such as commercial paper
rated A-1 by Standard and Poor's Ratings Group ("Standard & Poor's"),
Prime-1 by Moody's Investors Service, Inc. ("Moody's"), or F-1 by Fitch
Investors Service, Inc. ("Fitch"). The Fund may invest up to 20 percent of
its total assets in equity reserves.
BOND ASSET CATEGORIES. The portion of the Fund's assets which is invested in
bonds ("Bond Assets") will be allocated among the following asset categories
within the ranges specified. The prices of fixed income securities fluctuate
inversely to the direction of interest rates. Generally, the Fund will invest in
Bond Assets which are believed to offer opportunities for growth of capital when
the adviser believes interest rates will decline and, therefore, the value of
the debt securities will increase, or the market value of bonds will increase
due to factors affecting certain types of bonds or particular issuers, such as
improvement in credit quality due to company fundamentals or economic conditions
or assumptions on changes in trends in prepayment rates with respect to
mortgage-backed securities. The average duration of the Fund's Bond Assets will
be not less than three nor more than nine years. Duration is a commonly used
measure of the potential volatility of the price of a debt security, or the
aggregate market value of a portfolio of debt securities, prior to maturity.
Securities with shorter durations generally have less volatile prices than
securities of comparable quality with longer durations. The Fund should be
expected to maintain a higher
average duration during periods of lower expected market volatility, and a lower
average duration during periods of higher expected market volatility.
U.S. TREASURY SECURITIES. U.S. Treasury securities are direct obligations
of the U.S. Treasury, such as U.S. Treasury bills, notes, and bonds. The
Fund may invest up to 32.5 percent of its total assets in U.S. Treasury
securities. The Fund may invest in other U.S. government securities if, in
the judgment of the adviser, other U.S. government securities are more
attractive than U.S. Treasury securities.
MORTGAGE-BACKED SECURITIES. Mortgage-backed securities represent an
undivided interest in a pool of residential mortgages or may be
collateralized by a pool of residential mortgages. Mortgage-backed
securities are generally either issued or guaranteed by the Government
National Mortgage Association ("GNMA"), Federal National Mortgage
Association ("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC") or
other U.S. government agencies or instrumentalities. Mortgage-backed
securities may also be issued by single-purpose, stand-alone finance
subsidiaries or trusts of financial institutions, government agencies,
investment bankers, or companies related to the construction industry. The
Fund may invest up to 12.5 percent of its total assets in mortgage-backed
securities.
INVESTMENT-GRADE CORPORATE BONDS. Investment-grade corporate bonds are
corporate debt obligations having fixed or floating rates of interest and
which are rated BBB or higher by a nationally recognized statistical rating
organization ("NRSRO"). The Fund may invest up to 12.5 percent of its total
assets in investment-grade corporate bonds. In certain cases, the Fund's
adviser may choose bonds which are unrated if it determines that such bonds
are of comparable quality or have similar characteristics to the
investment-grade bonds described above. Yankee bonds, which are U.S.
dollar-denominated bonds issued and traded in the United States by foreign
issuers, are treated as investment-grade corporate bonds for purposes of
the asset category ranges.
HIGH YIELD CORPORATE BONDS. High yield corporate bonds are corporate debt
obligations having fixed or floating rates of interest and which are rated
BB or lower by NRSROs (commonly known as junk bonds). The Fund may invest
up to 16 percent of its total assets in high yield corporate bonds. There
is no minimal acceptable rating for a security to be purchased or held in
the Fund's portfolio, and the Fund may, from time to time, purchase or hold
securities rated in the lowest rating category. (See "Appendix.") In
certain cases the Fund's adviser may choose bonds which are unrated if it
determines that such bonds are of comparable quality or have similar
characteristics to the high yield bonds described above.
INVESTMENT RISKS. Lower-rated securities will usually offer higher
yields than higher-rated securities. However, there is more risk
associated with these investments. This is because of reduced
creditworthiness and increased risk of default. Lower-rated securities
generally tend to reflect short-term corporate and market developments
to a greater extent than higher-rated securities which react primarily
to fluctuations in the general level of interest rates. Short-term
corporate and market developments affecting the price or liquidity of
lower-rated securities could include adverse news affecting major
issuers, underwriters, or dealers of lower-rated corporate debt
obligations. In addition, since
there are fewer investors in lower-rated securities, it may be harder
to sell the securities at an optimum time. As a result of these
factors, lower-rated securities tend to have more price volatility and
carry more risk to principal than higher-rated securities.
Many corporate debt obligations, including many lower-rated bonds,
permit the issuers to call the security and thereby redeem their
obligations earlier than the stated maturity dates. Issuers are more
likely to call bonds during periods of declining interest rates. In
these cases, if the Fund owns a bond which is called, the Fund will
receive its return of principal earlier than expected and would likely
be required to reinvest the proceeds at lower interest rates, thus
reducing income to the Fund.
FOREIGN BONDS. Foreign bonds are high-quality debt securities of countries
other than the United States. The Fund's portfolio of foreign bonds will be
comprised mainly of foreign government, foreign governmental agency or
supranational institution bonds. The Fund will also invest in high-quality
debt securities issued by established corporations located primarily in
economically developed 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 would 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;
.notes, bonds, and discount notes issued or guaranteed by U.S. government
agencies and instrumentalities supported by the full faith and credit of
the United States;
.notes, bonds, and discount notes of U.S. government agencies or
instrumentalities which receive or have access to federal funding; and
.notes, bonds, and discount notes of other U.S. government
instrumentalities supported only by the credit of the instrumentalities.
The Fund may also purchase U.S. Treasury securities and the U.S. government
securities noted above pursuant to repurchase agreements.
MORTGAGE-BACKED SECURITIES. Mortgage-backed securities are securities
collateralized by residential mortgages. The mortgage-backed securities in
which the Fund may invest may be:
. issued by an agency of the U.S. government, typically GNMA, FNMA or
FHLMC;
. privately issued securities which are collateralized by pools of
mortgages in which each mortgage is guaranteed as to payment of principal
and interest by an agency or instrumentality of the U.S. government;
. privately issued securities which are collateralized by pools of
mortgages in which payment of principal and interest are guaranteed by
the issuer and such guarantee is collateralized by U.S. government
securities; and
. other privately issued securities in which the proceeds of the issuance
are invested in mortgage-backed securities and payment of the principal
and interest are supported by the credit of an agency or instrumentality
of the U.S. government.
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"). CMOs are bonds issued by
single-purpose, stand-alone finance subsidiaries or trusts of financial
institutions, government agencies, investment bankers, or companies
related to the construction industry. Most of the CMOs in which the
Fund would invest use the same basic structure:
. Several classes of securities are issued against a pool of mortgage
collateral. The most common structure contains four classes of
securities. The first three (A, B, and C bonds) pay interest at
their stated rates beginning with the issue date; the final class
(or Z bond) typically receives the residual income from the
underlying investments after payments are made to the other
classes.
. The cash flows from the underlying mortgages are applied first to
pay interest and then to retire securities.
. The classes of securities are retired sequentially. All principal
payments are directed first to the shortest-maturity class (or A
bonds). When those securities are completely retired, all principal
payments are then directed to the next-shortest maturity security
(or B bond). This process continues until all of the classes have
been paid off.
Because the cash flow is distributed sequentially instead of pro rata
as with pass-through securities, the cash flows and average lives of
CMOs are more predictable, and there is a period of time during which
the investors in the longer-maturity classes receive no principal
paydowns. The interest portion of these payments is distributed by the
Fund as income and the capital portion is reinvested.
The Fund will invest only in CMOs which are rated AAA or Aaa by an
NRSRO.
REAL ESTATE MORTGAGE INVESTMENT CONDUITS ("REMICS"). REMICs are
offerings of multiple class real estate mortgage-backed securities
which qualify and elect treatment as such under provisions of the
Internal Revenue Code. Issuers of REMICs may take several forms, such
as trusts, partnerships, corporations, associations or a segregated
pool of mortgages. Once REMIC status is elected and obtained, the
entity is not subject to federal income taxation. Instead, income is
passed through the entity and is taxed to the person or persons who
hold interests in the REMIC. A REMIC interest must consist of one or
more classes of "regular interests," some of which may offer adjustable
rates, and
a single class of "residual interests." To qualify as a REMIC,
substantially all of the assets of the entity must be in assets
directly or indirectly secured principally by real property.
CHARACTERISTICS OF MORTGAGE-BACKED SECURITIES. Mortgage-backed
securities have yield and maturity characteristics corresponding to the
underlying mortgages. Distributions to holders of mortgage-backed
securities include both interest and principal payments. Principal
payments represent the amortization of the principal of the underlying
mortgages and any prepayments of principal due to prepayment,
refinancing, or foreclosure of the underlying mortgages. Although
maturities of the underlying mortgage loans may range up to 30 years,
amortization and prepayments substantially shorten the effective
maturities of mortgage-backed securities. Due to these features,
mortgage-backed securities are less effective as a means of "locking
in" attractive long-term interest rates than fixed-income securities
which pay only a stated amount of interest until maturity, when the
entire principal amount is returned. This is caused by the need to
reinvest at lower interest rates both distributions of principal
generally and significant prepayments which become more likely as
mortgage interest rates decline. Since comparatively high interest
rates cannot be effectively "locked in," mortgage-backed securities may
have less potential for capital appreciation during periods of
declining interest rates than other non-callable, fixed-income
government securities of comparable stated maturities. However,
mortgage-backed securities may experience less pronounced declines in
value during periods of rising interest rates.
In addition, some of the CMOs purchased by the Fund may represent an
interest solely in the principal repayments or solely in the interest
payments on mortgage-backed securities (stripped mortgage-backed
securities or "SMBSs"). Due to the possibility of prepayments on the
underlying mortgages, SMBSs may be more interest-rate sensitive than
other securities purchased by the Fund. If prevailing interest rates
fall below the level at which SMBSs were issued, there may be
substantial prepayments on the underlying mortgages, leading to the
relatively early prepayments of principal-only SMBSs and a reduction in
the amount of payments made to holders of interest-only SMBSs. It is
possible that the Fund might not recover its original investment in
interest-only SMBSs if there are substantial prepayments on the
underlying mortgages. Therefore, interest-only SMBSs generally increase
in value as interest rates rise and decrease in value as interest rates
fall, counter to changes in value experienced by most fixed-income
securities. The Fund's adviser intends to use this characteristic of
interest-only SMBSs to reduce the effects of interest rate changes on
the value of the Fund's portfolio, while continuing to pursue the
Fund's investment objective.
CORPORATE BONDS. The investment-grade corporate bonds in which the Fund
invests are:
. rated within the four highest ratings for corporate bonds by Moody's
(Aaa, Aa, A, or Baa), Standard & Poor's (AAA, AA, A, or BBB, or Fitch
(AAA, AA, A, or BBB);
. unrated if other long-term debt securities of that issuer are rated, at
the time of purchase, Baa or better by Moody's or BBB or better by
Standard & Poor's or Fitch; or
. unrated if determined to be of equivalent quality to one of the foregoing
rating categories by the Fund's adviser.
Securities which are rated BBB by Standard & Poor's or Fitch or Baa by
Moody's have speculative characteristics. Changes in economic conditions or
other circumstances are more likely to lead to weakened capacity to make
principal and interest payments than higher rated bonds. If a security's
rating is reduced below the required minimum after the Fund has purchased
it, the Fund is not required to sell the security, but may consider doing
so.
The high yield corporate bonds in which the Fund invests are rated Ba or
lower by Moody's or BB or lower by Standard & Poor's or Fitch (commonly
known as junk bonds). A description of the rating categories is contained
in the Appendix to this prospectus.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Fund may invest in
the securities of other investment companies, but it will not own more than 3
percent of the total outstanding voting stock of any such investment company,
invest more than 5 percent of its total assets in any one such investment
company, or invest more than 10 percent of its total assets in such other
investment companies in general. To the extent that the Fund invests in
securities issued by other investment companies, the Fund will indirectly bear
its proportionate share of any fees and expenses paid by such companies in
addition to the fees and expenses payable directly by the Fund.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies but which are
subject to restrictions on resale under federal securities law. Under criteria
established by the Trustees, certain restricted securities are determined to be
liquid. To the extent that restricted securities are not determined to be
liquid, the Fund will limit their purchase, together with other illiquid
securities including 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.
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.
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.
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.
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,
here 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 consideration 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 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.
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.
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 $76 billion invested across more than 338 funds
under management and/or administration by its subsidiaries, as of December 31,
1996, Federated Investors is one of the largest mutual fund investment managers
in the United States. With more than 2,000 employees, Federated continues to be
led by the management who founded the company in 1955. Federated funds are
presently at work in and through 4,500 financial institutions nationwide.
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 Investment Strategy Committee. 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:
Scott B. Schermerhorn and Peter R. Anderson are the portfolio managers for the
domestic large company stocks asset category.
Scott B. Schermerhorn has been the Fund's portfolio manager since July 1, 1996.
Mr. Schermerhorn joined Federated Investors in 1996 as a Vice President of the
Fund's Adviser. From 1990 through 1996, Mr. Schermerhorn was a Senior Vice
President and Senior Investment Officer at J W Seligman & Co., Inc. Mr.
Schermerhorn received his M.B.A. in Finance and International Business from
Seton Hall University.
Peter R. Anderson has been the Fund's portfolio manager since the Fund's
inception. 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.
Aash M. Shah and James E. Grefenstette are the portfolio managers for the
domestic small company stocks asset category.
Aash M. Shah has been the Fund's portfolio manager since December 1995. 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. in Industrial Administration from Carnegie Mellon
University with a concentration in finance and accounting. Mr. Shah is a
Chartered Financial Analyst.
James E. Grefenstette has been the Fund's portfolio manager since August 1994.
Mr. Grefenstette joined Federated Investors in 1992 and has been a Vice
President since July 1996. Mr. Grefenstette served as an Assistant Vice
President of the Fund's Adviser from 1994 to 1996, and an investment analyst
from 1992 to 1994. Mr. Grefenstette was a credit analyst at Westinghouse Credit
Corp. from 1990 until 1992. Mr. Grefenstette received his M.S. in Industrial
Administration from Carnegie Mellon University.
Henry A. Frantzen, Drew J. Collins, Mark S. Kopinski, Frank Semack, and
Alexandre de Bethmann are portfolio managers for the foreign stocks asset
category.
Henry A. Frantzen has been the Fund's portfolio manager 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.
Drew J. Collins has been the Fund's portfolio manager 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 the Fund's portfolio manager 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 the Fund's portfolio manager 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 1980 to 1993. Mr. Semack received his
M.Sc. in economics from the London School of Economics.
Alexandre de Bethmann has been the Fund's portfolio manager 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 A. Frantzen, Drew J. Collins, Robert M. Kowit and Micheal W. Casey are
portfolio managers for the foreign bonds asset category. Messrs. Frantzen,
Collins and Kowit 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.
Micheal W. Casey, Ph.D. has been the Fund's portfolio manager since January 1,
1997. Mr. Casey joined Federated Investors in 1996 as an Assistant Vice
President. Mr. Casey served as an International Economist and Portfolio
Strategist for Maria Fiorini Ramirez Inc. from 1990 to 1996. Mr. Casey earned a
Ph.D. concentrating in economics from The New School for Social Research and a
M.Sc. from the London School of Economics.
Susan M. Nason and Joseph M. Balestrino are portfolio managers for the U.S.
Treasury securities asset category.
Susan M. Nason has been the Fund's portfolio manager since the Fund's inception.
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. in Industrial Administration from Carnegie Mellon
University.
Joseph M. Balestrino has been the Fund's portfolio manager since March 1995. 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. 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. in Industrial Administration from Carnegie Mellon University.
Kathleen M. Foody-Malus is the portfolio manager for the mortgage-backed
securities asset category. Ms. Foody-Malus has performed this duty since the
Fund's inception. 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.
Joseph M. Balestrino and Susan M. Nason are portfolio managers for the
investment-grade corporate bonds asset category. They have performed these
duties since the Fund's inception.
Mark E. Durbiano is the portfolio manager for the high yield corporate bonds
asset category. He has performed these duties since the Fund's inception. Mr.
Durbiano joined Federated Investors in 1982 and has been a Senior Vice President
of the Fund's Adviser since January 1996. Mr. Durbiano was a Vice President of
the Fund's Adviser from 1988 through 1995. Mr. Durbiano is a Chartered Financial
Analyst and received his M.B.A. in Finance from the University of Pittsburgh.
DISTRIBUTION OF SELECT SHARES
Federated Securities Corp. is the principal distributor for Shares. It is a
Pennsylvania corporation organized on November 14, 1969, and is the principal
distributor for a number of investment companies. Federated Securities Corp. is
a subsidiary of Federated Investors.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES. Under a distribution plan adopted
in accordance with Investment Company Act Rule 12b-1 (the "Distribution Plan"),
the distributor may be paid a fee in an amount computed at an annual rate of
.75% of the average daily net assets of Select Shares to finance any activity
which is principally intended to result in the sale of Shares subject to the
Distribution Plan. The distributor may select financial institutions such as
banks, fiduciaries, custodians for public funds, investment advisers, and
broker/dealers to provide sales services or distribution-related support
services as agents for their clients or customers.
The Distribution Plan is a compensation-type plan. As such, the Fund makes no
payments to the distributor except as described above. Therefore, the Fund does
not pay separately for unreimbursed expenses of the distributor, including
amounts expended by the distributor in excess of amounts received by it from the
Fund, interest, carrying or other financing charges in connection with excess
amounts expended, or the distributor's overhead expenses. However, the
distributor may be able to recover such amount or may earn a profit from future
payments made by the Fund under the Distribution Plan.
In addition, the Fund has entered into a Shareholder Services Agreement with
Federated Shareholder Services, a subsidiary of Federated Investors, under which
the Fund may make payments up to .25% of the average daily net asset value of
the Select Shares to obtain certain personal services for shareholders and the
maintenance of shareholder accounts. Under the Shareholder Services Agreement,
Federated Shareholder Services will either perform shareholder services directly
or will select financial institutions to perform shareholder services. Financial
institutions will receive fees based upon shares owned by their clients or
customers. The schedules of such fees and the basis upon which such fees will be
paid will be determined from time to time by the Fund and Federated Shareholder
Services.
SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS. In addition to receiving the
payments under the Distribution Plan and Shareholder Services Agreement,
Federated Securities Corp. and Federated Shareholder Services, from their own
assets, may pay financial institutions supplemental fees for the performance of
substantial sales services, distribution related support services, or
shareholder services. The support may include sponsoring sales, educational and
training seminars for their employees, providing sales literature, and
engineering computer software programs that emphasize the attributes of the
Fund. Such assistance will be predicated upon the amount of Shares the financial
institution sells or may sell, and/or upon the type and nature of sales or
marketing
support furnished by the financial institution. Any payments made by the
distributor may be reimbursed by the Fund's Adviser or its affiliates.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Services Company, a subsidiary of Federated
Investors, provides administrative personnel and services (including certain
legal and financial reporting services) necessary to operate the Fund. Federated
Services Company 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% on the first $250 million
.125% on the next $250 million
.10% on the next $250 million
.075% 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 Services Company may choose voluntarily to waive a portion of its fee.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the Adviser looks for prompt execution of the order at a favorable
price. In working with dealers, the Adviser will generally utilize those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. In selecting among firms
believed to meet these criteria, the Adviser may give consideration to those
firms which have sold or are selling shares of the Fund and other funds
distributed by Federated Securities Corp. The Adviser makes decisions on
portfolio transactions and selects brokers and dealers subject to review by the
Trustees.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund's net asset value per Share fluctuates. The net asset value for Shares
is determined by adding the interest of the Shares in the market value of all
securities and other assets of the Fund, subtracting the interest of the Shares
in the liabilities of the Fund and those attributable to Shares, and dividing
the remainder by the total number of Shares outstanding. The net asset value for
Institutional Shares may exceed that of Select Shares due to the variance in
daily net income realized by each class. Such variance will reflect only accrued
net income to which the shareholders of a particular class are entitled.
INVESTING IN SELECT SHARES
- --------------------------------------------------------------------------------
SHARE PURCHASES
Shares are sold on days on which the New York Stock Exchange is open for
business. Shares may be purchased through a financial institution which has a
sales agreement with the distributor or by wire or mail.
To purchase Shares, open an account by calling Federated Securities Corp.
Information needed to establish an account will be taken over the telephone. The
Fund reserves the right to reject any purchase request.
THROUGH A FINANCIAL INSTITUTION. An investor may call his financial institution
(such as a bank or an investment dealer) to place an order to purchase Shares.
Orders through a financial institution are considered received when the Fund is
notified of the purchase order. Purchase orders through a registered
broker/dealer must be received by the broker before 4:00 p.m. (Eastern time) and
must be transmitted by the broker to the Fund before 5:00 p.m. (Eastern time) in
order for Shares to be purchased at that day's price. Purchase orders through
other financial institutions must be received by the financial institution and
transmitted to the Fund before 4:00 p.m. (Eastern time) in order for Shares to
be purchased at that day's price. It is the financial institution's
responsibility to transmit orders promptly.
BY WIRE. To purchase Shares by Federal Reserve wire, call the Fund before 4:00
p.m. (Eastern time) to place an order. The order is considered received
immediately. Payment by federal funds must be received before 3:00 p.m. (Eastern
time) on the next business day following the order. Federal funds should be
wired as follows: Federated Shareholder Services Company, c/o State Street Bank
and Trust Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit to:
Federated Managed Aggressive Growth Fund--Select Shares; Fund Number (this
number can be found on the account statement or by contacting the Fund); Group
Number or Wire Order Number; Nominee or Institution Name; and ABA Number
011000028. Shares cannot be purchased by wire on holidays when wire transfers
are restricted. Questions on wire purchases should be directed to your
shareholder services representative at the telephone number listed on your
account statement.
BY MAIL. To purchase Shares by mail, send a check made payable to Federated
Managed Aggressive Growth Fund--Select Shares to Federated Shareholder Services
Company, P.O. Box 8600, Boston, Massachusetts 02266-8600. Orders by mail are
considered received after payment by check is converted by State Street Bank
into federal funds. This is normally the next business day after State Street
Bank receives the check.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in Shares is $1,500. Accounts established through
a financial intermediary 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 financial intermediary may be charged an additional service fee
by that financial intermediary.
The net asset value is determined as of the close of trading (normally 4:00
p.m., Eastern time) on the New York Stock Exchange, Monday through Friday,
except on: (i) days on which there are not sufficient changes in the value of
the Fund's portfolio securities 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.
SYSTEMATIC INVESTMENT PROGRAM
Once a Fund account has been opened, shareholders may add to their investment on
a regular basis. Under this program, funds may be automatically withdrawn
periodically from the shareholder's checking account and invested in Shares at
the net asset value next determined after an order is received by the Fund. A
shareholder may apply for participation in this program through Federated
Securities Corp.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Shareholder Services Company maintains
a share account for each shareholder. Share certificates are not issued unless
requested by contacting the Fund.
Detailed confirmations of each purchase or redemption are sent to each
shareholder. Quarterly confirmations are sent to report dividends paid during
the quarter.
DIVIDENDS
Dividends are declared and paid quarterly to all shareholders invested in the
Fund on the record date. Unless shareholders request cash payments by writing
the Fund, dividends are automatically reinvested in additional Shares of the
Fund on payment dates at the ex-dividend date net asset value without a sales
charge.
CAPITAL GAINS
Capital gains realized by the Fund, if any, will be distributed at least once
every 12 months.
REDEEMING SELECT SHARES
- --------------------------------------------------------------------------------
The Fund redeems Shares at their net asset value next determined after the Fund
receives the redemption request. Investors who redeem Shares through a financial
intermediary may be charged a service fee by that financial intermediary.
Redemptions will be made on days on which the Fund computes its net asset value.
Redemption requests must be received in proper form and can be made 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
REDEEMING SHARES BY MAIL. Shares may be redeemed in any amount by mailing a
-
written request to: Federated Shareholder Services Company, P.O. Box 8600,
Boston, MA 02266-8600. If Share certificates have been issued, they should be
sent unendorsed with the written request by registered or certified mail to the
address noted above.
The written request should state: the Fund name and the class designation; the
account name as registered with the Fund; the account number; and the number of
shares to be redeemed or the dollar amount requested. All owners of the account
must sign the request exactly as the shares are registered. Normally, a check
for the proceeds is mailed within one business day, but in no event more than
seven days, after the receipt of a proper written redemption request. Dividends
are paid up to and including the day that a redemption request is processed.
Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Fund or a redemption payable other than to
the shareholder of record must have their signatures guaranteed by a commercial
or savings bank, trust company or savings association whose deposits are insured
by an organization which is administered by the Federal Deposit Insurance
Corporation; a member firm of a domestic stock exchange; 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.
SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive payments of a predetermined amount may take
advantage of the Systematic Withdrawal Program. Under this program, Shares are
redeemed to provide for periodic withdrawal payments in an amount directed by
the shareholder. Depending upon the amount of the withdrawal payments, the
amount of dividends paid and capital gains distributions with respect to Shares,
and the fluctuation of the net asset value of Shares redeemed under this
program, redemptions may reduce, and eventually use up, the shareholder's
investment in the Fund. For this reason, payments under this program should not
be considered as yield or income on the shareholder's investment in the Fund. To
be eligible to participate in this program, a shareholder must have an account
value of at least $10,000, other than retirement accounts subject to required
minimum distributions. A shareholder may apply for participation in this program
through Federated Securities Corp.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem Shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $1,500. This requirement
does not apply, however, if the balance falls below $1,500 because of changes in
the Fund's net asset value. Before Shares are redeemed to close an account, the
shareholder is notified in writing and allowed 30 days to purchase additional
Shares to meet the minimum requirement.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights except that, in matters
affecting only a particular fund or class, only shares of that fund or class are
entitled to vote. As a Massachusetts business trust, the Trust is not required
to hold annual shareholder meetings. Shareholder approval will be sought only
for certain changes in the Trust's or the Fund's operation and for the election
of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust entitled to vote.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code applicable to regulated investment companies and to
receive the special tax treatment afforded to such companies.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional Shares.
STATE AND LOCAL TAXES
In the opinion of Houston, Donnelly and Meck, counsel to the Trust, Fund shares
may be subject to personal property taxes imposed by counties, municipalities,
and school districts in Pennsylvania to the extent that the portfolio securities
in the Fund would be subject to such taxes if owned directly by residents of
those jurisdictions.
Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its total return and yield for Shares.
Total return represents the change, over a specified period of time, in the
value of an investment in Shares after reinvesting all income and capital gain
distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
The yield of Shares is calculated by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by Shares
over a thirty-day period by the maximum offering price per share of Shares on
the last day of the period. This number is then annualized using semi-annual
compounding. The yield does not necessarily reflect income actually earned by
Shares and, therefore, may not correlate to the dividends or other distributions
paid to shareholders.
From time to time, advertisements for the Fund's Select Shares may refer to
ratings, rankings, and other information in certain financial publications
and/or compare the Fund's performance to certain indices.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
The Fund also offers another class of shares called Institutional Shares that
are sold at net asset value primarily to financial institutions acting in a
fiduciary or agency capacity and are subject to a minimum initial investment of
$25,000 over a 90-day period.
Institutional Shares are distributed with no 12b-1 Plan but are subject to
shareholder services fees.
Institutional Shares and Select Shares are subject to certain of the same
expenses. Expense differences, however, between Institutional Shares and Select
Shares may affect the performance of each class.
To obtain more information and a prospectus for Institutional Shares, investors
may call
1-800-341-7400.
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 79.
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1996 1995 1994(A)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.59 $ 9.82 $ 10.00
- -----------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------
Net investment income 0.33 0.35 0.17
- -----------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments, foreign currency, and
futures contracts 1.24 1.77 (0.25)
- ----------------------------------------------------------------------------------- --------- --------- -----------
Total from investment operations 1.57 2.12 (0.08)
- ----------------------------------------------------------------------------------- --------- --------- -----------
LESS DISTRIBUTIONS
- -----------------------------------------------------------------------------------
Distributions from net investment income (0.38) (0.33) (0.10)
- -----------------------------------------------------------------------------------
Distributions from net realized gain on investments,
foreign currency transactions, and futures contracts (0.26) (0.02) --
- ----------------------------------------------------------------------------------- --------- --------- -----------
Total distributions (0.64) (0.35) (0.10)
- ----------------------------------------------------------------------------------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 12.52 $ 11.59 $ 9.82
- ----------------------------------------------------------------------------------- --------- --------- -----------
TOTAL RETURN (B) 14.13% 21.96% (0.87%)
- -----------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------------------------------
Expenses 1.05% 1.00% 0.89%*
- -----------------------------------------------------------------------------------
Net investment income 2.96% 3.42% 3.42%*
- -----------------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.88% 1.71% 1.72%*(d)
- -----------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $49,715 $25,611 $15,696
- -----------------------------------------------------------------------------------
Average commission rate paid $0.0037
- -----------------------------------------------------------------------------------
Portfolio turnover 86% 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 Advisor 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.
Further information about the Fund's performance is contained in the Fund's
annual report for the fiscal year ended November 30, 1996, which can be obtained
free of charge.
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--60.1%
- -----------------------------------------------------------------------------------------------
LARGE-CAP STOCKS--25.1%
-------------------------------------------------------------------------------
BASIC INDUSTRY--1.8%
-------------------------------------------------------------------------------
12,400 Allegheny Teledyne, Inc. $ 289,850
-------------------------------------------------------------------------------
4,100 Betz Laboratories, Inc. 237,288
-------------------------------------------------------------------------------
2,200 Du Pont (E.I.) de Nemours & Co. 207,350
-------------------------------------------------------------------------------
4,000 Great Lakes Chemical Corp. 214,500
-------------------------------------------------------------------------------
19,500 LTV Corporation 209,625
-------------------------------------------------------------------------------
7,000 Morton International, Inc. 282,625
------------------------------------------------------------------------------- -------------
Total 1,441,238
------------------------------------------------------------------------------- -------------
CONSUMER DURABLES--1.0%
-------------------------------------------------------------------------------
5,500 General Motors Corp., Class H 299,750
-------------------------------------------------------------------------------
3,000 General Motors Corp. 172,875
-------------------------------------------------------------------------------
3,900 Martin Marietta Materials 91,650
-------------------------------------------------------------------------------
9,000 Rubbermaid, Inc. 216,000
------------------------------------------------------------------------------- -------------
Total 780,275
------------------------------------------------------------------------------- -------------
CONSUMER NON-DURABLES--3.5%
-------------------------------------------------------------------------------
3,700 Avon Products, Inc. 206,275
-------------------------------------------------------------------------------
2,500 CPC International, Inc. 208,125
-------------------------------------------------------------------------------
4,100 Dole Food, Inc., ACES, $2.7475 163,488
-------------------------------------------------------------------------------
3,500 Heinz (H.J.) Co. 132,563
-------------------------------------------------------------------------------
13,300 IBP, Inc. 329,175
-------------------------------------------------------------------------------
2,400 Kimberly-Clark Corp. 234,600
-------------------------------------------------------------------------------
5,250 Philip Morris Cos., Inc. 541,406
-------------------------------------------------------------------------------
5,900 Tambrands, Inc. 252,225
-------------------------------------------------------------------------------
3,100 Unilever N.V. 536,688
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
LARGE-CAP STOCKS--CONTINUED
-------------------------------------------------------------------------------
CONSUMER NON-DURABLES--CONTINUED
-------------------------------------------------------------------------------
3,100 V.F. Corp. $ 210,413
------------------------------------------------------------------------------- -------------
Total 2,814,958
------------------------------------------------------------------------------- -------------
ENERGY MINERALS--2.9%
-------------------------------------------------------------------------------
6,100 Baker Hughes, Inc. 223,413
-------------------------------------------------------------------------------
5,000 Chevron Corp. 335,000
-------------------------------------------------------------------------------
3,100 Exxon Corp. 293,338
-------------------------------------------------------------------------------
9,000 Occidental Petroleum Corp. 216,000
-------------------------------------------------------------------------------
1,100 Royal Dutch Petroleum Co. 186,863
-------------------------------------------------------------------------------
3,500 Texaco, Inc. 346,938
-------------------------------------------------------------------------------
13,100 USX-Marathon Group 299,663
-------------------------------------------------------------------------------
9,032 Union Pacific Resources Group, Inc. 269,831
-------------------------------------------------------------------------------
3,000 (a)Western Atlas, Inc. 211,500
------------------------------------------------------------------------------- -------------
Total 2,382,546
------------------------------------------------------------------------------- -------------
FINANCE--3.7%
-------------------------------------------------------------------------------
5,646 Allstate Corp. 340,172
-------------------------------------------------------------------------------
3,400 CIGNA Corp. 480,675
-------------------------------------------------------------------------------
3,400 Chase Manhattan Corp. 321,300
-------------------------------------------------------------------------------
2,200 Citicorp 240,350
-------------------------------------------------------------------------------
2,900 Dean Witter, Discover & Co. 198,288
-------------------------------------------------------------------------------
8,600 Federal National Mortgage Association 354,750
-------------------------------------------------------------------------------
3,900 Marsh & McLennan Cos., Inc. 442,163
-------------------------------------------------------------------------------
4,600 National City Corp. 213,325
-------------------------------------------------------------------------------
4,100 Providian Corp. 219,350
-------------------------------------------------------------------------------
5,000 Travelers Group, Inc. 225,000
------------------------------------------------------------------------------- -------------
Total 3,035,373
------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
LARGE-CAP STOCKS--CONTINUED
-------------------------------------------------------------------------------
HEALTH CARE--3.0%
-------------------------------------------------------------------------------
5,700 Abbott Laboratories $ 317,775
-------------------------------------------------------------------------------
4,800 (a)American Home Products Corp. 308,400
-------------------------------------------------------------------------------
8,700 Bard (C.R.), Inc. 243,600
-------------------------------------------------------------------------------
10,000 (a)Biomet, Inc. 165,000
-------------------------------------------------------------------------------
3,300 Bristol-Myers Squibb Co. 375,375
-------------------------------------------------------------------------------
4,800 Columbia/HCA Healthcare Corp. 192,000
-------------------------------------------------------------------------------
12,400 (a)Healthsource, Inc. 139,500
-------------------------------------------------------------------------------
2,800 Merck & Co., Inc. 232,400
-------------------------------------------------------------------------------
2,900 Smithkline Beecham, ADR 199,738
-------------------------------------------------------------------------------
5,300 United Healthcare Corp. 228,563
------------------------------------------------------------------------------- -------------
Total 2,402,351
------------------------------------------------------------------------------- -------------
PRODUCER MANUFACTURING--1.8%
-------------------------------------------------------------------------------
2,600 (a)FMC Corp. 200,850
-------------------------------------------------------------------------------
2,700 General Electric Co. 280,800
-------------------------------------------------------------------------------
3,200 Loews Corp. 296,800
-------------------------------------------------------------------------------
3,900 Textron, Inc. 371,963
-------------------------------------------------------------------------------
17,100 (b)Westinghouse Electric Corp., PEPS, Series C, $1.30 292,307
------------------------------------------------------------------------------- -------------
Total 1,442,720
------------------------------------------------------------------------------- -------------
RETAIL TRADE--1.1%
-------------------------------------------------------------------------------
6,900 Dayton-Hudson Corp. 268,238
-------------------------------------------------------------------------------
6,900 Sears, Roebuck & Co. 343,275
-------------------------------------------------------------------------------
14,300 Wal-Mart Stores, Inc. 364,650
------------------------------------------------------------------------------- -------------
Total 976,163
------------------------------------------------------------------------------- -------------
SERVICES--1.0%
-------------------------------------------------------------------------------
7,500 Block (H&R), Inc. 219,375
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
LARGE-CAP STOCKS--CONTINUED
-------------------------------------------------------------------------------
SERVICES--CONTINUED
-------------------------------------------------------------------------------
11,300 Browning-Ferris Industries, Inc. $ 303,688
-------------------------------------------------------------------------------
3,300 Gannett Co., Inc. 259,050
------------------------------------------------------------------------------- -------------
Total 782,113
------------------------------------------------------------------------------- -------------
TECHNOLOGY--2.1%
-------------------------------------------------------------------------------
5,000 (a)Analog Devices, Inc. 160,625
-------------------------------------------------------------------------------
6,400 Electronic Data Systems Corp. 309,600
-------------------------------------------------------------------------------
2,400 Intel Corp. 304,500
-------------------------------------------------------------------------------
800 International Business Machines Corp. 127,500
-------------------------------------------------------------------------------
1,723 Lockheed Martin Corp. 156,147
-------------------------------------------------------------------------------
1,879 Lucent Technologies, Inc. 96,299
-------------------------------------------------------------------------------
3,400 Raytheon Co. 173,864
-------------------------------------------------------------------------------
4,500 (a)Rockwell International Corp. 289,125
------------------------------------------------------------------------------- -------------
Total 1,617,660
------------------------------------------------------------------------------- -------------
TRANSPORTATION--0.3%
-------------------------------------------------------------------------------
8,300 (a)KLM Royal Dutch Airlines 216,838
------------------------------------------------------------------------------- -------------
UTILITIES--2.9%
-------------------------------------------------------------------------------
5,800 AT&T Corp. 227,650
-------------------------------------------------------------------------------
5,900 CMS Energy Corp. 191,750
-------------------------------------------------------------------------------
4,000 (a)Columbia Gas System, Inc. 258,500
-------------------------------------------------------------------------------
6,100 Enron Corp. 279,075
-------------------------------------------------------------------------------
4,000 FPL Group, Inc. 184,500
-------------------------------------------------------------------------------
7,200 GTE Corp. 323,100
-------------------------------------------------------------------------------
15,200 MCI Communications Corp. 463,600
-------------------------------------------------------------------------------
8,000 Pacific Gas & Electric Co. 193,000
-------------------------------------------------------------------------------
7,700 Southern Co. 171,325
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
LARGE-CAP STOCKS--CONTINUED
-------------------------------------------------------------------------------
UTILITIES--CONTINUED
-------------------------------------------------------------------------------
6,900 TECO Energy, Inc. $ 168,188
------------------------------------------------------------------------------- -------------
Total 2,460,688
------------------------------------------------------------------------------- -------------
TOTAL LARGE-CAP STOCKS 20,352,923
------------------------------------------------------------------------------- -------------
SMALL-CAP STOCKS--15.0%
-------------------------------------------------------------------------------
BASIC INDUSTRY--1.1%
-------------------------------------------------------------------------------
8,400 (a)Chirex, Inc. 90,300
-------------------------------------------------------------------------------
2,900 Donaldson Company, Inc. 88,450
-------------------------------------------------------------------------------
5,300 (a)Fibreboard Corp. 183,513
-------------------------------------------------------------------------------
6,300 (a)Royal Plastics Group Ltd. 113,400
-------------------------------------------------------------------------------
9,700 Spartech Corp. 103,063
-------------------------------------------------------------------------------
9,200 (a)Synthetech, Inc. 75,900
-------------------------------------------------------------------------------
1,600 Texas Industries, Inc. 91,000
-------------------------------------------------------------------------------
3,300 (a)Titanium Metals Corp. 110,550
------------------------------------------------------------------------------- -------------
Total 856,176
------------------------------------------------------------------------------- -------------
CONSUMER DURABLES--1.1%
-------------------------------------------------------------------------------
6,200 Action Performance Companies, Inc. 106,175
-------------------------------------------------------------------------------
1,700 Carlisle Cos., Inc. 97,750
-------------------------------------------------------------------------------
4,625 Cavalier Homes, Inc. 52,031
-------------------------------------------------------------------------------
4,800 (a)Champion Enterprises, Inc. 100,200
-------------------------------------------------------------------------------
4,000 Coachmen Industries, Inc. 102,000
-------------------------------------------------------------------------------
5,300 (a)Equity Marketing, Inc. 121,900
-------------------------------------------------------------------------------
2,600 (a)K2, Inc. 67,600
-------------------------------------------------------------------------------
3,500 Lewis Galoob Toys, Inc. 101,938
-------------------------------------------------------------------------------
4,700 Norwood Promotional Products 75,788
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
SMALL-CAP STOCKS--CONTINUED
-------------------------------------------------------------------------------
CONSUMER DURABLES--CONTINUED
-------------------------------------------------------------------------------
1,900 Wynns International, Inc. $ 55,338
------------------------------------------------------------------------------- -------------
Total 880,720
------------------------------------------------------------------------------- -------------
CONSUMER NON-DURABLES--0.6%
-------------------------------------------------------------------------------
5,300 (a)Helen of Troy Ltd. 113,950
-------------------------------------------------------------------------------
8,600 (a)Morningstar Group, Inc. 148,350
-------------------------------------------------------------------------------
2,200 (a)Mossimo, Inc. 33,275
-------------------------------------------------------------------------------
2,200 Natures Sunshine Products, Inc. 44,550
-------------------------------------------------------------------------------
6,200 (a)Sport-Haley Inc. 91,450
-------------------------------------------------------------------------------
3,400 Worthington Foods, Inc. 86,700
------------------------------------------------------------------------------- -------------
Total 518,275
------------------------------------------------------------------------------- -------------
ENERGY MINERALS--0.6%
-------------------------------------------------------------------------------
3,300 (a)Belden & Blake Corp. 83,325
-------------------------------------------------------------------------------
1,700 (a)Cliffs Drilling Co. 88,400
-------------------------------------------------------------------------------
1,800 (a)Energy Ventures, Inc. 88,425
-------------------------------------------------------------------------------
6,100 (a)Key Production Co. 77,013
-------------------------------------------------------------------------------
5,200 Lomak Petroleum, Inc. 85,150
-------------------------------------------------------------------------------
4,500 (a)Pool Energy Services Co. 66,375
------------------------------------------------------------------------------- -------------
Total 488,688
------------------------------------------------------------------------------- -------------
FINANCE--2.2%
-------------------------------------------------------------------------------
6,900 (a)ACC Consumer Finance Corp. 62,963
-------------------------------------------------------------------------------
2,600 Aames Financial Corp 111,475
-------------------------------------------------------------------------------
1,500 CMAC Investment Corp. 114,375
-------------------------------------------------------------------------------
2,500 Capital Re Corp. 95,938
-------------------------------------------------------------------------------
8,000 Commonwealth Bancorp 116,000
-------------------------------------------------------------------------------
9,000 (a)Consumer Portfolio Services 115,875
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
SMALL-CAP STOCKS--CONTINUED
-------------------------------------------------------------------------------
FINANCE--CONTINUED
-------------------------------------------------------------------------------
3,500 (a)Delphi Financial Group, Inc., Class A $ 98,875
-------------------------------------------------------------------------------
2,600 (a)Delta Financial Corp. 59,475
-------------------------------------------------------------------------------
2,900 Donegal Group, Inc. 56,188
-------------------------------------------------------------------------------
3,900 (a)Electro Rent Corp. 93,600
-------------------------------------------------------------------------------
4,800 (a)Everen Capital Corp. 108,000
-------------------------------------------------------------------------------
3,500 Executive Risk, Inc. 140,000
-------------------------------------------------------------------------------
3,300 (a)First Merchants Acceptance Corp. 69,300
-------------------------------------------------------------------------------
2,600 Frontier Insurance Group, Inc. 99,450
-------------------------------------------------------------------------------
1,900 (a)Insignia Financial Group, Inc., Class A 43,225
-------------------------------------------------------------------------------
500 (a)Markel Corp. 42,500
-------------------------------------------------------------------------------
3,400 Penn-America Group, Inc. 53,975
-------------------------------------------------------------------------------
5,800 (a)Southern Pacific Funding 184,150
-------------------------------------------------------------------------------
2,900 (a)UICI 81,200
-------------------------------------------------------------------------------
3,600 Vesta Insurance Group, Inc. 116,100
------------------------------------------------------------------------------- -------------
Total 1,862,664
------------------------------------------------------------------------------- -------------
HEALTH CARE--1.6%
-------------------------------------------------------------------------------
4,100 (a)American HomePatient, Inc. 94,813
-------------------------------------------------------------------------------
2,850 (a)Bio Rad Laboratories, Inc., Class A 85,144
-------------------------------------------------------------------------------
7,600 (a)Biosource International, Inc. 53,675
-------------------------------------------------------------------------------
3,400 Chad Therapeutics Inc. 53,550
-------------------------------------------------------------------------------
4,500 (a)Curative Technologies, Inc. 117,000
-------------------------------------------------------------------------------
10,800 (a)Diagnostic Health Services, Inc. 75,600
-------------------------------------------------------------------------------
2,800 (a)Geltex Pharmaceuticals, Inc. 50,050
-------------------------------------------------------------------------------
3,400 (a)Genesis Health Ventures, Inc. 94,775
-------------------------------------------------------------------------------
1,300 (a)Medicis Pharmaceutical Corp., Class A 57,038
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
SMALL-CAP STOCKS--CONTINUED
-------------------------------------------------------------------------------
HEALTH CARE--CONTINUED
-------------------------------------------------------------------------------
6,400 (a)OrthoLogic Corp. $ 39,200
-------------------------------------------------------------------------------
7,900 (a)Physician Computer Network, Inc. 65,175
-------------------------------------------------------------------------------
7,100 (a)Prime Medical Services 82,538
-------------------------------------------------------------------------------
6,300 (a)Rotech Medical Corp. 107,100
-------------------------------------------------------------------------------
1,700 (a)Safeskin Corp. 87,975
-------------------------------------------------------------------------------
2,800 (a)Sierra Health Services, Inc. 68,950
-------------------------------------------------------------------------------
3,000 (a)Universal Health Services, Inc., Class B 84,750
-------------------------------------------------------------------------------
3,900 (a)UroCor, Inc. 37,538
-------------------------------------------------------------------------------
4,800 (a)Veterinary Centers of America 51,000
------------------------------------------------------------------------------- -------------
Total 1,305,871
------------------------------------------------------------------------------- -------------
PRODUCER MANUFACTURING--0.6%
-------------------------------------------------------------------------------
2,300 (a)Cable Design Technologies, Class A 67,275
-------------------------------------------------------------------------------
4,300 (a)Maverick Tube Corp. 68,263
-------------------------------------------------------------------------------
2,300 (a)NCI Building System, Inc. 66,125
-------------------------------------------------------------------------------
2,500 (a)Reliance Steel & Aluminum Co. 93,750
-------------------------------------------------------------------------------
2,700 (a)Sinter Metals, Inc. 67,500
-------------------------------------------------------------------------------
3,600 (a)US Office Products Co. 111,600
------------------------------------------------------------------------------- -------------
Total 474,513
------------------------------------------------------------------------------- -------------
RETAIL TRADE--1.1%
-------------------------------------------------------------------------------
6,000 (a)Amrion, Inc. 137,250
-------------------------------------------------------------------------------
1,900 (a)MSC Industrial Direct Co. 71,013
-------------------------------------------------------------------------------
5,200 (a)Microage, Inc. 117,650
-------------------------------------------------------------------------------
4,100 (a)Pacific Sunwear of California 110,700
-------------------------------------------------------------------------------
6,800 (a)Paul Harris Stores, Inc. 124,100
-------------------------------------------------------------------------------
4,000 (a)Pomeroy Computer Resources 109,500
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
SMALL-CAP STOCKS--CONTINUED
-------------------------------------------------------------------------------
RETAIL TRADE--CONTINUED
-------------------------------------------------------------------------------
2,600 (a)Regis Corp. Minnesota $ 65,000
-------------------------------------------------------------------------------
3,400 Riser Foods, Inc. 103,700
-------------------------------------------------------------------------------
3,100 (a)Stein Mart, Inc. 59,288
------------------------------------------------------------------------------- -------------
Total 898,201
------------------------------------------------------------------------------- -------------
SERVICES--2.0%
-------------------------------------------------------------------------------
5,700 (a)ATC Communications, Inc. 87,638
-------------------------------------------------------------------------------
1,900 American List Corp. 56,050
-------------------------------------------------------------------------------
3,200 (a)BARRA, Inc. 83,200
-------------------------------------------------------------------------------
3,300 (a)CDI Corp. 96,113
-------------------------------------------------------------------------------
1,400 (a)Caribiner International, Inc. 61,775
-------------------------------------------------------------------------------
1,800 (a)Catalina Marketing Corp. 91,800
-------------------------------------------------------------------------------
3,800 (a)Consolidated Graphics, Inc. 172,900
-------------------------------------------------------------------------------
5,800 Employee Solutions, Inc. 107,300
-------------------------------------------------------------------------------
5,600 FactSet Research Systems 131,600
-------------------------------------------------------------------------------
3,000 HA-LO Industries, Inc. 115,500
-------------------------------------------------------------------------------
5,400 (a)National Education Corp. 76,275
-------------------------------------------------------------------------------
2,800 (a)Newpark Resources, Inc. 98,000
-------------------------------------------------------------------------------
3,500 (a)Personnel Group of America, Inc. 79,188
-------------------------------------------------------------------------------
2,400 (a)Premier Parks, Inc. 77,100
-------------------------------------------------------------------------------
6,500 (a)Prepaid Legal Services, Inc. 90,188
-------------------------------------------------------------------------------
6,000 (a)Prime Hospitality Corp. 99,750
-------------------------------------------------------------------------------
4,200 (a)Right Management Consultants 81,375
-------------------------------------------------------------------------------
1,000 (a)Univision Communications, Inc., Class A 39,750
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
SMALL-CAP STOCKS--CONTINUED
-------------------------------------------------------------------------------
SERVICES--CONTINUED
-------------------------------------------------------------------------------
1,200 (a)Volt Information Science, Inc. $ 42,000
------------------------------------------------------------------------------- -------------
Total 1,687,502
------------------------------------------------------------------------------- -------------
TECHNOLOGY--3.2%
-------------------------------------------------------------------------------
7,400 (a)Alphanet Solutions, Inc. 90,650
-------------------------------------------------------------------------------
10,100 (a)Award Software International, Inc. 90,900
-------------------------------------------------------------------------------
2,700 (a)Burr Brown Corp. 70,200
-------------------------------------------------------------------------------
1,300 (a)Claremont Technology Group 31,850
-------------------------------------------------------------------------------
5,800 (a)Cognex Corp. 114,550
-------------------------------------------------------------------------------
3,000 Computer Task Group, Inc. 125,625
-------------------------------------------------------------------------------
5,900 (a)Digital Systems Int., Inc. 90,713
-------------------------------------------------------------------------------
3,200 (a)Ducommun, Inc. 70,800
-------------------------------------------------------------------------------
1,900 (a)Dupont Photomasks, Inc. 78,850
-------------------------------------------------------------------------------
6,100 (a)EIS International, Inc. 53,375
-------------------------------------------------------------------------------
5,800 (a)ESS Technology, Inc. 114,550
-------------------------------------------------------------------------------
3,900 (a)Elexsys International, Inc. 64,838
-------------------------------------------------------------------------------
6,600 (a)Firearms Training Systems, Inc. 91,163
-------------------------------------------------------------------------------
2,200 (a)IA Corporation I 12,375
-------------------------------------------------------------------------------
5,100 (a)II-VI, Inc. 134,513
-------------------------------------------------------------------------------
4,400 Innovex, Inc. 178,750
-------------------------------------------------------------------------------
3,600 (a)Integrated Measurement Systems, Inc 63,900
-------------------------------------------------------------------------------
4,500 (a)Intervoice, Inc. 56,813
-------------------------------------------------------------------------------
2,700 (a)Perceptron, Inc. 93,488
-------------------------------------------------------------------------------
4,000 (a)Photronic Labs, Inc. 126,000
-------------------------------------------------------------------------------
7,600 (a)Raster Graphics Inc. 79,800
-------------------------------------------------------------------------------
4,500 (a)Sandisk Corp. 61,875
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
SMALL-CAP STOCKS--CONTINUED
-------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
-------------------------------------------------------------------------------
7,900 (a)StorMedia, Inc. $ 100,725
-------------------------------------------------------------------------------
4,300 (a)Stratasys, Inc. 71,488
-------------------------------------------------------------------------------
1,900 (a)Supertex, Inc. 36,100
-------------------------------------------------------------------------------
3,200 (a)Tollgrade Communications, Inc. 77,600
-------------------------------------------------------------------------------
3,300 (a)Tracor, Inc. 72,600
-------------------------------------------------------------------------------
4,300 (a)Trident International, Inc. 84,925
-------------------------------------------------------------------------------
5,600 (a)Trusted Information Systems 67,200
-------------------------------------------------------------------------------
2,800 (a)USCS International, Inc. 46,900
-------------------------------------------------------------------------------
4,800 (a)Voxware, Inc. 37,200
-------------------------------------------------------------------------------
1,900 Wyle Labs 68,400
------------------------------------------------------------------------------- -------------
Total 2,558,716
------------------------------------------------------------------------------- -------------
TRANSPORTATION--0.4%
-------------------------------------------------------------------------------
2,500 Airlines Express International Corp. 81,719
-------------------------------------------------------------------------------
1,700 (a)Alaska Air Group, Inc. 41,013
-------------------------------------------------------------------------------
1,600 Expeditors International Washington, Inc. 71,200
-------------------------------------------------------------------------------
3,600 USFreightways Corp. 93,375
------------------------------------------------------------------------------- -------------
Total 287,307
------------------------------------------------------------------------------- -------------
UTILITIES--0.5%
-------------------------------------------------------------------------------
2,400 (a)Atlantic Telephone Network, Inc. 45,300
-------------------------------------------------------------------------------
1,000 (a)Columbia Gas System, Inc. 64,625
-------------------------------------------------------------------------------
2,200 Leviathan Gas Pipe Line, Inc. 100,100
-------------------------------------------------------------------------------
3,400 (b)NGC Corp. 73,950
-------------------------------------------------------------------------------
2,400 TNP Enterprises, Inc. 61,200
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
SMALL-CAP STOCKS--CONTINUED
-------------------------------------------------------------------------------
UTILITIES--CONTINUED
-------------------------------------------------------------------------------
2,600 Trescomm International, Inc. $ 26,975
------------------------------------------------------------------------------- -------------
Total 372,150
------------------------------------------------------------------------------- -------------
TOTAL SMALL-CAP STOCKS 12,190,783
------------------------------------------------------------------------------- -------------
FOREIGN EQUITY--20.0%
-------------------------------------------------------------------------------
ARGENTINA--0.0%
-------------------------------------------------------------------------------
1,025 Banco Frances del Rio de la Plata S.A., ADR 31,006
-------------------------------------------------------------------------------
4,056 Compania Naviera Perez Companc S.A., Class B 27,754
-------------------------------------------------------------------------------
802 (a)IRSA Inversiones y Representaciones S.A., GDR 24,862
-------------------------------------------------------------------------------
1,000 YPF Sociedad Anonima, ADR 23,250
------------------------------------------------------------------------------- -------------
Total 106,872
------------------------------------------------------------------------------- -------------
AUSTRALIA--0.4%
-------------------------------------------------------------------------------
13,000 (a)Aristocrat Leisure Ltd. 36,822
-------------------------------------------------------------------------------
5,250 (a)Commonwealth Installment 33,160
-------------------------------------------------------------------------------
6,600 Lend Lease Corp., Ltd. 122,481
-------------------------------------------------------------------------------
20,000 News Corp., Ltd. 106,463
-------------------------------------------------------------------------------
15,000 Woodside Petroleum Ltd. 105,364
------------------------------------------------------------------------------- -------------
Total 404,290
------------------------------------------------------------------------------- -------------
AUSTRIA--0.0%
-------------------------------------------------------------------------------
220 Vae Eisenbahnsysteme AG 20,330
------------------------------------------------------------------------------- -------------
BELGIUM--0.1%
-------------------------------------------------------------------------------
1,800 Delhaize-Le Lion 105,648
------------------------------------------------------------------------------- -------------
BRAZIL--0.4%
-------------------------------------------------------------------------------
3,348,000 Banco Bradesco S.A., Preference 24,467
-------------------------------------------------------------------------------
66,000 Banco Itau S.A., Preference 25,876
-------------------------------------------------------------------------------
140,000 Centrais Eletricas Brasileiras, Preference, Series B 45,944
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-------------------------------------------------------------------------------
BRAZIL--CONTINUED
-------------------------------------------------------------------------------
2,700 (a)Cofap-Cia Fab Peca, Preference $ 22,086
-------------------------------------------------------------------------------
937,000 Companhia Energetica de Minas Gerais, Preference 30,205
-------------------------------------------------------------------------------
12,000 (a)Cosipa Pnb 10,920
-------------------------------------------------------------------------------
2,600 (a)(b)Elevadores Atlas 27,938
-------------------------------------------------------------------------------
100,000 (a)Light Participacoes S.A. 18,790
-------------------------------------------------------------------------------
714,000 Lojas Renner S.A., Preference 35,250
-------------------------------------------------------------------------------
230,000 (a)Petroleo Brasileiro S.A., Preference 31,616
-------------------------------------------------------------------------------
550 Telecomunicacoes Brasileras, ADR 41,663
-------------------------------------------------------------------------------
140,000 (a)Telecomunicacoes de Sao Paulo S.A., Preference 24,801
-------------------------------------------------------------------------------
11,014,000 (a)Usinas Siderurgicas de Minas Gerais, Pfd. 10,981
------------------------------------------------------------------------------- -------------
Total 350,537
------------------------------------------------------------------------------- -------------
CHILE--0.0%
-------------------------------------------------------------------------------
500 (a)Banco BHIF, ADR 8,438
-------------------------------------------------------------------------------
400 (a)Banco de A. Edwards, ADR 7,400
-------------------------------------------------------------------------------
200 (a)(b)Chilectra S.A., ADR 11,000
-------------------------------------------------------------------------------
100 Compania Telecomunicacion Chile, ADR 9,513
-------------------------------------------------------------------------------
300 (a)Santa Isabel S.A., ADR 7,538
-------------------------------------------------------------------------------
200 Sociedad Quimica Y Minera De Chile, ADR 10,400
------------------------------------------------------------------------------- -------------
Total 54,289
------------------------------------------------------------------------------- -------------
COLOMBIA--0.0%
-------------------------------------------------------------------------------
800 Banco Ganadero S.A., ADR 19,800
-------------------------------------------------------------------------------
900 Banco Industrial Colombiano, ADR 14,513
------------------------------------------------------------------------------- -------------
Total 34,313
------------------------------------------------------------------------------- -------------
FRANCE--1.4%
-------------------------------------------------------------------------------
918 AXA 55,163
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-------------------------------------------------------------------------------
FRANCE--CONTINUED
-------------------------------------------------------------------------------
482 Accor SA $ 61,821
-------------------------------------------------------------------------------
1,100 Casino Ord 49,801
-------------------------------------------------------------------------------
1,037 Compagnie Financiere de Paribas, Class A 71,247
-------------------------------------------------------------------------------
450 Compagnie de Saint Gobain 64,694
-------------------------------------------------------------------------------
1,529 Credit Commerical De France 74,053
-------------------------------------------------------------------------------
1,410 Credit Local de France 127,644
-------------------------------------------------------------------------------
500 Groupe Danon BSN SA 73,605
-------------------------------------------------------------------------------
960 Havas SA 67,996
-------------------------------------------------------------------------------
400 LVMH (Moet-Hennessy) 101,382
-------------------------------------------------------------------------------
1,130 Lafarge-Coppee 71,385
-------------------------------------------------------------------------------
721 Lyonnaise des Eaux SA 68,625
-------------------------------------------------------------------------------
660 Peugeot SA 81,113
-------------------------------------------------------------------------------
660 Rhone-Poulenc Rorer, Inc. 49,088
-------------------------------------------------------------------------------
1,680 Schneider SA 79,919
-------------------------------------------------------------------------------
531 Total SA-B 42,459
------------------------------------------------------------------------------- -------------
Total 1,139,995
------------------------------------------------------------------------------- -------------
GERMANY, FEDERAL REPUBLIC OF--1.4%
-------------------------------------------------------------------------------
2,490 BASF AG 92,098
-------------------------------------------------------------------------------
1,900 Bayer AG 76,452
-------------------------------------------------------------------------------
2,200 (a)Commerzbank AG, Frankfurt 54,067
-------------------------------------------------------------------------------
2,260 (a)Daimler Benz AG 147,596
-------------------------------------------------------------------------------
1,380 Deutsche Bank, AG 65,766
-------------------------------------------------------------------------------
2,400 Dresdner Bank AG, Frankfurt 71,231
-------------------------------------------------------------------------------
181 Gea AG, Vorzugsaktien 54,249
-------------------------------------------------------------------------------
215 (a)Henkel KGAA 10,484
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-------------------------------------------------------------------------------
GERMANY, FEDERAL REPUBLIC OF--CONTINUED
-------------------------------------------------------------------------------
935 Henkel KGAA, Pfd. $ 46,565
-------------------------------------------------------------------------------
70 Linde AG 42,507
-------------------------------------------------------------------------------
174 Mannesmann AG 72,571
-------------------------------------------------------------------------------
1,400 RWE AG 61,895
-------------------------------------------------------------------------------
4,300 (a)Rofin-Sinar Technologies, Inc. 55,363
-------------------------------------------------------------------------------
800 Schering AG 65,691
-------------------------------------------------------------------------------
945 Schwarz Pharma 70,348
-------------------------------------------------------------------------------
1,250 Siemens AG 60,220
-------------------------------------------------------------------------------
1,100 Veba AG 64,329
------------------------------------------------------------------------------- -------------
Total 1,111,432
------------------------------------------------------------------------------- -------------
HONG KONG--1.4%
-------------------------------------------------------------------------------
140,000 Aeon Credit Service 47,077
-------------------------------------------------------------------------------
63,500 Amoy Properties Ltd. 88,696
-------------------------------------------------------------------------------
9,000 Cheung Kong 79,152
-------------------------------------------------------------------------------
24,000 (a)(b)Cheung Kong Infrastructure 58,355
-------------------------------------------------------------------------------
12,000 (a)(b)China Resources Bejing Land 7,450
-------------------------------------------------------------------------------
2,429 HSBC Holdings PLC 50,578
-------------------------------------------------------------------------------
70,000 Henderson Investment Ltd. 85,101
-------------------------------------------------------------------------------
32,000 Hong Kong Telecom 55,458
-------------------------------------------------------------------------------
11,000 Hutchison Whampoa 85,004
-------------------------------------------------------------------------------
8,000 New World Development Co. Ltd. 54,061
-------------------------------------------------------------------------------
114,000 Oriental Press Group 64,136
-------------------------------------------------------------------------------
43,000 Peregrine Investments 79,527
-------------------------------------------------------------------------------
30,000 (a)(b)Shanghai Industrial Holdings Ltd 97,581
-------------------------------------------------------------------------------
5,000 Sun Hung Kai Properties 62,080
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-------------------------------------------------------------------------------
HONG KONG--CONTINUED
-------------------------------------------------------------------------------
41,000 (a)Winsor Property Holdings Ltd. $ 61,776
------------------------------------------------------------------------------- -------------
Total 976,032
------------------------------------------------------------------------------- -------------
INDIA--0.0%
-------------------------------------------------------------------------------
1,700 (a)(b)Bombay Suburban Electric Supply, GDR 33,575
-------------------------------------------------------------------------------
4,600 (a)(b)Crompton Greaves Ltd., GDR 14,950
-------------------------------------------------------------------------------
1,200 (a)Hindalco Industries, GDR 24,480
-------------------------------------------------------------------------------
2,000 (a)(b)Larsen & Toubro Ltd., GDR 29,000
-------------------------------------------------------------------------------
2,600 (a)(b)Mahindra and Mahindra , GDR 27,300
-------------------------------------------------------------------------------
1,600 (a)(b)Steel Authority of India, GDR 13,600
------------------------------------------------------------------------------- -------------
Total 142,905
------------------------------------------------------------------------------- -------------
INDONESIA--0.0%
-------------------------------------------------------------------------------
41,000 (a)Bank Negara Indonesia 20,544
-------------------------------------------------------------------------------
23,000 Citra Marga Nusaphala Persada 19,371
-------------------------------------------------------------------------------
5,000 Gudang Garam 21,269
-------------------------------------------------------------------------------
14,000 Modern Photo Film Co. 35,075
-------------------------------------------------------------------------------
10,000 Semen Gresik 30,490
-------------------------------------------------------------------------------
29,467 Steady Safe 34,556
-------------------------------------------------------------------------------
38,720 Pab K Tjiwi Kimia 37,151
-------------------------------------------------------------------------------
12,000 Tambang Timah 18,934
------------------------------------------------------------------------------- -------------
Total 217,390
------------------------------------------------------------------------------- -------------
ITALY--0.4%
-------------------------------------------------------------------------------
8,000 Banca Popolare Milano 40,898
-------------------------------------------------------------------------------
10,300 Eni 54,219
-------------------------------------------------------------------------------
5,100 Imi Istituto Mobiliare 42,843
-------------------------------------------------------------------------------
595 (a)La Rinascente S.P.A. Warrants, 12/31/1999 279
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-------------------------------------------------------------------------------
ITALY--CONTINUED
-------------------------------------------------------------------------------
42,000 Telecom Italia Mobile $ 98,770
-------------------------------------------------------------------------------
6,000 (a)Unicem S.P.A. 40,489
------------------------------------------------------------------------------- -------------
Total 277,498
------------------------------------------------------------------------------- -------------
JAPAN--5.4%
-------------------------------------------------------------------------------
16,000 Amada Co 133,731
-------------------------------------------------------------------------------
200 Asahi Broadcasting Corp. 21,949
-------------------------------------------------------------------------------
3,000 Canare Electric Co. Ltd. 63,213
-------------------------------------------------------------------------------
13,000 Casio Computer Co 105,461
-------------------------------------------------------------------------------
23 DDI Corp. 164,574
-------------------------------------------------------------------------------
9,000 Dai Nippon Printing Co. Ltd. 164,355
-------------------------------------------------------------------------------
12,000 Daito Trust Construction 156,980
-------------------------------------------------------------------------------
6,000 Fuji Photo Film Co. 188,060
-------------------------------------------------------------------------------
2,000 Hirose Electric Co 121,159
-------------------------------------------------------------------------------
8,000 Hitachi Maxell 165,057
-------------------------------------------------------------------------------
7,000 Ikegami Tsushinki 46,708
-------------------------------------------------------------------------------
10,000 JGC Corp. 92,186
-------------------------------------------------------------------------------
3,000 Japan Cash Machine Co. Ltd. 53,468
-------------------------------------------------------------------------------
5,000 Japan Radio Co. 61,018
-------------------------------------------------------------------------------
16 (a)(b)Japan Tobacco 113,924
-------------------------------------------------------------------------------
5,000 Konami Co 170,764
-------------------------------------------------------------------------------
6,000 Matsushita Kotobuk Electric 153,819
-------------------------------------------------------------------------------
4,000 (a)Meiwa Estate 116,594
-------------------------------------------------------------------------------
24,000 Minolta Co 151,080
-------------------------------------------------------------------------------
23,000 Mitsubishi Heavy Industries Ltd. 187,796
-------------------------------------------------------------------------------
10,000 Mycal Corp. 149,254
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-------------------------------------------------------------------------------
JAPAN--CONTINUED
-------------------------------------------------------------------------------
2,000 Nintendo Corp. Ltd. $ 141,352
-------------------------------------------------------------------------------
5,000 Nippon Comsys Corp. 62,335
-------------------------------------------------------------------------------
1,000 Nissei ASB Machine Co. 13,960
-------------------------------------------------------------------------------
3,000 Pioneer Electronic Corp 64,530
-------------------------------------------------------------------------------
3,000 Promise Co. Ltd. 150,132
-------------------------------------------------------------------------------
2 (b)Sakura Finance (Bermuda), Conv. Pfd. 113,664
-------------------------------------------------------------------------------
5,000 Sankyo Co. 133,889
-------------------------------------------------------------------------------
12,000 Shiseido Co. 144,337
-------------------------------------------------------------------------------
14,000 Shochiku Co. 130,290
-------------------------------------------------------------------------------
2,000 Sony Corp. 128,007
-------------------------------------------------------------------------------
3,000,000 (b)Sumitomo Bank International, Conv. Bond, .75%, 5/31/2001 28,611
-------------------------------------------------------------------------------
7,000 Sumitomo Trust & Banking 77,436
-------------------------------------------------------------------------------
8,000 Taisho Pharmaceutical Co. 178,402
-------------------------------------------------------------------------------
6,000 Takashimaya Co. 80,070
-------------------------------------------------------------------------------
9,000 Tokio Marine and Fire Insurance Co. 99,561
-------------------------------------------------------------------------------
30,000 (a)Tokyo Tatemono Co., Ltd. 137,489
-------------------------------------------------------------------------------
10,000 Tsubakimoto Chain Co. 58,911
------------------------------------------------------------------------------- -------------
Total 4,324,126
------------------------------------------------------------------------------- -------------
KOREA, REPUBLIC OF--0.0%
-------------------------------------------------------------------------------
1,500 Chonggu Housing & Construction 34,381
-------------------------------------------------------------------------------
1,500 Dongkuk Steel Mill Co. 29,133
-------------------------------------------------------------------------------
1,100 Hankuk Paper Manufacturing Co. 24,947
-------------------------------------------------------------------------------
3,000 Korea Exchange Bank 28,228
-------------------------------------------------------------------------------
2,700 (a)Korea Mobile Telecomm Corp., ADR 35,100
-------------------------------------------------------------------------------
1,700 Pacific Corporation 31,787
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-------------------------------------------------------------------------------
KOREA, REPUBLIC OF--CONTINUED
-------------------------------------------------------------------------------
960 Shinhan Bank $ 16,954
------------------------------------------------------------------------------- -------------
Total 200,530
------------------------------------------------------------------------------- -------------
MALAYSIA--0.6%
-------------------------------------------------------------------------------
26,000 Eastern and Oriental 56,589
-------------------------------------------------------------------------------
3,000 (a)Kentucky Fried Chicken 3,657
-------------------------------------------------------------------------------
15,000 Kentucky Fried Chicken 66,482
-------------------------------------------------------------------------------
4,000 Malayan Banking 39,573
-------------------------------------------------------------------------------
1,000 Malayan United Industries 748
-------------------------------------------------------------------------------
34,000 Malaysian Industrial Development 69,964
-------------------------------------------------------------------------------
12,000 Malaysian Pacific Industries 48,912
-------------------------------------------------------------------------------
14,000 Metacorp 43,213
-------------------------------------------------------------------------------
15,000 UMW Holdings 71,231
------------------------------------------------------------------------------- -------------
Total 400,369
------------------------------------------------------------------------------- -------------
MEXICO--0.1%
-------------------------------------------------------------------------------
900 (a)(b)Acer, Inc., ADR 16,425
-------------------------------------------------------------------------------
3,300 (a)Cemex S.A., Class B, ADR 23,822
-------------------------------------------------------------------------------
15,000 (a)Cifra S.A. de C.V., Class B 20,692
-------------------------------------------------------------------------------
2,000 (a)Empresas ICA Sociedad Controladora S.A., ADR 28,750
-------------------------------------------------------------------------------
13,000 Fomento Economico Mexicano, S.A. de C.V., Class B 44,421
-------------------------------------------------------------------------------
18,000 (a)Grupo Corvi S.A., Class UBL 15,063
-------------------------------------------------------------------------------
3,100 (a)(b)Grupo Financiero Bancomer, S.A. de C.V., Class B, ADR 24,974
-------------------------------------------------------------------------------
600 Pan American Beverage, Class A 28,050
-------------------------------------------------------------------------------
700 Telefonos de Mexico, Class L, ADR 21,263
-------------------------------------------------------------------------------
1,800 (a)Tubos de Acero de Mexico S.A., ADR 24,525
------------------------------------------------------------------------------- -------------
Total 247,985
------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-------------------------------------------------------------------------------
NETHERLANDS--0.8%
-------------------------------------------------------------------------------
2,100 ABN Amro Holding $ 136,038
-------------------------------------------------------------------------------
900 (a)ASM Lithography Holding N.V. 39,616
-------------------------------------------------------------------------------
610 Akzo Nobel N.V. 80,977
-------------------------------------------------------------------------------
3,900 Boskalis Westminster N.V. 77,353
-------------------------------------------------------------------------------
990 Hunter Douglas N.V. 64,764
-------------------------------------------------------------------------------
1,907 ING Groep, N.V. 66,800
-------------------------------------------------------------------------------
1,900 Vendex International A 82,532
-------------------------------------------------------------------------------
500 Wolters Kluwer N.V. 65,389
------------------------------------------------------------------------------- -------------
Total 613,469
------------------------------------------------------------------------------- -------------
NEW ZEALAND--0.3%
-------------------------------------------------------------------------------
22,000 Air New Zealand Ltd., Class B 57,895
-------------------------------------------------------------------------------
21,000 Fletcher Challenge Building 58,997
-------------------------------------------------------------------------------
70,000 Wrightson Ltd. 62,233
------------------------------------------------------------------------------- -------------
Total 179,125
------------------------------------------------------------------------------- -------------
NORWAY--0.2%
-------------------------------------------------------------------------------
3,670 Elkem A/S, Class A 57,183
-------------------------------------------------------------------------------
9,800 (a)Storebrand ASA 58,482
------------------------------------------------------------------------------- -------------
Total 115,665
------------------------------------------------------------------------------- -------------
PAKISTAN--0.0%
-------------------------------------------------------------------------------
400 (a)Hub Power Co., GDR 8,600
------------------------------------------------------------------------------- -------------
PHILIPPINES--0.0%
-------------------------------------------------------------------------------
114,000 (a)Belle Corp. 30,358
-------------------------------------------------------------------------------
55,282 (a)Davao Union Cement Corp., Class B 18,087
-------------------------------------------------------------------------------
66,600 (a)Filinvest Land, Inc. 23,563
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-------------------------------------------------------------------------------
PHILIPPINES--CONTINUED
-------------------------------------------------------------------------------
1,600 Philippine Commercial International Bank $ 21,304
------------------------------------------------------------------------------- -------------
Total 93,312
------------------------------------------------------------------------------- -------------
SINGAPORE--0.5%
-------------------------------------------------------------------------------
7,000 City Developments 61,889
-------------------------------------------------------------------------------
10,000 Hong Leong Finance Ltd. 34,652
-------------------------------------------------------------------------------
85,000 Roly International Holdings 56,100
-------------------------------------------------------------------------------
10,000 Sembawang Corp. Ltd. 54,189
-------------------------------------------------------------------------------
2,000 Singapore Press Holdings Ltd. 37,790
-------------------------------------------------------------------------------
10,000 Straits Steamship Land Ltd. 31,943
-------------------------------------------------------------------------------
2,500 (a)Straits Steamship Land Ltd. Warrants, 12/12/2000 2,799
-------------------------------------------------------------------------------
6,000 United Overseas Bank Ltd. 63,743
-------------------------------------------------------------------------------
17,000 Wing Tai Holdings, Ltd. 46,545
------------------------------------------------------------------------------- -------------
Total 389,650
------------------------------------------------------------------------------- -------------
SPAIN--0.7%
-------------------------------------------------------------------------------
1,200 Empresa Nac De Electridad 81,056
-------------------------------------------------------------------------------
870 Fomento de Construcciones Contratas SA 73,541
-------------------------------------------------------------------------------
7,100 Iberdrola SA 81,940
-------------------------------------------------------------------------------
1,400 Mapfre (corporacion) 74,031
-------------------------------------------------------------------------------
1,500 Repsol SA 55,523
-------------------------------------------------------------------------------
3,750 Telefonica de Espana 82,214
-------------------------------------------------------------------------------
693 Zardoya-Otis SA 73,826
------------------------------------------------------------------------------- -------------
Total 522,131
------------------------------------------------------------------------------- -------------
SWEDEN--0.2%
-------------------------------------------------------------------------------
7,900 Avesta Sheffield 81,169
-------------------------------------------------------------------------------
1,420 Skandia Forsakrings AB 40,492
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-------------------------------------------------------------------------------
SWEDEN--CONTINUED
-------------------------------------------------------------------------------
5,000 Stora Kopparbergs, Class A $ 68,497
------------------------------------------------------------------------------- -------------
Total 190,158
------------------------------------------------------------------------------- -------------
SWITZERLAND--1.1%
-------------------------------------------------------------------------------
60 ABB AG 75,075
-------------------------------------------------------------------------------
800 CS Holding AG-Registered 85,155
-------------------------------------------------------------------------------
60 Ciba-Giegy AG-Registered 74,246
-------------------------------------------------------------------------------
65 Nestle SA 70,560
-------------------------------------------------------------------------------
450 (a)Oerlikon-Buhrle Holding AG 46,433
-------------------------------------------------------------------------------
32 Reiseburo Kuoni AG, Class B 71,193
-------------------------------------------------------------------------------
12 Roche Holding AG 92,244
-------------------------------------------------------------------------------
49 Sandoz AG-R 56,988
-------------------------------------------------------------------------------
75 Sulzer AG-Reg 43,153
-------------------------------------------------------------------------------
66 (a)Swissair AG 50,127
-------------------------------------------------------------------------------
165 Zurich Versicherungsgesellschaft 46,835
------------------------------------------------------------------------------- -------------
Total 712,009
------------------------------------------------------------------------------- -------------
THAILAND--0.0%
-------------------------------------------------------------------------------
1,200 Bangkok Bank Public Co., Ltd. 13,719
-------------------------------------------------------------------------------
12,700 Industrial Finance Corporation of Thailand 40,029
-------------------------------------------------------------------------------
3,200 Krung Thai Bank PLC 9,146
-------------------------------------------------------------------------------
1,400 PTT Exploration and Production Public Co. 20,610
-------------------------------------------------------------------------------
30,000 Siam City Bank, 35,238
------------------------------------------------------------------------------- -------------
Total 118,742
------------------------------------------------------------------------------- -------------
UNITED KINGDOM--4.6%
-------------------------------------------------------------------------------
20,000 Asda Group 39,845
-------------------------------------------------------------------------------
8,520 BAA PLC 70,188
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-------------------------------------------------------------------------------
UNITED KINGDOM--CONTINUED
-------------------------------------------------------------------------------
16,000 BTR PLC $ 64,291
-------------------------------------------------------------------------------
4,393 Barclays PLC 75,555
-------------------------------------------------------------------------------
2,536 Boc Group PLC 37,776
-------------------------------------------------------------------------------
3,800 Boots Co. PLC 40,504
-------------------------------------------------------------------------------
3,219 British Aerospace PLC 62,616
-------------------------------------------------------------------------------
6,539 British Petroleum Co. PLC 75,609
-------------------------------------------------------------------------------
7,400 British Telecommunication PLC 46,841
-------------------------------------------------------------------------------
17,549 Bunzl PLC 65,499
-------------------------------------------------------------------------------
8,500 Cadbury Schweppes PLC 73,096
-------------------------------------------------------------------------------
15,100 Caradon PLC 60,547
-------------------------------------------------------------------------------
6,250 Carlton Communications PLC 52,854
-------------------------------------------------------------------------------
6,614 Chubb Security 38,141
-------------------------------------------------------------------------------
7,800 Compass Group 79,534
-------------------------------------------------------------------------------
23,370 Cookson Group 88,797
-------------------------------------------------------------------------------
12,000 Cowie Group PLC 79,892
-------------------------------------------------------------------------------
19,710 David S. Smith (Holdings) PLC 104,548
-------------------------------------------------------------------------------
11,600 Delta PLC 70,891
-------------------------------------------------------------------------------
3,235 EMI Group PLC 74,729
-------------------------------------------------------------------------------
21,900 FKI PLC 79,345
-------------------------------------------------------------------------------
6,280 General Accident 77,339
-------------------------------------------------------------------------------
10,890 General Electric Co. PLC 68,200
-------------------------------------------------------------------------------
3,400 Glaxo Wellcome PLC 55,919
-------------------------------------------------------------------------------
8,272 Grand Metropolitan PLC 64,599
-------------------------------------------------------------------------------
17,213 Guardian Royal Exchange 77,557
-------------------------------------------------------------------------------
3,960 Imperial Chemical Industries PLC 51,364
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-------------------------------------------------------------------------------
UNITED KINGDOM--CONTINUED
-------------------------------------------------------------------------------
9,100 Inchcape PLC $ 41,231
-------------------------------------------------------------------------------
13,353 Ladbroke Group PLC 46,022
-------------------------------------------------------------------------------
8,500 Marks & Spencer PLC 72,310
-------------------------------------------------------------------------------
20,600 Mirror Group PLC 79,657
-------------------------------------------------------------------------------
10,000 Morgan Crucible Co 76,833
-------------------------------------------------------------------------------
10,600 National Power Co. PLC 82,155
-------------------------------------------------------------------------------
11,000 (a)(b)Pace Micro Technology PLC 43,830
-------------------------------------------------------------------------------
4,600 Pearson 56,843
-------------------------------------------------------------------------------
4,909 Peninsular & Oriental Steam Navigation Co. 48,818
-------------------------------------------------------------------------------
5,500 Powergen PLC 53,631
-------------------------------------------------------------------------------
6,700 Premier Farnell PLC 80,202
-------------------------------------------------------------------------------
2,632 RTZ Corp. PLC 44,250
-------------------------------------------------------------------------------
4,800 Rank Group PLC 35,104
-------------------------------------------------------------------------------
4,655 Reckitt & Colman PLC 54,861
-------------------------------------------------------------------------------
7,191 Redland PLC 44,732
-------------------------------------------------------------------------------
5,100 Reed International PLC 98,819
-------------------------------------------------------------------------------
11,400 Rexam 64,781
-------------------------------------------------------------------------------
31,600 Rugby Group PLC 51,002
-------------------------------------------------------------------------------
6,300 Safeway PLC 41,308
-------------------------------------------------------------------------------
27,500 Sedgwick Group PLC 58,024
-------------------------------------------------------------------------------
2,928 Siebe PLC 46,741
-------------------------------------------------------------------------------
3,491 Smithkline Beecham PLC 48,127
-------------------------------------------------------------------------------
12,700 Tomkins PLC 53,059
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES
OR UNITS
OR VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-------------------------------------------------------------------------------
UNITED KINGDOM--CONTINUED
-------------------------------------------------------------------------------
2,720 Zeneca Group $ 74,997
------------------------------------------------------------------------------- -------------
Total 3,173,413
------------------------------------------------------------------------------- -------------
TOTAL FOREIGN EQUITY 16,230,815
------------------------------------------------------------------------------- -------------
TOTAL STOCKS (IDENTIFIED COST $43,144,819) 48,774,521
------------------------------------------------------------------------------- -------------
BONDS--29.1%
- -----------------------------------------------------------------------------------------------
TREASURY--9.0%
-------------------------------------------------------------------------------
$ 635,000 United States Treasury Note, 5.000%, 2/15/1999 627,075
-------------------------------------------------------------------------------
500,000 United States Treasury Note, 6.250%, 2/15/2003 508,835
-------------------------------------------------------------------------------
500,000 United States Treasury Note, 6.375%, 3/31/2001 510,950
-------------------------------------------------------------------------------
1,605,000 United States Treasury Note, 6.375%, 8/15/2002 1,645,029
-------------------------------------------------------------------------------
1,300,000 United States Treasury Note, 6.375%, 9/30/2001 1,329,315
-------------------------------------------------------------------------------
2,025,000 United States Treasury Note, 6.500%, 5/15/2005 2,087,370
-------------------------------------------------------------------------------
200,000 United States Treasury Note, 6.875%, 5/15/2006 211,448
-------------------------------------------------------------------------------
350,000 United States Treasury Note, 7.500%, 2/15/2005 383,040
------------------------------------------------------------------------------- -------------
TOTAL TREASURY 7,303,062
------------------------------------------------------------------------------- -------------
MORTGAGE-BACKED SECURITIES--4.9%
-------------------------------------------------------------------------------
GOVERNMENT AGENCY--4.9%
-------------------------------------------------------------------------------
354,799 Federal Home Loan Mortgage Corp., 7.500%, 30 Year,
10/1/2025 359,670
-------------------------------------------------------------------------------
167,053 Federal Home Loan Mortgage Corp., 7.000%, 15 Year,
4/1/2009 168,616
-------------------------------------------------------------------------------
481,909 Federal Home Loan Mortgage Corp., 6.500%, 15 Year,
10/1/2010 479,779
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
BONDS--CONTINUED
- -----------------------------------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES--CONTINUED
-------------------------------------------------------------------------------
GOVERNMENT AGENCY--CONTINUED
-------------------------------------------------------------------------------
$ 84,820 Federal National Mortgage Association, 7.000%, 30 Year,
5/1/2001 $ 86,436
-------------------------------------------------------------------------------
211,801 Federal National Mortgage Association, 8.000%, 30 Year,
7/1/2023 218,814
-------------------------------------------------------------------------------
475,081 Federal National Mortgage Association, 7.000%, 15 Year,
8/1/2011 478,934
-------------------------------------------------------------------------------
528,192 Federal National Mortgage Association, 6.500%, 30 Year,
7/1/2026 512,996
-------------------------------------------------------------------------------
498,937 Federal National Mortgage Association, 7.500%, 30 Year,
8/1/2026 505,638
-------------------------------------------------------------------------------
218,069 Government National Mortgage Association, 9.000%, 30 Year,
10/15/2019 235,035
-------------------------------------------------------------------------------
441,897 Government National Mortgage Association, 8.500%, 30 Year,
10/15/2022 464,124
-------------------------------------------------------------------------------
470,320 Government National Mortgage Association, 8.000%, 30 Year,
7/15/2025 485,601
------------------------------------------------------------------------------- -------------
TOTAL MORTGAGE-BACKED SECURITIES 3,995,643
------------------------------------------------------------------------------- -------------
INVESTMENT GRADE BONDS--2.4%
-------------------------------------------------------------------------------
BANKING--0.3%
-------------------------------------------------------------------------------
250,000 Bank Of Montreal, Sub. Note, 7.80%, 4/1/2007 270,648
------------------------------------------------------------------------------- -------------
CABLE TELEVISION--0.3%
-------------------------------------------------------------------------------
230,000 Continental Cablevision, Sr. Deb., 9.50%, 8/1/2013 270,393
------------------------------------------------------------------------------- -------------
CHEMICALS & PLASTICS--0.3%
-------------------------------------------------------------------------------
250,000 (b)Bayer Corp., Deb., 6.50%, 10/1/2002 253,930
------------------------------------------------------------------------------- -------------
FINANCIAL INTERMEDIARIES--0.6%
-------------------------------------------------------------------------------
100,000 American General Corp., S.F. Deb., 9.625%, 2/1/2018 108,199
-------------------------------------------------------------------------------
150,000 DLJ, Note, 6.875%, 11/1/2005 150,399
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
BONDS--CONTINUED
- -----------------------------------------------------------------------------------------------
INVESTMENT GRADE BONDS--CONTINUED
-------------------------------------------------------------------------------
FINANCIAL INTERMEDIARIES--CONTINUED
-------------------------------------------------------------------------------
$ 200,000 Green Tree Financial Corp, Sr. Sub. Note, 10.25%, 6/1/2002 $ 235,520
------------------------------------------------------------------------------- -------------
Total 494,118
------------------------------------------------------------------------------- -------------
FOOD & DRUG RETAILERS--0.3%
-------------------------------------------------------------------------------
250,000 Hook-Superx, Inc., Sr. Note, 10.125%, 6/1/2002 266,478
------------------------------------------------------------------------------- -------------
INDUSTRIAL PRODUCTS & EQUIPMENT--0.3%
-------------------------------------------------------------------------------
250,000 Joy Technologies Inc., Sr. Note, 10.25%, 9/1/2003 276,850
------------------------------------------------------------------------------- -------------
SOVEREIGN GOVERNMENT--0.3%
-------------------------------------------------------------------------------
250,000 Republic of Colombia, Note, 7.25%, 2/15/2003 248,668
------------------------------------------------------------------------------- -------------
TOTAL INVESTMENT GRADE BONDS 2,081,085
------------------------------------------------------------------------------- -------------
HIGH YIELD BONDS--5.3%
-------------------------------------------------------------------------------
AUTOMOTIVE--0.2%
-------------------------------------------------------------------------------
50,000 (b)Blue Bird Body Co., Sr. Sub. Note, 10.75%, 11/15/2006 51,875
-------------------------------------------------------------------------------
25,000 Collins & Aikman Products, Sr. Sub. Note, 11.50%, 4/15/2006 26,813
-------------------------------------------------------------------------------
50,000 Exide Corp., Sr. Note, 10.00%, 4/15/2005 52,375
------------------------------------------------------------------------------- -------------
Total 131,063
------------------------------------------------------------------------------- -------------
BANKING--0.0%
-------------------------------------------------------------------------------
25,000 (b)First Nationwide Escrow, Sr. Sub. Note, 10.625%, 10/1/2003 26,750
-------------------------------------------------------------------------------
25,000 First Nationwide Holdings, Sr. Note, 12.25%, 5/15/2001 28,188
------------------------------------------------------------------------------- -------------
Total 54,938
------------------------------------------------------------------------------- -------------
BEVERAGE & TOBACCO--0.0%
-------------------------------------------------------------------------------
25,000 Dr Pep Btlg Hldgs, Sr. Disc. Note, 0/11.625%, 2/15/2003 23,250
------------------------------------------------------------------------------- -------------
BROADCAST RADIO & TV--0.6%
-------------------------------------------------------------------------------
37,000 Chancellor Broadcasting Co., Sr. Sub. Note, 12.50%, 10/1/2004 41,255
-------------------------------------------------------------------------------
25,000 Granite Broadcasting Corp, Sr. Sub. Note, 9.375%, 12/1/2005 23,938
-------------------------------------------------------------------------------
50,000 Heritage Media Corp., Sr. Sub. Note, 8.75%, 2/15/2006 48,500
-------------------------------------------------------------------------------
</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
-------------------------------------------------------------------------------
$ 25,000 Pegasus Media , Note, 12.50%, 7/1/2005 $ 27,125
-------------------------------------------------------------------------------
50,000 SCI Television, Sr. Secd. Note, 11.00%, 6/30/2005 53,875
-------------------------------------------------------------------------------
50,000 SFX Broadcasting, Inc., Sr. Sub. Note, 10.75%, 5/15/2006 52,625
-------------------------------------------------------------------------------
50,000 Sinclair Broadcast Group, Sr. Sub. Note, 10.00%, 9/30/2005 50,375
-------------------------------------------------------------------------------
50,000 Young Broadcasting Corp., Sr. Sub. Note, 10.125%, 2/15/2005 50,500
------------------------------------------------------------------------------- -------------
Total 348,193
------------------------------------------------------------------------------- -------------
BUSINESS EQUIPMENT & SERVICES--0.1%
-------------------------------------------------------------------------------
50,000 Knoll, Inc., Sr. Sub. Note, 10.875%, 3/15/2006 54,750
-------------------------------------------------------------------------------
25,000 Monarch Acquisition Corp., Sr. Note, 12.50%, 7/1/2003 27,875
-------------------------------------------------------------------------------
25,000 United Stationers Supply, Sr. Sub. Note, 12.75%, 5/1/2005 27,719
------------------------------------------------------------------------------- -------------
Total 110,344
------------------------------------------------------------------------------- -------------
CABLE TELEVISION--0.4%
-------------------------------------------------------------------------------
25,000 (b)Australis Holdings Pty , Unit, 0/15.000%, 11/1/2002 14,188
-------------------------------------------------------------------------------
50,000 Bell Cablemedia PLC, Sr. Disc. Note, 0/11.950%, 7/15/2004 43,250
-------------------------------------------------------------------------------
50,000 CF Cable TV Inc., Sr. Secd. 2nd Priority Note, 11.625%, 2/15/2005 58,250
-------------------------------------------------------------------------------
25,000 Cablevision Systems Corp., Sr. Sub. Note, 9.875%, 5/15/2006 25,313
-------------------------------------------------------------------------------
50,000 Charter Communication Southeast, Sr. Note, 11.25%, 3/15/2006 51,750
-------------------------------------------------------------------------------
50,000 Comcast UK Cable, Deb., 0/11.200%, 11/15/2007 34,875
-------------------------------------------------------------------------------
100,000 (b)CS Wireless Systems, Inc., Unit, 0/11.375%, 3/1/2006 38,500
-------------------------------------------------------------------------------
25,000 Echostar Satellite Broadcasting Corp. Sr. Disc. Note, 0/13.125%,
3/15/2004 19,125
-------------------------------------------------------------------------------
100,000 International Cabletel, Sr. Disc. Note, 0/12.750%, 4/15/2005 72,000
-------------------------------------------------------------------------------
25,000 Telewest PLC, Sr. Disc. Deb., 0/11.000%, 10/1/2007 17,125
-------------------------------------------------------------------------------
25,000 Uih Australia/Pacific, Sr. Disc. Note, 0/14.000%, 5/15/2006 13,375
------------------------------------------------------------------------------- -------------
Total 387,751
------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
BONDS--CONTINUED
- -----------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
-------------------------------------------------------------------------------
CHEMICALS & PLASTICS--0.4%
-------------------------------------------------------------------------------
$ 25,000 Arcadian Partners LP, Sr. Note, Series B, 10.75%, 5/1/2005 $ 27,688
-------------------------------------------------------------------------------
50,000 (b)Astor Corp., Sr. Sub. Note, 10.50%, 10/15/2006 51,000
-------------------------------------------------------------------------------
25,000 Crain Industries Inc., Sr. Sub. Note, 13.50%, 8/15/2005 28,188
-------------------------------------------------------------------------------
50,000 Harris Chemical, Sr. Note, 10.25%, 7/15/2001 51,625
-------------------------------------------------------------------------------
33,000 Polymer Group, Sr. Note, 12.250%, 7/15/2002 35,805
-------------------------------------------------------------------------------
25,000 RBX Corp., Sr. Sub. Note, Series B, 11.25%, 10/15/2005 21,625
-------------------------------------------------------------------------------
50,000 Sterling Chemicals, Inc., Sr. Sub. Note, 11.75%, 8/15/2006 51,875
-------------------------------------------------------------------------------
50,000 Viridian Inc., Note, 9.75%, 4/1/2003 54,743
------------------------------------------------------------------------------- -------------
Total 322,549
------------------------------------------------------------------------------- -------------
CLOTHING & TEXTILES--0.1%
-------------------------------------------------------------------------------
50,000 Westpoint Stevens, Inc., Sr. Sub. Deb., 9.375%, 12/15/2005 51,625
------------------------------------------------------------------------------- -------------
CONSUMER PRODUCTS--0.2%
-------------------------------------------------------------------------------
50,000 Herff Jones, Inc., Sr. Sub. Note, 11.00%, 8/15/2005 53,750
-------------------------------------------------------------------------------
50,000 (b)ICON Fitness Corp., Sr. Disc. Note, 0/14.00%, 11/15/2006 26,125
-------------------------------------------------------------------------------
50,000 Playtex Family Products Corp., Sr. Sub. Note, 9.00%, 12/15/2003 49,750
-------------------------------------------------------------------------------
25,000 Simmons Co., Sr. Sub. Note, 10.75%, 4/15/2006 26,125
------------------------------------------------------------------------------- -------------
Total 155,750
------------------------------------------------------------------------------- -------------
CONTAINER & GLASS PRODUCTS--0.1%
-------------------------------------------------------------------------------
50,000 Owens Illinois, Inc., Sr. Sub. Note, 9.75%, 8/15/2004 52,250
-------------------------------------------------------------------------------
25,000 Packaging Resources Inc., Sr. Note, 11.625%, 5/1/2003 26,375
------------------------------------------------------------------------------- -------------
Total 78,625
------------------------------------------------------------------------------- -------------
ECOLOGICAL SERVICES & EQUIPMENT--0.1%
-------------------------------------------------------------------------------
50,000 (b)Allied Waste, Sr. Sub. Note, 10.25%, 12/1/2006 51,313
-------------------------------------------------------------------------------
25,000** (a)Mid-American Waste System, Sr. Sub. Note, 12.25%, 2/15/2003 10,250
------------------------------------------------------------------------------- -------------
Total 61,563
------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
BONDS--CONTINUED
- -----------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
-------------------------------------------------------------------------------
ELECTRONICS--0.1%
-------------------------------------------------------------------------------
$ 50,000 Advanced Micro Devices, Sr. Secd. Note, 11.00%, 8/1/2003 $ 54,438
------------------------------------------------------------------------------- -------------
FOOD & DRUG RETAILERS--0.1%
-------------------------------------------------------------------------------
25,000 Carr Gottstein Foods Co., Sr. Sub. Note, 12.00%, 11/15/2005 26,750
-------------------------------------------------------------------------------
Grand Union Co., 884 Common Shares 5,083
-------------------------------------------------------------------------------
50,000 Ralph's Grocery Co., Sr. Note, 10.45%, 6/15/2004 51,938
-------------------------------------------------------------------------------
25,000 Smith's Food & Drug , Sr. Sub. Note, 11.25%, 5/15/2007 27,500
------------------------------------------------------------------------------- -------------
Total 111,271
------------------------------------------------------------------------------- -------------
FOOD PRODUCTS--0.1%
-------------------------------------------------------------------------------
50,000 (b)International Home Foods, Sr. Sub. Note, 10.375%, 11/1/2006 51,375
-------------------------------------------------------------------------------
25,000 Specialty Foods, Sr. Sub. Note, 11.250%, 8/15/2003 21,375
-------------------------------------------------------------------------------
25,000 Van De Kamp's, Inc., Sr. Sub. Note, 12.00%, 9/15/2005 27,500
------------------------------------------------------------------------------- -------------
Total 100,250
------------------------------------------------------------------------------- -------------
FOREST PRODUCTS--0.3%
-------------------------------------------------------------------------------
25,000 Four M Corp., Sr. Note, 12.00%, 6/1/2006 25,813
-------------------------------------------------------------------------------
50,000 Repap New Brunswick, 2nd Priority Sr. Secd. Note, 10.625%,
4/15/2005 48,750
-------------------------------------------------------------------------------
50,000 Riverwood International, Sr. Sub. Note, 10.875%, 4/1/2008 45,500
-------------------------------------------------------------------------------
50,000 Stone Container, Sr. Note, 11.50%, 10/1/2004 52,750
------------------------------------------------------------------------------- -------------
Total 172,813
------------------------------------------------------------------------------- -------------
HEALTHCARE--0.2%
-------------------------------------------------------------------------------
25,000 (b)Dade International, Inc., Sr. Sub. Note, 11.125%, 5/1/2006 27,125
-------------------------------------------------------------------------------
50,000 (b)Prime Succession Acq., Sr. Sub. Note, 10.75%, 8/15/2004 54,250
-------------------------------------------------------------------------------
50,000 Tenet Healthcare, Sr. Sub. Note, 10.125%, 3/1/2005 55,500
------------------------------------------------------------------------------- -------------
Total 136,875
------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
BONDS--CONTINUED
- -----------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
-------------------------------------------------------------------------------
HOTELS, MOTELS, INNS & CASINOS--0.1%
-------------------------------------------------------------------------------
$ 50,000 Courtyard By Marriott, Sr. Note, 10.75%, 2/1/2008 $ 53,000
------------------------------------------------------------------------------- -------------
INDUSTRIAL PRODUCTS & EQUIPMENT--0.3%
-------------------------------------------------------------------------------
25,000 Cabot Safety Corp., Sr. Sub. Note, 12.50%, 7/15/2005 28,063
-------------------------------------------------------------------------------
50,000 (b)Euramax International PLC, Sr. Sub. Note, 11.25%, 10/1/2006 51,500
-------------------------------------------------------------------------------
50,000 Mettler-Toledo, Inc., Sr. Sub. Note, 9.75%, 10/1/2006 52,625
-------------------------------------------------------------------------------
50,000 Unifrax Investment Corp., Sr. Note, 10.50%, 11/1/2003 51,500
------------------------------------------------------------------------------- -------------
Total 183,688
------------------------------------------------------------------------------- -------------
LEISURE & ENTERTAINMENT--0.2%
-------------------------------------------------------------------------------
100,000 Amf Group, Inc., Sr. Sub. Disc. Note, 0/12.250%, 3/15/2006 63,750
-------------------------------------------------------------------------------
25,000 Cobblestone Golf, Sr. Note, 11.50%, 6/1/2003 26,188
-------------------------------------------------------------------------------
50,000 Six Flags Theme Parks, Sr. Sub. Disc. Note, 0/12.250%, 6/15/2005 46,250
------------------------------------------------------------------------------- -------------
Total 136,188
------------------------------------------------------------------------------- -------------
MACHINERY & EQUIPMENT--0.2%
-------------------------------------------------------------------------------
50,000 Alvey Systems, Sr. Sub. Note, 11.375%, 1/31/2003 52,500
-------------------------------------------------------------------------------
50,000 (b)Clark Material, Sr. Note, 10.75%, 11/15/2006 51,375
-------------------------------------------------------------------------------
17,000 Primeco Inc., Sr. Sub. Note, 12.75%, 3/1/2005 19,380
-------------------------------------------------------------------------------
25,000 (b)Tokheim Corporation, Sr. Sub. Note, 11.50%, 8/1/2006 26,438
------------------------------------------------------------------------------- -------------
Total 149,693
------------------------------------------------------------------------------- -------------
METALS & MINING--0.1%
-------------------------------------------------------------------------------
50,000 Royal Oak Mines, Sr. Sub. Note, 11.00%, 8/15/2006 51,125
------------------------------------------------------------------------------- -------------
OIL & GAS--0.3%
-------------------------------------------------------------------------------
50,000 (b)Abraxas Petroleum Corp., Sr. Note, 11.50%, 11/1/2004 51,875
-------------------------------------------------------------------------------
50,000 Falcon Drilling Company, Sr. Note, 9.75%, 1/15/2001 52,500
-------------------------------------------------------------------------------
50,000 Mesa Operating Company, Sr. Sub. Note, 10.625%, 7/1/2006 54,125
------------------------------------------------------------------------------- -------------
Total 158,500
------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
BONDS--CONTINUED
- -----------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
-------------------------------------------------------------------------------
PRINTING & PUBLISHING--0.3%
-------------------------------------------------------------------------------
$ 50,000 Garden State Newspapers, Inc., Sr. Sub. Note, 12.00%, 7/1/2004 $ 53,625
-------------------------------------------------------------------------------
K-III Communications Corp., 500 Pfd. Shares, Series D, $10.00 47,000
-------------------------------------------------------------------------------
50,000 (b)Petersen Publishing, Sr. Sub. Note, 11.125%, 11/15/2006 51,313
------------------------------------------------------------------------------- -------------
Total 151,938
------------------------------------------------------------------------------- -------------
SERVICES--0.1%
-------------------------------------------------------------------------------
25,000 Coinmach Corp., Sr. Note, 11.75%, 11/15/2005 27,125
-------------------------------------------------------------------------------
50,000 (b)Ryder TRS, Inc., Sr. Sub. Note, 10.00%, 12/1/2006 51,188
------------------------------------------------------------------------------- -------------
Total 78,313
------------------------------------------------------------------------------- -------------
STEEL--0.1%
-------------------------------------------------------------------------------
25,000 Bayou Steel Corp., 1st Mtg. Note, 10.25%, 3/1/2001 23,375
-------------------------------------------------------------------------------
25,000 EnviroSource, Inc., Sr. Note, 9.75%, 6/15/2003 23,355
-------------------------------------------------------------------------------
50,000 GS Technologies Operating Co., Inc., Sr. Note, 12.00%, 9/1/2004 51,750
-------------------------------------------------------------------------------
25,000 Republic Engineered Steel, 1st Mtg. Note, 9.875%, 12/15/2001 22,844
------------------------------------------------------------------------------- -------------
Total 121,324
------------------------------------------------------------------------------- -------------
SURFACE TRANSPORTATION--0.2%
-------------------------------------------------------------------------------
25,000 Ameritruck Distribution, Sr. Sub. Note, 12.25%, 11/15/2005 24,875
-------------------------------------------------------------------------------
50,000 Gearbulk Holding Limited, Sr. Note, 11.25%, 12/1/2004 54,500
-------------------------------------------------------------------------------
25,000 Great Dane Holdings, Sr. Sub. Deb., 12.75%, 8/1/2001 25,125
-------------------------------------------------------------------------------
50,000 (b)Statia Terminals, 1st Mtg. Note, 11.75%, 11/15/2003 50,750
-------------------------------------------------------------------------------
25,000 Stena AB, Sr. Note, 10.50%, 12/15/2005 26,781
------------------------------------------------------------------------------- -------------
Total 182,031
------------------------------------------------------------------------------- -------------
TELECOMMUNICATIONS & CELLULAR--0.2%
-------------------------------------------------------------------------------
50,000 American Communications , Sr. Disc. Note, 0/12.750%, 4/1/2006 27,375
-------------------------------------------------------------------------------
50,000 Arch Communications, Sr. Disc. Note, 0/10.875%, 3/15/2008 29,125
-------------------------------------------------------------------------------
100,000 Brooks Fiber Properties, Inc. Sr. Disc. Note, 0/10.875%, 3/1/2006 66,500
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OR
FOREIGN
CURRENCY VALUE
PAR IN U.S.
AMOUNT DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
BONDS--CONTINUED
- -----------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
-------------------------------------------------------------------------------
TELECOMMUNICATIONS & CELLULAR--CONTINUED
-------------------------------------------------------------------------------
$ 25,000 Fonorola, Inc., Sr. Secd. Note, 12.50%, 8/15/2002 $ 27,313
-------------------------------------------------------------------------------
50,000 Intermedia Communications, Sr. Disc. Note, 0/12.500%, 5/15/2006 33,125
-------------------------------------------------------------------------------
50,000 Millicom International , Sr. Disc. Note, 13.50%, 6/1/2006 29,625
-------------------------------------------------------------------------------
25,000 (a)Mobilemedia Communication, Sr. Sub. Note, 9.375%, 11/1/2007 13,750
-------------------------------------------------------------------------------
50,000 Nextel Communications, Inc., Sr. Disc. Note, 0/11.50%, 9/1/2003 37,875
-------------------------------------------------------------------------------
25,000 Paging Network, Sr. Sub. Note, 10.125%, 8/1/2007 25,156
-------------------------------------------------------------------------------
25,000 Sygnet Wireless, Inc., Sr. Note, 11.50%, 10/1/2006 25,250
-------------------------------------------------------------------------------
50,000 Teleport Communications, Sr. Disc. Note, 0/11.125%, 7/1/2007 34,250
-------------------------------------------------------------------------------
50,000 Vanguard Cellular Systems, Deb., 9.375%, 4/15/2006 50,375
------------------------------------------------------------------------------- -------------
Total 399,719
------------------------------------------------------------------------------- -------------
UTILITIES--0.2%
-------------------------------------------------------------------------------
50,000 California Energy Co., Sr. Disc. Note, 0/10.250%, 1/15/2004 52,375
-------------------------------------------------------------------------------
El Paso Electric Co. 542, PIK Pfd. Shares, Series A, 11.40% 59,756
------------------------------------------------------------------------------- -------------
Total 112,131
------------------------------------------------------------------------------- -------------
TOTAL HIGH YIELD BONDS 4,078,948
------------------------------------------------------------------------------- -------------
FOREIGN BONDS--7.5%
-------------------------------------------------------------------------------
AUSTRALIA DOLLAR--0.3%
-------------------------------------------------------------------------------
89,000 Queensland Treas Global, Local Government Guarantee, 8.00%,
5/14/2003 76,017
-------------------------------------------------------------------------------
57,000 Queensland Treas Global, Local Government Guarantee, 8.00%,
8/14/2001 48,232
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN
CURRENCY VALUE
PAR IN U.S.
AMOUNT DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
FOREIGN BONDS--CONTINUED
- -----------------------------------------------------------------------------------------------
FOREIGN BONDS--CONTINUED
-------------------------------------------------------------------------------
AUSTRALIA DOLLAR--CONTINUED
-------------------------------------------------------------------------------
60,000 State Bank Of New South Wales, 12.25%, 2/26/2001 $ 57,840
------------------------------------------------------------------------------- -------------
Total 182,089
------------------------------------------------------------------------------- -------------
BELGIUM FRANC--0.2%
-------------------------------------------------------------------------------
514,000 Belgian Government, Bond, 6.50%, 3/31/2005 17,107
-------------------------------------------------------------------------------
4,000,000 Belgium Kingdom, 7.75%, 10/15/2004 143,667
------------------------------------------------------------------------------- -------------
Total 160,774
------------------------------------------------------------------------------- -------------
CANADA DOLLAR--0.4%
-------------------------------------------------------------------------------
204,000 Canada Government, Deb., 6.50%, 6/1/2004 158,142
-------------------------------------------------------------------------------
155,000 Ontario Hydro, 9.00%, 6/24/2002 134,257
------------------------------------------------------------------------------- -------------
Total 292,399
------------------------------------------------------------------------------- -------------
DANISH KRONE--0.5%
-------------------------------------------------------------------------------
1,927,000 Denmark--Bullet, Bond, 8.00%, 3/15/2006 356,900
-------------------------------------------------------------------------------
500,000 Denmark, 8.00%, 5/15/2003 93,649
------------------------------------------------------------------------------- -------------
Total 450,549
------------------------------------------------------------------------------- -------------
DEUTSCHE MARK--1.4%
-------------------------------------------------------------------------------
150,000 Bundesobligationen, Deb., 7.25%, 10/20/1997 100,848
-------------------------------------------------------------------------------
188,000 Deutschland Republic, Deb., 6.25%, 1/4/2024 116,973
-------------------------------------------------------------------------------
20,000,000 KFW International Finance, 6.00%, 11/29/1999 201,053
-------------------------------------------------------------------------------
150,000 KFW International Finance, Bank Guarantee, 6.75%, 6/20/2005 104,193
-------------------------------------------------------------------------------
600,000 KFW International Finance, 7.00%, 5/12/2000 124,263
-------------------------------------------------------------------------------
435,000 Treuhandanstalt, 7.75%, 10/1/2002 320,290
-------------------------------------------------------------------------------
288,000 Treuhandanstalt, Foreign Government Guarantee, 6.875%,
6/11/2003 203,384
------------------------------------------------------------------------------- -------------
Total 1,171,004
------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN
CURRENCY VALUE
PAR IN U.S.
AMOUNT DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
FOREIGN BONDS--CONTINUED
- -----------------------------------------------------------------------------------------------
FOREIGN BONDS--CONTINUED
-------------------------------------------------------------------------------
FRENCH FRANC--0.4%
-------------------------------------------------------------------------------
324,000 France O.a.t., Bond, 7.25%, 4/25/2006 $ 69,529
-------------------------------------------------------------------------------
187,500 France O.a.t., Bond, 7.50%, 4/25/2005 259,614
------------------------------------------------------------------------------- -------------
Total 329,143
------------------------------------------------------------------------------- -------------
IRISH POUND--0.4%
-------------------------------------------------------------------------------
92,000 Irish Government, Bond, 6.50%, 10/18/2001 158,773
-------------------------------------------------------------------------------
92,000 Treasury, Deb., 6.25%, 4/1/1999 156,375
------------------------------------------------------------------------------- -------------
Total 315,148
------------------------------------------------------------------------------- -------------
ITALIAN LIRA--0.4%
-------------------------------------------------------------------------------
150,000,000 Btps, Bond, 10.50%, 11/1/2000 111,425
-------------------------------------------------------------------------------
380,000,000 Buoni Poliennali Del Tes, 9.50%, 1/1/2005 281,398
------------------------------------------------------------------------------- -------------
Total 392,823
------------------------------------------------------------------------------- -------------
JAPANESE YEN--0.4%
-------------------------------------------------------------------------------
28,000,000 Export-Import Bank Japan, 4.375%, 10/1/2003 279,938
-------------------------------------------------------------------------------
11,000,000 Interamerican Development, Deb., 7.25%, 5/15/2000 116,012
------------------------------------------------------------------------------- -------------
Total 395,950
------------------------------------------------------------------------------- -------------
NETHERLANDS GUILDER--0.6%
-------------------------------------------------------------------------------
255,000 Bank Ned Gemeenten, Bond, 6.375%, 1/4/2006 154,332
-------------------------------------------------------------------------------
130,000 Lkb-global Bd, Bank Guarantee, 6.00%, 1/25/2006 85,196
-------------------------------------------------------------------------------
250,000 Netherlands Government, 5.75%, 1/15/2004 148,611
-------------------------------------------------------------------------------
90,000 Netherlands Government, 6.00%, 1/15/2006 53,657
------------------------------------------------------------------------------- -------------
Total 441,796
------------------------------------------------------------------------------- -------------
NEW ZEALAND DOLLAR--0.1%
-------------------------------------------------------------------------------
61,000 New Zealand Government, 8.00%, 2/15/2001 45,119
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN
CURRENCY VALUE
PAR IN U.S.
AMOUNT DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
FOREIGN BONDS--CONTINUED
- -----------------------------------------------------------------------------------------------
FOREIGN BONDS--CONTINUED
-------------------------------------------------------------------------------
NEW ZEALAND DOLLAR--CONTINUED
-------------------------------------------------------------------------------
55,000 New Zealand Government, Bond, 8.00%, 7/15/1998 $ 39,782
------------------------------------------------------------------------------- -------------
Total 84,901
------------------------------------------------------------------------------- -------------
NORWEGIAN KRONE--0.2%
-------------------------------------------------------------------------------
641,000 NGB 9.00%, 1/31/1999 108,664
-------------------------------------------------------------------------------
330,000 Norwegian Government, Bond, 7.00%, 5/31/2001 54,796
-------------------------------------------------------------------------------
247,000 Norwegian Government Foreign Government Guarantee, 5.75%,
11/30/2004 37,804
------------------------------------------------------------------------------- -------------
Total 201,264
------------------------------------------------------------------------------- -------------
PORTUGUESE ESCUDO--0.3%
-------------------------------------------------------------------------------
29,250,000 Portuguese Ot's, Bond, 11.875%, 2/23/2000 218,574
------------------------------------------------------------------------------- -------------
SPANISH PESETA--0.6%
-------------------------------------------------------------------------------
16,000,000 Spanish Government, 10.00%, 2/28/2005 146,759
-------------------------------------------------------------------------------
29,000,000 Spanish Government, Bond, 8.80%, 4/30/2006 246,368
-------------------------------------------------------------------------------
3,410,000 Spanish Government, Bond, 9.40%, 4/30/1999 28,303
-------------------------------------------------------------------------------
8,540,000 Spanish Government, Deb., 10.10%, 2/28/2001 75,287
------------------------------------------------------------------------------- -------------
Total 496,717
------------------------------------------------------------------------------- -------------
SWEDISH KRONA--0.1%
-------------------------------------------------------------------------------
800,000 Sweden, 6.00%, 2/9/2005 112,835
------------------------------------------------------------------------------- -------------
UNITED KINGDOM POUND--1.2%
-------------------------------------------------------------------------------
187,000 British Gas PLC, 8.875%, 7/8/2008 330,307
-------------------------------------------------------------------------------
38,000 U.K. Treasury, Deb., 8.50%, 12/7/2005 68,778
-------------------------------------------------------------------------------
160,000 U.K. Conversion, 9.00%, 3/3/2000 285,054
-------------------------------------------------------------------------------
30,000 U.K. Treasury, Bond, 8.00%, 12/7/2015 52,927
-------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN
CURRENCY
PAR
AMOUNT OR VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
- -------------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
FOREIGN BONDS--CONTINUED
-------------------------------------------------------------------------------
92,000 United Kingdom Treasury, Bond, 7.50%, 12/7/2006 $ 154,480
------------------------------------------------------------------------------- -------------
Total 891,546
------------------------------------------------------------------------------- -------------
TOTAL FOREIGN BONDS 6,137,512
------------------------------------------------------------------------------- -------------
TOTAL BONDS (IDENTIFIED COST $22,839,601) 23,596,250
------------------------------------------------------------------------------- -------------
CASH EQUIVALENTS--11.3%
- -----------------------------------------------------------------------------------------------
(C)REPURCHASE AGREEMENT--11.3%
-------------------------------------------------------------------------------
$ 9,145,000 BT Securities Corporation, 5.720%, dated 11/29/1996, due 12/2/1996 (AT
AMORTIZED COST) 9,145,000
------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST $75,129,420)(D) $ 81,515,771
------------------------------------------------------------------------------- -------------
</TABLE>
(a) Non-income producing security.
(b) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. At November 30, 1996, these securities
amounted to $2,009,304 which represents 2.48% of net assets.
(c) 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.
(d) The cost of investments for federal tax purposes amounts to $75,155,640. The
net unrealized appreciation of investments on a federal tax basis amounts to
$6,360,131 which is comprised of $7,739,574 appreciation and $1,379,443
depreciation at November 30, 1996.
Note: The categories of investments are shown as a percentage of net assets
($81,105,195) at
November 30, 1996.
The following acronyms are used throughout this portfolio:
ACES--Adjustable Convertible Extendable Securities
ADR--American Depository Receipt
GDR--Global Depository Receipt
LP--Limited Partnership
PEPS--Participating Equity Preferred Stock
PIK--Payment in Kind
PLC--Public Limited Company
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
*MOBILEMEDIA COMMUNICATIONS
On November 1, 1996, MobileMedia Communications failed to make its scheduled
interest payment. Subsequent to November 30, 1996 holdings in these securities
have been sold.
**MID-AMERICAN WASTE SYSTEMS, INC.
On February 15, 1996 and August 15, 1996, Mid-American Waste Systems failed to
make its scheduled interest payment. Currently, the company is in negotiations
with its debt holders and has retained an investment bank to evaluate its
options. The unofficial subordinated bondholders group has retained legal
counsel and financial advisors and is monitoring the situation closely.
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------------
Investment in repurchase agreement $ 9,145,000
- --------------------------------------------------------------------------------------
Investments in securities 72,370,771
- -------------------------------------------------------------------------------------- ------------
Total investments in securities, at value (identified cost: $75,129,420
and tax cost: $75,155,640) $ 81,515,771
- ----------------------------------------------------------------------------------------------------
Cash denominated in foreign currencies (identified cost: $259) 259
- ----------------------------------------------------------------------------------------------------
Income receivable 556,361
- ----------------------------------------------------------------------------------------------------
Receivable for investments sold 164,898
- ----------------------------------------------------------------------------------------------------
Receivable for shares sold 139,742
- ----------------------------------------------------------------------------------------------------
Deferred expenses 20,825
- ---------------------------------------------------------------------------------------------------- ------------
Total assets 82,397,856
- ----------------------------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------------
Payable for investments purchased $ 970,394
- --------------------------------------------------------------------------------------
Payable for shares redeemed 168,474
- --------------------------------------------------------------------------------------
Payable to Bank 55,061
- --------------------------------------------------------------------------------------
Payable for foreign taxes withheld 3,889
- --------------------------------------------------------------------------------------
Payable for foreign currency exchange contracts 591
- --------------------------------------------------------------------------------------
Accrued expenses 94,252
- -------------------------------------------------------------------------------------- ------------
Total liabilities 1,292,661
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSETS for 6,482,221 shares outstanding $ 81,105,195
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSETS CONSIST OF:
- ----------------------------------------------------------------------------------------------------
Paid in capital $ 72,046,365
- ----------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and translation
of assets and liabilities in foreign currency 6,386,347
- ----------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments, foreign currency transactions,
and futures contracts 2,386,770
- ----------------------------------------------------------------------------------------------------
Undistributed net investment income 285,713
- ---------------------------------------------------------------------------------------------------- ------------
Total Net Assets $ 81,105,195
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PROCEEDS PER SHARE:
- ----------------------------------------------------------------------------------------------------
Institutional Shares: $49,715,145 / 3,970,973 shares outstanding $12.52
- ---------------------------------------------------------------------------------------------------- ------------
Select Shares: $31,390,050 / 2,511,248 shares outstanding $12.50
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -----------------------------------------------------------------------------------------------------
Dividends (net of foreign taxes withheld of $31,692) $ 575,142
- -----------------------------------------------------------------------------------------------------
Interest (net of dollar roll expense of $5,892) (net of foreign taxes withheld of $1,486) 1,749,683
- ----------------------------------------------------------------------------------------------------- ---------
Total income 2,324,825
- -----------------------------------------------------------------------------------------------------
EXPENSES:
- ------------------------------------------------------------------------------------------
Investment advisory fee $ 434,558
- ------------------------------------------------------------------------------------------
Administrative personnel and services fee 155,001
- ------------------------------------------------------------------------------------------
Custodian fees 108,600
- ------------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 76,039
- ------------------------------------------------------------------------------------------
Directors'/Trustees' fees 3,854
- ------------------------------------------------------------------------------------------
Auditing fees 14,621
- ------------------------------------------------------------------------------------------
Legal fees 3,942
- ------------------------------------------------------------------------------------------
Portfolio accounting fees 75,129
- ------------------------------------------------------------------------------------------
Distribution services fee--Select Shares 163,831
- ------------------------------------------------------------------------------------------
Shareholder services fee--Institutional Shares 90,242
- ------------------------------------------------------------------------------------------
Shareholder services fee--Select Shares 54,610
- ------------------------------------------------------------------------------------------
Share registration costs 44,290
- ------------------------------------------------------------------------------------------
Printing and postage 38,097
- ------------------------------------------------------------------------------------------
Insurance premiums 4,493
- ------------------------------------------------------------------------------------------
Taxes 1,018
- ------------------------------------------------------------------------------------------
Miscellaneous 15,391
- ------------------------------------------------------------------------------------------ ---------
Total expenses 1,283,716
- ------------------------------------------------------------------------------------------
Waivers--
- -------------------------------------------------------------------------------
Waiver of investment advisory fee $(393,073)
- -------------------------------------------------------------------------------
Waiver of distribution services fee--Select Shares (54,610)
- -------------------------------------------------------------------------------
Waiver of shareholder services fee--Institutional Shares (72,194)
- ------------------------------------------------------------------------------- ---------
Total waivers (519,877)
- ------------------------------------------------------------------------------------------ ---------
Net expenses 763,839
- ----------------------------------------------------------------------------------------------------- ---------
Net investment income 1,560,986
- ----------------------------------------------------------------------------------------------------- ---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FOREIGN CURRENCY, AND FUTURES CONTRACTS:
- -----------------------------------------------------------------------------------------------------
Net realized gain on investments, foreign currency transactions, and futures contracts 2,610,405
- -----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments, translation of assets
and liabilities in foreign currency, and futures contracts 3,708,316
- ----------------------------------------------------------------------------------------------------- ---------
Net realized and unrealized gain on investments, foreign currency, and futures contracts 6,318,721
- ----------------------------------------------------------------------------------------------------- ---------
Change in net assets resulting from operations $7,879,707
- ----------------------------------------------------------------------------------------------------- ---------
</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 YEAR ENDED
NOVEMBER 30, NOVEMBER 30,
1996 1995
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------------------------------------------------
OPERATIONS--
- ------------------------------------------------------------------------------
Net investment income $ 1,560,986 $ 794,962
- ------------------------------------------------------------------------------
Net realized gain (loss) on investments, foreign
currency transactions, and futures contracts ($2,395,283 and $888,863,
respectively, as computed for federal tax purposes) 2,610,405 651,763
- ------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of
investments, translation of assets and liabilities in
foreign currency, and futures contracts 3,708,316 3,244,417
- ------------------------------------------------------------------------------ --------------- ---------------
Change in net assets resulting from operations 7,879,707 4,691,142
- ------------------------------------------------------------------------------ --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ------------------------------------------------------------------------------
Distributions from net investment income:
- ------------------------------------------------------------------------------
Institutional Shares (1,071,156) (547,698)
- ------------------------------------------------------------------------------
Select Shares (489,212) (101,587)
- ------------------------------------------------------------------------------
Distributions from net realized gain on investments,
foreign currency transactions, and futures contracts
- ------------------------------------------------------------------------------
Institutional Shares (600,532) (28,086)
- ------------------------------------------------------------------------------
Select Shares (289,253) (3,092)
- ------------------------------------------------------------------------------ --------------- ---------------
Change in net assets resulting
from distributions to shareholders (2,450,153) (680,463)
- ------------------------------------------------------------------------------ --------------- ---------------
SHARE TRANSACTIONS--
- ------------------------------------------------------------------------------
Proceeds from sale of shares 51,526,045 24,745,587
- ------------------------------------------------------------------------------
Net asset value of shares issued to shareholders
in payment of distributions declared 2,029,232 492,403
- ------------------------------------------------------------------------------
Cost of shares redeemed (15,833,126) (8,663,934)
- ------------------------------------------------------------------------------ --------------- ---------------
Change in net assets resulting from share transactions 37,722,151 16,574,056
- ------------------------------------------------------------------------------ --------------- ---------------
Change in net assets 43,151,705 20,584,735
- ------------------------------------------------------------------------------
NET ASSETS:
- ------------------------------------------------------------------------------
Beginning of period 37,953,490 17,368,755
- ------------------------------------------------------------------------------ --------------- ---------------
End of period (including undistributed net investment
income of $285,713 and $342,257 respectively) $ 81,105,195 $ 37,953,490
- ------------------------------------------------------------------------------ --------------- ---------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
(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 portfolios. The financial statements
included herein are only those of Federated Managed Aggressive Growth Fund (the
"Fund"), a diversified portfolio. The financial statements of the other
portfolios are presented separately. The assets of each portfolio are segregated
and a shareholder's interest is limited to the portfolio in which shares are
held. The investment objective of the Fund is to seek capital appreciation.
The Fund offers two classes of shares: Institutional Shares and Select Shares.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Listed equity securities are valued at the last sale
price reported on a national securities exchange. U.S. government
securities, listed corporate bonds, (other fixed income and asset-backed
securities), and unlisted securities and private placement securities are
generally valued at the mean of the latest bid and asked price as furnished
by an independent pricing service. Short-term securities are valued at the
prices provided by an independent pricing service. However, short-term
securities with remaining maturities of sixty days or less at the time of
purchase may be valued at amortized cost, which approximates fair market
value.
With respect to valuation of foreign securities, trading in foreign
countries may be completed at times which vary from the closing of the New
York Stock Exchange. Therefore, foreign securities are valued at the latest
closing price on the exchange on which they are traded prior to the closing
of the New York Stock Exchange. Foreign securities quoted in foreign
currencies are translated into U.S. dollars at the foreign exchange rate in
effect at noon, eastern time, on the day the value of the foreign security
is determined.
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.
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral
securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code"). Dividend
income and distributions to shareholders are recorded on the ex-dividend
date.
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 passive foreign investment company
transactions. The following reclassifications have been made to the
financial statements.
<TABLE>
<CAPTION>
INCREASE (DECREASE)
ACCUMULATED
NET REALIZED UNDISTRIBUTED NET
GAIN/LOSS INVESTMENT INCOME
<S> <C>
$57,162 ($57,162)
</TABLE>
Net investment income, net realized gains/losses, and net assets were not
affected by this reclassification.
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
However, federal taxes may be imposed on the Fund upon the disposition of
certain investments in passive foreign investment companies. Withholding
taxes on foreign interest and dividends have been provided for in
accordance with the Fund's understanding of the applicable country's tax
rules and rates.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
and are being amortized over a period not to exceed five years from the
Fund's commencement date.
FUTURES CONTRACTS--The Fund purchases stock index futures contracts to
manage cashflows, enhance yield, and to potentially reduce transaction
costs. Upon entering into a stock index futures contract with a broker, the
Fund is required to deposit in a segregated account a specified amount of
cash or U.S. government securities. Futures contracts are valued daily and
unrealized gains or losses are recorded in a "variation margin" account.
Daily, the Fund receives from or pays to the broker a specified amount of
cash based upon changes in the variation margin account. When a contract is
closed, the Fund recognizes a realized gain or loss. 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 year ended November 30, 1996, the Fund had realized
gains of $532,453 on future contracts. As of November 30, 1996, the Fund
had no outstanding futures contracts.
FOREIGN EXCHANGE CONTRACTS--The Fund may enter into foreign currency
contracts or the delayed delivery of securities or foreign currency
exchange transactions. These contracts are used to hedge the Fund's
securities against currency fluctuations. Risks may arise upon entering
these transactions from the potential inability of counter-parties 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 purposes as unrealized
until the settlement date.
At November 30, 1996, the Fund had outstanding foreign currency commitments
as set forth below:
<TABLE>
<CAPTION>
UNREALIZED
SETTLEMENT CONTRACTS TO IN EXCHANGE CONTRACTS AT APPRECIATION
CONTRACTS SOLD DATE DELIVER/RECEIVE FOR VALUE (DEPRECIATION)
<S> <C> <C> <C> <C> <C>
New Zealand Dollar 12/3/1996 81,620 $57,461 $ 58,051 ($ 591)
</TABLE>
FOREIGN CURRENCY TRANSLATION--The accounting records of the Fund are
maintained in U.S. dollars. All assets and liabilities denominated in
foreign currencies ("FC") are translated into U.S. dollars based on the
rate of exchange of such currencies against U.S. dollars on the date of
valuation. Purchases and sales of securities, income and expenses are
translated at the rate of exchange quoted on the respective date that such
transactions are recorded. Differences between income and expense amounts
recorded and collected or paid are adjusted when reported by the custodian
bank. The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
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 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,
1996 is as follows:
<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE ACQUISITION COST
<S> <C> <C>
Abraxas Petroleum Corp., Sr. Note 11/05/1996 $ 50,000
Acer, Inc. 07/19/1996 12,975
Allied Waste, Sr. Sub. Note 11/25/1996 50,000
Astor Corp., Sr. Sub. Note 10/02/1996 49,750
Australis Holdings Pty, Unit 10/29/1996 14,219
Bayer Corp., Deb. 05/21/1996 245,903
Blue Bird Body Co., Sr. Sub. Note 11/13/1996 49,848
Bombay Suburban Electric Supply 02/29/1996 24,480
Cheung Kong Infrastructure 07/11/1996-08/22/1996 39,925
Chilectra S.A., ADR 02/28/1996 10,856
China Resources Bejing Land 11/05/1996 3,700
Clark Material, Sr. Note 11/22/1996 50,000
Crompton Greaves Ltd 07/01/1996-07/02/1996 38,295
CS Wireless Systems, Inc., Unit 02/16/1996 62,600
Dade International, Inc., Sr. Sub. Note 04/30/1996 25,000
Elevadores Atlas 09/25/1996 28,045
Euramax International Plc, Sr. Sub. Note 09/18/1996 $ 50,000
First Nationwide Escrow, Sr. Sub. Note 09/13/1996 25,625
Grupo Financiero Bancomer, S.A. de C.V. Class B 11/06/1995-01/17/1996 18,055
ICON Fitness Corp., Sr. Disc. Note 11/15/1996 25,612
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE ACQUISITION COST
<S> <C> <C>
International Home Foods, Sr. Sub. Note 10/29/1996 50,000
Japan Tobacco 06/17/1996-01/08/1996 121,236
Larsen & Toubro Ltd 06/05/1996 39,800
Mahindra and Mahindra 01/22/1996-02/02/1996 19,450
Pace Micro Technology 08/23/1996 38,874
Petersen Publishing, Sr. Sub. Note 11/20/1996 50,000
Prime Succession Acq., Sr. Sub. Note 08/13/1996 50,000
Ryder TRS, Inc., Sr. Sub. Note 11/20/1996 50,000
Sakura Finance (Bermuda), Conv. Pfd. 09/12/1996 108,794
Shanghai Industrial Holdings LTD 05/23/1996 28,522
Statia Terminals, 1st Mtg. Note 11/22/1996 50,000
Steel Authority of India 04/22/1996-04/23/1996 25,024
Sumitomo Bank International, Conv. Bond 06/06/1996 27,540
Tokheim Corporation, Sr. Sub. Note 08/16/1996 25,000
Westinghouse Electric Corp., PEPS, Series C 09/27/1995-03/14/1996 285,688
NGC Corp. 11/15/1996 63,089
</TABLE>
DOLLAR ROLL TRANSACTIONS--The Fund enters into dollar roll transactions,
with respect to mortgage securities issued by GNMA, FNMA and FHLMC, in
which the Fund sells mortgage securities to financial institutions and
simultaneously agrees to accept substantially similar (same type, coupon
and maturity) securities at a later date at an agreed upon price. Dollar
roll transactions are short-term financing arrangements which will not
exceed twelve months. The Fund will use the proceeds generated from the
transactions to invest in short-term investments, which may enhance the
Fund's current yield and total return.
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. Transactions in shares were as follows:
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
NOVEMBER 30, 1996 NOVEMBER 30, 1995
INSTITUTIONAL SHARES SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 2,592,730 $ 30,626,600 1,317,111 $ 14,153,127
- ---------------------------------------------------------
Shares issued to shareholders in payment of distributions
declared 115,076 1,330,109 39,301 411,923
- ---------------------------------------------------------
Shares redeemed (946,450) (11,216,939) (744,515) (7,759,093)
- --------------------------------------------------------- ---------- -------------- ---------- -------------
Net change resulting from
Institutional share transactions 1,761,356 $ 20,739,770 611,897 $ 6,805,957
- --------------------------------------------------------- ---------- -------------- ---------- -------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
NOVEMBER 30, 1996 NOVEMBER 30, 1995
SELECT SHARES SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 1,775,082 $ 20,899,445 970,853 $ 10,592,460
- ---------------------------------------------------------
Shares issued to shareholders in payment of distributions
declared 60,465 699,123 7,409 80,480
- ---------------------------------------------------------
Shares redeemed (389,611) (4,616,187) (83,687) (904,841)
- --------------------------------------------------------- ---------- ------------- ---------- -------------
Net change resulting from
Select share transactions 1,445,936 $ 16,982,381 894,575 $ 9,768,099
- --------------------------------------------------------- ---------- ------------- ---------- -------------
Net change resulting from share transactions 3,207,292 $ 37,722,151 1,506,472 $ 16,574,056
- --------------------------------------------------------- ---------- ------------- ---------- -------------
</TABLE>
(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 0.75% 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., (the "Sub-Adviser"), 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.
ADMINISTRATIVE FEE--Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ is
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
based on the level of average aggregate daily net assets of all funds advised by
subsidiaries of Federated Investors for the period. The administrative fee
received during the period of the Administrative Services Agreement shall be at
least $125,000 per portfolio and $30,000 per each additional class of shares.
DISTRIBUTION SERVICES FEE--The Fund has adopted a Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will
compensate Federated Securities Corp. ("FSC"), the principal distributor, from
the net assets of the Fund to finance activities intended to result in the sale
of the Fund's Select Shares. The Plan provides that the Fund may incur
distribution expenses up to 0.75% of average daily net assets of Select Shares
annually, to compensate FSC. The distributor may voluntarily choose to waive any
portion of its fee. The distributor can modify or terminate this voluntary
waiver at any time at its sole discretion.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25%
of average daily net assets of the Fund shares for the period. The fee paid to
FSS is used to finance certain services for shareholders and to maintain
shareholder accounts. FSS may voluntarily choose to waive any portion of its
fee. FSS can modify or terminate this voluntary waiver at any time at its sole
discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--FServ, through its
subsidiary, Federated Shareholder Services Company ("FSSC") serves as transfer
and dividend disbursing agent for the Fund. The fee paid to FSSC is based on the
size, type, and number of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses of $88,333 were borne initially
by Adviser.The Fund has agreed to reimburse Adviser for the organizational
expenses during the five year period following effective date. For the period
ended November 30, 1996, the Fund paid $12,835 pursuant to this agreement.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended November 30, 1996, were as follows:
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------------
PURCHASES $ 79,404,582
- --------------------------------------------------------------------------------------------------- -------------
SALES $ 44,470,061
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
(6) CONCENTRATION OF CREDIT RISK
The Fund invests in securities of non-U.S. issuers. Although the Fund maintains
a diversified investment portfolio, the political or economic developments
within a particular country or region may have an adverse effect on the ability
of domiciled issuers to meet their obligations. Additionally, political or
economic developments may have an effect on the liquidity and volatility of
portfolio securities and currency holdings.
At November 30, 1996, the diversification of industries was as follows:
<TABLE>
<CAPTION>
INDUSTRY % OF NET ASSETS
<S> <C>
Aerospace & Military Technology 0.1%
Agency 1.6
Automotive 0.6
Banking 2.2
Basic Industry 2.8
Beverage & Tobacco 0.2
Broadcast Radio & TV 0.4
Broadcasting & Publishing 0.9
Building Materials & Construction 0.4
Business & Public Services 0.4
Business Equipment & Services 0.1
Cable Television 0.8
Chemicals & Plastics 1.2
Clothing & Textiles 0.1
Construction & Housing 0.6
Consumer Durables 2.0
Consumer Non-Durables 4.1
Consumer Products 0.2
Container & Glass Products 0.1
Data Processing & Reproduction 0.0
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY % OF NET ASSETS
<S> <C>
Ecological Services & Equipment 0.1%
Electrical & Electronics 1.0
Electronics 1.0
Energy--Oil & Gas 0.1
Energy Equipment & Services 0.1
Energy Minerals 3.5
Energy Sources 0.5
Financial 17.3
Financial Intermediaries 0.6
Financial Services 0.8
Food & Drug Retailers 0.5
Food & Household Products 0.6
Food Processing 0.1
Food Products 0.1
Forest Products 0.2
Forest Products & Paper 0.4
Government Agency 4.9
Health & Personal Care 1.0
Healthcare 4.7
Hotels, Motels, Inns & Casinos 0.1
Industrial Components 0.1
Industrial Products & Equipment 0.6
Insurance 0.7
Leisure & Entertainment 0.2
Leisure & Tourism 0.5
Machinery & Engineering 1.2
Machinery & Equipment 0.2
Manufacturing 0.4
Merchandising 0.9
Metals & Mining 0.1
Metals--Steel 0.4
Mining 0.0
Miscellaneous Materials & Commodities 0.3
Multi-Industry 0.6
Oil & Gas 0.2
Pharmaceutical 0.4
Printing & Publishing 0.2
Producer Manufacturing 2.4
Real Estate 1.3
</TABLE>
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY % OF NET ASSETS
<S> <C>
Recreation, Other Consumer Goods 0.8%
Retail Trade 2.3
Services 3.1
Sovereign Government 5.5
State/Provincial 0.2
Steel 0.1
Supranational 0.1
Surface Transportation 0.2
Tobacco 0.2
Technology 5.1
Telecommunications 0.8
Telecommunications & Cellular 0.5
Transportation 0.9
Treasury Securities 9.0
Utilities 4.7
Wholesale & International Trade 0.1
</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, 1996, and 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, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Federated Managed Aggressive Growth Fund, an investment portfolio of Managed
Series Trust, as of November 30, 1996, 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 15, 1997
APPENDIX
- --------------------------------------------------------------------------------
STANDARD AND POOR'S RATINGS GROUP LONG-TERM DEBT RATINGS
AAA--Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.
A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB--Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.
B--Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or
BB- rating.
CCC--Debt rated CCC has currently identifiable vulnerability to default and is
dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating.
CC--The rating CC typically is applied to debt subordinated to senior debt that
is assigned an actual or implied CCC debt rating.
C--The rating C typically is applied to debt subordinated to senior debt which
is assigned an actual or implied CCC- debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.
CI--The rating CI is reserved for income bonds on which no interest is being
paid.
D--Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D
rating also will be used upon the filing of a bankruptcy petition if debt
service payments are jeopardized.
MOODY'S INVESTORS SERVICE, INC., CORPORATE BOND RATINGS
AAA--Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
AA--Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment some time in the future.
BAA--Bonds which are rated Baa are considered as medium-grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well.
BA--Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
CAA--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
CA--Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C--Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
FITCH INVESTORS SERVICE, INC., LONG-TERM DEBT RATINGS
AAA--Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA--Bonds considered to be investment grade and of very high quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F-1+.
A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB--Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds and, therefore, impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.
BB--Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.
B--Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.
CCC--Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.
CC--Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C--Bonds are in imminent default in payment of interest or principal.
DDD, DD, AND D--Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. DDD
represents the highest potential for recovery on these bonds, and D represents
the lowest potential for recovery.
NR--NR indicates that Fitch does not rate the specific issue.
PLUS (+) OR MINUS (-): Plus or minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the AAA category.
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Federated Managed Aggressive Growth Fund
Select Shares Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Sub-Adviser
Federated Global Research Corp. 175 Water Street
New York, NY 10038-4965
- ---------------------------------------------------------------------------------------------------------------------
Custodian
State Street Bank and P.O. Box 8600
Trust Company Boston, Massachusetts 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Shareholder Services Company P.O. Box 8600
Boston, Massachusetts 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
THIS PAGE INTENTIONALLY LEFT BLANK
FEDERATED MANAGED
AGGRESSIVE GROWTH FUND
SELECT SHARES
PROSPECTUS
A Diversified Portfolio of
Managed Series Trust,
an Open-End Management
Investment Company
Prospectus dated January 31, 1997
[LOGO] FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
FEDERATED SECURITIES CORP. IS THE DISTRIBUTOR OF THE FUND
AND IS A SUBSIDIARY OF FEDERATED INVESTORS.
[RECYCLED LOGO]
3122008A-SEL (1/97)
Cusip 56166K800
FEDERATED MANAGED GROWTH FUND
(A PORTFOLIO OF MANAGED SERIES TRUST)
INSTITUTIONAL SHARES
PROSPECTUS
The Institutional Shares of Federated Managed Growth Fund (the "Fund") offered
by this prospectus represent interests in the Fund, which is a diversified
investment portfolio of Managed Series Trust (the "Trust"). The Trust is an
open-end management investment company (a mutual fund).
The investment objective of the Fund is to seek capital appreciation. In
pursuing its objective, the Fund will consider the current income of the
investments it selects. The Fund invests in both bonds and stocks. Institutional
Shares are sold at net asset value.
THE INSTITUTIONAL SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR
OBLIGATIONS OF ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD,
OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE INSTITUTIONAL SHARES
INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
This prospectus contains the information you should read and know before you
invest in Institutional Shares of the Fund. Keep this prospectus for future
reference.
The Fund has also filed a Statement of Additional Information for Institutional
Shares and Select Shares of all portfolios of the Trust dated January 31, 1997,
with the Securities and Exchange Commission ("SEC"). The information contained
in the Statement of Additional Information is incorporated by reference into
this prospectus. You may request a copy of the Statement of Additional
Information or a paper copy of this prospectus, if you have received your
prospectus electronically, free of charge by calling 1-800-341-7400. To obtain
other information or to make inquiries about the Fund, contact the Fund at the
address listed in the back of this prospectus. The Statement of Additional
Information, material incorporated by reference into this document, and other
information regarding the Fund are maintained electronically with the SEC at
Internet Web site (http:// www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
Prospectus dated January 31, 1997
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--
INSTITUTIONAL SHARES 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Investment Limitations 15
TRUST INFORMATION 15
- ------------------------------------------------------
Management of the Trust 15
Distribution of Institutional Shares 19
Administration of the Fund 19
Brokerage Transactions 20
NET ASSET VALUE 21
- ------------------------------------------------------
INVESTING IN INSTITUTIONAL SHARES 21
- ------------------------------------------------------
Share Purchases 21
Minimum Investment Required 22
What Shares Cost 22
Systematic Investment Program 22
Certificates and Confirmations 22
Dividends 22
Capital Gains 22
REDEEMING INSTITUTIONAL SHARES 23
- ------------------------------------------------------
Through a Financial Institution 23
Telephone Redemption 23
Written Requests 23
Systematic Withdrawal Program 24
Accounts with Low Balances 24
SHAREHOLDER INFORMATION 24
- ------------------------------------------------------
Voting Rights 24
TAX INFORMATION 25
- ------------------------------------------------------
Federal Income Tax 25
State and Local Taxes 25
PERFORMANCE INFORMATION 25
- ------------------------------------------------------
OTHER CLASSES OF SHARES 26
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--SELECT SHARES 27
- ------------------------------------------------------
FINANCIAL STATEMENTS 28
- ------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 80
- ------------------------------------------------------
APPENDIX 81
- ------------------------------------------------------
ADDRESSES 84
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price)............................ None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price).................................................................... None
Contingent Deferred Sales Charge (as a percentage of original purchase
price or redemption proceeds, as applicable)........................................................... None
Redemption Fee (as a percentage of amount redeemed, if applicable)....................................... None
Exchange Fee............................................................................................. None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver) (1)........................................................................ 0.55%
12b-1 Fee................................................................................................ None
Total Other Expenses..................................................................................... 0.45%
Shareholder Services Fee (after waiver) (2).............................................. 0.05%
Total Operating Expenses (3)................................................................... 1.00%
</TABLE>
- ------------
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.75%.
(2) The shareholder services fee has been reduced to reflect the voluntary
waiver of a portion of the shareholder services fee. The shareholder service
provider can terminate this voluntary waiver at any time at its sole
discretion. The maximum shareholder services fee is 0.25%.
(3) The total operating expenses in the table above are based on expenses
expected during the fiscal year ending November 30, 1997. The total
operating expenses were 1.05% for the fiscal year ended November 30, 1996
and would have been 1.45% absent the voluntary waivers of portions of the
management fee and shareholder services fee.
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of Institutional Shares of the
Fund will bear, either directly or indirectly. For more complete descriptions of
the various costs and expenses, see "Investing in Institutional Shares" and
"Trust Information." Wire-transferred redemptions of less than $5,000 may be
subject to additional fees.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment assuming
(1) 5% annual return and (2) redemption at the end of each time
period................................................................ $10 $32 $55 $122
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
FEDERATED MANAGED GROWTH FUND
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 80.
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1996 1995 1994(A)
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------- --------- --------- -----------
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.52 $ 9.82 $ 10.00
- ----------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------------
Net investment income 0.41 0.40 0.20
- ----------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments, foreign currency, and
futures contracts 0.97 1.70 (0.26)
- ---------------------------------------------------------------------------------- --------- --------- -----------
Total from investment operations 1.38 2.10 (0.06)
- ---------------------------------------------------------------------------------- --------- --------- -----------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------------------
Distributions from net investment income (0.44) (0.40) (0.12)
- ----------------------------------------------------------------------------------
Distributions from net realized gain on investments, foreign currency
transactions, and futures contracts (0.23) -- --
- ---------------------------------------------------------------------------------- --------- --------- -----------
Total distributions (0.67) (0.40) (0.12)
- ---------------------------------------------------------------------------------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 12.23 $ 11.52 $ 9.82
- ---------------------------------------------------------------------------------- --------- --------- -----------
TOTAL RETURN (B) 12.54% 21.79% (0.59%)
- ----------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------------
Expenses 1.05% 1.00% 0.89%*
- ----------------------------------------------------------------------------------
Net investment income 3.77% 4.29% 4.28%*
- ----------------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.40% 0.76% 0.90%*
- ----------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $136,255 $68,313 $28,973
- ----------------------------------------------------------------------------------
Average commission rate paid $0.0020
- ----------------------------------------------------------------------------------
Portfolio turnover 95% 106% 71 %
- ----------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 25, 1994 (date of initial
public investment) to November 30, 1994. For the period from January 27,
1994 (start of business) to May 24, 1994 the Fund had no investment
activity.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
Further information about the Fund's performance is contained in the Fund's
annual report for the fiscal year ended November 30, 1996, which can be obtained
free of charge.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated November 15, 1993. The Declaration of Trust permits the Trust to
offer separate series of shares of beneficial interest representing interest in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. As of the date of this prospectus, the Board of
Trustees ("Trustees") have established two classes of shares of the Fund, known
as Institutional Shares and Select Shares. This prospectus relates only to
Institutional Shares.
Institutional Shares ("Shares") of the Fund are designed to give institutions,
individuals, and financial institutions acting in a fiduciary or agency capacity
a convenient means of accumulating an interest in a professionally managed,
diversified investment portfolio. A minimum initial investment of $25,000 over a
90-day period is required.
Shares are currently sold and redeemed at net asset value without a sales charge
imposed by the Fund.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is to seek capital appreciation. In
pursuing its objective, the Fund will consider the current income of the
investments it selects. There can be, of course, no assurance that the Fund will
achieve its investment objective. The Fund's investment objective cannot be
changed without the approval of shareholders. Unless otherwise noted, the Fund's
investment policies may be changed by the Trustees without shareholder approval.
INVESTMENT POLICIES
ASSET ALLOCATION. The Fund will primarily invest in two types of assets:
equities and bonds. The Fund's investment approach is based on the conviction
that, over time, the choice of investment asset categories and their relative
long-term weightings within the portfolio will have the primary impact on its
investment performance. Of secondary importance to the Fund's performance are
the shifting of money among asset categories and the selection of securities
within asset categories. Therefore, the Fund will pursue its investment
objective in the following manner: (1) by setting long-term ranges for each
asset category; (2) by moving money among asset categories within those defined
ranges; and (3) by actively selecting securities within each of the asset
categories. The Fund attempts to minimize risk by allocating its assets in such
a fashion.
Within each of these types of investments, the Fund has designated asset
categories. As a matter of investment policy, ranges have been set for each
asset category's portfolio commitment.
The Fund will invest between 50 and 70 percent of its assets in equities. The
equities asset categories are large company stocks, utility stocks, small
company stocks, foreign stocks and equity reserves.
The Fund will invest between 30 and 50 percent of its assets in bonds. The
Fund's adviser believes that bonds offer opportunities for growth of capital or
otherwise may be desirable under prevailing market or economic conditions. The
bond asset categories are U.S. Treasury securities, mortgage-backed securities,
investment-grade corporate bonds, high yield corporate bonds and foreign bonds.
The following is a summary of the asset categories and the amount of the Fund's
total assets which may be invested in each asset category:
<TABLE>
<CAPTION>
ASSET CATEGORY RANGE
<S> <C>
EQUITIES 50-70%
Large Company Stocks 0-70%
Utility Stocks 0-7.5%
Small Company Stocks 0-21%
Foreign Stocks 0-21%
Equity Reserves 0-15%
BONDS 30-50%
U.S. Treasury Securities 0-45%
Mortgage-Backed Securities 0-15%
Investment-Grade Corporate Bonds 0-15%
High Yield Corporate Bonds 0-15%
Foreign Bonds 0-15%
</TABLE>
The Fund's adviser will regularly review the Fund's allocation among the asset
categories and make any changes, within the ranges established for each asset
category, that it believes will provide the most favorable outlook for achieving
the Fund's investment objective. The Fund's adviser will attempt to exploit
inefficiencies among the various asset categories. If, for example, foreign
stocks are judged to be unusually attractive relative to other asset categories,
the allocation for foreign stocks may be moved to its upper limit. At other
times, when foreign stocks appear to be overvalued, the commitment may be moved
down to a lesser allocation. There is no assurance, however, that the adviser's
attempts to pursue this strategy will result in a benefit to the Fund.
Each asset category within the Fund will be a managed portfolio. The Fund will
seek superior investment performance through security selection in addition to
determining the percentage of its assets to allocate to each of the asset
categories.
EQUITY ASSET CATEGORIES. The portion of the Fund's assets which is invested in
equities will be allocated among the following asset categories within the
ranges specified:
LARGE COMPANY STOCKS. Large company stocks are common stocks and
securities convertible into or exchangeable for common stocks, such as
rights and warrants, of high-quality companies selected by the Fund's
adviser. Ordinarily, these companies will be in the top 25 percent of their
industries with regard to revenues and have a market capitalization of
$500,000,000 or more. However, other factors, such as a company's product
position, market share, current earnings and/or dividend and earnings
growth prospects, will be considered by the Fund's
adviser and may outweigh revenues. The Fund may invest up to 70 percent of
its total assets in large company stocks.
UTILITY STOCKS. Utility stocks are common stocks and securities
convertible into or exchangeable for common stocks, such as rights and
warrants, of utility companies. The Fund may invest up to 7.5 percent of
its total assets in utility stocks. Common stocks of utilities are
generally characterized by higher dividend yields and lower growth rates
than common stocks of industrial companies. Under normal market conditions,
the higher income stream from utility stocks tends to make them less
volatile than stocks of industrial companies.
SMALL COMPANY STOCKS. Small company stocks are common stocks and
securities convertible into or exchangeable for common stocks, such as
rights and warrants, of companies with a market capitalization (market
price x number of shares outstanding) below the top 1,000 stocks that
comprise the large and mid-range capitalization sector of the United States
equity market. These stocks are comparable to, but not limited to, the
stocks comprising the Russell 2000 Index, an index of small capitalization
stocks. The Fund may invest up to 21 percent of its total assets in small
company stocks.
INVESTMENT RISKS. Stocks in the small capitalization sector of the
United States equity market have historically been more volatile in
price than larger capitalization stocks, such as those included in the
Standard & Poor's Ratings Group 500 Index. This is because, among other
things, small companies have less certain growth prospects than larger
companies; have a lower degree of liquidity in the equity market; and
tend to have a greater sensitivity to changing economic conditions.
Further, in addition to exhibiting greater volatility, the stocks of
small companies may, to some degree, fluctuate independently of the
stocks of large companies; that is, small company stocks may decline in
price as large company stocks rise in price or vice versa.
FOREIGN STOCKS. The Fund invests in non-U.S. equity securities. A
substantial portion of these will be equity securities of established
companies in economically developed countries. These securities may be
either dollar-denominated or denominated in foreign currencies. American
Depository Receipts ("ADRs"), including dollar denominated ADRs which are
issued by domestic banks and traded in the United States on exchanges or
over-the-counter, are treated as foreign stocks for purposes of the asset
category ranges. The Fund may invest up to 21 percent of its total assets
in foreign stocks.
EQUITY RESERVES. When the adviser believes that a temporary defensive
position is desirable, the Fund may invest in equity reserves. Equity
reserves will be used to adjust the risk level of the equity portion of the
Fund in response to market conditions. Equity reserves will consist of U.S.
and foreign short-term money market instruments such as commercial paper
rated A-1 by Standard and Poor's Ratings Group ("Standard & Poor's"),
Prime-1 by Moody's Investors Service, Inc. ("Moody's"), or F-1 by Fitch
Investors Service, Inc. ("Fitch"). The Fund may invest up to 15 percent of
its total assets in equity reserves.
BOND ASSET CATEGORIES. The portion of the Fund's assets which is invested in
bonds ("Bond Assets") will be allocated among the following asset categories
within the ranges specified. The prices of fixed income securities fluctuate
inversely to the direction of interest rates. Generally, the
Fund will invest in Bond Assets which are believed to offer opportunities for
growth of capital when the adviser believes interest rates will decline and,
therefore, the value of the debt securities will increase, or the market value
of bonds will increase due to factors affecting certain types of bonds or
particular issuers, such as improvement in credit quality due to company
fundamentals or economic conditions or assumptions on changes in trends in
prepayment rates with respect to mortgage-backed securities. The average
duration of the Fund's Bond Assets will be not less than three nor more than
seven years. Duration is a commonly used measure of the potential volatility of
the price of a debt security, or the aggregate market value of a portfolio of
debt securities, prior to maturity. Securities with shorter durations generally
have less volatile prices than securities of comparable quality with longer
durations. The Fund should be expected to maintain a higher average duration
during periods of lower expected market volatility, and a lower average duration
during periods of higher expected market volatility.
U.S. TREASURY SECURITIES. U.S. Treasury securities are direct obligations
of the U.S. Treasury, such as U.S. Treasury bills, notes, and bonds. The
Fund may invest up to 45 percent of its total assets in U.S. Treasury
securities. The Fund may invest in other U.S. government securities if, in
the judgment of the adviser, other U.S. government securities are more
attractive than U.S. Treasury securities.
MORTGAGE-BACKED SECURITIES. Mortgage-backed securities represent an
undivided interest in a pool of residential mortgages or may be
collateralized by a pool of residential mortgages. Mortgage-backed
securities are generally either issued or guaranteed by the Government
National Mortgage Association ("GNMA"), Federal National Mortgage
Association ("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC") or
other U.S. government agencies or instrumentalities. Mortgage-backed
securities may also be issued by single-purpose, stand-alone finance
subsidiaries or trusts of financial institutions, government agencies,
investment bankers, or companies related to the construction industry. The
Fund may invest up to 15 percent of its total assets in mortgage-backed
securities.
INVESTMENT-GRADE CORPORATE BONDS. Investment-grade corporate bonds are
corporate debt obligations having fixed or floating rates of interest and
which are rated BBB or higher by a nationally recognized statistical rating
organization ("NRSRO"). The Fund may invest up to 15 percent of its total
assets in investment-grade corporate bonds. In certain cases, the Fund's
adviser may choose bonds which are unrated if it determines that such bonds
are of comparable quality or have similar characteristics to the
investment-grade bonds described above. Yankee bonds, which are U.S.
dollar-denominated bonds issued and traded in the United States by foreign
issuers, are treated as investment-grade corporate bonds for purposes of
the asset category ranges.
HIGH YIELD CORPORATE BONDS. High yield corporate bonds are corporate debt
obligations having fixed or floating rates of interest and which are rated
BB or lower by NRSROs (commonly known as junk bonds). The Fund may invest
up to 15 percent of its total assets in high yield corporate bonds. There
is no minimal acceptable rating for a security to be purchased or held in
the Fund's portfolio, and the Fund may, from time to time, purchase or hold
securities rated in the lowest rating category. (See "Appendix.") In
certain cases the Fund's adviser may
choose bonds which are unrated if it determines that such bonds are of
comparable quality or have similar characteristics to the high yield bonds
described above.
INVESTMENT RISKS. Lower-rated securities will usually offer higher
yields than higher-rated securities. However, there is more risk
associated with these investments. This is because of reduced
creditworthiness and increased risk of default. Lower-rated securities
generally tend to reflect short-term corporate and market developments
to a greater extent than higher-rated securities which react primarily
to fluctuations in the general level of interest rates. Short-term
corporate and market developments affecting the price or liquidity of
lower-rated securities could include adverse news affecting major
issuers, underwriters, or dealers of lower-rated corporate debt
obligations. In addition, since there are fewer investors in
lower-rated securities, it may be harder to sell the securities at an
optimum time. As a result of these factors, lower-rated securities tend
to have more price volatility and carry more risk to principal than
higher-rated securities.
Many corporate debt obligations, including many lower-rated bonds,
permit the issuers to call the security and thereby redeem their
obligations earlier than the stated maturity dates. Issuers are more
likely to call bonds during periods of declining interest rates. In
these cases, if the Fund owns a bond which is called, the Fund will
receive its return of principal earlier than expected and would likely
be required to reinvest the proceeds at lower interest rates, thus
reducing income to the Fund.
FOREIGN BONDS. Foreign bonds are high-quality debt securities of countries
other than the United States. The Fund's portfolio of foreign bonds will be
comprised mainly of foreign government, foreign governmental agency or
supranational institution bonds. The Fund will also invest in high-quality
debt securities issued by established corporations located primarily in
economically developed countries other than the United States and subject
to the Fund's credit limitations for foreign bonds. The Fund may invest up
to 15 percent of its total assets in foreign bonds.
ACCEPTABLE INVESTMENTS
EQUITY SECURITIES. Common stocks represent ownership interest in a
corporation. Unlike bonds, which are debt securities, common stocks have
neither fixed maturity dates nor fixed schedules of promised payments.
Utility stocks are common stocks of utility companies, including water
companies, companies that produce, transmit, or distribute gas and electric
energy and those companies that provide communications facilities, such as
telephone and telegraph companies. Foreign stocks are equity securities of
foreign issuers.
FOREIGN SECURITIES. The foreign bonds in which the Fund invests are rated
within the four highest ratings for bonds by Moody's (Aaa, Aa, A or Baa) or
by Standard & Poor's (AAA, AA, A or BBB) or are unrated if determined to be
of equivalent quality by the Fund's adviser.
INVESTMENT RISKS. Investments in foreign securities involve special
risks that differ from those associated with investments in domestic
securities. The risks associated with investments in foreign securities
apply to securities issued by foreign corporations and sovereign
governments. These risks relate to political and economic developments
abroad, as well as those that result from the differences between the
regulation of domestic securities and issuers and foreign securities
and issuers. These risks may include, but are not limited to,
expropriation, confiscatory taxation, currency fluctuations,
withholding taxes on interest, limitations on the use or transfer of
Fund assets, political or social instability and adverse diplomatic
developments. It may also be more difficult to enforce contractual
obligations or obtain court judgments abroad than would be the case in
the United States because of differences in the legal systems. If the
issuer of the debt or the governmental authorities that control the
repayment of the debt would 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;
notes, bonds, and discount notes issued or guaranteed by U.S. government
agencies and instrumentalities supported by the full faith and credit of
the United States;
notes, bonds, and discount notes of U.S. government agencies or
instrumentalities which receive or have access to federal funding; and
notes, bonds, and discount notes of other U.S. government
instrumentalities supported only by the credit of the instrumentalities.
The Fund may also purchase U.S. Treasury securities and the U.S.
government securities noted above pursuant to repurchase agreements.
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. Under criteria
established by the Trustees, certain restricted securities are determined to be
liquid. To the extent that restricted securities are not determined to be
liquid, the Fund will limit their purchase, together with other illiquid
securities including 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.
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.
FOREIGN CURRENCY TRANSACTIONS. The Fund will enter into foreign currency
transactions to obtain the necessary currencies to settle securities
transactions. Currency transactions may be conducted either on a spot or cash
basis at prevailing rates or through forward foreign currency exchange
contracts.
The Fund may also enter into foreign currency transactions to protect Fund
assets against adverse changes in foreign currency exchange rates or exchange
control regulations. Such changes could unfavorably affect the value of Fund
assets which are denominated in foreign currencies, such as foreign securities
or funds deposited in foreign banks, as measured in U.S. dollars. Although
foreign currency exchanges may be used by the Fund to protect against a decline
in the value of one or more currencies, such efforts may also limit any
potential gain that might result from a relative increase in the value of such
currencies and might, in certain cases, result in losses to the Fund.
CURRENCY RISKS. To the extent that debt securities purchased by the Fund
are denominated in currencies other than the U.S. dollar, changes in
foreign currency exchange rates will affect the Fund's net asset value; the
value of interest earned; gains and losses realized on the sale of
securities; and net investment income and capital gain, if any, to be
distributed to shareholders by the Fund. If the value of a foreign currency
rises against the U.S. dollar, the value of the Fund's assets denominated
in that currency will increase; correspondingly, if the value of a foreign
currency declines against the U.S. dollar, the value of the Fund's assets
denominated in that currency will decrease.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward foreign currency
exchange contract ("forward contract") is an obligation to purchase or sell an
amount of a particular currency at a specific price and on a future date agreed
upon by the parties.
Generally, no commission charges or deposits are involved. At the time the Fund
enters into a forward contract, Fund assets with a value equal to the Fund's
obligation under the forward contract
are segregated and are maintained until the contract has been settled. The Fund
will not enter into a forward contract with a term of more than one year.
The Fund will generally enter into a forward contract to provide the proper
currency to settle a securities transaction at the time the transaction occurs
("trade date"). The period between trade date and settlement date will vary
between 24 hours and 30 days, depending upon local custom.
The Fund may also protect against the decline of a particular foreign currency
by entering into a forward contract to sell an amount of that currency
approximating the value of all or a portion of the Fund's assets denominated in
that currency ("hedging"). The success of this type of short-term hedging
strategy is highly uncertain due to the difficulties of predicting short-term
currency market movements and of precisely matching forward contract amounts and
the constantly changing value of the securities involved. Although the adviser
will consider the likelihood of changes in currency values when making
investment decisions, the adviser believes that it is important to be able to
enter into forward contracts when it believes the interests of the Fund will be
served. The Fund will not enter into forward contracts for hedging purposes in a
particular currency in an amount in excess of the Fund's assets denominated in
that currency. The Fund will not invest more than 21% of its total assets in
forward foreign currency exchange contracts.
OPTIONS. The Fund may deal in options on foreign currencies, foreign currency
futures, securities, and securities indices, which options may be listed for
trading on a national securities exchange or traded over-the-counter. The Fund
will use options only to manage interest rate and currency risks. The Fund may
write covered call options to generate income.
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.
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 consideration when the Fund's adviser deems it appropriate
to make changes in the Fund's portfolio.
INVESTMENT LIMITATIONS
The Fund will not:
borrow money directly or through reverse repurchase agreements or pledge
securities except, under certain circumstances, the Fund may borrow up to
one-third of the value of its total assets and pledge up to 15 percent of
the value of those assets to secure such borrowings;
lend any securities except for portfolio securities; or
underwrite any issue of securities, except as it may be deemed to be an
underwriter under the Securities Act of 1933 in connection with the sale
of restricted securities which the Fund may purchase pursuant to its
investment objective, policies and limitations.
The above investment limitations cannot be changed without shareholder approval.
TRUST INFORMATION
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MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Trust's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. The Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Except as noted below with regard to the sub-adviser,
investment decisions for the Fund are made by Federated Management, the Fund's
investment adviser (the "Adviser"), subject to direction by the Trustees. The
adviser continually conducts investment research and supervision for the Fund
and is responsible for the purchase or sale of portfolio instruments, for which
it receives an annual fee from the Fund.
ADVISORY FEES. The Fund's adviser receives an annual investment advisory
fee equal to .75% of 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.
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.
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 $76
billion invested across more than 338 funds under management and/or
administration by its subsidiaries, as of December 31, 1996, Federated Investors
is one of the largest mutual fund investment managers in the United States. With
more than 2,000 employees, Federated continues to be led by the management who
founded the company in 1955. Federated funds are presently at work in and
through 4,500 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 Investment Strategy Committee. 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:
Scott B. Schermerhorn and Peter R. Anderson are the portfolio managers for
the domestic large company stocks asset category.
Scott B. Schermerhorn has been the Fund's portfolio manager since July 1,
1996. Mr. Schermerhorn joined Federated Investors in 1996 as a Vice
President of the Fund's Adviser. From 1990 through 1996, Mr. Schermerhorn
was a Senior Vice President and Senior Investment Officer at J W Seligman &
Co., Inc. Mr. Schermerhorn received his M.B.A. in Finance and International
Business from Seton Hall University.
Peter R. Anderson has been the Fund's portfolio manager since the Fund's
inception. 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.
Aash M. Shah and James E. Grefenstette are the portfolio managers for the
domestic small company stocks asset category.
Aash M. Shah has been the Fund's portfolio manager since December 1995. 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. in Industrial Administration
from Carnegie Mellon University with a concentration in finance and
accounting. Mr. Shah is a Chartered Financial Analyst.
James E. Grefenstette has been the Fund's portfolio manager since August
1994. Mr. Grefenstette joined Federated Investors in 1992 and has been a
Vice President since July 1996. Mr. Grefenstette served as an Assistant
Vice President of the Fund's Adviser from 1994 to 1996, and an investment
analyst from 1992 to 1994. Mr. Grefenstette was a credit analyst at
Westinghouse Credit Corp. from 1990 until 1992. Mr. Grefenstette received
his M.S. in Industrial Administration from Carnegie Mellon University.
Henry A. Frantzen, Drew J. Collins, Mark S. Kopinski, Frank Semack, and
Alexandre de Bethmann are portfolio managers for the foreign stocks asset
category.
Henry A. Frantzen has been the Fund's portfolio manager 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.
Drew J. Collins has been the Fund's portfolio manager 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 the Fund's portfolio manager 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 the Fund's portfolio manager 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 1980 to 1993. Mr. Semack
received his M.Sc. in economics from the London School of Economics.
Alexandre de Bethmann has been the Fund's portfolio manager 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 A. Frantzen, Drew J. Collins, Robert M. Kowit and Micheal W. Casey
are portfolio managers for the foreign bonds asset category. Messrs.
Frantzen, Collins and Kowit 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.
Micheal W. Casey, Ph.D. has been the Fund's portfolio manager since January
1, 1997. Mr. Casey joined Federated Investors in 1996 as an Assistant Vice
President. Mr. Casey served as an International Economist and Portfolio
Strategist for Maria Fiorini Ramirez Inc. from 1990 to 1996. Mr. Casey
earned a Ph.D. concentrating in economics from The New School for Social
Research and a M.Sc. from the London School of Economics.
Susan M. Nason and Joseph M. Balestrino are portfolio managers for the U.S.
Treasury securities asset category.
Susan M. Nason has been the Fund's portfolio manager since the Fund's
inception. 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. in Industrial
Administration from Carnegie Mellon University.
Joseph M. Balestrino has been the Fund's portfolio manager since March
1995. 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. 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. in Industrial Administration from Carnegie Mellon
University.
Kathleen M. Foody-Malus is the portfolio manager for the mortgage-backed
securities asset category. Ms. Foody-Malus has performed this duty since
the Fund's inception. 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.
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 Services Company, a subsidiary of Federated
Investors, provides administrative personnel and services (including certain
legal and financial reporting services) necessary to operate the Fund. Federated
Services Company 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% on the first $250 million
.125% on the next $250 million
.10% on the next $250 million
.075% 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 Services Company 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 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 utilize those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. In selecting among firms
believed to meet these criteria, the 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 Shareholder Services Company, c/o State Street Bank
and Trust Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit to:
Federated Managed Growth Fund--Institutional Shares; Fund Number (this number
can be found on the account statement or by contacting the Fund); Group Number
or Wire Order Number; Nominee or Institution Name; and ABA Number 011000028.
Shares cannot be purchased by wire on holidays when wire transfers are
restricted. Questions on wire purchases should be directed to your shareholder
services representative at the telephone number listed on your account
statement.
BY MAIL. To purchase Shares by mail, send a check made payable to Federated
Managed Growth Fund--Institutional Shares to Federated Shareholder 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 financial intermediary 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 financial intermediary may be charged an additional service fee
by that financial intermediary.
The net asset value is determined as of the close of trading (normally 4:00
p.m., Eastern time) on the New York Stock Exchange, Monday through Friday,
except on (i) days on which there are not sufficient changes in the value of the
Fund's portfolio securities 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.
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 Shareholder Services Company maintains
a share account for each shareholder. Share certificates are not issued unless
requested by contacting the Fund.
Detailed confirmations of each purchase or redemption are sent to each
shareholder. Quarterly confirmations are sent to report dividends paid during
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. Investors who redeem Shares through a financial
intermediary may be charged a service fee by that financial intermediary.
Redemptions will be made on days on which the Fund computes its net asset value.
Redemption requests must be received in proper form and can be made through a
financial institution, by telephone request or by written request.
THROUGH A FINANCIAL INSTITUTION
A shareholder may redeem Shares by calling his financial institution (such as a
bank or an investment dealer) to request the redemption. Shares will be redeemed
at the net asset value next determined after the Fund receives the redemption
request from the financial institution. Redemption requests through a registered
broker/dealer must be received by the broker before 4:00 p.m. (Eastern time) and
must be transmitted by the broker to the Fund before 5:00 p.m. (Eastern time) in
order for Shares to be redeemed at that day's net asset value. Redemption
requests through other financial institutions must be received by the financial
institution and transmitted to the Fund before 4:00 p.m. (Eastern time) in order
for Shares to be redeemed at that day's net asset value. The financial
institution is responsible for promptly submitting redemption requests and
providing proper written instructions to the Fund. The financial institution may
charge customary fees and commissions for this service.
TELEPHONE REDEMPTION
Shareholders may redeem their Shares by telephoning the Fund before 4:00 p.m.
(Eastern time). All proceeds will normally be wire transferred the following
business day, but in no event more than seven days, to the shareholder's account
at a domestic commercial bank that is a member of the Federal Reserve System.
Proceeds from redemption requests received on holidays when wire transfers are
restricted will be wired the following business day. Questions about telephone
redemptions on days when wire transfers are restricted should be directed to
your shareholder services representative at the telephone number listed on your
account statement. If at any time, the Fund shall determine it necessary to
terminate or modify this method of redemption, shareholders would be promptly
notified.
An authorization form permitting the Fund to accept telephone requests must
first be completed. Authorization forms and information on this service are
available from Federated Securities Corp. Telephone redemption instructions may
be recorded. If reasonable procedures are not followed by the Fund, it may be
liable for losses due to unauthorized or fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "Written Requests," should be considered.
WRITTEN REQUESTS
REDEEMING SHARES BY MAIL. Shares may be redeemed in any amount by mailing a
written request to: Federated Shareholder Services Company, P.O. Box 8600,
Boston, MA 02266-8600. If Share
certificates have been issued, they should be sent unendorsed with the written
request by registered or certified mail to the address noted above.
The written request should state: the Fund name and the class designation; the
account name as registered with the Fund; the account number; and the number of
shares to be redeemed or the dollar amount requested. All owners of the account
must sign the request exactly as the shares are registered. Normally, a check
for the proceeds is mailed within one business day, but in no event more than
seven days, after the receipt of a proper written redemption request. Dividends
are paid up to and including the day that a redemption request is processed.
Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Fund or a redemption payable other than to
the shareholder of record must have their signatures guaranteed by a commercial
or savings bank, trust company or savings association whose deposits are insured
by an organization which is administered by the Federal Deposit Insurance
Corporation; a member firm of a domestic stock exchange; 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.
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, other than retirement accounts subject to required
minimum distributions. 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, Donnelly and Meck, counsel to the Trust, Fund shares
may be subject to personal property taxes imposed by counties, municipalities,
and school districts in Pennsylvania to the extent that the portfolio securities
in the Fund would be subject to such taxes if owned directly by residents of
those jurisdictions.
Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its total return and yield for Shares.
Total return represents the change, over a specified period of time, in the
value of an investment in Shares 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 1-800-341-7400.
FEDERATED MANAGED GROWTH FUND
FINANCIAL HIGHLIGHTS--SELECT SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 80.
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1996 1995 1994(A)
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------- --------- --------- -----------
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.50 $ 9.81 $ 10.00
- ----------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------------
Net investment income 0.36 0.23 0.15
- ----------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments, foreign currency, and
futures contracts 0.94 1.79 (0.24)
- ---------------------------------------------------------------------------------- --------- --------- -----------
Total from investment operations 1.30 2.02 (0.09)
- ---------------------------------------------------------------------------------- --------- --------- -----------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------------------
Distributions from net investment income (0.37) (0.33) (0.10)
- ----------------------------------------------------------------------------------
Distributions from net realized gain on investments, foreign currency
transactions, and futures contracts (0.23) -- --
- ---------------------------------------------------------------------------------- --------- --------- -----------
Total distributions (0.60) (0.33) (0.10)
- ---------------------------------------------------------------------------------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 12.20 $ 11.50 $ 9.81
- ---------------------------------------------------------------------------------- --------- --------- -----------
TOTAL RETURN (B) 11.75% 20.95% (0.90%)
- ----------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------------
Expenses 1.75% 1.75% 1.70%*
- ----------------------------------------------------------------------------------
Net investment income 3.06% 3.48% 3.53%*
- ----------------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.45% 0.76% 1.15%*
- ----------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $60,208 $27,358 $ 2,952
- ----------------------------------------------------------------------------------
Average commission rate paid $0.0020
- ----------------------------------------------------------------------------------
Portfolio turnover 95% 106% 71 %
- ----------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 25, 1994 (date of initial
public investment) to November 30, 1994. For the period from January 27,
1994 (start of business) to May 24, 1994 the Fund had no investment
activity.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
Further information about the Fund's performance is contained in the Fund's
annual report for the fiscal year ended November 30, 1996, which can be obtained
free of charge.
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED GROWTH FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES OR IN U.S.
UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--48.7%
- ----------------------------------------------------------------------------------------------
LARGE-COMPANY--25.5%
----------------------------------------------------------------------------
BASIC INDUSTRY--1.8%
----------------------------------------------------------------------------
30,700 Allegheny Teledyne, Inc. $ 717,613
----------------------------------------------------------------------------
10,100 Betz Laboratories, Inc. 584,538
----------------------------------------------------------------------------
5,500 Du Pont (E.I.) de Nemours & Co. 518,375
----------------------------------------------------------------------------
10,000 Great Lakes Chemical Corp. 536,250
----------------------------------------------------------------------------
49,000 LTV Corporation 526,750
----------------------------------------------------------------------------
17,400 Morton International, Inc. 702,525
---------------------------------------------------------------------------- --------------
Total 3,586,051
---------------------------------------------------------------------------- --------------
CONSUMER DURABLES--1.0%
----------------------------------------------------------------------------
13,800 General Motors Corp., Class H 752,100
----------------------------------------------------------------------------
7,400 General Motors Corp. 426,425
----------------------------------------------------------------------------
9,500 Martin Marietta Materials 223,250
----------------------------------------------------------------------------
22,300 Rubbermaid, Inc. 535,200
---------------------------------------------------------------------------- --------------
Total 1,936,975
---------------------------------------------------------------------------- --------------
CONSUMER NON-DURABLES--3.5%
----------------------------------------------------------------------------
9,100 Avon Products, Inc. 507,325
----------------------------------------------------------------------------
6,100 CPC International, Inc. 507,825
----------------------------------------------------------------------------
10,000 Dole Food, Inc., ACES, $2.7475 398,750
----------------------------------------------------------------------------
8,700 Heinz (H.J.) Co. 329,513
----------------------------------------------------------------------------
33,000 IBP, Inc. 816,750
----------------------------------------------------------------------------
6,000 Kimberly-Clark Corp. 586,500
----------------------------------------------------------------------------
13,050 Philip Morris Cos., Inc. 1,345,781
----------------------------------------------------------------------------
14,500 Tambrands, Inc. 619,875
----------------------------------------------------------------------------
7,700 Unilever N.V. 1,333,063
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES OR IN U.S.
UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
LARGE-COMPANY--CONTINUED
----------------------------------------------------------------------------
CONSUMER NON-DURABLES--CONTINUED
----------------------------------------------------------------------------
7,600 V.F. Corp. $ 515,850
---------------------------------------------------------------------------- --------------
Total 6,961,232
---------------------------------------------------------------------------- --------------
ENERGY MINERALS--3.0%
----------------------------------------------------------------------------
15,100 Baker Hughes, Inc. 553,038
----------------------------------------------------------------------------
12,300 Chevron Corp. 824,100
----------------------------------------------------------------------------
7,700 Exxon Corp. 728,613
----------------------------------------------------------------------------
22,400 Occidental Petroleum Corp. 537,600
----------------------------------------------------------------------------
2,800 Royal Dutch Petroleum Co. 475,650
----------------------------------------------------------------------------
8,600 Texaco, Inc. 852,475
----------------------------------------------------------------------------
31,000 USX-Marathon Group 709,125
----------------------------------------------------------------------------
22,381 Union Pacific Resources Group, Inc. 668,632
----------------------------------------------------------------------------
7,500 (a)Western Atlas, Inc. 528,750
---------------------------------------------------------------------------- --------------
Total 5,877,983
---------------------------------------------------------------------------- --------------
FINANCE--3.8%
----------------------------------------------------------------------------
13,913 Allstate Corp. 838,258
----------------------------------------------------------------------------
8,300 CIGNA Corp. 1,173,413
----------------------------------------------------------------------------
8,500 Chase Manhattan Corp. 803,250
----------------------------------------------------------------------------
5,500 Citicorp 600,875
----------------------------------------------------------------------------
7,200 Dean Witter, Discover & Co. 492,300
----------------------------------------------------------------------------
21,300 Federal National Mortgage Association 878,625
----------------------------------------------------------------------------
9,500 Marsh & McLennan Cos., Inc. 1,077,063
----------------------------------------------------------------------------
11,500 National City Corp. 533,313
----------------------------------------------------------------------------
10,100 Providian Corp. 540,350
----------------------------------------------------------------------------
12,333 Travelers Group, Inc. 555,000
---------------------------------------------------------------------------- --------------
Total 7,492,447
---------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES OR IN U.S.
UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
LARGE-COMPANY--CONTINUED
----------------------------------------------------------------------------
HEALTH CARE--3.0%
----------------------------------------------------------------------------
13,500 Abbott Laboratories $ 752,625
----------------------------------------------------------------------------
11,900 (a)American Home Products Corp. 764,575
----------------------------------------------------------------------------
17,000 Bard (C.R.), Inc. 476,000
----------------------------------------------------------------------------
24,800 (a)Biomet, Inc. 409,200
----------------------------------------------------------------------------
8,200 Bristol-Myers Squibb Co. 932,750
----------------------------------------------------------------------------
11,700 Columbia/HCA Healthcare Corp. 468,000
----------------------------------------------------------------------------
30,700 (a)Healthsource, Inc. 345,375
----------------------------------------------------------------------------
6,900 Merck & Co., Inc. 572,700
----------------------------------------------------------------------------
7,200 Smithkline Beecham, ADR 495,900
----------------------------------------------------------------------------
13,200 United Healthcare Corp. 569,250
---------------------------------------------------------------------------- --------------
Total 5,786,375
---------------------------------------------------------------------------- --------------
PRODUCER MANUFACTURING--1.9%
----------------------------------------------------------------------------
6,500 (a)FMC Corp. 502,125
----------------------------------------------------------------------------
6,700 General Electric Co. 696,800
----------------------------------------------------------------------------
8,300 Loews Corp. 769,825
----------------------------------------------------------------------------
9,700 Textron, Inc. 925,138
----------------------------------------------------------------------------
45,000 (b)Westinghouse Electric Corp., PEPS, Series C, $1.30 769,230
---------------------------------------------------------------------------- --------------
Total 3,663,118
---------------------------------------------------------------------------- --------------
RETAIL TRADE--1.2%
----------------------------------------------------------------------------
17,100 Dayton-Hudson Corp. 664,763
----------------------------------------------------------------------------
17,000 Sears, Roebuck & Co. 845,750
----------------------------------------------------------------------------
35,300 Wal-Mart Stores, Inc. 900,150
---------------------------------------------------------------------------- --------------
Total 2,410,663
---------------------------------------------------------------------------- --------------
SERVICES--1.0%
----------------------------------------------------------------------------
18,500 Block (H&R), Inc. 541,125
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES OR IN U.S.
UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
LARGE-COMPANY--CONTINUED
----------------------------------------------------------------------------
SERVICES--CONTINUED
----------------------------------------------------------------------------
28,000 Browning-Ferris Industries, Inc. $ 752,500
----------------------------------------------------------------------------
8,100 Gannett Co., Inc. 635,850
---------------------------------------------------------------------------- --------------
Total 1,929,475
---------------------------------------------------------------------------- --------------
TECHNOLOGY--2.1%
----------------------------------------------------------------------------
18,000 (a)Analog Devices, Inc. 578,250
----------------------------------------------------------------------------
15,800 Electronic Data Systems Corp. 764,325
----------------------------------------------------------------------------
5,500 Intel Corp. 697,813
----------------------------------------------------------------------------
1,900 International Business Machines Corp. 302,813
----------------------------------------------------------------------------
4,102 Lockheed Martin Corp. 371,744
----------------------------------------------------------------------------
4,634 Lucent Technologies, Inc. 237,493
----------------------------------------------------------------------------
8,400 Raytheon Co. 429,450
----------------------------------------------------------------------------
11,100 (a)Rockwell International Corp. 713,175
---------------------------------------------------------------------------- --------------
Total 4,095,063
---------------------------------------------------------------------------- --------------
TRANSPORTATION--0.2%
----------------------------------------------------------------------------
14,000 (a)KLM Royal Dutch Airlines 365,750
---------------------------------------------------------------------------- --------------
UTILITIES--3.0%
----------------------------------------------------------------------------
14,300 AT&T Corp. 561,275
----------------------------------------------------------------------------
14,600 CMS Energy Corp. 474,500
----------------------------------------------------------------------------
9,900 (a)Columbia Gas System, Inc. 639,788
----------------------------------------------------------------------------
15,000 Enron Corp. 686,250
----------------------------------------------------------------------------
10,000 FPL Group, Inc. 461,250
----------------------------------------------------------------------------
17,700 GTE Corp. 794,288
----------------------------------------------------------------------------
37,600 MCI Communications Corp. 1,146,800
----------------------------------------------------------------------------
19,900 Pacific Gas & Electric Co. 480,088
----------------------------------------------------------------------------
17,600 Southern Co. 391,600
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES OR IN U.S.
UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
LARGE-COMPANY--CONTINUED
----------------------------------------------------------------------------
UTILITIES--CONTINUED
----------------------------------------------------------------------------
17,000 TECO Energy, Inc. $ 414,375
---------------------------------------------------------------------------- --------------
Total 6,050,214
---------------------------------------------------------------------------- --------------
TOTAL LARGE-COMPANY 50,155,346
---------------------------------------------------------------------------- --------------
SMALL-COMPANY--7.7%
----------------------------------------------------------------------------
BASIC INDUSTRY--0.5%
----------------------------------------------------------------------------
10,500 (a)Chirex, Inc. 112,875
----------------------------------------------------------------------------
3,500 Donaldson Company, Inc. 106,750
----------------------------------------------------------------------------
5,200 (a)Fibreboard Corp. 180,050
----------------------------------------------------------------------------
7,900 (a)Royal Plastics Group Ltd. 142,200
----------------------------------------------------------------------------
12,200 Spartech Corp. 129,625
----------------------------------------------------------------------------
11,500 (a)Synthetech, Inc. 94,875
----------------------------------------------------------------------------
2,000 Texas Industries, Inc. 113,750
----------------------------------------------------------------------------
4,100 (a)Titanium Metals Corp. 137,350
---------------------------------------------------------------------------- --------------
Total 1,017,475
---------------------------------------------------------------------------- --------------
CONSUMER DURABLES--0.6%
----------------------------------------------------------------------------
7,800 Action Performance Companies, Inc. 133,575
----------------------------------------------------------------------------
2,100 Carlisle Cos., Inc. 120,750
----------------------------------------------------------------------------
5,875 Cavalier Homes, Inc. 66,094
----------------------------------------------------------------------------
6,800 (a)Champion Enterprises, Inc. 141,950
----------------------------------------------------------------------------
4,900 Coachmen Industries, Inc. 124,950
----------------------------------------------------------------------------
6,900 (a)Equity Marketing, Inc. 158,700
----------------------------------------------------------------------------
3,300 (a)K2, Inc. 85,800
----------------------------------------------------------------------------
4,400 Lewis Galoob Toys, Inc. 128,150
----------------------------------------------------------------------------
6,000 Norwood Promotional Products 96,750
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES OR IN U.S.
UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
SMALL-COMPANY--CONTINUED
----------------------------------------------------------------------------
CONSUMER DURABLES--CONTINUED
----------------------------------------------------------------------------
2,500 Wynns International, Inc. $ 72,813
---------------------------------------------------------------------------- --------------
Total 1,129,532
---------------------------------------------------------------------------- --------------
CONSUMER NON-DURABLES--0.3%
----------------------------------------------------------------------------
6,600 (a)Helen of Troy Ltd. 141,900
----------------------------------------------------------------------------
9,500 (a)Morningstar Group, Inc. 163,875
----------------------------------------------------------------------------
2,700 (a)Mossimo, Inc. 40,838
----------------------------------------------------------------------------
2,900 Natures Sunshine Products, Inc. 58,725
----------------------------------------------------------------------------
7,700 (a)Sport-Haley Inc. 113,575
----------------------------------------------------------------------------
4,200 Worthington Foods, Inc. 107,100
---------------------------------------------------------------------------- --------------
Total 626,013
---------------------------------------------------------------------------- --------------
ENERGY MINERALS--0.3%
----------------------------------------------------------------------------
4,200 (a)Belden & Blake Corp. 106,050
----------------------------------------------------------------------------
2,100 (a)Cliffs Drilling Co. 109,200
----------------------------------------------------------------------------
2,200 (a)Energy Ventures, Inc. 108,075
----------------------------------------------------------------------------
7,700 (a)Key Production Co. 97,213
----------------------------------------------------------------------------
6,500 Lomak Petroleum, Inc. 106,438
----------------------------------------------------------------------------
5,700 (a)Pool Energy Services Co. 84,075
---------------------------------------------------------------------------- --------------
Total 611,051
---------------------------------------------------------------------------- --------------
FINANCE--1.2%
----------------------------------------------------------------------------
8,900 (a)ACC Consumer Finance Corp. 81,213
----------------------------------------------------------------------------
3,300 Aames Financial Corp 141,488
----------------------------------------------------------------------------
1,900 CMAC Investment Corp. 144,875
----------------------------------------------------------------------------
3,100 Capital Re Corp. 118,963
----------------------------------------------------------------------------
10,000 Commonwealth Bancorp 145,000
----------------------------------------------------------------------------
10,900 (a)Consumer Portfolio Services 140,338
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES OR IN U.S.
UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
SMALL-COMPANY--CONTINUED
----------------------------------------------------------------------------
FINANCE--CONTINUED
----------------------------------------------------------------------------
4,300 (a)Delphi Financial Group, Inc., Class A $ 121,475
----------------------------------------------------------------------------
3,300 (a)Delta Financial Corp. 75,488
----------------------------------------------------------------------------
3,600 Donegal Group, Inc. 69,750
----------------------------------------------------------------------------
4,900 (a)Electro Rent Corp. 117,600
----------------------------------------------------------------------------
6,100 (a)Everen Capital Corp. 137,250
----------------------------------------------------------------------------
4,200 Executive Risk, Inc. 168,000
----------------------------------------------------------------------------
4,100 (a)First Merchants Acceptance Corp. 86,100
----------------------------------------------------------------------------
3,200 Frontier Insurance Group, Inc. 122,400
----------------------------------------------------------------------------
2,400 (a)Insignia Financial Group, Inc., Class A 54,600
----------------------------------------------------------------------------
1,100 (a)Markel Corp. 93,500
----------------------------------------------------------------------------
4,200 Penn-America Group, Inc. 66,675
----------------------------------------------------------------------------
7,500 (a)Southern Pacific Funding 238,125
----------------------------------------------------------------------------
3,400 (a)UICI 95,200
----------------------------------------------------------------------------
4,500 Vesta Insurance Group, Inc. 145,125
---------------------------------------------------------------------------- --------------
Total 2,363,165
---------------------------------------------------------------------------- --------------
HEALTH CARE--0.8%
----------------------------------------------------------------------------
5,200 (a)American HomePatient, Inc. 120,250
----------------------------------------------------------------------------
3,480 (a)Bio Rad Laboratories, Inc., Class A 103,965
----------------------------------------------------------------------------
9,000 (a)Biosource International, Inc. 63,563
----------------------------------------------------------------------------
4,300 Chad Therapeutics Inc. 67,725
----------------------------------------------------------------------------
5,700 (a)Curative Technologies, Inc. 148,200
----------------------------------------------------------------------------
13,500 (a)Diagnostic Health Services, Inc. 94,500
----------------------------------------------------------------------------
3,500 (a)Geltex Pharmaceuticals, Inc. 62,563
----------------------------------------------------------------------------
4,300 (a)Genesis Health Ventures, Inc. 119,863
----------------------------------------------------------------------------
1,600 (a)Medicis Pharmaceutical Corp., Class A 70,200
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES OR IN U.S.
UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
SMALL-COMPANY--CONTINUED
----------------------------------------------------------------------------
HEALTH CARE--CONTINUED
----------------------------------------------------------------------------
8,200 (a)OrthoLogic Corp. $ 50,225
----------------------------------------------------------------------------
10,000 (a)Physician Computer Network, Inc. 82,500
----------------------------------------------------------------------------
9,000 (a)Prime Medical Services 104,625
----------------------------------------------------------------------------
7,900 (a)Rotech Medical Corp. 134,300
----------------------------------------------------------------------------
2,100 (a)Safeskin Corp. 108,675
----------------------------------------------------------------------------
3,500 (a)Sierra Health Services, Inc. 86,188
----------------------------------------------------------------------------
3,800 (a)Universal Health Services, Inc., Class B 107,350
----------------------------------------------------------------------------
4,900 (a)UroCor, Inc. 47,163
----------------------------------------------------------------------------
6,000 (a)Veterinary Centers of America 63,750
---------------------------------------------------------------------------- --------------
Total 1,635,605
---------------------------------------------------------------------------- --------------
PRODUCER MANUFACTURING--0.3%
----------------------------------------------------------------------------
2,900 (a)Cable Design Technologies, Class A 84,825
----------------------------------------------------------------------------
5,400 (a)Maverick Tube Corp. 85,725
----------------------------------------------------------------------------
3,020 (a)NCI Building System, Inc. 86,825
----------------------------------------------------------------------------
3,100 (a)Reliance Steel & Aluminum Co. 116,250
----------------------------------------------------------------------------
3,400 (a)Sinter Metals, Inc. 85,000
----------------------------------------------------------------------------
4,500 (a)US Office Products Co. 139,500
---------------------------------------------------------------------------- --------------
Total 598,125
---------------------------------------------------------------------------- --------------
RETAIL TRADE--0.6%
----------------------------------------------------------------------------
7,000 (a)Amrion, Inc. 160,125
----------------------------------------------------------------------------
3,020 (a)MSC Industrial Direct Co. 112,873
----------------------------------------------------------------------------
6,500 (a)Microage, Inc. 147,063
----------------------------------------------------------------------------
5,100 (a)Pacific Sunwear of California 137,700
----------------------------------------------------------------------------
8,400 (a)Paul Harris Stores, Inc. 153,300
----------------------------------------------------------------------------
5,000 (a)Pomeroy Computer Resources 136,875
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES OR IN U.S.
UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
SMALL-COMPANY--CONTINUED
----------------------------------------------------------------------------
RETAIL TRADE--CONTINUED
----------------------------------------------------------------------------
3,300 (a)Regis Corp. Minnesota $ 82,500
----------------------------------------------------------------------------
4,200 Riser Foods, Inc. 128,100
----------------------------------------------------------------------------
3,900 (a)Stein Mart, Inc. 74,588
---------------------------------------------------------------------------- --------------
Total 1,133,124
---------------------------------------------------------------------------- --------------
SERVICES--1.1%
----------------------------------------------------------------------------
7,100 (a)ATC Communications, Inc. 109,163
----------------------------------------------------------------------------
2,400 American List Corp. 70,800
----------------------------------------------------------------------------
4,000 (a)BARRA, Inc. 104,000
----------------------------------------------------------------------------
4,200 (a)CDI Corp. 122,325
----------------------------------------------------------------------------
1,700 (a)Caribiner International, Inc. 75,013
----------------------------------------------------------------------------
2,200 (a)Catalina Marketing Corp. 112,200
----------------------------------------------------------------------------
4,800 (a)Consolidated Graphics, Inc. 218,400
----------------------------------------------------------------------------
7,400 Employee Solutions, Inc. 136,900
----------------------------------------------------------------------------
7,100 FactSet Research Systems 166,850
----------------------------------------------------------------------------
2,000 HA-LO Industries, Inc. 77,000
----------------------------------------------------------------------------
6,700 (a)National Education Corp. 94,638
----------------------------------------------------------------------------
3,500 (a)Newpark Resources, Inc. 122,500
----------------------------------------------------------------------------
4,500 (a)Personnel Group of America, Inc. 101,813
----------------------------------------------------------------------------
3,000 (a)Premier Parks, Inc. 96,375
----------------------------------------------------------------------------
7,300 (a)Prepaid Legal Services, Inc. 101,288
----------------------------------------------------------------------------
6,500 (a)Prime Hospitality Corp. 108,063
----------------------------------------------------------------------------
4,650 (a)Right Management Consultants 90,094
----------------------------------------------------------------------------
1,500 (a)Univision Communications, Inc., Class A 59,625
----------------------------------------------------------------------------
1,500 (a)Volt Information Science, Inc. 52,500
---------------------------------------------------------------------------- --------------
Total 2,019,547
---------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES OR IN U.S.
UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
SMALL-COMPANY--CONTINUED
----------------------------------------------------------------------------
TECHNOLOGY--1.6%
----------------------------------------------------------------------------
9,200 (a)Alphanet Solutions, Inc. $ 112,700
----------------------------------------------------------------------------
12,600 (a)Award Software International, Inc. 113,400
----------------------------------------------------------------------------
3,400 (a)Burr Brown Corp. 88,400
----------------------------------------------------------------------------
1,900 (a)Claremont Technology Group 46,550
----------------------------------------------------------------------------
7,300 (a)Cognex Corp. 144,175
----------------------------------------------------------------------------
3,800 Computer Task Group, Inc. 159,125
----------------------------------------------------------------------------
6,800 (a)Digital Systems Int., Inc. 104,550
----------------------------------------------------------------------------
4,000 (a)Ducommun, Inc. 88,500
----------------------------------------------------------------------------
2,400 (a)Dupont Photomasks, Inc. 99,600
----------------------------------------------------------------------------
7,700 (a)EIS International, Inc. 67,375
----------------------------------------------------------------------------
7,000 (a)ESS Technology, Inc. 138,250
----------------------------------------------------------------------------
4,900 (a)Elexsys International, Inc. 81,463
----------------------------------------------------------------------------
8,000 (a)Firearms Training Systems, Inc. 110,500
----------------------------------------------------------------------------
2,800 (a)IA Corporation I 15,750
----------------------------------------------------------------------------
5,900 (a)II-VI, Inc. 155,613
----------------------------------------------------------------------------
5,500 Innovex, Inc. 223,438
----------------------------------------------------------------------------
4,500 (a)Integrated Measurement Systems, Inc 79,875
----------------------------------------------------------------------------
5,800 (a)Intervoice, Inc. 73,225
----------------------------------------------------------------------------
3,400 (a)Perceptron, Inc. 117,725
----------------------------------------------------------------------------
5,000 (a)Photronic Labs, Inc. 157,500
----------------------------------------------------------------------------
9,500 (a)Raster Graphics Inc. 99,750
----------------------------------------------------------------------------
5,600 (a)Sandisk Corp. 77,000
----------------------------------------------------------------------------
9,500 (a)StorMedia, Inc. 121,125
----------------------------------------------------------------------------
5,500 (a)Stratasys, Inc. 91,438
----------------------------------------------------------------------------
2,500 (a)Supertex, Inc. 47,500
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES OR IN U.S.
UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
SMALL-COMPANY--CONTINUED
----------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
----------------------------------------------------------------------------
3,700 (a)Tollgrade Communications, Inc. $ 89,725
----------------------------------------------------------------------------
4,100 (a)Tracor, Inc. 90,200
----------------------------------------------------------------------------
4,500 (a)Trident International, Inc. 88,875
----------------------------------------------------------------------------
6,600 (a)Trusted Information Systems 79,200
----------------------------------------------------------------------------
3,400 (a)USCS International, Inc. 56,950
----------------------------------------------------------------------------
6,000 (a)Voxware, Inc. 46,500
----------------------------------------------------------------------------
2,400 Wyle Labs 86,400
---------------------------------------------------------------------------- --------------
Total 3,152,377
---------------------------------------------------------------------------- --------------
TRANSPORTATION--0.2%
----------------------------------------------------------------------------
3,200 Airlines Express International Corp. 104,600
----------------------------------------------------------------------------
2,100 (a)Alaska Air Group, Inc. 50,663
----------------------------------------------------------------------------
2,000 Expeditors International Washington, Inc. 89,000
----------------------------------------------------------------------------
4,400 USFreightways Corp. 114,125
---------------------------------------------------------------------------- --------------
Total 358,388
---------------------------------------------------------------------------- --------------
UTILITIES--0.2%
----------------------------------------------------------------------------
3,000 (a)Atlantic Telephone Network, Inc. 56,625
----------------------------------------------------------------------------
1,200 (a)Columbia Gas System, Inc. 77,550
----------------------------------------------------------------------------
2,700 Leviathan Gas Pipe Line, Inc. 122,850
----------------------------------------------------------------------------
4,200 (b)NGC Corp. 91,350
----------------------------------------------------------------------------
3,000 TNP Enterprises, Inc. 76,500
----------------------------------------------------------------------------
3,300 Trescomm International, Inc. 34,238
---------------------------------------------------------------------------- --------------
Total 459,113
---------------------------------------------------------------------------- --------------
TOTAL SMALL-COMPANY 15,103,515
---------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES OR IN U.S.
UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
UTILITY STOCKS--2.7%
----------------------------------------------------------------------------
ELECTRIC UTILITIES: CENTRAL--0.7%
----------------------------------------------------------------------------
8,300 CMS Energy Corp. $ 269,750
----------------------------------------------------------------------------
8,239 Cinergy Corp. 276,007
----------------------------------------------------------------------------
11,000 DPL, Inc. 268,125
----------------------------------------------------------------------------
9,600 Illinova Corp. 254,400
----------------------------------------------------------------------------
7,100 NIPSCO Industries, Inc. 275,125
---------------------------------------------------------------------------- --------------
Total 1,343,407
---------------------------------------------------------------------------- --------------
ELECTRIC UTILITIES: EAST--0.4%
----------------------------------------------------------------------------
8,950 DQE, Inc. 264,025
----------------------------------------------------------------------------
8,200 GPU, Inc. 275,725
----------------------------------------------------------------------------
10,500 Peco Energy Co. 267,750
---------------------------------------------------------------------------- --------------
Total 807,500
---------------------------------------------------------------------------- --------------
ELECTRIC UTILITIES: SOUTH--0.7%
----------------------------------------------------------------------------
5,500 Duke Power Co. 255,063
----------------------------------------------------------------------------
5,900 FPL Group, Inc. 272,138
----------------------------------------------------------------------------
11,500 Southern Co. 255,875
----------------------------------------------------------------------------
10,700 TECO Energy, Inc. 260,813
----------------------------------------------------------------------------
6,400 Texas Utilities Co. 252,800
---------------------------------------------------------------------------- --------------
Total 1,296,689
---------------------------------------------------------------------------- --------------
ELECTRIC UTILITIES: WEST--0.3%
----------------------------------------------------------------------------
12,400 Pacificorp 260,400
----------------------------------------------------------------------------
8,600 Pinnacle West Capital Corp. 267,675
---------------------------------------------------------------------------- --------------
Total 528,075
---------------------------------------------------------------------------- --------------
NATURAL GAS DISTRIBUTION--0.2%
----------------------------------------------------------------------------
8,700 MCN Corp. 250,125
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES OR IN U.S.
UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
UTILITY STOCKS--CONTINUED
----------------------------------------------------------------------------
NATURAL GAS DISTRIBUTION--CONTINUED
----------------------------------------------------------------------------
7,800 Pacific Enterprises $ 238,875
---------------------------------------------------------------------------- --------------
Total 489,000
---------------------------------------------------------------------------- --------------
OIL/GAS TRANSMISSION--0.4%
----------------------------------------------------------------------------
5,700 Enron Corp. 260,775
----------------------------------------------------------------------------
6,800 Panenergy Corp. 299,200
----------------------------------------------------------------------------
4,700 Williams Companies, Inc. 263,788
---------------------------------------------------------------------------- --------------
Total 823,763
---------------------------------------------------------------------------- --------------
TOTAL UTILITY STOCKS 5,288,434
---------------------------------------------------------------------------- --------------
FOREIGN EQUITY--12.8%
----------------------------------------------------------------------------
ARGENTINA--0.1%
----------------------------------------------------------------------------
1,705 Banco Frances del Rio de la Plata S.A., ADR 51,576
----------------------------------------------------------------------------
7,237 Compania Naviera Perez Companc S.A., Class B 49,521
----------------------------------------------------------------------------
1,405 (a)IRSA Inversiones y Representaciones S.A., GDR 43,555
----------------------------------------------------------------------------
1,800 YPF Sociedad Anonima, ADR 41,850
---------------------------------------------------------------------------- --------------
Total 186,502
---------------------------------------------------------------------------- --------------
AUSTRALIA--0.4%
----------------------------------------------------------------------------
21,000 (a)Aristocrat Leisure Ltd. 59,482
----------------------------------------------------------------------------
10,500 (b)Commonwealth Installment 66,319
----------------------------------------------------------------------------
12,400 Lend Lease Corp., Ltd. 230,116
----------------------------------------------------------------------------
31,000 News Corp., Ltd. 165,017
----------------------------------------------------------------------------
25,000 Woodside Petroleum Ltd. 175,606
---------------------------------------------------------------------------- --------------
Total 696,540
---------------------------------------------------------------------------- --------------
AUSTRIA--0.0%
----------------------------------------------------------------------------
370 Vae Eisenbahnsysteme AG 34,191
---------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES OR IN U.S.
UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
----------------------------------------------------------------------------
BELGIUM--0.1%
----------------------------------------------------------------------------
2,000 Delhaize-Le Lion $ 117,387
---------------------------------------------------------------------------- --------------
BRAZIL--0.3%
----------------------------------------------------------------------------
5,460,000 Banco Bradesco S.A., Preference 39,906
----------------------------------------------------------------------------
113,000 Banco Itau S.A., Preference 44,303
----------------------------------------------------------------------------
210,000 Centrais Eletricas Brasileiras, Preference, Series B 68,916
----------------------------------------------------------------------------
6,200 (a)Cofap-Cia Fab Peca, Preference 50,716
----------------------------------------------------------------------------
1,523,000 Companhia Energetica de Minas Gerais, Preference 49,095
----------------------------------------------------------------------------
20,000 (a)Cosipa Pnb 18,199
----------------------------------------------------------------------------
4,100 (a)(b)Elevadores Atlas 44,056
----------------------------------------------------------------------------
156,000 (a)Light Participacoes S.A. 29,312
----------------------------------------------------------------------------
1,157,000 Lojas Renner S.A., Preference 57,122
----------------------------------------------------------------------------
340,000 (a)Petroleo Brasileiro S.A., Preference 46,738
----------------------------------------------------------------------------
865 Telecomunicacoes Brasileras, ADR 65,524
----------------------------------------------------------------------------
235,000 (a)Telecomunicacoes de Sao Paulo S.A., Preference 41,631
----------------------------------------------------------------------------
17,784,000 (a)Usinas Siderurgicas de Minas Gerais, Pfd. 17,732
---------------------------------------------------------------------------- --------------
Total 573,250
---------------------------------------------------------------------------- --------------
CHILE--0.0%
----------------------------------------------------------------------------
900 (a)Banco BHIF, ADR 15,188
----------------------------------------------------------------------------
600 (a)Banco de A. Edwards, ADR 11,100
----------------------------------------------------------------------------
300 (a)(b)Chilectra S.A., ADR 16,500
----------------------------------------------------------------------------
200 Compania Telecomunicacion Chile, ADR 19,025
----------------------------------------------------------------------------
600 (a)Santa Isabel S.A., ADR 15,075
----------------------------------------------------------------------------
300 Sociedad Quimica Y Minera De Chile, ADR 15,600
---------------------------------------------------------------------------- --------------
Total 92,488
---------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES OR IN U.S.
UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
----------------------------------------------------------------------------
COLOMBIA--0.0%
----------------------------------------------------------------------------
1,400 Banco Ganadero S.A., ADR $ 34,650
----------------------------------------------------------------------------
1,500 Banco Industrial Colombiano, ADR 24,188
---------------------------------------------------------------------------- --------------
Total 58,838
---------------------------------------------------------------------------- --------------
FRANCE--0.9%
----------------------------------------------------------------------------
2,100 AXA 126,190
----------------------------------------------------------------------------
765 Accor S.A. 98,118
----------------------------------------------------------------------------
1,820 Casino Ord 82,398
----------------------------------------------------------------------------
1,556 Compagnie Financiere de Paribas, Class A 106,905
----------------------------------------------------------------------------
710 Compagnie de Saint Gobain 102,073
----------------------------------------------------------------------------
2,447 Credit Commerical De France 118,514
----------------------------------------------------------------------------
1,240 Credit Local de France 112,255
----------------------------------------------------------------------------
800 Groupe Danon BSN S.A. 117,769
----------------------------------------------------------------------------
850 Havas S.A. 60,205
----------------------------------------------------------------------------
600 LVMH (Moet-Hennessy) 152,073
----------------------------------------------------------------------------
1,810 Lafarge-Coppee 114,342
----------------------------------------------------------------------------
1,162 Lyonnaise des Eaux S.A. 110,599
----------------------------------------------------------------------------
1,010 Peugeot S.A. 124,128
----------------------------------------------------------------------------
1,100 Rhone-Poulenc Rorer, Inc. 81,813
----------------------------------------------------------------------------
2,648 Schneider S.A. 125,967
----------------------------------------------------------------------------
1,600 Total S.A. 127,938
---------------------------------------------------------------------------- --------------
Total 1,761,287
---------------------------------------------------------------------------- --------------
GERMANY, FEDERAL REPUBLIC OF--0.9%
----------------------------------------------------------------------------
4,000 BASF AG 147,949
----------------------------------------------------------------------------
3,040 Bayer AG 122,323
----------------------------------------------------------------------------
3,550 (a)Commerzbank AG, Frankfurt 87,244
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES OR IN U.S.
UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
----------------------------------------------------------------------------
GERMANY, FEDERAL REPUBLIC OF--CONTINUED
----------------------------------------------------------------------------
4,000 (a)Daimler Benz AG $ 261,231
----------------------------------------------------------------------------
2,230 Deutsche Bank, AG 106,273
----------------------------------------------------------------------------
3,800 Dresdner Bank AG, Frankfurt 112,782
----------------------------------------------------------------------------
270 Gea AG, Vorzugsaktien 80,925
----------------------------------------------------------------------------
275 (a)Henkel KGAA 13,409
----------------------------------------------------------------------------
1,475 Henkel KGAA, Pfd. 73,458
----------------------------------------------------------------------------
105 Linde AG 63,760
----------------------------------------------------------------------------
285 Mannesmann AG 118,866
----------------------------------------------------------------------------
2,300 RWE AG 101,684
----------------------------------------------------------------------------
6,200 (a)Rofin-Sinar Technologies, Inc. 79,825
----------------------------------------------------------------------------
1,400 Schering Ag 114,960
----------------------------------------------------------------------------
1,550 Schwarz Pharma 115,386
----------------------------------------------------------------------------
2,000 Siemens AG 96,353
----------------------------------------------------------------------------
1,780 Veba AG 104,097
---------------------------------------------------------------------------- --------------
Total 1,800,525
---------------------------------------------------------------------------- --------------
HONG KONG--0.8%
----------------------------------------------------------------------------
220,000 Aeon Credit Service 73,978
----------------------------------------------------------------------------
102,500 Amoy Properties Ltd. 143,171
----------------------------------------------------------------------------
13,000 Cheung Kong 114,330
----------------------------------------------------------------------------
36,000 (a)(b)Cheung Kong Infrastructure 87,532
----------------------------------------------------------------------------
17,900 (a)(b)China Resources Bejing Land 11,112
----------------------------------------------------------------------------
3,751 HSBC Holdings PLC 78,105
----------------------------------------------------------------------------
117,000 Henderson Investment Ltd. 142,240
----------------------------------------------------------------------------
48,000 Hong Kong Telecom 83,187
----------------------------------------------------------------------------
17,000 Hutchison Whampoa 131,370
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES OR IN U.S.
UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
----------------------------------------------------------------------------
HONG KONG--CONTINUED
----------------------------------------------------------------------------
13,000 New World Development Co. Ltd. $ 87,849
----------------------------------------------------------------------------
174,000 Oriental Press Group 97,892
----------------------------------------------------------------------------
67,000 Peregrine Investments 123,914
----------------------------------------------------------------------------
52,000 (a)(b)Shanghai Industrial Holdings Ltd. 169,141
----------------------------------------------------------------------------
8,000 Sun Hung Kai Properties 99,327
----------------------------------------------------------------------------
64,000 (a)Winsor Property Holdings Ltd. 96,430
---------------------------------------------------------------------------- --------------
Total 1,539,578
---------------------------------------------------------------------------- --------------
INDIA--0.1%
----------------------------------------------------------------------------
3,100 (a)(b)Bombay Suburban Electric Supply, GDR 61,225
----------------------------------------------------------------------------
7,200 (a)(b)Crompton Greaves Ltd., GDR 23,400
----------------------------------------------------------------------------
1,950 (a)Hindalco Industries, GDR 39,780
----------------------------------------------------------------------------
3,000 (a)(b)Larsen & Toubro Ltd., GDR 43,500
----------------------------------------------------------------------------
4,200 (a)(b)Mahindra and Mahindra, GDR 44,100
----------------------------------------------------------------------------
2,050 (a)(b)Steel Authority of India, GDR 17,425
---------------------------------------------------------------------------- --------------
Total 229,430
---------------------------------------------------------------------------- --------------
INDONESIA--0.2%
----------------------------------------------------------------------------
65,000 (a)Bank Negara Indonesia 32,569
----------------------------------------------------------------------------
36,000 Citra Marga Nusaphala Persada 30,320
----------------------------------------------------------------------------
9,000 Gudang Garam 38,284
----------------------------------------------------------------------------
20,500 Modern Photo Film Co. 51,359
----------------------------------------------------------------------------
16,000 Semen Gresik 48,785
----------------------------------------------------------------------------
48,733 Steady Safe 57,150
----------------------------------------------------------------------------
65,340 Pab K Tjiwi Kimia 62,693
----------------------------------------------------------------------------
19,000 Tambang Timah 29,979
---------------------------------------------------------------------------- --------------
Total 351,139
---------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES OR IN U.S.
UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
----------------------------------------------------------------------------
ITALY--0.3%
----------------------------------------------------------------------------
13,500 Banca Popolare Milano $ 69,016
----------------------------------------------------------------------------
17,150 Eni 90,278
----------------------------------------------------------------------------
8,400 Imi Istituto Mobiliare 70,566
----------------------------------------------------------------------------
890 (a)La Rinascente S.P.A. Warrants, 12/31/1999 417
----------------------------------------------------------------------------
63,000 Telecom Italia Mobile 148,155
----------------------------------------------------------------------------
9,700 (a)Unicem S.P.A. 65,458
---------------------------------------------------------------------------- --------------
Total 443,890
---------------------------------------------------------------------------- --------------
JAPAN--3.3%
----------------------------------------------------------------------------
21,000 Amada Co 175,522
----------------------------------------------------------------------------
300 Asahi Broadcasting Corp. 32,924
----------------------------------------------------------------------------
5,000 Canare Electric Co. Ltd. 105,356
----------------------------------------------------------------------------
22,000 Casio Computer Co 178,472
----------------------------------------------------------------------------
29 DDI Corp. 207,507
----------------------------------------------------------------------------
14,000 Dai Nippon Printing Co. Ltd. 255,663
----------------------------------------------------------------------------
19,000 Daito Trust Construction 248,551
----------------------------------------------------------------------------
8,000 Fuji Photo Film Co. 250,746
----------------------------------------------------------------------------
4,000 Hirose Electric Co 242,318
----------------------------------------------------------------------------
10,000 Hitachi Maxell 206,321
----------------------------------------------------------------------------
12,000 Ikegami Tsushinki 80,070
----------------------------------------------------------------------------
18,000 JGC Corp. 165,935
----------------------------------------------------------------------------
4,000 Japan Cash Machine Co. Ltd. 71,291
----------------------------------------------------------------------------
9,000 Japan Radio Co. 109,833
----------------------------------------------------------------------------
36 (a)(b)Japan Tobacco 256,330
----------------------------------------------------------------------------
8,000 Konami Co 273,222
----------------------------------------------------------------------------
9,000 Matsushita Kotobuk Electric 230,729
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES OR IN U.S.
UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
----------------------------------------------------------------------------
JAPAN--CONTINUED
----------------------------------------------------------------------------
7,000 (a)Meiwa Estate $ 204,039
----------------------------------------------------------------------------
36,000 Minolta Co 226,620
----------------------------------------------------------------------------
26,000 Mitsubishi Heavy Industries Ltd. 212,291
----------------------------------------------------------------------------
16,000 Mycal Corp. 238,806
----------------------------------------------------------------------------
4,000 Nintendo Corp. Ltd. 282,704
----------------------------------------------------------------------------
9,000 Nippon Comsys Corp. 112,204
----------------------------------------------------------------------------
2,000 Nissei ASB Machine Co. 27,919
----------------------------------------------------------------------------
5,000 Pioneer Electronic Corp 107,550
----------------------------------------------------------------------------
4,000 Promise Co. Ltd. 200,176
----------------------------------------------------------------------------
3 (b)Sakura Finance (Bermuda), Conv. Pfd. 170,496
----------------------------------------------------------------------------
7,000 Sankyo Co 187,445
----------------------------------------------------------------------------
16,000 Shiseido Co 192,450
----------------------------------------------------------------------------
7,000 Shochiku Co 65,145
----------------------------------------------------------------------------
4,000 Sony Corp. 256,014
----------------------------------------------------------------------------
6,000,000 (b)Sumitomo Bank Int'l, Conv. Bond, 0.75%, 5/31/2001 57,221
----------------------------------------------------------------------------
12,000 Sumitomo Trust & Banking 132,748
----------------------------------------------------------------------------
10,000 Taisho Pharmaceutical Co 223,003
----------------------------------------------------------------------------
9,000 Takashimaya Co 120,105
----------------------------------------------------------------------------
14,000 Tokio Marine and Fire Insurance Co. 154,873
----------------------------------------------------------------------------
36,000 (a)Tokyo Tatemono Co., Ltd. 164,987
----------------------------------------------------------------------------
7,000 Tsubakimoto Chain Co 41,238
---------------------------------------------------------------------------- --------------
Total 6,468,824
---------------------------------------------------------------------------- --------------
KOREA, REPUBLIC OF--0.2%
----------------------------------------------------------------------------
2,500 Chonggu Housing & Construction 57,301
----------------------------------------------------------------------------
2,300 Dongkuk Steel Mill Co 44,671
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES OR IN U.S.
UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
----------------------------------------------------------------------------
KOREA, REPUBLIC OF--CONTINUED
----------------------------------------------------------------------------
1,700 Hankuk Paper Manufacturing Co. $ 38,555
----------------------------------------------------------------------------
4,900 Korea Exchange Bank 46,107
----------------------------------------------------------------------------
4,200 (a)Korea Mobile Telecomm Corp., ADR 54,600
----------------------------------------------------------------------------
2,700 Pacific Corporation 50,486
----------------------------------------------------------------------------
1,240 Shinhan Bank 21,900
---------------------------------------------------------------------------- --------------
Total 313,620
---------------------------------------------------------------------------- --------------
MALAYSIA--0.3%
----------------------------------------------------------------------------
42,000 Eastern and Oriental 91,413
----------------------------------------------------------------------------
27,999 (a)Kentucky Fried Chicken 109,102
----------------------------------------------------------------------------
8,000 Malayan Banking 79,145
----------------------------------------------------------------------------
56,000 Malaysian Industrial Development 115,235
----------------------------------------------------------------------------
19,000 Malaysian Pacific Industries 77,444
----------------------------------------------------------------------------
22,000 Metacorp 67,907
----------------------------------------------------------------------------
23,000 UMW Holdings 109,220
---------------------------------------------------------------------------- --------------
Total 649,466
---------------------------------------------------------------------------- --------------
MEXICO--0.2%
----------------------------------------------------------------------------
1,450 (a)(b)Acer, Inc., ADR 26,463
----------------------------------------------------------------------------
5,900 (a)Cemex S.A., Class B, ADR 42,591
----------------------------------------------------------------------------
24,000 (a)Cifra S.A. de CV, Class B 33,108
----------------------------------------------------------------------------
3,600 (a)Empresas ICA Sociedad Controladora S.A., ADR 51,750
----------------------------------------------------------------------------
9,000 Fomento Economico Mexicano, S.A. de C.V., Class B 30,753
----------------------------------------------------------------------------
26,000 (a)Grupo Corvi S.A., Class UBL 21,757
----------------------------------------------------------------------------
5,500 (a)(b)Grupo Financiero Bancomer, S.A. de C.V., Class B, ADR 44,308
----------------------------------------------------------------------------
1,300 Pan American Beverage, Class A 60,775
----------------------------------------------------------------------------
1,400 Telefonos de Mexico, Class L, ADR 42,525
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES OR IN U.S.
UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
----------------------------------------------------------------------------
MEXICO--CONTINUED
----------------------------------------------------------------------------
3,000 (a)Tubos de Acero de Mexico S.A., ADR $ 40,875
---------------------------------------------------------------------------- --------------
Total 394,905
---------------------------------------------------------------------------- --------------
NETHERLANDS--0.5%
----------------------------------------------------------------------------
3,300 ABN Amro Holding 213,774
----------------------------------------------------------------------------
960 Akzo Nobel N.V. 127,440
----------------------------------------------------------------------------
7,470 Boskalis Westminster N.V. 148,161
----------------------------------------------------------------------------
1,600 Hunter Douglas N.V. 104,669
----------------------------------------------------------------------------
3,180 ING Groep, N.V. 111,391
----------------------------------------------------------------------------
3,000 Vendex International A 130,314
----------------------------------------------------------------------------
950 Wolters Kluwer N.V. 124,239
---------------------------------------------------------------------------- --------------
Total 959,988
---------------------------------------------------------------------------- --------------
NEW ZEALAND--0.1%
----------------------------------------------------------------------------
32,000 Air New Zealand Ltd., Class B 84,210
----------------------------------------------------------------------------
31,000 Fletcher Challenge Building 87,091
----------------------------------------------------------------------------
106,000 Wrightson Ltd. 94,239
---------------------------------------------------------------------------- --------------
Total 265,540
---------------------------------------------------------------------------- --------------
NORWAY--0.1%
----------------------------------------------------------------------------
5,750 Elkem A/S, Class A 89,592
----------------------------------------------------------------------------
15,500 (a)Storebrand ASA 92,498
---------------------------------------------------------------------------- --------------
Total 182,090
---------------------------------------------------------------------------- --------------
PAKISTAN--0.0%
----------------------------------------------------------------------------
700 (a)Hub Power Co., GDR 15,050
---------------------------------------------------------------------------- --------------
PHILIPPINES--0.1%
----------------------------------------------------------------------------
179,000 (a)Belle Corp. 47,668
----------------------------------------------------------------------------
91,812 (a)Davao Union Cement Corp., Class B 30,038
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES OR IN U.S.
UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
----------------------------------------------------------------------------
PHILIPPINES--CONTINUED
----------------------------------------------------------------------------
108,150 (a)Filinvest Land, Inc. $ 38,263
----------------------------------------------------------------------------
2,700 Philippine Commercial International Bank 35,951
---------------------------------------------------------------------------- --------------
Total 151,920
---------------------------------------------------------------------------- --------------
SINGAPORE--0.3%
----------------------------------------------------------------------------
11,000 City Developments 97,255
----------------------------------------------------------------------------
17,000 Hong Leong Finance Ltd. 58,909
----------------------------------------------------------------------------
131,000 Roly International Holdings 86,460
----------------------------------------------------------------------------
16,000 Sembawang Corp. Ltd. 86,702
----------------------------------------------------------------------------
3,000 Singapore Press Holdings Ltd. 56,684
----------------------------------------------------------------------------
16,000 Straits Steamship Land Ltd. 51,109
----------------------------------------------------------------------------
4,000 (a)Straits Steamship Land Ltd. Warrants, 12/12/2000 4,478
----------------------------------------------------------------------------
10,000 United Overseas Bank Ltd. 106,239
----------------------------------------------------------------------------
27,000 Wing Tai Holdings, Ltd. 73,925
---------------------------------------------------------------------------- --------------
Total 621,761
---------------------------------------------------------------------------- --------------
SPAIN--0.4%
----------------------------------------------------------------------------
1,900 Empresa Nac De Electridad 128,339
----------------------------------------------------------------------------
1,360 Fomento de Construcciones y Contratas S.A. 114,961
----------------------------------------------------------------------------
11,700 Iberdrola S.A. 135,028
----------------------------------------------------------------------------
2,200 Mapfre (corporacion) 116,335
----------------------------------------------------------------------------
3,000 Repsol S.A. 111,047
----------------------------------------------------------------------------
5,950 Telefonica de Espana 130,446
----------------------------------------------------------------------------
1,100 Zardoya-Otis S.A. 117,184
---------------------------------------------------------------------------- --------------
Total 853,340
---------------------------------------------------------------------------- --------------
SWEDEN--0.1%
----------------------------------------------------------------------------
2,350 Skandia Forsakrings AB 67,012
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES OR IN U.S.
UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
----------------------------------------------------------------------------
SWEDEN--CONTINUED
----------------------------------------------------------------------------
7,950 Stora Kopparbergs, Class A $ 108,911
---------------------------------------------------------------------------- --------------
Total 175,923
---------------------------------------------------------------------------- --------------
SWITZERLAND--0.6%
----------------------------------------------------------------------------
100 ABB AG 125,125
----------------------------------------------------------------------------
1,500 CS Holding AG-Registered 159,666
----------------------------------------------------------------------------
100 Ciba-Giegy AG-Registered 123,744
----------------------------------------------------------------------------
90 Nestle S.A. 97,699
----------------------------------------------------------------------------
800 (a)Oerlikon-Buhrle Holding AG 82,547
----------------------------------------------------------------------------
50 Reiseburo Kuoni AG, Class B 111,239
----------------------------------------------------------------------------
20 Roche Holding AG 153,740
----------------------------------------------------------------------------
100 Sandoz AG-R 116,302
----------------------------------------------------------------------------
125 Sulzer AG-Reg 71,922
----------------------------------------------------------------------------
100 (a)Swissair AG 75,949
----------------------------------------------------------------------------
253 Zurich Versicherungsgesellschaft 71,814
---------------------------------------------------------------------------- --------------
Total 1,189,747
---------------------------------------------------------------------------- --------------
THAILAND--0.1%
----------------------------------------------------------------------------
1,800 Bangkok Bank Public Co., Ltd. 20,579
----------------------------------------------------------------------------
19,600 Industrial Finance Corporation of Thailand 61,776
----------------------------------------------------------------------------
5,000 Krung Thai Bank PLC 14,291
----------------------------------------------------------------------------
2,200 PTT Exploration and Production Public Co. 32,388
----------------------------------------------------------------------------
46,500 Siam City Bank 54,619
---------------------------------------------------------------------------- --------------
Total 183,653
---------------------------------------------------------------------------- --------------
UNITED KINGDOM--2.4%
----------------------------------------------------------------------------
32,000 Asda Group 63,753
----------------------------------------------------------------------------
13,700 BAA PLC 112,861
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES OR IN U.S.
UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
----------------------------------------------------------------------------
UNITED KINGDOM--CONTINUED
----------------------------------------------------------------------------
30,000 BTR PLC $ 120,545
----------------------------------------------------------------------------
7,172 Barclays PLC 123,344
----------------------------------------------------------------------------
4,159 Boc Group PLC 61,951
----------------------------------------------------------------------------
6,200 Boots Co. PLC 66,086
----------------------------------------------------------------------------
5,432 British Aerospace PLC 105,663
----------------------------------------------------------------------------
10,464 British Petroleum Co. PLC 120,992
----------------------------------------------------------------------------
12,100 British Telecommunication PLC 76,591
----------------------------------------------------------------------------
28,801 Bunzl PLC 107,495
----------------------------------------------------------------------------
14,300 Cadbury Schweppes PLC 122,973
----------------------------------------------------------------------------
23,200 Caradon PLC 93,026
----------------------------------------------------------------------------
11,250 Carlton Communications PLC 95,137
----------------------------------------------------------------------------
10,785 Chubb Security 62,193
----------------------------------------------------------------------------
12,500 Compass Group 127,459
----------------------------------------------------------------------------
26,380 Cookson Group 100,233
----------------------------------------------------------------------------
18,700 Cowie Group PLC 124,499
----------------------------------------------------------------------------
16,600 David S. Smith (Holdings) PLC 88,051
----------------------------------------------------------------------------
18,400 Delta PLC 112,448
----------------------------------------------------------------------------
5,050 EMI Group PLC 116,656
----------------------------------------------------------------------------
34,200 FKI PLC 123,909
----------------------------------------------------------------------------
10,030 General Accident 123,520
----------------------------------------------------------------------------
17,450 General Electric Co. PLC 109,283
----------------------------------------------------------------------------
5,600 Glaxo Wellcome PLC 92,102
----------------------------------------------------------------------------
12,719 Grand Metropolitan PLC 99,333
----------------------------------------------------------------------------
28,186 Guardian Royal Exchange 126,998
----------------------------------------------------------------------------
2,640 Imperial Chemical Industries PLC 34,243
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES OR IN U.S.
UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
----------------------------------------------------------------------------
UNITED KINGDOM--CONTINUED
----------------------------------------------------------------------------
14,800 Inchcape PLC $ 67,058
----------------------------------------------------------------------------
21,649 Ladbroke Group PLC 74,614
----------------------------------------------------------------------------
13,500 Marks & Spencer PLC 114,845
----------------------------------------------------------------------------
32,300 Mirror Group PLC 124,899
----------------------------------------------------------------------------
15,300 Morgan Crucible Co 117,554
----------------------------------------------------------------------------
16,980 National Power Co. PLC 131,604
----------------------------------------------------------------------------
9,980 Pearson 123,324
----------------------------------------------------------------------------
8,693 Peninsular & Oriental Steam Navigation Co. 86,448
----------------------------------------------------------------------------
10,500 Premier Farnell PLC 125,689
----------------------------------------------------------------------------
4,249 RTZ Corp. PLC 71,436
----------------------------------------------------------------------------
8,800 Rank Group PLC 64,358
----------------------------------------------------------------------------
7,125 Reckitt & Colman PLC 83,972
----------------------------------------------------------------------------
10,736 Redland PLC 66,784
----------------------------------------------------------------------------
8,200 Reed International PLC 158,885
----------------------------------------------------------------------------
17,800 Rexam 101,150
----------------------------------------------------------------------------
48,600 Rugby Group PLC 78,440
----------------------------------------------------------------------------
10,000 Safeway PLC 65,568
----------------------------------------------------------------------------
42,200 Sedgwick Group PLC 89,040
----------------------------------------------------------------------------
4,746 Siebe PLC 75,762
----------------------------------------------------------------------------
5,648 Smithkline Beecham PLC 77,866
----------------------------------------------------------------------------
19,300 Tomkins PLC 80,633
----------------------------------------------------------------------------
4,350 Zeneca Group 119,939
---------------------------------------------------------------------------- --------------
Total 4,811,212
---------------------------------------------------------------------------- --------------
TOTAL FOREIGN EQUITIES 25,122,084
---------------------------------------------------------------------------- --------------
TOTAL STOCKS (IDENTIFIED COST $84,187,732) 95,669,379
---------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
BONDS--44.4%
- ----------------------------------------------------------------------------------------------
TREASURY--21.9%
----------------------------------------------------------------------------
$ 10,840,000 United States Treasury Note, 5.500%, 12/31/2000 $ 10,730,841
----------------------------------------------------------------------------
8,385,000 United States Treasury Note, 5.625%, 11/30/2000 8,340,727
----------------------------------------------------------------------------
2,000,000 United States Treasury Note, 5.875%, 4/30/1998 2,010,340
----------------------------------------------------------------------------
2,500,000 United States Treasury Note, 6.125%, 3/31/1998 2,520,475
----------------------------------------------------------------------------
6,455,000 United States Treasury Note, 6.125%, 7/31/2000 6,533,686
----------------------------------------------------------------------------
3,400,000 United States Treasury Note, 6.250%, 8/31/2000 3,455,250
----------------------------------------------------------------------------
9,165,000 United States Treasury Note, 6.375%, 8/15/2002 9,393,575
---------------------------------------------------------------------------- --------------
TOTAL TREASURY 42,984,894
---------------------------------------------------------------------------- --------------
MORTGAGE-BACKED SECURITIES--7.3%
----------------------------------------------------------------------------
GOVERNMENT AGENCY--7.3%
----------------------------------------------------------------------------
764,153 Federal Home Loan Mortgage Corp., 9.500%, 6/1/2021 825,438
----------------------------------------------------------------------------
1,028,483 Federal Home Loan Mortgage Corp., 7.000%, 2/1/2026 1,023,330
----------------------------------------------------------------------------
1,279,063 Federal Home Loan Mortgage Corp., 7.500%, 7/1/2026 1,296,624
----------------------------------------------------------------------------
669,320 Federal Home Loan Mortgage Corp., 8.000%, 10/1/2010 691,067
----------------------------------------------------------------------------
919,511 Federal Home Loan Mortgage Corp., 7.000%, 1/1/2011 928,117
----------------------------------------------------------------------------
1,009,913 Federal Home Loan Mortgage Corp., 6.000%, 7/1/2011 985,282
----------------------------------------------------------------------------
288,390 Federal National Mortgage Association, 7.000%, 5/1/2001 293,884
----------------------------------------------------------------------------
733,148 Federal National Mortgage Association, 8.500%, 3/1/2025 764,988
----------------------------------------------------------------------------
485,130 Federal National Mortgage Association, 6.000%, 2/1/2003 478,304
----------------------------------------------------------------------------
488,702 Federal National Mortgage Association, 6.500%, 4/1/2011 484,648
----------------------------------------------------------------------------
198,009 Federal National Mortgage Association, 6.500%, 5/1/2011 196,458
----------------------------------------------------------------------------
465,606 Federal National Mortgage Association, 8.000%, 11/1/2024 478,838
----------------------------------------------------------------------------
871,681 Federal National Mortgage Association, 7.500%, 7/1/2025 883,388
----------------------------------------------------------------------------
466,795 Federal National Mortgage Association, 7.000%, 8/1/2025 463,434
----------------------------------------------------------------------------
1,694,302 Federal National Mortgage Association, 6.500%, 10/1/2025 1,645,557
----------------------------------------------------------------------------
788,117 Government National Mortgage Association, 9.000%, 2/15/2020 849,432
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT IN U.S.
OR SHARES DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES--CONTINUED
----------------------------------------------------------------------------
GOVERNMENT AGENCY--CONTINUED
----------------------------------------------------------------------------
$ 527,367 Government National Mortgage Association, 6.500%, 1/15/2024 $ 516,651
----------------------------------------------------------------------------
246,064 Government National Mortgage Association, 7.000%, 5/15/2024 244,831
----------------------------------------------------------------------------
500,121 Government National Mortgage Association, 7.500%, 3/15/2026 507,457
----------------------------------------------------------------------------
274,342 Government National Mortgage Association, 8.000%, 11/15/2024 282,909
----------------------------------------------------------------------------
467,853 Government National Mortgage Association, 8.000%, 5/15/2025 482,424
---------------------------------------------------------------------------- --------------
TOTAL MORTGAGE-BACKED SECURITIES 14,323,061
---------------------------------------------------------------------------- --------------
HIGH YIELD BONDS--5.2%
----------------------------------------------------------------------------
AUTOMOTIVE--0.1%
----------------------------------------------------------------------------
100,000 Aftermarket Technology Co., Sr. Sub. Note, 12.00%, 8/1/2004 111,500
----------------------------------------------------------------------------
50,000 (b)Blue Bird Body Co., Sr. Sub. Note, 10.75%, 11/15/2006 51,875
----------------------------------------------------------------------------
100,000 Collins & Aikman Products, Sr. Sub. Note, 11.50%, 4/15/2006 107,250
---------------------------------------------------------------------------- --------------
Total 270,625
---------------------------------------------------------------------------- --------------
BANKING--0.1%
----------------------------------------------------------------------------
100,000 (b)First Nationwide Escrow, Sr. Sub. Note, 10.625%, 10/1/2003 107,000
----------------------------------------------------------------------------
75,000 First Nationwide Holdings, Sr. Note, 12.25%, 5/15/2001 84,563
---------------------------------------------------------------------------- --------------
Total 191,563
---------------------------------------------------------------------------- --------------
BEVERAGE & TOBACCO--0.1%
----------------------------------------------------------------------------
100,000 Dimon Inc., Sr. Note, 8.875%, 6/1/2006 105,750
----------------------------------------------------------------------------
100,000 Dr Pep Btlg Hldgs, Sr. Disc. Note, 0/11.625%, 2/15/2003 93,000
---------------------------------------------------------------------------- --------------
Total 198,750
---------------------------------------------------------------------------- --------------
BROADCAST RADIO & TV--0.4%
----------------------------------------------------------------------------
38,000 Chancellor Broadcasting Co., Sr. Sub. Note, 12.50%, 10/1/2004 42,370
----------------------------------------------------------------------------
Chancellor Broadcasting Co., 1,000 PIK Pfd. Shares, 12.25% 111,000
----------------------------------------------------------------------------
50,000 Granite Broadcasting Corp, Sr. Sub. Note, 9.375%, 12/1/2005 47,875
----------------------------------------------------------------------------
100,000 Heritage Media Corp., Sr. Sub. Note, 8.75%, 2/15/2006 97,000
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
----------------------------------------------------------------------------
BROADCAST RADIO & TV--CONTINUED
----------------------------------------------------------------------------
$ 100,000 Pegasus Media, Note, 12.50%, 7/1/2005 $ 108,500
----------------------------------------------------------------------------
100,000 SFX Broadcasting, Inc., Sr. Sub. Note, 10.75%, 5/15/2006 105,250
----------------------------------------------------------------------------
150,000 Sinclair Broadcast Group, Sr. Sub. Note, 10.00%, 9/30/2005 151,125
----------------------------------------------------------------------------
100,000 Sullivan Broadcasting, Sr. Sub. Note, 10.25%, 12/15/2005 100,250
----------------------------------------------------------------------------
50,000 Young Broadcasting Corp., Sr. Sub. Note, 10.125%, 2/15/2005 50,500
---------------------------------------------------------------------------- --------------
Total 813,870
---------------------------------------------------------------------------- --------------
BUSINESS EQUIPMENT & SERVICES--0.2%
----------------------------------------------------------------------------
150,000 Knoll, Inc., Sr. Sub. Note, 10.875%, 3/15/2006 164,250
----------------------------------------------------------------------------
100,000 Monarch Acquisition Corp., Sr. Note, 12.50%, 7/1/2003 111,500
----------------------------------------------------------------------------
50,000 (b)Outsourcing Solutions, Sr. Sub. Note, 11.00%, 11/1/2006 52,250
----------------------------------------------------------------------------
100,000 United Stationers Supply, Sr. Sub. Note, 12.75%, 5/1/2005 110,875
---------------------------------------------------------------------------- --------------
Total 438,875
---------------------------------------------------------------------------- --------------
CABLE TELEVISION--0.6%
----------------------------------------------------------------------------
100,000 (b)Australis Holdings Pty, Unit, 0/15.00%, 11/1/2002 56,750
----------------------------------------------------------------------------
100,000 Bell Cablemedia PLC, Sr. Disc. Note, 0/11.95%, 7/15/2004 86,500
----------------------------------------------------------------------------
100,000 CF Cable TV Inc., Sr. Secd. 2nd Priority Note, 11.625%,
2/15/2005 116,500
----------------------------------------------------------------------------
100,000 Cablevision Systems Corp., Sr. Sub. Note, 9.875%, 5/15/2006 101,250
----------------------------------------------------------------------------
50,000 Cai Wireless Systems, Sr. Note, 12.25%, 9/15/2002 41,250
----------------------------------------------------------------------------
50,000 Charter Communication Southeast, Sr. Note, 11.25%, 3/15/2006 51,750
----------------------------------------------------------------------------
175,000 Comcast UK Cable, Deb., 0/11.20%, 11/15/2007 122,063
----------------------------------------------------------------------------
100,000 Echostar Satellite Broadcasting Corp. Sr. Disc. Note, 0/13.125%, 3/15/2004 76,500
----------------------------------------------------------------------------
100,000 International Cabletel, Sr. Disc. Note, 0/12.75%, 4/15/2005 72,000
----------------------------------------------------------------------------
100,000 International Cabletel, Sr. Note, 0/11.50%, 2/1/2006 64,625
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
----------------------------------------------------------------------------
CABLE TELEVISION--CONTINUED
----------------------------------------------------------------------------
$ 100,000 People's Choice--TV, Unit, 0/13.125%, 6/1/2004 $ 39,500
----------------------------------------------------------------------------
50,000 Rogers Cablesystems Inc., Sr. Secd. 2nd Priority Note, 10.00%, 12/1/2007 53,000
----------------------------------------------------------------------------
50,000 Rogers Cablesystems Ltd., Sr. Secd. 2nd Priority Note, 10.00%, 3/15/2005 53,750
----------------------------------------------------------------------------
275,000 Telewest PLC, Sr. Disc. Deb., 0/11.00%, 10/1/2007 188,375
----------------------------------------------------------------------------
100,000 UIH Australia/Pacific, Sr. Disc. Note, 0/14.00%, 5/15/2006 53,500
---------------------------------------------------------------------------- --------------
Total 1,177,313
---------------------------------------------------------------------------- --------------
CHEMICALS & PLASTICS--0.4%
----------------------------------------------------------------------------
50,000 (b)Astor Corp., Sr. Sub. Note, 10.50%, 10/15/2006 51,000
----------------------------------------------------------------------------
100,000 Crain Industries Inc., Sr. Sub. Note, 13.50%, 8/15/2005 112,750
----------------------------------------------------------------------------
35,000 Foamex Capital Corp., Sr. Sub. Deb., 11.875%, 10/1/2004 37,800
----------------------------------------------------------------------------
50,000 Foamex L.P., Sr. Note, 11.25%, 10/1/2002 53,125
----------------------------------------------------------------------------
150,000 Harris Chemical, Sr. Note, 10.25%, 7/15/2001 154,875
----------------------------------------------------------------------------
83,000 Polymer Group, Sr. Note, 12.25%, 7/15/2002 90,055
----------------------------------------------------------------------------
100,000 RBX Corp., Sr. Sub. Note, Series B, 11.25%, 10/15/2005 86,500
----------------------------------------------------------------------------
75,000 Sterling Chemical Holding, Sr. Disc. Note, 0/13.50%, 8/15/2008 42,563
----------------------------------------------------------------------------
Sterling Chemicals Holdings, Inc. 75 Warrants, 8/15/2008 2,625
----------------------------------------------------------------------------
50,000 Sterling Chemicals, Inc., Sr. Sub. Note, 11.75%, 8/15/2006 51,875
----------------------------------------------------------------------------
50,000 Uniroyal Technology Corporation, Sr. Secd. Note, 11.75%,
6/1/2003 50,000
----------------------------------------------------------------------------
75,000 Viridian Inc., Note, 9.75%, 4/1/2003 82,115
---------------------------------------------------------------------------- --------------
Total 815,283
---------------------------------------------------------------------------- --------------
CLOTHING & TEXTILES--0.1%
----------------------------------------------------------------------------
150,000 Westpoint Stevens, Inc., Sr. Sub. Deb., 9.375%, 12/15/2005 154,875
---------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT IN U.S.
OR SHARES DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
----------------------------------------------------------------------------
CONSUMER PRODUCTS--0.2%
----------------------------------------------------------------------------
$ 50,000 American Safety Razor Co., Sr. Note, 9.875%, 8/1/2005 $ 53,750
----------------------------------------------------------------------------
100,000 Hosiery Corp. of America, Sr. Sub. Note, 13.75%, 8/1/2002 110,500
----------------------------------------------------------------------------
Hosiery Corp. of America, 50 Common Shares 275
----------------------------------------------------------------------------
100,000 (b)ICON Fitness Corp., Sr. Disc. Note, 0/14.00%, 11/15/2006 52,250
----------------------------------------------------------------------------
100,000 Playtex Family Products Corp., Sr. Sub. Note, 9.00%, 12/15/2003 99,500
----------------------------------------------------------------------------
75,000 Simmons Co., Sr. Sub. Note, 10.75%, 4/15/2006 78,375
---------------------------------------------------------------------------- --------------
Total 394,650
---------------------------------------------------------------------------- --------------
CONTAINER & GLASS PRODUCTS--0.1%
----------------------------------------------------------------------------
100,000 Owens Illinois, Inc., Sr. Sub. Note, 10.50%, 6/15/2002 106,375
----------------------------------------------------------------------------
50,000 Owens Illinois, Inc., Sr. Sub. Note, 9.75%, 8/15/2004 52,250
----------------------------------------------------------------------------
100,000 Packaging Resources Inc., Sr. Note, 11.625%, 5/1/2003 105,500
---------------------------------------------------------------------------- --------------
Total 264,125
---------------------------------------------------------------------------- --------------
COSMETICS & TOILETRIES--0.1%
----------------------------------------------------------------------------
100,000 Revlon Consumer Products, Sr. Sub. Note, 10.50%, 2/15/2003 105,250
---------------------------------------------------------------------------- --------------
ECOLOGICAL SERVICES & EQUIPMENT--0.1%
----------------------------------------------------------------------------
50,000 (b)Allied Waste, Sr. Sub. Note, 10.25%, 12/1/2006 51,313
----------------------------------------------------------------------------
ICF Kaiser International, 120 Warrants, 12/31/1998 60
----------------------------------------------------------------------------
75,000 ICF Kaiser International, Sr. Sub. Note, 12.00%, 12/31/2003 71,250
----------------------------------------------------------------------------
100,000 (a)*Mid-American Waste System, Sr. Sub. Note, 12.25%, 2/15/2003 41,000
---------------------------------------------------------------------------- --------------
Total 163,623
---------------------------------------------------------------------------- --------------
ELECTRONICS--0.0%
----------------------------------------------------------------------------
50,000 Advanced Micro Devices, Sr. Secd. Note, 11.00%, 8/1/2003 54,438
---------------------------------------------------------------------------- --------------
FOOD & DRUG RETAILERS--0.2%
----------------------------------------------------------------------------
100,000 Carr Gottstein Foods Co., Sr. Sub. Note, 12.00%, 11/15/2005 107,000
----------------------------------------------------------------------------
Grand Union Co., 1325 Common Shares 7,619
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
----------------------------------------------------------------------------
FOOD & DRUG RETAILERS--CONTINUED
----------------------------------------------------------------------------
$ 150,000 Ralph's Grocery Co., Sr. Note, 10.45%, 6/15/2004 $ 155,813
----------------------------------------------------------------------------
50,000 Smith's Food & Drug, Sr. Sub. Note, 11.25%, 5/15/2007 55,000
---------------------------------------------------------------------------- --------------
Total 325,432
---------------------------------------------------------------------------- --------------
FOOD PRODUCTS--0.1%
----------------------------------------------------------------------------
75,000 (b)International Home Foods, Sr. Sub. Note, 10.375%, 11/1/2006 77,063
----------------------------------------------------------------------------
50,000 Specialty Foods, Sr. Sub. Note, 11.75%, 8/15/2003 42,750
----------------------------------------------------------------------------
100,000 Van De Kamp's, Inc., Sr. Sub. Note, 12.00%, 9/15/2005 110,000
---------------------------------------------------------------------------- --------------
Total 229,813
---------------------------------------------------------------------------- --------------
FOREST PRODUCTS--0.2%
----------------------------------------------------------------------------
75,000 Four M Corp, Sr. Note, 12.00%, 6/1/2006 77,438
----------------------------------------------------------------------------
50,000 Repap New Brunswick, 2nd Priority Sr. Secd. Note, 10.625%,
4/15/2005 48,750
----------------------------------------------------------------------------
100,000 Riverwood International, Sr. Sub. Note, 10.875%, 4/1/2008 91,000
----------------------------------------------------------------------------
75,000 Stone Container, Sr. Note, 11.50%, 10/1/2004 79,125
---------------------------------------------------------------------------- --------------
Total 296,313
---------------------------------------------------------------------------- --------------
HEALTHCARE--0.2%
----------------------------------------------------------------------------
125,000 (b)Dade International, Inc., Sr. Sub. Note, 11.125%, 5/1/2006 135,625
----------------------------------------------------------------------------
50,000 (b)Prime Succession Acq., Sr. Sub. Note, 10.75%, 8/15/2004 54,250
----------------------------------------------------------------------------
100,000 Tenet Healthcare, Sr. Sub. Note, 10.125%, 3/1/2005 111,000
---------------------------------------------------------------------------- --------------
Total 300,875
---------------------------------------------------------------------------- --------------
HOTELS, MOTELS, INNS & CASINOS--0.0%
----------------------------------------------------------------------------
50,000 Courtyard By Marriott, Sr. Note, 10.75%, 2/1/2008 53,000
---------------------------------------------------------------------------- --------------
INDUSTRIAL PRODUCTS & EQUIPMENT--0.2%
----------------------------------------------------------------------------
100,000 Cabot Safety Corp., Sr. Sub. Note, 12.50%, 7/15/2005 112,250
----------------------------------------------------------------------------
75,000 (b)Euramax International PLC, Sr. Sub. Note, 11.25%, 10/1/2006 77,250
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
----------------------------------------------------------------------------
INDUSTRIAL PRODUCTS & EQUIPMENT--CONTINUED
----------------------------------------------------------------------------
$ 50,000 Fairfield Manufacturing Co., Inc., Sr. Sub. Note, 11.375%,
7/1/2001 $ 51,250
----------------------------------------------------------------------------
50,000 (b)Intl Knife & Saw, Inc., Sr. Sub. Note, 11.375%, 11/15/2006 51,500
----------------------------------------------------------------------------
50,000 Mettler-Toledo, Inc., Sr. Sub. Note, 9.75%, 10/1/2006 52,625
---------------------------------------------------------------------------- --------------
Total 344,875
---------------------------------------------------------------------------- --------------
LEISURE & ENTERTAINMENT--0.2%
----------------------------------------------------------------------------
50,000 AMF Group, Inc., Sr. Sub. Note, 10.875%, 3/15/2006 52,688
----------------------------------------------------------------------------
100,000 AMF Group, Inc., Sr. Sub. Disc. 0/12.25%, Note, 3/15/2006 63,750
----------------------------------------------------------------------------
50,000 Cobblestone Golf, Sr. Note, 11.50%, 6/1/2003 52,375
----------------------------------------------------------------------------
100,000 Premier Parks, Sr. Note, 12.00%, 8/15/2003 109,500
----------------------------------------------------------------------------
150,000 Six Flags Theme Parks, Sr. Sub. Disc. Note, 0/12.25%, 6/15/2005 138,750
---------------------------------------------------------------------------- --------------
Total 417,063
---------------------------------------------------------------------------- --------------
MACHINERY & EQUIPMENT--0.2%
----------------------------------------------------------------------------
100,000 Alvey Systems, Sr. Sub. Note, 11.375%, 1/31/2003 105,000
----------------------------------------------------------------------------
50,000 (b)Clark Material, Sr. Note, 10.75%, 11/15/2006 51,375
----------------------------------------------------------------------------
67,000 Primeco Inc., Sr. Sub. Note, 12.75%, 3/1/2005 76,380
----------------------------------------------------------------------------
75,000 (b)Tokheim Corporation, Sr. Sub. Note, 11.50%, 8/1/2006 79,313
---------------------------------------------------------------------------- --------------
Total 312,068
---------------------------------------------------------------------------- --------------
OIL & GAS--0.1%
----------------------------------------------------------------------------
100,000 (b)HS Resources, Inc., Sr. Sub. Note, 9.25%, 11/15/2006 102,250
----------------------------------------------------------------------------
50,000 Mesa Operating Company, Sr. Sub. Note, 10.625%, 7/1/2006 54,125
----------------------------------------------------------------------------
100,000 United Meridian Corp., Sr. Sub. Note, 10.375%, 10/15/2005 109,250
---------------------------------------------------------------------------- --------------
Total 265,625
---------------------------------------------------------------------------- --------------
PRINTING & PUBLISHING--0.1%
----------------------------------------------------------------------------
100,000 Garden State Newspapers, Inc., Sr. Sub. Note, 12.00%, 7/1/2004 107,250
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT IN U.S.
OR SHARES DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
----------------------------------------------------------------------------
PRINTING & PUBLISHING--CONTINUED
----------------------------------------------------------------------------
K-III Communications Corp., 1,044 PIK Pfd. Shares, Series B, 11.625% $ 104,923
----------------------------------------------------------------------------
$ 50,000 (b)Petersen Publishing, Sr. Sub. Note, 11.125%, 11/15/2006 51,313
---------------------------------------------------------------------------- --------------
Total 263,486
---------------------------------------------------------------------------- --------------
REAL ESTATE--0.1%
----------------------------------------------------------------------------
100,000 Trizec Finance, Sr. Note, 10.875%, 10/15/2005 110,750
---------------------------------------------------------------------------- --------------
SERVICES--0.0%
----------------------------------------------------------------------------
50,000 (b)Ryder TRS, Inc., Sr. Sub. Note, 10.00%, 12/1/2006 51,188
---------------------------------------------------------------------------- --------------
STEEL--0.2%
----------------------------------------------------------------------------
(b)Bar Technologies, Inc. 50 Warrants, 4/1/2001 3,000
----------------------------------------------------------------------------
50,000 Bar Technologies, Inc., Company Guarantee, 13.50%, 4/1/2001 50,750
----------------------------------------------------------------------------
50,000 Bayou Steel Corp., 1st Mtg. Note, 10.25%, 3/1/2001 46,750
----------------------------------------------------------------------------
75,000 EnviroSource, Inc., Sr. Note, 9.75%, 6/15/2003 70,065
----------------------------------------------------------------------------
100,000 GS Technologies Operating Co., Inc., Sr. Note, 12.00%, 9/1/2004 103,500
----------------------------------------------------------------------------
75,000 Republic Engineered Steel, 1st Mtg. Note, 9.875%, 12/15/2001 68,531
---------------------------------------------------------------------------- --------------
Total 342,596
---------------------------------------------------------------------------- --------------
SURFACE TRANSPORTATION--0.3%
----------------------------------------------------------------------------
50,000 Ameritruck Distribution, Sr. Sub. Note, 12.25%, 11/15/2005 49,750
----------------------------------------------------------------------------
100,000 Gearbulk Holding Limited, Sr. Note, 11.25%, 12/1/2004 109,000
----------------------------------------------------------------------------
50,000 Great Dane Holdings, Sr. Sub. Deb., 12.75%, 8/1/2001 50,250
----------------------------------------------------------------------------
75,000 (b)Statia Terminals, 1st Mtg. Note, 11.75%, 11/15/2003 76,125
----------------------------------------------------------------------------
100,000 Stena AB, Sr. Note, 10.50%, 12/15/2005 107,125
----------------------------------------------------------------------------
100,000 Trism, Inc., Sr. Sub. Note, 10.75%, 12/15/2000 96,500
---------------------------------------------------------------------------- --------------
Total 488,750
---------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT IN U.S.
OR SHARES DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
----------------------------------------------------------------------------
TELECOMMUNICATIONS & CELLULAR--0.5%
----------------------------------------------------------------------------
$ 100,000 American Communications, Sr. Disc. Note, 0/12.75%, 4/1/2006 $ 54,750
----------------------------------------------------------------------------
175,000 Arch Communications, Sr. Disc. Note, 0/10.875%, 3/15/2008 101,938
----------------------------------------------------------------------------
250,000 Brooks Fiber Properties, Inc. Sr. Disc. Note, 0/10.875%, 3/1/2006 166,250
----------------------------------------------------------------------------
150,000 Cellular Communication, Sr. Disc. Note, 0/10.875%, 8/15/2000 102,750
----------------------------------------------------------------------------
Cellular Communications International, Inc. 150 Warrants,
8/15/2003 1,875
----------------------------------------------------------------------------
25,000 Fonorola, Inc., Sr. Secd. Note, 12.50%, 8/15/2002 27,313
----------------------------------------------------------------------------
200,000 Millicom International, Sr. Disc. Note, 13.50%, 6/1/2006 118,500
----------------------------------------------------------------------------
25,000 (a)**Mobilemedia Communication, Sr. Sub. Note, 9.375%, 11/1/2007 13,750
----------------------------------------------------------------------------
75,000 Nextel Communications, Inc., Sr. Disc. Note, 0/11.50%, 9/1/2003 56,813
----------------------------------------------------------------------------
50,000 Paging Network, Sr. Sub. Note, 10.125%, 8/1/2007 50,313
----------------------------------------------------------------------------
PanAmSat Corp., 52 PIK Pfd. Shares, 12.75% 63,700
----------------------------------------------------------------------------
50,000 Sygnet Wireless, Inc., Sr. Note, 11.50%, 10/1/2006 50,500
----------------------------------------------------------------------------
150,000 Teleport Communications, Sr. Disc. Note, 0/11.125%, 7/1/2007 102,750
----------------------------------------------------------------------------
125,000 Vanguard Cellular Systems, Deb., 9.375%, 4/15/2006 125,938
---------------------------------------------------------------------------- --------------
Total 1,037,140
---------------------------------------------------------------------------- --------------
UTILITIES--0.1%
----------------------------------------------------------------------------
125,000 California Energy Co., Sr. Disc. Note, 0/10.25%, 1/15/2004 130,938
----------------------------------------------------------------------------
El Paso Electric Co., 1,084 PIK Pfd. Shares, Series A, 11.40% 119,541
---------------------------------------------------------------------------- --------------
Total 250,479
---------------------------------------------------------------------------- --------------
TOTAL HIGH YIELD BONDS 10,132,693
---------------------------------------------------------------------------- --------------
INVESTMENT GRADE BONDS--2.7%
----------------------------------------------------------------------------
BANKING--0.3%
----------------------------------------------------------------------------
250,000 Bank Of Montreal, Sub. Note, 7.80%, 4/1/2007 270,648
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
INVESTMENT GRADE BONDS--CONTINUED
----------------------------------------------------------------------------
BANKING--CONTINUED
----------------------------------------------------------------------------
$ 250,000 National Bank of Canada, Sub. Note, 8.125%, 8/15/2004 $ 272,193
---------------------------------------------------------------------------- --------------
Total 542,841
---------------------------------------------------------------------------- --------------
BEVERAGE & TOBACCO--0.0%
----------------------------------------------------------------------------
50,000 Philip Morris Cos., Inc., Deb., 6.00%, 7/15/2001 48,938
---------------------------------------------------------------------------- --------------
CABLE TELEVISION--0.3%
----------------------------------------------------------------------------
230,000 Continental Cablevision, Sr. Deb., 9.50%, 8/1/2013 270,393
----------------------------------------------------------------------------
250,000 TKR Cable, Inc., Sr. Note, 10.50%, 10/30/2007 276,955
---------------------------------------------------------------------------- --------------
Total 547,348
---------------------------------------------------------------------------- --------------
CHEMICALS & PLASTICS--0.1%
----------------------------------------------------------------------------
250,000 (b)Bayer Corp., Deb., 6.50%, 10/1/2002 253,930
---------------------------------------------------------------------------- --------------
FINANCIAL INTERMEDIARIES--0.6%
----------------------------------------------------------------------------
200,000 American General Corp., S.F. Deb., 9.625%, 2/1/2018 216,398
----------------------------------------------------------------------------
300,000 DLJ, Note, 6.875%, 11/1/2005 300,798
----------------------------------------------------------------------------
250,000 Green Tree Financial Corp, Sr. Sub. Note, 10.25%, 6/1/2002 294,400
----------------------------------------------------------------------------
100,000 Lehman Bros Inc, Sr. Sub. Note, 6.125%, 2/1/2001 98,728
----------------------------------------------------------------------------
150,000 Salomon Inc, Sr. Note, 9.00%, 2/15/1999 158,312
----------------------------------------------------------------------------
100,000 Salomon Inc., Sr. Note, 7.02%, 9/25/1998 101,491
---------------------------------------------------------------------------- --------------
Total 1,170,127
---------------------------------------------------------------------------- --------------
FOOD & DRUG RETAILERS--0.1%
----------------------------------------------------------------------------
250,000 Hook-Superx, Inc., Sr. Note, 10.125%, 6/1/2002 266,478
---------------------------------------------------------------------------- --------------
INDUSTRIAL PRODUCTS & EQUIPMENT--0.1%
----------------------------------------------------------------------------
250,000 Joy Technologies Inc, Sr. Note, 10.25%, 9/1/2003 276,850
---------------------------------------------------------------------------- --------------
INSURANCE--0.3%
----------------------------------------------------------------------------
225,000 Conseco, Inc., Sr. Note, 10.50%, 12/15/2004 273,431
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
INVESTMENT GRADE BONDS--CONTINUED
----------------------------------------------------------------------------
INSURANCE--CONTINUED
----------------------------------------------------------------------------
$ 250,000 Sunamerica Inc, Medium Term Note, 7.34%, 8/30/2005 $ 260,716
---------------------------------------------------------------------------- --------------
Total 534,147
---------------------------------------------------------------------------- --------------
METALS & MINING--0.2%
----------------------------------------------------------------------------
250,000 Santa Fe Pacific Gold Co, Note, 8.375%, 7/1/2005 262,795
---------------------------------------------------------------------------- --------------
PRINTING & PUBLISHING--0.1%
----------------------------------------------------------------------------
250,000 News Amer Hldgs, Sr. Note, 7.50%, 3/1/2000 258,283
---------------------------------------------------------------------------- --------------
SERVICES--0.1%
----------------------------------------------------------------------------
200,000 Loewen Group Int'l, Sr. Note, 8.25%, 4/15/2003 206,262
---------------------------------------------------------------------------- --------------
SOVEREIGN GOVERNMENT--0.3%
----------------------------------------------------------------------------
250,000 (b)Freeport Terminal (Malta), GTD. Global Note, 7.50%, 3/29/2009 262,878
----------------------------------------------------------------------------
285,000 Republic of Colombia, Note, 7.25%, 2/15/2003 283,481
---------------------------------------------------------------------------- --------------
Total 546,359
---------------------------------------------------------------------------- --------------
SURFACE TRANSPORTATION--0.2%
----------------------------------------------------------------------------
250,000 Trans Ocean Container Corp., Sr. Sub. Note, 12.25%, 7/1/2004 300,815
---------------------------------------------------------------------------- --------------
TOTAL INVESTMENT GRADE BONDS 5,215,173
---------------------------------------------------------------------------- --------------
FOREIGN BONDS--7.3%
----------------------------------------------------------------------------
AUSTRALIAN DOLLAR--0.3%
----------------------------------------------------------------------------
224,000 Queensland Treas Global, Local Government Guarantee, 8.00%, 5/14/2003 191,323
----------------------------------------------------------------------------
283,000 Queensland Treas Global, Local Government Guarantee, 8.00%, 8/14/2001 239,470
----------------------------------------------------------------------------
150,000 State Bank Of New South Wales, 12.25%, 2/26/2001 144,601
---------------------------------------------------------------------------- --------------
Total 575,394
---------------------------------------------------------------------------- --------------
BELGIAN FRANC--0.2%
----------------------------------------------------------------------------
2,570,000 Belgian Government, Bond, 6.50%, 3/31/2005 85,534
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN
CURRENCY VALUE
PAR IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN BONDS--CONTINUED
----------------------------------------------------------------------------
BELGIAN FRANC--CONTINUED
----------------------------------------------------------------------------
9,000,000 Belgium Kingdom, 7.75%, 10/15/2004 $ 323,250
---------------------------------------------------------------------------- --------------
Total 408,784
---------------------------------------------------------------------------- --------------
CANADIAN DOLLAR--0.4%
----------------------------------------------------------------------------
569,000 Canada Government, Deb., 6.50%, 6/1/2004 441,091
----------------------------------------------------------------------------
400,000 Ontario Hydro, 9.00%, 6/24/2002 346,470
---------------------------------------------------------------------------- --------------
Total 787,561
---------------------------------------------------------------------------- --------------
DANISH KRONE--0.4%
----------------------------------------------------------------------------
2,931,000 Denmark--Bullet, Bond, 8.00%, 3/15/2006 542,851
----------------------------------------------------------------------------
1,200,000 Denmark, 8.00%, 5/15/2003 224,757
---------------------------------------------------------------------------- --------------
Total 767,608
---------------------------------------------------------------------------- --------------
FRENCH FRANC--0.3%
----------------------------------------------------------------------------
1,352,000 France O.a.t., Bond, 7.25%, 4/25/2006 290,132
----------------------------------------------------------------------------
319,000 France O.a.t., Bond, 7.50%, 4/25/2005 441,690
---------------------------------------------------------------------------- --------------
Total 731,822
---------------------------------------------------------------------------- --------------
DEUTSCHE MARK--1.4%
----------------------------------------------------------------------------
400,000 Bundesobligationen, Deb., 7.25%, 10/20/1997 268,929
----------------------------------------------------------------------------
195,000 Deutschland Republic, Deb., 6.25%, 1/4/2024 121,328
----------------------------------------------------------------------------
42,000,000 KFW International Finance, 6.00%, 11/29/1999 422,212
----------------------------------------------------------------------------
500,000 KFW International Finance, Bank Guarantee, 6.75%, 6/20/2005 347,308
----------------------------------------------------------------------------
800,000 KFW International Finance, 7.00%, 5/12/2000 165,684
----------------------------------------------------------------------------
1,050,000 Treuhandanstalt, 7.75%, 10/1/2002 773,113
----------------------------------------------------------------------------
960,000 Treuhandanstalt, Foreign Gov't. Guarantee, 6.875%, 6/11/2003 677,948
---------------------------------------------------------------------------- --------------
Total 2,776,522
---------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN
CURRENCY VALUE
PAR IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN BONDS--CONTINUED
----------------------------------------------------------------------------
IRISH POUND--0.3%
----------------------------------------------------------------------------
180,000 Irish Government, Bond, 6.50%, 10/18/2001 $ 310,642
----------------------------------------------------------------------------
180,000 Treasury, Deb., 6.25%, 4/1/1999 305,952
---------------------------------------------------------------------------- --------------
Total 616,594
---------------------------------------------------------------------------- --------------
ITALIAN LIRA--0.6%
----------------------------------------------------------------------------
265,000,000 Btps, Bond, 10.50%, 11/1/2000 196,851
----------------------------------------------------------------------------
1,225,000,000 Buoni Poliennali Del Tes, 9.50%, 1/1/2005 907,144
---------------------------------------------------------------------------- --------------
Total 1,103,995
---------------------------------------------------------------------------- --------------
JAPANESE YEN--0.6%
----------------------------------------------------------------------------
100,000,000 Export-Import Bank Japan, 4.375%, 10/1/2003 999,780
----------------------------------------------------------------------------
10,000,000 Interamerican Development, Deb., 7.25%, 5/15/2000 105,465
---------------------------------------------------------------------------- --------------
Total 1,105,245
---------------------------------------------------------------------------- --------------
NETHERLANDS GUILDER--0.4%
----------------------------------------------------------------------------
285,000 Bank Ned Gemeenten, Bond, 6.375%, 1/4/2006 172,489
----------------------------------------------------------------------------
220,000 Lkb-global Bd, Bank Guarantee, 6.00%, 1/25/2006 144,178
----------------------------------------------------------------------------
650,000 Netherlands Government, 5.75%, 1/15/2004 386,389
----------------------------------------------------------------------------
300,000 Netherlands Government, 6.00%, 1/15/2006 178,855
---------------------------------------------------------------------------- --------------
Total 881,911
---------------------------------------------------------------------------- --------------
NEW ZEALAND DOLLAR--0.2%
----------------------------------------------------------------------------
205,000 New Zealand Government, 8.00%, 2/15/2001 151,629
----------------------------------------------------------------------------
270,000 New Zealand Government, Bond, 8.00%, 7/15/1998 195,293
---------------------------------------------------------------------------- --------------
Total 346,922
---------------------------------------------------------------------------- --------------
NORWEGIAN KRONE--0.3%
----------------------------------------------------------------------------
1,429,000 NGB Bond, 9.00%, 1/31/1999 242,249
----------------------------------------------------------------------------
1,620,000 Norwegian Government, Bond, 7.00%, 5/31/2001 268,999
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN
CURRENCY VALUE
PAR IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN BONDS--CONTINUED
----------------------------------------------------------------------------
NORWEGIAN KRONE--CONTINUED
----------------------------------------------------------------------------
1,215,000 Norwegian Government, Foreign Gov't. Guarantee, 5.75%,
11/30/2004 $ 185,961
---------------------------------------------------------------------------- --------------
Total 697,209
---------------------------------------------------------------------------- --------------
PORTUGESE ESCUDO--0.1%
----------------------------------------------------------------------------
33,000,000 Portuguese Ot's, Bond, 11.875%, 2/23/2000 246,597
---------------------------------------------------------------------------- --------------
SPANISH PESETA--0.5%
----------------------------------------------------------------------------
40,000,000 Spanish Government, 10.00%, 2/28/2005 366,898
----------------------------------------------------------------------------
30,000,000 Spanish Government, Bond, 8.80%, 4/30/2006 254,863
----------------------------------------------------------------------------
16,740,000 Spanish Government, Bond, 9.40%, 4/30/1999 138,944
----------------------------------------------------------------------------
15,030,000 Spanish Government, Deb., 10.10%, 2/28/2001 132,501
---------------------------------------------------------------------------- --------------
Total 893,206
---------------------------------------------------------------------------- --------------
SWEDISH KRONA--0.3%
----------------------------------------------------------------------------
1,000,000 Stadshypotekskas, Foreign Spanish Government Guarantee, Series 1551, 7.50%,
3/17/1999 155,221
----------------------------------------------------------------------------
2,400,000 Sweden, 6.00%, 2/9/2005 338,504
---------------------------------------------------------------------------- --------------
Total 493,725
---------------------------------------------------------------------------- --------------
UNITED KINGDOM POUND--1.0%
----------------------------------------------------------------------------
366,000 British Gas PLC, 8.875%, 7/8/2008 646,484
----------------------------------------------------------------------------
145,000 UK Treasury, Deb., 8.50%, 12/7/2005 262,444
----------------------------------------------------------------------------
375,000 UK Conversion, 9.00%, 3/3/2000 668,095
----------------------------------------------------------------------------
60,000 UK Treasury, Bond, 8.00%, 12/7/2015 105,855
----------------------------------------------------------------------------
180,000 United Kingdom Treasury, Bond, 7.50%, 12/7/2006 302,244
---------------------------------------------------------------------------- --------------
Total 1,985,122
---------------------------------------------------------------------------- --------------
TOTAL FOREIGN BONDS 14,418,217
---------------------------------------------------------------------------- --------------
TOTAL BONDS (IDENTIFIED COST $84,813,883) 87,074,038
---------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
CASH EQUIVALENT--6.5%
- ----------------------------------------------------------------------------------------------
(C)REPURCHASE AGREEMENT--6.5%
----------------------------------------------------------------------------
$ 12,760,000 BT Securities Corporation, 5.720%, dated 11/29/1996, due
12/2/1996 (AT AMORTIZED COST) $ 12,760,000
---------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (IDENTIFIED COST $181,761,615)(D) $ 195,503,417
---------------------------------------------------------------------------- --------------
</TABLE>
(a) Non-income producing security.
(b) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. At November 30, 1996, these securities
amounted to $3,749,206 which represents 1.9% of net assets.
(c) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investment in the repurchase agreement is through participation in a joint
account with other Federated Funds.
(d) The cost of investments for federal tax purposes amounts to $181,859,746.
The net unrealized appreciation of investments on a federal tax basis
amounts to $13,643,671 which is comprised of $15,792,579 appreciation and
$2,148,908 depreciation at November 30, 1996.
Note: The categories of investments are shown as a percentage of net assets
($196,463,347) at November 30, 1996.
The following acronyms are used throughout this portfolio:
ACES--Adjustable Convertible Extendable Securities
ADR--American Depository Receipt
GDR--Global Depository Receipt
GTD--Guaranty
PEPS--Participating Equity Preferred Stock
PIK--Payment in Kind
PLC--Public Limited Company
SPA--Standby Purchase Agreement
*MID-AMERICAN WASTE SYSTEMS, INC.
On February 15, 1996 and August 15, 1996, Mid-American Waste Systems failed to
make its scheduled interest payment. Currently, the company is in negotiations
with its debt holders and has retained an investment bank to evaluate its
options. The unofficial subordinated bondholders group has retained legal
counsel and financial advisors and is monitoring the situation closely.
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
**MOBILEMEDIA COMMUNICATIONS.
On November 1, 1996, MobileMedia Communications failed to make its scheduled
interest payment. Subsequent to November 30, 1996 holdings in these securities
have been sold.
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------------------------
Total investments in securities, at value (identified cost $181,761,615, and tax cost $181,859,746) $ 195,503,417
- ---------------------------------------------------------------------------------------------------
Cash denominated in foreign currencies (identified cost $18,886) 18,886
- ---------------------------------------------------------------------------------------------------
Income receivable 2,023,744
- ---------------------------------------------------------------------------------------------------
Receivable for investments sold 499,775
- ---------------------------------------------------------------------------------------------------
Receivable for shares sold 178,038
- ---------------------------------------------------------------------------------------------------
Deferred expenses 24,672
- --------------------------------------------------------------------------------------------------- -------------
Total assets 198,248,532
- ---------------------------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------------
Payable for investments purchased $ 1,464,746
- --------------------------------------------------------------------------------------
Payable for shares redeemed 71,663
- --------------------------------------------------------------------------------------
Payable to Bank 104,277
- --------------------------------------------------------------------------------------
Payable for taxes withheld 8,594
- --------------------------------------------------------------------------------------
Payable for foreign currency exchange contracts 841
- --------------------------------------------------------------------------------------
Accrued expenses 135,064
- -------------------------------------------------------------------------------------- -----------
Total liabilities 1,785,185
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS for 16,073,938 shares outstanding $ 196,463,347
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------------------------
Paid in capital $ 176,771,334
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments, translation of assets and liabilities
in foreign currency and futures contracts 13,742,353
- ---------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments, foreign currency transactions
and futures contracts 4,772,024
- ---------------------------------------------------------------------------------------------------
Undistributed net investment income 1,177,636
- --------------------------------------------------------------------------------------------------- -------------
Total Net Assets $ 196,463,347
- --------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ---------------------------------------------------------------------------------------------------
Institutional Shares: $136,255,381 / 11,139,678 shares outstanding $12.23
- --------------------------------------------------------------------------------------------------- -------------
Select Shares: $60,207,966 / 4,934,260 shares outstanding $12.20
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED GROWTH FUND
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Dividends (net of foreign taxes withheld of $53,139) $1,346,574
- ----------------------------------------------------------------------------------------------------
Interest (net of dollar roll expense of $28,552) (net of foreign taxes withheld of $9,019) 5,772,747
- ---------------------------------------------------------------------------------------------------- ----------
Total income 7,119,321
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- -----------------------------------------------------------------------------------------
Investment advisory fee $1,108,082
- -----------------------------------------------------------------------------------------
Administrative personnel and services fee 155,001
- -----------------------------------------------------------------------------------------
Custodian fees 136,787
- -----------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 105,068
- -----------------------------------------------------------------------------------------
Directors'/Trustees' fees 4,817
- -----------------------------------------------------------------------------------------
Auditing fees 14,561
- -----------------------------------------------------------------------------------------
Legal fees 4,122
- -----------------------------------------------------------------------------------------
Portfolio accounting fees 88,456
- -----------------------------------------------------------------------------------------
Distribution services fee--Select Shares 331,734
- -----------------------------------------------------------------------------------------
Shareholder services fee--Institutional Shares 258,783
- -----------------------------------------------------------------------------------------
Shareholder services fee--Select Shares 110,578
- -----------------------------------------------------------------------------------------
Share registration costs 69,233
- -----------------------------------------------------------------------------------------
Printing and postage 70,759
- -----------------------------------------------------------------------------------------
Insurance premiums 5,003
- -----------------------------------------------------------------------------------------
Taxes 2,783
- -----------------------------------------------------------------------------------------
Miscellaneous 18,452
- ----------------------------------------------------------------------------------------- ---------
Total expenses 2,484,219
- -----------------------------------------------------------------------------------------
Waivers--
- ------------------------------------------------------------------------------
Waiver of investment advisory fee $(299,180)
- ------------------------------------------------------------------------------
Waiver of distribution services fee--Select Shares (110,578)
- ------------------------------------------------------------------------------
Waiver of shareholder services fee--Institutional Shares (207,026)
- ------------------------------------------------------------------------------ ---------
Total waivers (616,784)
- ----------------------------------------------------------------------------------------- ---------
Net expenses 1,867,435
- ---------------------------------------------------------------------------------------------------- ----------
Net investment income 5,251,886
- ---------------------------------------------------------------------------------------------------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FOREIGN CURRENCY AND FUTURES CONTRACTS:
- ----------------------------------------------------------------------------------------------------
Net realized gain on investments, foreign currency transactions and futures contracts 5,108,532
- ----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments, translation of assets and liabilities
in foreign currency and futures contracts 7,820,439
- ---------------------------------------------------------------------------------------------------- ----------
Net realized and unrealized gain on investments, foreign currency and futures contracts 12,928,971
- ---------------------------------------------------------------------------------------------------- ----------
Change in net assets resulting from operations $18,180,857
- ---------------------------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
NOVEMBER 30,
1996 1995
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------------------------------------------------------
OPERATIONS--
- ------------------------------------------------------------------------------------
Net investment income $ 5,251,886 $ 2,388,609
- ------------------------------------------------------------------------------------
Net realized gain (loss) on investments, foreign currency
transactions, and futures contracts ($4,840,279 and $2,146,546
net gains, respectively, as computed for federal tax purposes) 5,108,532 1,792,344
- ------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of
investments, translation of assets and liabilities in foreign
currency and futures contracts 7,820,439 6,797,361
- ------------------------------------------------------------------------------------ ------------- ------------
Change in net assets resulting from operations 18,180,857 10,978,314
- ------------------------------------------------------------------------------------ ------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ------------------------------------------------------------------------------------
Distributions from net investment income
- ------------------------------------------------------------------------------------
Institutional Shares (3,611,245) (1,589,524)
- ------------------------------------------------------------------------------------
Select Shares (1,261,400) (320,621)
- ------------------------------------------------------------------------------------
Distributions from net realized gains on investments,
foreign currency transactions and futures contracts
- ------------------------------------------------------------------------------------
Institutional Shares (1,417,081) --
- ------------------------------------------------------------------------------------
Select Shares (583,800) --
- ------------------------------------------------------------------------------------ ------------- ------------
Change in net assets resulting from distributions to
shareholders (6,873,526) (1,910,145)
- ------------------------------------------------------------------------------------ ------------- ------------
SHARE TRANSACTIONS--
- ------------------------------------------------------------------------------------
Proceeds from sale of shares 111,287,688 63,762,378
- ------------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment
of distributions declared 4,340,056 1,014,253
- ------------------------------------------------------------------------------------
Cost of shares redeemed (26,142,343) (10,099,348)
- ------------------------------------------------------------------------------------ ------------- ------------
Change in net assets resulting from share transactions 89,485,401 54,677,283
- ------------------------------------------------------------------------------------ ------------- ------------
Change in net assets 100,792,732 63,745,452
- ------------------------------------------------------------------------------------
NET ASSETS:
- ------------------------------------------------------------------------------------
Beginning of period 95,670,615 31,925,163
- ------------------------------------------------------------------------------------ ------------- ------------
End of period (including undistributed net investment income
of $1,177,636 and $885,488, respectively) $ 196,463,347 $ 95,670,615
- ------------------------------------------------------------------------------------ ------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
(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 portfolios. The financial statements
included herein are only those of Federated Managed Growth Fund (the "Fund"), a
diversified portfolio. The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held. The
investment objective of the Fund is to seek capital appreciation.
The Fund offers two classes of shares: Institutional Shares and Select Shares.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Listed equity securities are valued at the last sale
price reported on a national securities exchange. U.S. government
securities, listed corporate bonds, other fixed income and asset-backed
securities, and unlisted securities and private placement securities are
generally valued at the mean of the latest bid and asked price as furnished
by an independent pricing service. Short-term securities are valued at the
prices provided by an independent pricing service. However, short-term
securities with remaining maturities of sixty days or less at the time of
purchase may be valued at amortized cost, which approximates fair market
value.
With respect to valuation of foreign securities, trading in foreign
countries may be completed at times which vary from the closing of the New
York Stock Exchange. Therefore, foreign securities are valued at the latest
closing price on the exchange on which they are traded prior to the closing
of the New York Stock Exchange. Foreign Securities quoted in foreign
currencies are translated into U.S. dollars at the foreign exchange rate in
effect at noon, eastern time, on the day the value of the foreign security
is determined.
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.
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral
securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code"). Dividend
income and distributions to shareholders are recorded on the ex-dividend
date.
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 passive foreign investment companies. The
following reclassifications have been made to the financial statements.
<TABLE>
<CAPTION>
INCREASE (DECREASE)
ACCUMULATED UNDISTRIBUTED NET
NET REALIZED GAIN INVESTMENT INCOME
<S> <C>
$ 87,093 ($ 87,093)
</TABLE>
Net investment income, net realized gains/losses, and net assets were not
affected by this reclassification.
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
However, federal taxes may be imposed on the Fund upon the disposition of
certain investments in passive foreign investment companies. Withholding
taxes on foreign interest and dividends have been provided for in
accordance with the Fund's understanding of the applicable country's tax
rules and rates.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
and are being amortized over a period not to exceed five years from the
Fund's commencement date.
FUTURES CONTRACTS--The Fund purchases stock index futures contracts to
manage cashflows, enhance yield, and to potentially reduce transaction
costs. Upon entering into a stock index futures contract with a broker, the
Fund is required to deposit in a segregated account a specified amount of
cash or U.S. government securities. Futures contracts are valued daily and
unrealized gains or losses are recorded in a "variation margin" account.
Daily, the Fund receives from or pays to the broker a specified amount of
cash based upon changes in the variation margin account. When a contract is
closed, the Fund recognizes a realized gain or loss. 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 year ended November 30, 1996, the Fund had realized
gains of $1,052,413 on futures contracts. As of November 30, 1996, the Fund
had no outstanding futures contracts.
FOREIGN EXCHANGE CONTRACTS--The Fund may enter into foreign currency
contracts for the delayed delivery of securities or foreign currency
exchange transactions. These contracts are used to hedge the Fund's
securities against currency fluctuations. Risks may arise upon entering
these transactions from the potential inability of counter-parts 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, 1996, the Fund had outstanding
foreign currency commitments as set forth below:
<TABLE>
<CAPTION>
IN UNREALIZED
CONTRACTS TO EXCHANGE CONTRACTS APPRECIATION
CONTRACTS SOLD SETTLEMENT DATE DELIVER/RECEIVE FOR AT VALUE (DEPRECIATION)
<S> <C> <C> <C> <C> <C>
Brazilian Real December 2, 1996 11,402 $ 11,054 $ 11,038 $ 16
Brazilian Real December 2, 1996 7,594 7,353 7,351 2
New Zealand Dollar December 3, 1996 118,720 83,579 84,438 (859)
------
Total ($ 841)
------
</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 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 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,
1996 is as follows:
<TABLE>
<CAPTION>
ACQUISITION
SECURITY ACQUISITION DATE COST
<S> <C> <C>
Acer, Inc., ADR 7/19/1996 $ 20,900
Allied Waste 11/25/1996 50,000
Astor Corp. 10/2/1996 49,750
Australis Holdings Pty, Unit 10/29/1996 56,880
Bar Technologies, Inc. 8/28/1996 2,794
Bayer Corp. 5/21/1996 245,903
Blue Bird Body Co. 11/13/1996 49,848
Bombay Suburban Electric Supply, GDR 2/29/1996 44,640
Cheung Kong Infrastructure 7/11/1996-8/22/1996 59,912
China Resources Bejing Land 11/5/1996 5,519
Chilectra S.A., ADR 2/28/1996 16,284
Clark Material 11/22/1996 50,000
Commonwealth Installment 7/15/1996 50,502
Crompton Greaves Ltd., GDR 7/1/1996-7/2/1996 60,493
Dade International, Inc. 4/30/1996-6/13/1996 128,156
Elevadores Atlas 9/25/1996 44,224
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ACQUISITION
SECURITY ACQUISITION DATE COST
<S> <C> <C>
Euramax International Plc 9/18/1996 75,375
First Nationwide Escrow 9/13/1996 101,250
Freeport Terminal (Malta) 5/12/1995 247,740
Grupo Financiero Bancomer, S.A. de C.V., Class B, ADR 11/6/1995-1/29/1996 33,772
HS Resources, Inc. 11/22/1996 99,482
ICON Fitness Corp. 11/15/1996 51,224
Intl Knife & Saw, Inc. 10/31/1996 50,000
International Home Foods 10/29/1996 75,000
Japan Tobacco, 6/17/1996-7/26/1996 273,048
Larsen & Toubro Ltd., GDR 6/5/1996 59,700
Mahindra and Mahindra, GDR 1/22/1996-2/2/1996 31,500
NGC Corp. 11/15/1996 77,934
Outsourcing Solutions 10/31/1996 50,000
Petersen Publishing 11/20/1996 50,000
Prime Succession Acq. 8/13/1996 50,000
Ryder TRS, Inc. 11/20/1996 50,000
Sakura Finance (Bermuda) 9/12/1996 163,191
Shanghai Industrial Holdings LTD 5/23/1996 49,439
Steel Authority of India, GDR 4/22/1996-4/23/1996 32,044
Statia Terminals 11/22/1996 75,000
Sumitomo Bank Int'l 6/6/1996 55,081
Tokheim Corporation 8/16/1996-9/4/1996 76,625
Westinghouse Electric Corp. 9/27/1995-3/14/1996 760,588
</TABLE>
DOLLAR ROLL TRANSACTIONS--The Fund enters into dollar roll transactions,
with respect to mortgage securities issued by GNMA, FNMA and FHLMC, in
which the Fund sells mortgage securities to financial institutions and
simultaneously agrees to accept substantially similar (same type, coupon
and maturity) securities at a later date at an agreed upon price. Dollar
roll transactions are short-term financing arrangements which will not
exceed twelve months. The Fund will use the proceeds generated from the
transactions to invest in short-term investments, which may enhance the
Fund's current yield and total return.
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1996 1995
INSTITUTIONAL SHARES SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 6,436,864 $ 74,361,820 3,678,939 $ 39,452,689
- --------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 233,538 2,669,402 72,763 769,585
- --------------------------------------------------------
Shares redeemed (1,460,401) (16,943,185) (772,807) (8,225,144)
- -------------------------------------------------------- ----------- -------------- ---------- -------------
Net change resulting from Institutional Shares
transactions 5,210,001 $ 60,088,037 2,978,895 $ 31,997,130
- -------------------------------------------------------- ----------- -------------- ---------- -------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1996 1995
SELECT SHARES SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 3,200,775 $ 36,925,868 2,233,281 $ 24,309,689
- ---------------------------------------------------------
Shares issued to shareholders in payment of distributions
declared 146,513 1,670,654 22,609 244,668
- ---------------------------------------------------------
Shares redeemed (792,466) (9,199,158) (177,462) (1,874,204)
- --------------------------------------------------------- ---------- ------------- ---------- -------------
Net change resulting from Select Shares transactions 2,554,822 $ 29,397,364 2,078,428 $ 22,680,153
- --------------------------------------------------------- ---------- ------------- ---------- -------------
Net change resulting from share transactions 7,764,823 $ 89,485,401 5,057,323 $ 54,677,283
- --------------------------------------------------------- ---------- ------------- ---------- -------------
</TABLE>
(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 0.75% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive any portion of its fee. The Adviser can modify or
terminate this voluntary waiver at any time at its sole discretion.
Under the terms of a sub-advisory agreement between the Adviser and Federated
Global Research Corp. (the "Sub-Adviser"), the Sub-Adviser receives an allocable
portion of the Fund's advisory fee.
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
Such allocation is based on the amount of foreign securities which the
Sub-Adviser manages for the Fund. This fee is paid by the Adviser out of its
resources and is not an incremental Fund expense.
ADMINISTRATIVE FEE--Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ is based on the level of average
aggregate daily net assets of all funds advised by subsidiaries of Federated
Investors for the period. The administrative fee received during the period of
the Administrative Services Agreement shall be at least $125,000 per portfolio
and $30,000 per each additional class of shares.
DISTRIBUTION SERVICES FEE--The Fund has adopted a Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will
compensate Federated Securities Corp. ("FSC"), the principal distributor, from
the net assets of the Fund to finance activities intended to result in the sale
of the Fund's Select Shares. The Plan provides that the Fund may incur
distribution expenses of up to 0.75% 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 0.25%
of average daily net assets of the Fund for the period. The fee paid to FSS is
used to finance certain services for shareholders and to maintain shareholder
accounts. FSS may voluntarily choose to waive any portion of its fee. FSS can
modify or terminate this voluntary waiver at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--FServ, through its
subsidiary, Federated Shareholder Services Company ("FSSC") serves as transfer
and dividend disbursing agent for the Fund. The fee paid to FSSC is based on the
size, type, and number of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses of $88,474 were borne initially
by Adviser. The Fund has agreed to reimburse Adviser for the organizational
expenses during the five year period following effective date. For the period
ended November 30, 1996, the Fund paid $12,897 pursuant to this agreement.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended November 30, 1996, were as follows:
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------------------------
PURCHASES $ 214,892,993
- -------------------------------------------------------------------------------------------------- --------------
SALES $ 128,619,370
- -------------------------------------------------------------------------------------------------- --------------
</TABLE>
(6) CONCENTRATION OF CREDIT RISK
The Fund invests in securities of non-U.S. issuers. Although the Fund maintains
a diversified investment portfolio, the political or economic developments
within a particular country or region may have an adverse effect on the ability
of domiciled issuers to meet their obligations. Additionally, political or
economic developments may have an effect on the liquidity and volatility of
portfolio securities and currency holdings. At November 30, 1996, the
diversification of industries was as follows:
<TABLE>
<CAPTION>
INDUSTRY % OF NET ASSETS INDUSTRY % OF NET ASSETS
<S> <C> <C> <C>
Aerospace & Military Technology 0.1 Health Care 4.0
Agency 1.6 Industrial Components 0.1
Automotive 0.5 Industrial Products & Equipment 0.2
Banking 1.3 Insurance 0.7
Basic Industry 2.7 Leisure & Entertainment 0.2
Beverage & Tobacco 0.2 Leisure & Tourism 0.2
Broadcast Radio & T.V. 0.5 Machinery & Engineering 0.7
Broadcasting & Publishing 0.5 Machinery & Equipment 0.1
Building Materials & Components 0.1 Manufacturing 0.3
Business & Public Services 0.2 Merchandising 0.6
Business Equipment & Services 0.3 Metals & Mining 0.1
Cable Television 0.6 Miscellaneous Materials & Commodities 0.2
Cash Equivalents 6.7 Multi-Industry 0.4
Chemicals & Plastics 0.7 Oil & Gas 0.8
Clothing & Textiles 0.1 Pharmaceutical 0.2
Construction & Housing 0.4 Printing & Publishing 0.3
Consumer Durables 1.6 Producer Manufacturing 2.2
Consumer Non-Durables 4.3 Real Estate 0.8
Container & Glass Products 0.2 Recreation, Other Consumer Goods 0.4
Cosmetics & Toiletries 0.1 Retail Trade 1.9
Eletric Utilities 1.5 Services 2.2
Electrical & Electronics 0.7 Sovereign 5.2
Electronic Components, Instruments 0.5 State & Provincial 0.3
Energy Minerals 3.4 Steel 0.2
Energy Sources 0.4 Supranational 0.1
Finance 5.0 Surface Transportation 0.4
Finance Intermediaries 0.7 Tobacco 0.1
Finance Services 0.5 Technology 3.6
Food & Drug Retailers 0.3 Telecommunications 0.3
Food & Household Products 0.4 Telecommunications & Cellular 0.6
Forest Products & Paper 0.2 Transportation 0.5
Government Agency 7.2 Treasury Securities 21.9
Health Care & Personal Care 0.7 Utilities--Electronic & Gas 4.0
</TABLE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
MANAGED SERIES TRUST
(Federated Managed Growth Fund):
We have audited the accompanying statement of assets and liabilities of
Federated Managed Growth Fund (an investment portfolio of Managed Series Trust,
a Massachusetts business trust), including the schedule of portfolio
investments, as of November 30, 1996, and 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, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Federated Managed Growth Fund, an investment portfolio of Managed Series Trust,
as of November 30, 1996, 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 15, 1997
APPENDIX
- --------------------------------------------------------------------------------
STANDARD AND POOR'S RATINGS GROUP LONG-TERM DEBT RATINGS
AAA--Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.
A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB--Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.
B--Debt rated B has greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or
BB- rating.
CCC--Debt rated CCC has currently identifiable vulnerability to default and is
dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating.
CC--The rating CC typically is applied to debt subordinated to senior debt that
is assigned an actual or implied CCC debt rating.
C--The rating C typically is applied to debt subordinated to senior debt which
is assigned an actual or implied CCC- debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.
CI--The rating CI is reserved for income bonds on which no interest is being
paid.
D--Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D
rating also will be used upon the filing of a bankruptcy petition if debt
service payments are jeopardized.
MOODY'S INVESTORS SERVICE, INC., CORPORATE BOND RATINGS
Aaa--Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment some time in the future.
Baa--Bonds which are rated Baa are considered as medium-grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well.
Ba--Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca--Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C--Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
FITCH INVESTORS SERVICE, INC., LONG-TERM DEBT RATINGS
AAA--Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA--Bonds considered to be investment grade and of very high quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F-1+.
A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB--Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds and, therefore, impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.
BB--Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.
B--Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.
CCC--Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.
CC--Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C--Bonds are in imminent default in payment of interest or principal.
DDD, DD, AND D--Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. DDD
represents the highest potential for recovery on these bonds, and D represents
the lowest potential for recovery.
NR--NR indicates that Fitch does not rate the specific issue.
PLUS (+) OR MINUS (-): Plus or minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the AAA category.
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Federated Managed Growth Fund
Institutional Shares Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Sub-Adviser
Federated Global 175 Water Street
Research Corp. New York, NY 10038-4965
- ---------------------------------------------------------------------------------------------------------------------
Custodian
State Street Bank and P.O. Box 8600
Trust Company Boston, Massachusetts 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Shareholder Services Company P.O. Box 8600
Boston, Massachusetts 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED
GROWTH FUND
INSTITUTIONAL SHARES
PROSPECTUS
A Diversified Portfolio
of Managed Series Trust,
an Open-End Management
Investment Company
Prospectus dated January 31, 1997
[LOGO OF FEDERATED INVESTORS]
Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.
Cusip 56166K503
3122010A-IS (1/97)
[RECYCLED PAPER LOGO]
FEDERATED MANAGED GROWTH FUND
(A PORTFOLIO OF MANAGED SERIES TRUST)
SELECT SHARES
PROSPECTUS
The Select Shares of Federated Managed Growth Fund (the "Fund") offered by this
prospectus represent interests in the Fund, which is a diversified investment
portfolio of Managed Series Trust (the "Trust"). The Trust is an open-end
management investment company (a mutual fund).
The investment objective of the Fund is to seek capital appreciation. In
pursuing its objective, the Fund will consider the current income of the
investments it selects. The Fund invests in both bonds and stocks. Select Shares
are sold at net asset value.
The Select Shares offered by this prospectus are not deposits or obligations of
any bank, are not endorsed or guaranteed by any bank, and are not insured by the
Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in these select shares involves investment risks,
including the possible loss of principal.
This prospectus contains the information you should read and know before you
invest in Select Shares of the Fund. Keep this prospectus for future reference.
The Fund has also filed a Statement of Additional Information for Select Shares
and Institutional Shares of all portfolios of the Trust dated January 31, 1997,
with the Securities and Exchange Commission ("SEC"). The information contained
in the Statement of Additional Information is incorporated by reference into
this prospectus. You may request a copy of the Statement of Additional
Information, or a paper copy of this prospectus, if you have received your
prospectus electronically, free of charge by calling 1-800-341-7400. To obtain
other information or to make inquiries about the Fund, contact the Fund at the
address listed in the back of this prospectus. The Statement of Additional
Information, material incorporated by reference into this document, and other
information regarding the Fund are maintained electronically with the SEC at
Internet Web site (http://www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
Prospectus dated January 31, 1997
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--SELECT SHARES 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Investment Limitations 15
TRUST INFORMATION 15
- ------------------------------------------------------
Management of the Trust 15
Distribution of Select Shares 19
Administration of the Fund 20
Brokerage Transactions 20
NET ASSET VALUE 21
- ------------------------------------------------------
INVESTING IN SELECT SHARES 21
- ------------------------------------------------------
Share Purchases 21
Minimum Investment Required 22
What Shares Cost 22
Systematic Investment Program 22
Certificates and Confirmations 22
Dividends 22
Capital Gains 23
REDEEMING SELECT SHARES 23
- ------------------------------------------------------
Through a Financial Institution 23
Telephone Redemption 23
Written Requests 24
Systematic Withdrawal Program 24
Accounts with Low Balances 24
SHAREHOLDER INFORMATION 25
- ------------------------------------------------------
Voting Rights 25
TAX INFORMATION 25
- ------------------------------------------------------
Federal Income Tax 25
State and Local Taxes 25
PERFORMANCE INFORMATION 25
- ------------------------------------------------------
OTHER CLASSES OF SHARES 26
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES 27
- ------------------------------------------------------
FINANCIAL STATEMENTS 28
- ------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 81
- ------------------------------------------------------
APPENDIX 82
- ------------------------------------------------------
ADDRESSES 85
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
SELECT SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price).................................................................... None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price).................................................................... None
Contingent Deferred Sales Charge (as a percentage of original purchase
price or redemption proceeds, as applicable)........................................................... None
Redemption Fee (as a percentage of amount redeemed, if applicable)....................................... None
Exchange Fee............................................................................................. None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver) (1)........................................................................ 0.55%
12b-1 Fee (after waiver) (2)............................................................................. 0.50%
Total Other Expenses..................................................................................... 0.70%
Shareholder Services Fee................................................................. 0.25%
Total Operating Expenses (3)................................................................... 1.75%
</TABLE>
- ------------
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.75%.
(2) The 12b-1 fee has been reduced to reflect the voluntary waiver of a portion
of the 12b-1 fee. The distributor can terminate the voluntary waiver at any
time at its sole discretion. The maximum 12b-1 fee is 0.75%.
(3) The total operating expenses would have been 2.20% absent the voluntary
waivers of portions of the management fee and the 12b-1 fee.
Long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales charge permitted under the rules of the National
Association of Securities Dealers, Inc.
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Select Shares of the Fund
will bear, either directly or indirectly. For more complete descriptions of the
various costs and expenses, see "Investing in Select Shares" and "Trust
Information". Wire-transferred redemptions of less than $5,000 may be subject to
additional fees.
<TABLE>
<S> <C> <C> <C> <C>
EXAMPLE 1 year 3 years 5 years 10 years
You would pay the following expenses on a $1,000 investment assuming
(1) 5% annual return and (2) redemption at the end of each time
period................................................................ $18 $55 $95 $206
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
FEDERATED MANAGED GROWTH FUND
FINANCIAL HIGHLIGHTS--SELECT SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 81.
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
<S> <C> <C> <C>
1996 1995 1994(A)
<CAPTION>
- ---------------------------------------------------------------------------------- --------- --------- -----------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.50 $ 9.81 $ 10.00
- ----------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------------
Net investment income 0.36 0.23 0.15
- ----------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments, foreign currency, and
futures contracts 0.94 1.79 (0.24)
- ---------------------------------------------------------------------------------- --------- --------- -----------
Total from investment operations 1.30 2.02 (0.09)
- ---------------------------------------------------------------------------------- --------- --------- -----------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------------------
Distributions from net investment income (0.37) (0.33) (0.10)
- ----------------------------------------------------------------------------------
Distributions from net realized gain on investments, foreign currency
transactions, and futures contracts (0.23) -- --
- ---------------------------------------------------------------------------------- --------- --------- -----------
Total distributions (0.60) (0.33) (0.10)
- ---------------------------------------------------------------------------------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 12.20 $ 11.50 $ 9.81
- ---------------------------------------------------------------------------------- --------- --------- -----------
TOTAL RETURN (B) 11.75% 20.95% (0.90%)
- ----------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------------
Expenses 1.75% 1.75% 1.70%*
- ----------------------------------------------------------------------------------
Net investment income 3.06% 3.48% 3.53%*
- ----------------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.45% 0.76% 1.15%*
- ----------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $60,208 $27,358 $ 2,952
- ----------------------------------------------------------------------------------
Average commission rate paid $0.0020
- ----------------------------------------------------------------------------------
Portfolio turnover 95% 106% 71 %
- ----------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 25, 1994 (date of initial
public investment) to November 30, 1994. For the period from January 27,
1994 (start of business) to May 24, 1994 the Fund had no investment
activity.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
Further information about the Fund's performance is contained in the Fund's
annual report for the fiscal year ended November 30, 1996, whch can be obtained
free of charge.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated November 15, 1993. The Declaration of Trust permits the Trust to
offer separate series of shares of beneficial interest representing interests in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. As of the date of this prospectus, the Board of
Trustees ("Trustees") have established two classes of shares of the Fund, known
as Select Shares and Institutional Shares. This prospectus relates only to
Select Shares.
Select Shares ("Shares") of the Fund are designed primarily for retail and
private banking customers of financial institutions as a convenient means of
accumulating an interest in a professionally managed, diversified portfolio of
bonds and equities. A minimum initial investment of $1,500 is required.
Shares are currently sold and redeemed at net asset value without a sales charge
imposed by the Fund.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is to seek capital appreciation. In
pursuing its objective, the Fund will consider the current income of the
investments it selects. There can be, of course, no assurance that the Fund will
achieve its investment objective. The Fund's investment objective cannot be
changed without the approval of shareholders. Unless otherwise noted, the Fund's
investment policies may be changed by the Trustees without shareholder approval.
INVESTMENT POLICIES
ASSET ALLOCATION. The Fund will primarily invest in two types of assets:
equities and bonds. The Fund's investment approach is based on the conviction
that, over time, the choice of investment asset categories and their relative
long-term weightings within the portfolio will have the primary impact on its
investment performance. Of secondary importance to the Fund's performance are
the shifting of money among asset categories and the selection of securities
within asset categories. Therefore, the Fund will pursue its investment
objective in the following manner: (1) by setting long-term ranges for each
asset category; (2) by moving money among asset categories within those defined
ranges; and (3) by actively selecting securities within each of the asset
categories. The Fund attempts to minimize risk by allocating its assets in such
a fashion.
Within each of these types of investments, the Fund has designated asset
categories. As a matter of investment policy, ranges have been set for each
asset category's portfolio commitment.
The Fund will invest between 50 and 70 percent of its assets in equities. The
equities asset categories are large company stocks, utility stocks, small
company stocks, foreign stocks and equity reserves.
The Fund will invest between 30 and 50 percent of its assets in bonds. The
Fund's adviser believes that bonds offer opportunities for growth of capital or
otherwise may be desirable under prevailing market or economic conditions. The
bond asset categories are U.S. Treasury securities, mortgage-backed securities,
investment-grade corporate bonds, high yield corporate bonds and foreign bonds.
The following is a summary of the asset categories and the amount of the Fund's
total assets which may be invested in each asset category:
<TABLE>
<CAPTION>
ASSET CATEGORY RANGE
<S> <C>
EQUITIES 50-70%
Large Company Stocks 0-70%
Utility Stocks 0-7.5%
Small Company Stocks 0-21%
Foreign Stocks 0-21%
Equity Reserves 0-15%
BONDS 30-50%
U.S. Treasury Securities 0-45%
Mortgage-Backed Securities 0-15%
Investment-Grade Corporate Bonds 0-15%
High Yield Corporate Bonds 0-15%
Foreign Bonds 0-15%
</TABLE>
The Fund's adviser will regularly review the Fund's allocation among the asset
categories and make any changes, within the ranges established for each asset
category, that it believes will provide the most favorable outlook for achieving
the Fund's investment objective. The Fund's adviser will attempt to exploit
inefficiencies among the various asset categories. If, for example, foreign
stocks are judged to be unusually attractive relative to other asset categories,
the allocation for foreign stocks may be moved to its upper limit. At other
times, when foreign stocks appear to be overvalued, the commitment may be moved
down to a lesser allocation. There is no assurance, however, that the adviser's
attempts to pursue this strategy will result in a benefit to the Fund.
Each asset category within the Fund will be a managed portfolio. The Fund will
seek superior investment performance through security selection in addition to
determining the percentage of its assets to allocate to each of the asset
categories.
EQUITY ASSET CATEGORIES. The portion of the Fund's assets which is invested in
equities will be allocated among the following asset categories within the
ranges specified:
LARGE COMPANY STOCKS. Large company stocks are common stocks and
securities convertible into or exchangeable for common stocks, such as
rights and warrants, of high-quality companies selected by the Fund's
adviser. Ordinarily, these companies will be in the top 25 percent of their
industries with regard to revenues and have a market capitalization of
$500,000,000 or more. However, other factors, such as a company's product
position, market share, current earnings and/or dividend and earnings
growth prospects, will be considered by the Fund's adviser and may
outweigh revenues. The Fund may invest up to 70 percent of its total
assets in large company stocks.
UTILITY STOCKS. Utility stocks are common stocks and securities
convertible into or exchangeable for common stocks, such as rights and
warrants, of utility companies. The Fund may invest up to 7.5 percent of
its total assets in utility stocks. Common stocks of utilities are
generally characterized by higher dividend yields and lower growth rates
than common stocks of industrial companies. Under normal market conditions,
the higher income stream from utility stocks tends to make them less
volatile than stocks of industrial companies.
SMALL COMPANY STOCKS. Small company stocks are common stocks and
securities convertible into or exchangeable for common stocks, such as
rights and warrants, of companies with a market capitalization (market
price x number of shares outstanding) below the top 1,000 stocks that
comprise the large and mid-range capitalization sector of the United States
equity market. These stocks are comparable to, but not limited to, the
stocks comprising the Russell 2000 Index, an index of small capitalization
stocks. The Fund may invest up to 21 percent of its total assets in small
company stocks.
INVESTMENT RISKS. Stocks in the small capitalization sector of the
United States equity market have historically been more volatile in
price than larger capitalization stocks, such as those included in the
Standard & Poor's Ratings Group 500 Index. This is because, among other
things, small companies have less certain growth prospects than larger
companies; have a lower degree of liquidity in the equity market; and
tend to have a greater sensitivity to changing economic conditions.
Further, in addition to exhibiting greater volatility, the stocks of
small companies may, to some degree, fluctuate independently of the
stocks of large companies; that is, small company stocks may decline in
price as large company stocks rise in price or vice versa.
FOREIGN STOCKS. The Fund invests in non-U.S. equity securities. A
substantial portion of these will be equity securities of established
companies in economically developed countries. These securities may be
either dollar-denominated or denominated in foreign currencies. American
Depository Receipts ("ADRs"), including dollar denominated ADRs which are
issued by domestic banks and traded in the United States on exchanges or
over-the-counter, are treated as foreign stocks for purposes of the asset
category ranges. The Fund may invest up to 21 percent of its total assets
in foreign stocks.
EQUITY RESERVES. When the adviser believes that a temporary defensive
position is desirable, the Fund may invest in equity reserves. Equity
reserves will be used to adjust the risk level of the equity portion of the
Fund in response to market conditions. Equity reserves will consist of U.S.
and foreign short-term money market instruments such as commercial paper
rated A-1 by Standard and Poor's Ratings Group ("Standard & Poor's"),
Prime-1 by Moody's Investors Service, Inc. ("Moody's"), or F-1 by Fitch
Investors Service, Inc. ("Fitch"). The Fund may invest up to 15 percent of
its total assets in equity reserves.
BOND ASSET CATEGORIES. The portion of the Fund's assets which is invested in
bonds ("Bond Assets") will be allocated among the following asset categories
within the ranges specified. The prices of fixed income securities fluctuate
inversely to the direction of interest rates. Generally, the
Fund will invest in Bond Assets which are believed to offer opportunities for
growth of capital when the adviser believes interest rates will decline and,
therefore, the value of the debt securities will increase, or the market value
of bonds will increase due to factors affecting certain types of bonds or
particular issuers, such as improvement in credit quality due to company
fundamentals or economic conditions or assumptions on changes in trends in
prepayment rates with respect to mortgage-backed securites. The average duration
of the Fund's Bond Assets will be not less than three nor more than seven years.
Duration is a commonly used measure of the potential volatility of the price of
a debt security, or the aggregate market value of a portfolio of debt
securities, prior to maturity. Securities with shorter durations generally have
less volatile prices than securities of comparable quality with longer
durations. The Fund should be expected to maintain a higher average duration
during periods of lower expected market volatility, and a lower average duration
during periods of higher expected market volatility.
U.S. TREASURY SECURITIES. U.S. Treasury securities are direct obligations
of the U.S. Treasury, such as U.S. Treasury bills, notes, and bonds. The
Fund may invest up to 45 percent of its total assets in U.S. Treasury
securities. The Fund may invest in other U.S. government securities if, in
the judgment of the adviser, other U.S. government securities are more
attractive than U.S. Treasury securities.
MORTGAGE-BACKED SECURITIES. Mortgage-backed securities represent an
undivided interest in a pool of residential mortgages or may be
collateralized by a pool of residential mortgages. Mortgage-backed
securities are generally either issued or guaranteed by the Government
National Mortgage Association ("GNMA"), Federal National Mortgage
Association ("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC") or
other U.S. government agencies or instrumentalities. Mortgage-backed
securities may also be issued by single-purpose, stand-alone finance
subsidiaries or trusts of financial institutions, government agencies,
investment bankers, or companies related to the construction industry. The
Fund may invest up to 15 percent of its total assets in mortgage-backed
securities.
INVESTMENT-GRADE CORPORATE BONDS. Investment-grade corporate bonds are
corporate debt obligations having fixed or floating rates of interest and
which are rated BBB or higher by a nationally recognized statistical rating
organization ("NRSRO"). The Fund may invest up to 15 percent of its total
assets in investment-grade corporate bonds. In certain cases, the Fund's
adviser may choose bonds which are unrated if it determines that such bonds
are of comparable quality or have similar characteristics to the
investment-grade bonds described above. Yankee bonds, which are U.S.
dollar-denominated bonds issued and traded in the United States by foreign
issuers, are treated as investment-grade corporate bonds for purposes of
the asset category ranges.
HIGH YIELD CORPORATE BONDS. High yield corporate bonds are corporate debt
obligations having fixed or floating rates of interest and which are rated
BB or lower by NRSROs (commonly known as junk bonds). The Fund may invest
up to 15 percent of its total assets in high yield corporate bonds. There
is no minimal acceptable rating for a security to be purchased or held in
the Fund's portfolio, and the Fund may, from time to time, purchase or hold
securities rated in the lowest rating category. (See "Appendix.") In
certain cases the Fund's adviser may choose bonds which are unrated if it
determines that such bonds are of comparable quality or have similar
characteristics to the high yield bonds described above.
INVESTMENT RISKS. Lower-rated securities will usually offer higher
yields than higher-rated securities. However, there is more risk
associated with these investments. This is because of reduced
creditworthiness and increased risk of default. Lower-rated securities
generally tend to reflect short-term corporate and market developments
to a greater extent than higher-rated securities which react primarily
to fluctuations in the general level of interest rates. Short-term
corporate and market developments affecting the price or liquidity of
lower-rated securities could include adverse news affecting major
issuers, underwriters, or dealers of lower-rated corporate debt
obligations. In addition, since there are fewer investors in
lower-rated securities, it may be harder to sell the securities at an
optimum time. As a result of these factors, lower-rated securities tend
to have more price volatility and carry more risk to principal than
higher-rated securities.
Many corporate debt obligations, including many lower-rated bonds,
permit the issuers to call the security and thereby redeem their
obligations earlier than the stated maturity dates. Issuers are more
likely to call bonds during periods of declining interest rates. In
these cases, if the Fund owns a bond which is called, the Fund will
receive its return of principal earlier than expected and would likely
be required to reinvest the proceeds at lower interest rates, thus
reducing income to the Fund.
FOREIGN BONDS. Foreign bonds are high-quality debt securities of countries
other than the United States. The Fund's portfolio of foreign bonds will be
comprised mainly of foreign government, foreign governmental agency or
supranational institution bonds. The Fund will also invest in high-quality
debt securities issued by established corporations located primarily in
economically developed countries other than the United States and subject
to the Fund's credit limitations for foreign bonds. The Fund may invest up
to 15 percent of its total assets in foreign bonds.
ACCEPTABLE INVESTMENTS
EQUITY SECURITIES. Common stocks represent ownership interest in a
corporation. Unlike bonds, which are debt securities, common stocks have
neither fixed maturity dates nor fixed schedules of promised payments.
Utility stocks are common stocks of utility companies, including water
companies, companies that produce, transmit, or distribute gas and electric
energy and those companies that provide communications facilities, such as
telephone and telegraph companies. Foreign stocks are equity securities of
foreign issuers.
FOREIGN SECURITIES. The foreign bonds in which the Fund invests are rated
within the four highest ratings for bonds by Moody's (Aaa, Aa, A or Baa) or
by Standard & Poor's (AAA, AA, A or BBB) or are unrated if determined to be
of equivalent quality by the Fund's adviser.
INVESTMENT RISKS. Investments in foreign securities involve special
risks that differ from those associated with investments in domestic
securities. The risks associated with investments in foreign securities
apply to securities issued by foreign corporations and sovereign
governments. These risks relate to political and economic developments
abroad, as well as those that result from the differences between the
regulation of domestic securities and issuers and foreign securities
and issuers. These risks may include, but are not limited to,
expropriation, confiscatory taxation, currency fluctuations,
withholding taxes on interest, limitations on the use or transfer of
Fund assets, political or social instability and adverse diplomatic
developments. It may also be more difficult to enforce contractual
obligations or obtain court judgments abroad than would be the case in
the United States because of differences in the legal systems. If the
issuer of the debt or the governmental authorities that control the
repayment of the debt would 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;
notes, bonds, and discount notes issued or guaranteed by U.S. government
agencies and instrumentalities supported by the full faith and credit of
the United States;
notes, bonds, and discount notes of U.S. government agencies or
instrumentalities which receive or have access to federal funding; and
notes, bonds, and discount notes of other U.S. government
instrumentalities supported only by the credit of the instrumentalities.
The Fund may also purchase U.S. Treasury securities and the U.S. government
securities noted above pursuant to repurchase agreements.
MORTGAGE-BACKED SECURITIES. Mortgage-backed securities are securities
collateralized by residential mortgages. The mortgage-backed securities in
which the Fund may invest may be:
issued by an agency of the U.S. government, typically GNMA, FNMA or
FHLMC;
privately issued securities which are collateralized by pools of
mortgages in which each mortgage is guaranteed as to payment of principal
and interest by an agency or instrumentality of the U.S. government;
privately issued securities which are collateralized by pools of
mortgages in which payment of principal and interest are guaranteed by
the issuer and such guarantee is collateralized by U.S. government
securities; and
other privately issued securities in which the proceeds of the issuance
are invested in mortgage-backed securities and payment of the principal
and interest are supported by the credit of an agency or instrumentality
of the U.S. government.
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"). CMOs are bonds issued by
single-purpose, stand-alone finance subsidiaries or trusts of financial
institutions, government agencies, investment bankers, or companies
related to the construction industry. Most of the CMOs in which the
Fund would invest use the same basic structure:
Several classes of securities are issued against a pool of mortgage
collateral. The most common structure contains four classes of
securities. The first three (A, B, and C bonds) pay interest at
their stated rates beginning with the issue date; the final class
(or Z bond) typically receives the residual income from the
underlying investments after payments are made to the other
classes.
The cash flows from the underlying mortgages are applied first to
pay interest and then to retire securities.
The classes of securities are retired sequentially. All principal
payments are directed first to the shortest-maturity class (or A
bonds). When those securities are completely retired, all principal
payments are then directed to the next-shortest maturity security
(or B bond). This process continues until all of the classes have
been paid off.
Because the cash flow is distributed sequentially instead of pro
rata as with pass-through securities, the cash flows and average
lives of CMOs are more predictable, and there is a period of time
during which the investors in the longer-maturity classes receive
no principal paydowns. The interest portion of these payments is
distributed by the Fund as income and the capital portion is
reinvested.
The Fund will invest only in CMOs which are rated AAA or Aaa by an
NRSRO.
REAL ESTATE MORTGAGE INVESTMENT CONDUITS ("REMICS"). REMICs are
offerings of multiple class real estate mortgage-backed securities
which qualify and elect treatment as such under provisions of the
Internal Revenue Code. Issuers of REMICs may take several forms, such
as trusts, partnerships, corporations, associations or a segregated
pool of mortgages. Once REMIC status is elected and obtained, the
entity is not subject to federal income taxation. Instead, income is
passed through the entity and is taxed to the person or persons who
hold interests in the REMIC. A REMIC interest must consist of one or
more classes of "regular interests," some of which may offer adjustable
rates, and a single class of "residual interests." To qualify as a
REMIC, substantially all of the assets of the entity must be in assets
directly or indirectly secured principally by real property.
CHARACTERISTICS OF MORTGAGE-BACKED SECURITIES. Mortgage-backed
securities have yield and maturity characteristics corresponding to the
underlying mortgages. Distributions to holders of mortgage-backed
securities include both interest and principal payments. Principal
payments represent the amortization of the principal of the underlying
mortgages and any prepayments of principal due to prepayment,
refinancing, or foreclosure of the underlying mortgages. Although
maturities of the underlying mortgage loans may range up to 30 years,
amortization and prepayments substantially shorten the effective
maturities of mortgage-backed securities. Due to these features,
mortgage-backed securities are less effective as a means of "locking
in" attractive long-term interest rates than fixed-income securities
which pay only a stated amount of interest until maturity, when the
entire principal amount is returned. This is caused by the need to
reinvest at lower interest rates both distributions of principal
generally and significant prepayments which become more likely as
mortgage interest rates decline. Since comparatively high interest
rates cannot be effectively "locked in," mortgage-backed securities may
have less potential for capital appreciation during periods of
declining interest rates than other non-callable, fixed-income
government securities of comparable stated maturities. However,
mortgage-backed securities may experience less pronounced declines in
value during periods of rising interest rates.
In addition, some of the CMOs purchased by the Fund may represent an
interest solely in the principal repayments or solely in the interest
payments on mortgage-backed securities (stripped mortgage-backed
securities or "SMBSs"). Due to the possibility of prepayments on the
underlying mortgages, SMBSs may be more interest-rate sensitive than
other securities purchased by the Fund. If prevailing interest rates
fall below the level at which SMBSs were issued, there may be
substantial prepayments on the underlying mortgages, leading to the
relatively early prepayments of principal-only SMBSs and a reduction in
the amount of payments made to holders of interest-only SMBSs. It is
possible that the Fund might not recover its original investment in
interest-only SMBSs if there are substantial prepayments on the
underlying mortgages. Therefore, interest-only SMBSs generally increase
in value as interest rates rise and decrease in value as interest rates
fall, counter to changes in value experienced by most fixed income
securities. The Fund's adviser intends to use this characteristic of
interest-only SMBSs to reduce the effects of interest rate changes on
the value of the Fund's portfolio, while continuing to pursue the
Fund's investment objective.
CORPORATE BONDS. The investment-grade corporate bonds in which the Fund
invests are:
rated within the four highest ratings for corporate bonds by Moody's
(Aaa, Aa, A, or Baa), Standard & Poor's (AAA, AA, A, or BBB), or Fitch
(AAA, AA, A, or BBB);
unrated if other long-term debt securities of that issuer are rated, at
the time of purchase, Baa or better by Moody's or BBB or better by
Standard & Poor's or Fitch; or
unrated if determined to be of equivalent quality to one of the foregoing
rating categories by the Fund's adviser.
Securities which are rated BBB by Standard & Poor's or Fitch or Baa by
Moody's have speculative characteristics. Changes in economic conditions
or other circumstances are more likely to lead to weakened capacity to
make principal and interest payments than higher rated bonds. If a
security's rating is reduced below the required minimum after the Fund
has purchased it, the Fund is not required to sell the security, but may
consider doing so.
The high yield corporate bonds in which the Fund invests are rated Ba or
lower by Moody's or BB or lower by Standard & Poor's or Fitch (commonly
known as junk bonds). A description of the rating categories is contained
in the Appendix to this prospectus.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Fund may invest in
the securities of other investment companies, but it will not own more than 3
percent of the total outstanding voting stock of any such investment company,
invest more than 5 percent of its total assets in any one such investment
company, or invest more than 10 percent of its total assets in such other
investment companies in general. To the extent that the Fund invests in
securities issued by other investment companies, the Fund will indirectly bear
its proportionate share of any fees and expenses paid by such companies in
addition to the fees and expenses payable directly by the Fund.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies but which are
subject to restrictions on resale under federal securities law. Under criteria
established by the Trustees, certain restricted securities are determined to be
liquid. To the extent that restricted securities are not determined to be
liquid, the Fund will limit their purchase, together with other illiquid
securities including 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.
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.
FOREIGN CURRENCY TRANSACTIONS. The Fund will enter into foreign currency
transactions to obtain the necessary currencies to settle securities
transactions. Currency transactions may be conducted either on a spot or cash
basis at prevailing rates or through forward foreign currency exchange
contracts.
The Fund may also enter into foreign currency transactions to protect Fund
assets against adverse changes in foreign currency exchange rates or exchange
control regulations. Such changes could unfavorably affect the value of Fund
assets which are denominated in foreign currencies, such as foreign securities
or funds deposited in foreign banks, as measured in U.S. dollars. Although
foreign currency exchanges may be used by the Fund to protect against a decline
in the value of one or more currencies, such efforts may also limit any
potential gain that might result from a relative increase in the value of such
currencies and might, in certain cases, result in losses to the Fund.
CURRENCY RISKS. To the extent that debt securities purchased by the Fund
are denominated in currencies other than the U.S. dollar, changes in
foreign currency exchange rates will affect the Fund's net asset value; the
value of interest earned; gains and losses realized on the sale of
securities; and net investment income and capital gain, if any, to be
distributed to shareholders by the Fund. If the value of a foreign currency
rises against the U.S. dollar, the value of the Fund's assets denominated
in that currency will increase; correspondingly, if the value of a foreign
currency declines against the U.S. dollar, the value of the Fund's assets
denominated in that currency will decrease.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward foreign currency
exchange contract ("forward contract") is an obligation to purchase or sell an
amount of a particular currency at a specific price and on a future date agreed
upon by the parties.
Generally, no commission charges or deposits are involved. At the time the Fund
enters into a forward contract, Fund assets with a value equal to the Fund's
obligation under the forward contract are segregated and are maintained until
the contract has been settled. The Fund will not enter into a forward contract
with a term of more than one year.
The Fund will generally enter into a forward contract to provide the proper
currency to settle a securities transaction at the time the transaction occurs
("trade date"). The period between trade date and settlement date will vary
between 24 hours and 30 days, depending upon local custom.
The Fund may also protect against the decline of a particular foreign currency
by entering into a forward contract to sell an amount of that currency
approximating the value of all or a portion of the Fund's assets denominated in
that currency ("hedging"). The success of this type of short-term hedging
strategy is highly uncertain due to the difficulties of predicting short-term
currency market movements and of precisely matching forward contract amounts and
the constantly changing value of the securities involved. Although the adviser
will consider the likelihood of changes in currency values when making
investment decisions, the adviser believes that it is important to be able to
enter into forward contracts when it believes the interests of the Fund will be
served. The Fund will not enter into forward contracts for hedging purposes in a
particular currency in an amount in excess of the Fund's assets denominated in
that currency. The Fund will not invest more than 21% of its total assets in
forward foreign currency exchange contracts.
OPTIONS. The Fund may deal in options on foreign currencies, foreign currency
futures, securities, and securities indices, which options may be listed for
trading on a national securities exchange or traded over-the-counter. The Fund
will use options only to manage interest rate and currency risks. The Fund may
write covered call options to generate income.
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.
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 consideration when the Fund's adviser deems it appropriate
to make changes in the Fund's portfolio.
INVESTMENT LIMITATIONS
The Fund will not:
borrow money directly or through reverse repurchase agreements or pledge
securities except, under certain circumstances, the Fund may borrow up to
one-third of the value of its total assets and pledge up to 15 percent of
the value of those assets to secure such borrowings;
lend any securities except for portfolio securities; or
underwrite any issue of securities, except as it may be deemed to be an
underwriter under the Securities Act of 1933 in connection with the sale
of restricted securities which the Fund may purchase pursuant to its
investment objective, policies and limitations.
The above investment limitations cannot be changed without shareholder approval.
TRUST INFORMATION
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MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Trust's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. The Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Except as noted below with regard to the sub-adviser,
investment decisions for the Fund are made by Federated Management, the Fund's
investment adviser (the "Adviser"), subject to direction by the Trustees. The
Adviser continually conducts investment research and supervision for the Fund
and is responsible for the purchase or sale of portfolio instruments, for which
it receives an annual fee from the Fund.
ADVISORY FEES. The Adviser receives an annual investment advisory fee
equal to .75% of 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.
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.
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 $76
billion invested across more than 338 funds under management and/or
administration by its subsidiaries, as of December 31, 1996, Federated Investors
is one of the largest mutual fund investment managers in the United States. With
more than 2,000 employees, Federated continues to be led by the management who
founded the company in 1955. Federated funds are presently at work in and
through 4,500 financial institutions nationwide.
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 Investment Strategy Committee. 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:
Scott B. Schermerhorn and Peter R. Anderson are the portfolio managers for the
domestic large company stocks asset category.
Scott B. Schermerhorn has been the Fund's portfolio manager since July 1, 1996.
Mr. Schermerhorn joined Federated Investors in 1996 as a Vice President of the
Fund's Adviser. From 1990 through 1996, Mr. Schermerhorn was a Senior Vice
President and Senior Investment Officer at J W Seligman & Co., Inc. Mr.
Schermerhorn received his M.B.A. in Finance and International Business from
Seton Hall University.
Peter R. Anderson has been the Fund's portfolio manager since the Fund's
inception. 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.
Aash M. Shah and James E. Grefenstette are the portfolio managers for the
domestic small company stocks asset category.
Aash M. Shah has been the Fund's portfolio manager since December 1995. 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. in Industrial Administration from Carnegie Mellon
University with a concentration in finance and accounting. Mr. Shah is a
Chartered Financial Analyst.
James E. Grefenstette has been the Fund's portfolio manager since August 1994.
Mr. Grefenstette joined Federated Investors in 1992 and has been a Vice
President since July 1996. Mr. Grefenstette served as an Assistant Vice
President of the Fund's Adviser from 1994 to 1996, and an investment analyst
from 1992 to 1994. Mr. Grefenstette was a credit analyst at Westinghouse Credit
Corp. from 1990 until 1992. Mr. Grefenstette received his M.S. in Industrial
Administration from Carnegie Mellon University.
Henry A. Frantzen, Drew J. Collins, Mark S. Kopinski, Frank Semack, and
Alexandre de Bethmann are portfolio managers for the foreign stocks asset
category.
Henry A. Frantzen has been the Fund's portfolio manager 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.
Drew J. Collins has been the Fund's portfolio manager 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 the Fund's portfolio manager 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 the Fund's portfolio manager 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 1980 to 1993. Mr. Semack received his
M.Sc. in economics from the London School of Economics.
Alexandre de Bethmann has been the Fund's portfolio manager 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 A. Frantzen, Drew J. Collins, Robert M. Kowit and Micheal W. Casey are
portfolio managers for the foreign bonds asset category. Messrs. Frantzen,
Collins and Kowit 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.
Micheal W. Casey, Ph.D. has been the Fund's portfolio manager since January 1,
1997. Mr. Casey joined Federated Investors in 1996 as an Assistant Vice
President. Mr. Casey served as an International Economist and Portfolio
Strategist for Maria Fiorini Ramirez Inc. from 1990 to 1996. Mr. Casey earned a
Ph.D. concentrating in economics from The New School for Social Research and a
M.Sc. from the London School of Economics.
Susan M. Nason and Joseph M. Balestrino are portfolio managers for the U.S.
Treasury securities asset category.
Susan M. Nason has been the Fund's portfolio manager since the Fund's inception.
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. in Industrial Administration from Carnegie Mellon
University.
Joseph M. Balestrino has been the Fund's portfolio manager since March 1995. 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. 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. in Industrial Administration from Carnegie Mellon University.
Kathleen M. Foody-Malus is the portfolio manager for the mortgage-backed
securities asset category. Ms. Foody-Malus has performed this duty since the
Fund's inception. 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.
Joseph M. Balestrino and Susan M. Nason are portfolio managers for the
investment-grade corporate bonds asset category. They have performed these
duties since the Fund's inception.
Mark E. Durbiano is the portfolio manager for the high yield corporate bonds
asset category. He has performed these duties since the Fund's inception. Mr.
Durbiano joined Federated Investors in 1982 and has been a Senior Vice President
of the Fund's Adviser since January 1996. Mr. Durbiano was a Vice President of
the Fund's Adviser from 1988 through 1995. Mr. Durbiano is a Chartered Financial
Analyst and received his M.B.A. in Finance from the University of Pittsburgh.
DISTRIBUTION OF SELECT SHARES
Federated Securities Corp. is the principal distributor for Shares. It is a
Pennsylvania corporation organized on November 14, 1969, and is the principal
distributor for a number of investment companies. Federated Securities Corp. is
a subsidiary of Federated Investors.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES. Under a distribution plan adopted
in accordance with Investment Company Act Rule 12b-1 (the "Distribution Plan"),
the distributor may be paid a fee in an amount computed at an annual rate of
.75% of the average daily net assets of Select Shares to finance any activity
which is principally intended to result in the sale of Shares subject to the
Distribution Plan. The distributor may select financial institutions such as
banks, fiduciaries, custodians for public funds, investment advisers, and
broker/dealers to provide sales services or distribution-related support
services as agents for their clients or customers.
The Distribution Plan is a compensation-type plan. As such, the Fund makes no
payments to the distributor except as described above. Therefore, the Fund does
not pay separately for unreimbursed expenses of the distributor, including
amounts expended by the distributor in excess of amounts received by it from the
Fund, interest, carrying or other financing charges in connection with excess
amounts expended, or the distributor's overhead expenses. However, the
distributor may be able to recover such amount or may earn a profit from future
payments made by the Fund under the Distribution Plan.
In addition, the Fund has entered into a Shareholder Services Agreement with
Federated Shareholder Services, a subsidiary of Federated Investors, under which
the Fund may make payments up to.25% of the average daily net asset value of the
Select Shares to obtain certain personal services for shareholders and the
maintenance of shareholder accounts. Under the Shareholder Services Agreement,
Federated Shareholders Services will either perform shareholder services
directly or will select financial institutions to perform shareholder services.
Financial institutions will receive fees based upon shares owned by their
clients or customers. The schedules of such fees and the basis upon which such
fees will be paid will be determined from time to time by the Fund and Federated
Shareholder Services.
SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS. In addition to receiving the
payments under the Distribution Plan and Shareholder Services Agreement,
Federated Securities Corp. and Federated Shareholder Services, from their own
assets, may pay financial institutions supplemental fees for the performance of
substantial sales services, distribution related support services, or
shareholder services. The support may include sponsoring sales, educational and
training seminars for their employees, providing sales literature, and
engineering computer software programs that emphasize the attributes of the
Fund. Such assistance will be predicated upon the amount of Shares the financial
institution sells or may sell, and/or upon the type and nature of sales or
marketing support furnished by the financial institution. Any payments made by
the distributor may be reimbursed by the Fund's Adviser or its affiliates.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Services Company, a subsidiary of Federated
Investors, provides administrative personnel and services (including certain
legal and financial reporting services) necessary to operate the Fund. Federated
Services Company 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% on the first $250 million
.125% on the next $250 million
.10% on the next $250 million
.075% 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 Services Company may choose voluntarily to waive a portion of its fee.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the Adviser looks for prompt execution of the order at a favorable
price. In working with dealers, the Adviser will generally utilize those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. In selecting among firms
believed to meet these criteria, the Adviser may give consideration to those
firms which have sold or are selling shares of the Fund and other funds
distributed by Federated Securities Corp. The Adviser makes decisions on
portfolio transactions and selects brokers and dealers subject to review by
the Trustees.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund's net asset value per Share fluctuates. The net asset value for Shares
is determined by adding the interest of the Shares in the market value of all
securities and other assets of the Fund, subtracting the interest of the Shares
in the liabilities of the Fund and those attributable to Shares, and dividing
the remainder by the total number of Shares outstanding. The net asset value for
Institutional Shares may exceed that of Select Shares due to the variance in
daily net income realized by each class. Such variance will reflect only accrued
net income to which the shareholders of a particular class are entitled.
INVESTING IN SELECT SHARES
- --------------------------------------------------------------------------------
SHARE PURCHASES
Shares are sold on days on which the New York Stock Exchange is open for
business. Shares may be purchased through a financial institution which has a
sales agreement with the distributor or by wire or mail.
To purchase Shares, open an account by calling Federated Securities Corp.
Information needed to establish an account will be taken over the telephone. The
Fund reserves the right to reject any purchase request.
THROUGH A FINANCIAL INSTITUTION. An investor may call his financial institution
(such as a bank or an investment dealer) to place an order to purchase Shares.
Orders through a financial institution are considered received when the Fund is
notified of the purchase order. Purchase orders through a registered
broker/dealer must be received by the broker before 4:00 p.m. (Eastern time) and
must be transmitted by the broker to the Fund before 5:00 p.m. (Eastern time) in
order for Shares to be purchased at that day's price. Purchase orders through
other financial institutions must be received by the financial institution and
transmitted to the Fund before 4:00 p.m. (Eastern time) in order for Shares to
be purchased at that day's price. It is the financial institution's
responsibility to transmit orders promptly.
BY WIRE. To purchase Shares by Federal Reserve wire, call the Fund before 4:00
p.m. (Eastern time) to place an order. The order is considered received
immediately. Payment by federal funds must be received before 3:00 p.m. (Eastern
time) on the next business day following the order. Federal funds should be
wired as follows: Federated Shareholder Services Company, c/o State Street Bank
and Trust Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit to:
Federated Managed Growth Fund-- Select Shares; Fund Number (this number can be
found on the account statement or by contacting the Fund); Group Number or Wire
Order Number; Nominee or Institution Name; and ABA Number 011000028. Shares
cannot be purchased by wire on holidays when wire transfers
are restricted. Questions on wire purchases should be directed to your
shareholder services representative at the telephone number listed on your
account statement.
BY MAIL. To purchase Shares by mail, send a check made payable to Federated
Managed Growth Fund--Select Shares to Federated Shareholder Services Company,
P.O. Box 8600, Boston, Massachusetts 02266-8600. Orders by mail are considered
received after payment by check is converted by State Street Bank into federal
funds. This is normally the next business day after State Street Bank receives
the check.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in Shares is $1,500. Accounts established through
a financial intermediary 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 financial intermediary may be charged an additional service fee
by that financial intermediary.
The net asset value is determined as of the close of trading (normally 4:00
p.m., Eastern time) on the New York Stock Exchange, Monday through Friday,
except on (i) days on which there are not sufficient changes in the value of the
Fund's portfolio securities 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.
SYSTEMATIC INVESTMENT PROGRAM
Once a Fund account has been opened, shareholders may add to their investment on
a regular basis. Under this program, funds may be automatically withdrawn
periodically from the shareholder's checking account and invested in Shares at
the net asset value next determined after an order is received by the Fund. A
shareholder may apply for participation in this program through Federated
Securities Corp.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Shareholder Services Company maintains
a share account for each shareholder. Share certificates are not issued unless
requested by contacting the Fund.
Detailed confirmations of each purchase or redemption are sent to each
shareholder. Quarterly confirmations are sent to report dividends paid during
the quarter.
DIVIDENDS
Dividends are declared and paid quarterly to all shareholders invested in the
Fund on the record date. Unless shareholders request cash payments by writing
the Fund, dividends are automatically reinvested in additional Shares of the
Fund on payment dates at the ex-dividend date net asset value without a sales
charge.
CAPITAL GAINS
Capital gains realized by the Fund, if any, will be distributed at least once
every 12 months.
REDEEMING SELECT SHARES
- --------------------------------------------------------------------------------
The Fund redeems Shares at their net asset value next determined after the Fund
receives the redemption request. Investors who redeem Shares through a financial
intermediary may be charged a service fee by that financial intermediary.
Redemptions will be made on days on which the Fund computes its net asset value.
Redemption requests must be received in proper form and can be made 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
REDEEMING SHARES BY MAIL. Shares may be redeemed in any amount by mailing a
written request to: Federated Shareholder Services Company, P.O. Box 8600,
Boston, MA 02266-8600. If Share certificates have been issued, they should be
sent unendorsed with the written request by registered or certified mail to the
address noted above.
The written request should state: the Fund name and the class designation; the
account name as registered with the Fund; the account number; and the number of
shares to be redeemed or the dollar amount requested. All owners of the account
must sign the request exactly as the shares are registered. Normally, a check
for the proceeds is mailed within one business day, but in no event more than
seven days, after the receipt of a proper written redemption request. Dividends
are paid up to and including the day that a redemption request is processed.
Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Fund or a redemption payable other than to
the shareholder of record must have their signatures guaranteed by a commercial
or savings bank, trust company or savings association whose deposits are insured
by an organization which is administered by the Federal Deposit Insurance
Corporation; a member firm of a domestic stock exchange; 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.
SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive payments of a predetermined amount may take
advantage of the Systematic Withdrawal Program. Under this program, Shares are
redeemed to provide for periodic withdrawal payments in an amount directed by
the shareholder. Depending upon the amount of the withdrawal payments, the
amount of dividends paid and capital gains distributions with respect to Shares,
and the fluctuation of the net asset value of Shares redeemed under this
program, redemptions may reduce, and eventually use up, the shareholder's
investment in the Fund. For this reason, payments under this program should not
be considered as yield or income on the shareholder's investment in the Fund. To
be eligible to participate in this program, a shareholder must have an account
value of at least $10,000, other than retirement accounts subject to required
minimum distributions. A shareholder may apply for participation in this program
through Federated Securities Corp.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem Shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $1,500. This requirement
does not apply, however, if the balance falls below $1,500 because of changes in
the Fund's net asset value. Before Shares are redeemed to close an account, the
shareholder is notified in writing and allowed 30 days to purchase additional
Shares to meet the minimum requirement.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights except that, in matters
affecting only a particular fund or class, only shares of that fund or class are
entitled to vote. As a Massachusetts business trust, the Trust is not required
to hold annual shareholder meetings. Shareholder approval will be sought only
for certain changes in the Trust's or the Fund's operation and for the election
of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust entitled to vote.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code applicable to regulated investment companies and to
receive the special tax treatment afforded to such companies.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional Shares.
STATE AND LOCAL TAXES
In the opinion of Houston, Donnelly and Meck, counsel to the Trust, Fund shares
may be subject to personal property taxes imposed by counties, municipalities,
and school districts in Pennsylvania to the extent that the portfolio securities
in the Fund would be subject to such taxes if owned directly by residents of
those jurisdictions.
Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its total return and yield for Shares.
Total return represents the change, over a specified period of time, in the
value of an investment in Shares after reinvesting all income and capital gain
distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
The yield of Shares is calculated by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by Shares
over a thirty-day period by the maximum offering price per share of Shares on
the last day of the period. This number is then annualized using semi-annual
compounding. The yield does not necessarily reflect income actually earned by
Shares and, therefore, may not correlate to the dividends or other
distributions paid to shareholders.
From time to time, advertisements for the Fund's Select Shares may refer to
ratings, rankings, and other information in certain financial publications
and/or compare the Fund's performance to certain indices.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
The Fund also offers another class of shares called Institutional Shares that
are sold at net asset value primarily to financial institutions acting in a
fiduciary or agency capacity and are subject to a minimum initial investment of
$25,000 over a 90-day period.
Institutional Shares are distributed without a 12b-1 Plan but are subject to
shareholder services fees.
Institutional Shares and Select Shares are subject to certain of the same
expenses. Expense differences, however, between Institutional Shares and Select
Shares may affect the performance of each class.
To obtain more information and a prospectus for Institutional Shares, investors
may call 1-800-341-7400.
FEDERATED MANAGED GROWTH FUND
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 81.
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
<S> <C> <C> <C>
1996 1995 1994(A)
<CAPTION>
- ---------------------------------------------------------------------------------- --------- --------- -----------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.52 $ 9.82 $ 10.00
- ----------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------------
Net investment income 0.41 0.40 0.20
- ----------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments, foreign currency, and
futures contracts 0.97 1.70 (0.26)
- ---------------------------------------------------------------------------------- --------- --------- -----------
Total from investment operations 1.38 2.10 (0.06)
- ---------------------------------------------------------------------------------- --------- --------- -----------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------------------
Distributions from net investment income (0.44) (0.40) (0.12)
- ----------------------------------------------------------------------------------
Distributions from net realized gain on investments, foreign currency
transactions, and futures contracts (0.23) -- --
- ---------------------------------------------------------------------------------- --------- --------- -----------
Total distributions (0.67) (0.40) (0.12)
- ---------------------------------------------------------------------------------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 12.23 $ 11.52 $ 9.82
- ---------------------------------------------------------------------------------- --------- --------- -----------
TOTAL RETURN (B) 12.54% 21.79% (0.59%)
- ----------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------------
Expenses 1.05% 1.00% 0.89%*
- ----------------------------------------------------------------------------------
Net investment income 3.77% 4.29% 4.28%*
- ----------------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.40% 0.76% 0.90%*
- ----------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $136,255 $68,313 $28,973
- ----------------------------------------------------------------------------------
Average commission rate paid $0.0020
- ----------------------------------------------------------------------------------
Portfolio turnover 95% 106% 71 %
- ----------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 25, 1994 (date of initial
public investment) to November 30, 1994. For the period from January 27,
1994 (start of business) to May 24, 1994 the Fund had no investment
activity.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
Further information about the Fund's performance is contained in the Fund's
annual report for the fiscal year ended November 30, 1996, whch can be obtained
free of charge.
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED GROWTH FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--48.7%
- ----------------------------------------------------------------------------------------------
LARGE-COMPANY--25.5%
----------------------------------------------------------------------------
BASIC INDUSTRY--1.8%
----------------------------------------------------------------------------
30,700 Allegheny Teledyne, Inc. $ 717,613
----------------------------------------------------------------------------
10,100 Betz Laboratories, Inc. 584,538
----------------------------------------------------------------------------
5,500 Du Pont (E.I.) de Nemours & Co. 518,375
----------------------------------------------------------------------------
10,000 Great Lakes Chemical Corp. 536,250
----------------------------------------------------------------------------
49,000 LTV Corporation 526,750
----------------------------------------------------------------------------
17,400 Morton International, Inc. 702,525
---------------------------------------------------------------------------- --------------
Total 3,586,051
---------------------------------------------------------------------------- --------------
CONSUMER DURABLES--1.0%
----------------------------------------------------------------------------
13,800 General Motors Corp., Class H 752,100
----------------------------------------------------------------------------
7,400 General Motors Corp. 426,425
----------------------------------------------------------------------------
9,500 Martin Marietta Materials 223,250
----------------------------------------------------------------------------
22,300 Rubbermaid, Inc. 535,200
---------------------------------------------------------------------------- --------------
Total 1,936,975
---------------------------------------------------------------------------- --------------
CONSUMER NON-DURABLES--3.5%
----------------------------------------------------------------------------
9,100 Avon Products, Inc. 507,325
----------------------------------------------------------------------------
6,100 CPC International, Inc. 507,825
----------------------------------------------------------------------------
10,000 Dole Food, Inc., ACES, $2.7475 398,750
----------------------------------------------------------------------------
8,700 Heinz (H.J.) Co. 329,513
----------------------------------------------------------------------------
33,000 IBP, Inc. 816,750
----------------------------------------------------------------------------
6,000 Kimberly-Clark Corp. 586,500
----------------------------------------------------------------------------
13,050 Philip Morris Cos., Inc. 1,345,781
----------------------------------------------------------------------------
14,500 Tambrands, Inc. 619,875
----------------------------------------------------------------------------
7,700 Unilever N.V. 1,333,063
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
LARGE-COMPANY--CONTINUED
----------------------------------------------------------------------------
CONSUMER NON-DURABLES--CONTINUED
----------------------------------------------------------------------------
7,600 V.F. Corp. $ 515,850
---------------------------------------------------------------------------- --------------
Total 6,961,232
---------------------------------------------------------------------------- --------------
ENERGY MINERALS--3.0%
----------------------------------------------------------------------------
15,100 Baker Hughes, Inc. 553,038
----------------------------------------------------------------------------
12,300 Chevron Corp. 824,100
----------------------------------------------------------------------------
7,700 Exxon Corp. 728,613
----------------------------------------------------------------------------
22,400 Occidental Petroleum Corp. 537,600
----------------------------------------------------------------------------
2,800 Royal Dutch Petroleum Co. 475,650
----------------------------------------------------------------------------
8,600 Texaco, Inc. 852,475
----------------------------------------------------------------------------
31,000 USX-Marathon Group 709,125
----------------------------------------------------------------------------
22,381 Union Pacific Resources Group, Inc. 668,632
----------------------------------------------------------------------------
7,500 (a)Western Atlas, Inc. 528,750
---------------------------------------------------------------------------- --------------
Total 5,877,983
---------------------------------------------------------------------------- --------------
FINANCE--3.8%
----------------------------------------------------------------------------
13,913 Allstate Corp. 838,258
----------------------------------------------------------------------------
8,300 CIGNA Corp. 1,173,413
----------------------------------------------------------------------------
8,500 Chase Manhattan Corp. 803,250
----------------------------------------------------------------------------
5,500 Citicorp 600,875
----------------------------------------------------------------------------
7,200 Dean Witter, Discover & Co. 492,300
----------------------------------------------------------------------------
21,300 Federal National Mortgage Association 878,625
----------------------------------------------------------------------------
9,500 Marsh & McLennan Cos., Inc. 1,077,063
----------------------------------------------------------------------------
11,500 National City Corp. 533,313
----------------------------------------------------------------------------
10,100 Providian Corp. 540,350
----------------------------------------------------------------------------
12,333 Travelers Group, Inc. 555,000
---------------------------------------------------------------------------- --------------
Total 7,492,447
---------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
LARGE-COMPANY--CONTINUED
----------------------------------------------------------------------------
HEALTH CARE--3.0%
----------------------------------------------------------------------------
13,500 Abbott Laboratories $ 752,625
----------------------------------------------------------------------------
11,900 (a)American Home Products Corp. 764,575
----------------------------------------------------------------------------
17,000 Bard (C.R.), Inc. 476,000
----------------------------------------------------------------------------
24,800 (a)Biomet, Inc. 409,200
----------------------------------------------------------------------------
8,200 Bristol-Myers Squibb Co. 932,750
----------------------------------------------------------------------------
11,700 Columbia/HCA Healthcare Corp. 468,000
----------------------------------------------------------------------------
30,700 (a)Healthsource, Inc. 345,375
----------------------------------------------------------------------------
6,900 Merck & Co., Inc. 572,700
----------------------------------------------------------------------------
7,200 Smithkline Beecham, ADR 495,900
----------------------------------------------------------------------------
13,200 United Healthcare Corp. 569,250
---------------------------------------------------------------------------- --------------
Total 5,786,375
---------------------------------------------------------------------------- --------------
PRODUCER MANUFACTURING--1.9%
----------------------------------------------------------------------------
6,500 (a)FMC Corp. 502,125
----------------------------------------------------------------------------
6,700 General Electric Co. 696,800
----------------------------------------------------------------------------
8,300 Loews Corp. 769,825
----------------------------------------------------------------------------
9,700 Textron, Inc. 925,138
----------------------------------------------------------------------------
45,000 (b)Westinghouse Electric Corp., PEPS, Series C, $1.30 769,230
---------------------------------------------------------------------------- --------------
Total 3,663,118
---------------------------------------------------------------------------- --------------
RETAIL TRADE--1.2%
----------------------------------------------------------------------------
17,100 Dayton-Hudson Corp. 664,763
----------------------------------------------------------------------------
17,000 Sears, Roebuck & Co. 845,750
----------------------------------------------------------------------------
35,300 Wal-Mart Stores, Inc. 900,150
---------------------------------------------------------------------------- --------------
Total 2,410,663
---------------------------------------------------------------------------- --------------
SERVICES--1.0%
----------------------------------------------------------------------------
18,500 Block (H&R), Inc. 541,125
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
LARGE-COMPANY--CONTINUED
----------------------------------------------------------------------------
SERVICES--CONTINUED
----------------------------------------------------------------------------
28,000 Browning-Ferris Industries, Inc. $ 752,500
----------------------------------------------------------------------------
8,100 Gannett Co., Inc. 635,850
---------------------------------------------------------------------------- --------------
Total 1,929,475
---------------------------------------------------------------------------- --------------
TECHNOLOGY--2.1%
----------------------------------------------------------------------------
18,000 (a)Analog Devices, Inc. 578,250
----------------------------------------------------------------------------
15,800 Electronic Data Systems Corp. 764,325
----------------------------------------------------------------------------
5,500 Intel Corp. 697,813
----------------------------------------------------------------------------
1,900 International Business Machines Corp. 302,813
----------------------------------------------------------------------------
4,102 Lockheed Martin Corp. 371,744
----------------------------------------------------------------------------
4,634 Lucent Technologies, Inc. 237,493
----------------------------------------------------------------------------
8,400 Raytheon Co. 429,450
----------------------------------------------------------------------------
11,100 (a)Rockwell International Corp. 713,175
---------------------------------------------------------------------------- --------------
Total 4,095,063
---------------------------------------------------------------------------- --------------
TRANSPORTATION--0.2%
----------------------------------------------------------------------------
14,000 (a)KLM Royal Dutch Airlines 365,750
---------------------------------------------------------------------------- --------------
UTILITIES--3.0%
----------------------------------------------------------------------------
14,300 AT&T Corp. 561,275
----------------------------------------------------------------------------
14,600 CMS Energy Corp. 474,500
----------------------------------------------------------------------------
9,900 (a)Columbia Gas System, Inc. 639,788
----------------------------------------------------------------------------
15,000 Enron Corp. 686,250
----------------------------------------------------------------------------
10,000 FPL Group, Inc. 461,250
----------------------------------------------------------------------------
17,700 GTE Corp. 794,288
----------------------------------------------------------------------------
37,600 MCI Communications Corp. 1,146,800
----------------------------------------------------------------------------
19,900 Pacific Gas & Electric Co. 480,088
----------------------------------------------------------------------------
17,600 Southern Co. 391,600
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
LARGE-COMPANY--CONTINUED
----------------------------------------------------------------------------
UTILITIES--CONTINUED
----------------------------------------------------------------------------
17,000 TECO Energy, Inc. $ 414,375
---------------------------------------------------------------------------- --------------
Total 6,050,214
---------------------------------------------------------------------------- --------------
TOTAL LARGE-COMPANY 50,155,346
---------------------------------------------------------------------------- --------------
SMALL-COMPANY--7.7%
----------------------------------------------------------------------------
BASIC INDUSTRY--0.5%
----------------------------------------------------------------------------
10,500 (a)Chirex, Inc. 112,875
----------------------------------------------------------------------------
3,500 Donaldson Company, Inc. 106,750
----------------------------------------------------------------------------
5,200 (a)Fibreboard Corp. 180,050
----------------------------------------------------------------------------
7,900 (a)Royal Plastics Group Ltd. 142,200
----------------------------------------------------------------------------
12,200 Spartech Corp. 129,625
----------------------------------------------------------------------------
11,500 (a)Synthetech, Inc. 94,875
----------------------------------------------------------------------------
2,000 Texas Industries, Inc. 113,750
----------------------------------------------------------------------------
4,100 (a)Titanium Metals Corp. 137,350
---------------------------------------------------------------------------- --------------
Total 1,017,475
---------------------------------------------------------------------------- --------------
CONSUMER DURABLES--0.6%
----------------------------------------------------------------------------
7,800 Action Performance Companies, Inc. 133,575
----------------------------------------------------------------------------
2,100 Carlisle Cos., Inc. 120,750
----------------------------------------------------------------------------
5,875 Cavalier Homes, Inc. 66,094
----------------------------------------------------------------------------
6,800 (a)Champion Enterprises, Inc. 141,950
----------------------------------------------------------------------------
4,900 Coachmen Industries, Inc. 124,950
----------------------------------------------------------------------------
6,900 (a)Equity Marketing, Inc. 158,700
----------------------------------------------------------------------------
3,300 (a)K2, Inc. 85,800
----------------------------------------------------------------------------
4,400 Lewis Galoob Toys, Inc. 128,150
----------------------------------------------------------------------------
6,000 Norwood Promotional Products 96,750
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
SMALL-COMPANY--CONTINUED
----------------------------------------------------------------------------
CONSUMER DURABLES--CONTINUED
----------------------------------------------------------------------------
2,500 Wynns International, Inc. $ 72,813
---------------------------------------------------------------------------- --------------
Total 1,129,532
---------------------------------------------------------------------------- --------------
CONSUMER NON-DURABLES--0.3%
----------------------------------------------------------------------------
6,600 (a)Helen of Troy Ltd. 141,900
----------------------------------------------------------------------------
9,500 (a)Morningstar Group, Inc. 163,875
----------------------------------------------------------------------------
2,700 (a)Mossimo, Inc. 40,838
----------------------------------------------------------------------------
2,900 Natures Sunshine Products, Inc. 58,725
----------------------------------------------------------------------------
7,700 (a)Sport-Haley Inc. 113,575
----------------------------------------------------------------------------
4,200 Worthington Foods, Inc. 107,100
---------------------------------------------------------------------------- --------------
Total 626,013
---------------------------------------------------------------------------- --------------
ENERGY MINERALS--0.3%
----------------------------------------------------------------------------
4,200 (a)Belden & Blake Corp. 106,050
----------------------------------------------------------------------------
2,100 (a)Cliffs Drilling Co. 109,200
----------------------------------------------------------------------------
2,200 (a)Energy Ventures, Inc. 108,075
----------------------------------------------------------------------------
7,700 (a)Key Production Co. 97,213
----------------------------------------------------------------------------
6,500 Lomak Petroleum, Inc. 106,438
----------------------------------------------------------------------------
5,700 (a)Pool Energy Services Co. 84,075
---------------------------------------------------------------------------- --------------
Total 611,051
---------------------------------------------------------------------------- --------------
FINANCE--1.2%
----------------------------------------------------------------------------
8,900 (a)ACC Consumer Finance Corp. 81,213
----------------------------------------------------------------------------
3,300 Aames Financial Corp 141,488
----------------------------------------------------------------------------
1,900 CMAC Investment Corp. 144,875
----------------------------------------------------------------------------
3,100 Capital Re Corp. 118,963
----------------------------------------------------------------------------
10,000 Commonwealth Bancorp 145,000
----------------------------------------------------------------------------
10,900 (a)Consumer Portfolio Services 140,338
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
SMALL-COMPANY--CONTINUED
----------------------------------------------------------------------------
FINANCE--CONTINUED
----------------------------------------------------------------------------
4,300 (a)Delphi Financial Group, Inc., Class A $ 121,475
----------------------------------------------------------------------------
3,300 (a)Delta Financial Corp. 75,488
----------------------------------------------------------------------------
3,600 Donegal Group, Inc. 69,750
----------------------------------------------------------------------------
4,900 (a)Electro Rent Corp. 117,600
----------------------------------------------------------------------------
6,100 (a)Everen Capital Corp. 137,250
----------------------------------------------------------------------------
4,200 Executive Risk, Inc. 168,000
----------------------------------------------------------------------------
4,100 (a)First Merchants Acceptance Corp. 86,100
----------------------------------------------------------------------------
3,200 Frontier Insurance Group, Inc. 122,400
----------------------------------------------------------------------------
2,400 (a)Insignia Financial Group, Inc., Class A 54,600
----------------------------------------------------------------------------
1,100 (a)Markel Corp. 93,500
----------------------------------------------------------------------------
4,200 Penn-America Group, Inc. 66,675
----------------------------------------------------------------------------
7,500 (a)Southern Pacific Funding 238,125
----------------------------------------------------------------------------
3,400 (a)UICI 95,200
----------------------------------------------------------------------------
4,500 Vesta Insurance Group, Inc. 145,125
---------------------------------------------------------------------------- --------------
Total 2,363,165
---------------------------------------------------------------------------- --------------
HEALTH CARE--0.8%
----------------------------------------------------------------------------
5,200 (a)American HomePatient, Inc. 120,250
----------------------------------------------------------------------------
3,480 (a)Bio Rad Laboratories, Inc., Class A 103,965
----------------------------------------------------------------------------
9,000 (a)Biosource International, Inc. 63,563
----------------------------------------------------------------------------
4,300 Chad Therapeutics Inc. 67,725
----------------------------------------------------------------------------
5,700 (a)Curative Technologies, Inc. 148,200
----------------------------------------------------------------------------
13,500 (a)Diagnostic Health Services, Inc. 94,500
----------------------------------------------------------------------------
3,500 (a)Geltex Pharmaceuticals, Inc. 62,563
----------------------------------------------------------------------------
4,300 (a)Genesis Health Ventures, Inc. 119,863
----------------------------------------------------------------------------
1,600 (a)Medicis Pharmaceutical Corp., Class A 70,200
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
SMALL-COMPANY--CONTINUED
----------------------------------------------------------------------------
HEALTH CARE--CONTINUED
----------------------------------------------------------------------------
8,200 (a)OrthoLogic Corp. $ 50,225
----------------------------------------------------------------------------
10,000 (a)Physician Computer Network, Inc. 82,500
----------------------------------------------------------------------------
9,000 (a)Prime Medical Services 104,625
----------------------------------------------------------------------------
7,900 (a)Rotech Medical Corp. 134,300
----------------------------------------------------------------------------
2,100 (a)Safeskin Corp. 108,675
----------------------------------------------------------------------------
3,500 (a)Sierra Health Services, Inc. 86,188
----------------------------------------------------------------------------
3,800 (a)Universal Health Services, Inc., Class B 107,350
----------------------------------------------------------------------------
4,900 (a)UroCor, Inc. 47,163
----------------------------------------------------------------------------
6,000 (a)Veterinary Centers of America 63,750
---------------------------------------------------------------------------- --------------
Total 1,635,605
---------------------------------------------------------------------------- --------------
PRODUCER MANUFACTURING--0.3%
----------------------------------------------------------------------------
2,900 (a)Cable Design Technologies, Class A 84,825
----------------------------------------------------------------------------
5,400 (a)Maverick Tube Corp. 85,725
----------------------------------------------------------------------------
3,020 (a)NCI Building System, Inc. 86,825
----------------------------------------------------------------------------
3,100 (a)Reliance Steel & Aluminum Co. 116,250
----------------------------------------------------------------------------
3,400 (a)Sinter Metals, Inc. 85,000
----------------------------------------------------------------------------
4,500 (a)US Office Products Co. 139,500
---------------------------------------------------------------------------- --------------
Total 598,125
---------------------------------------------------------------------------- --------------
RETAIL TRADE--0.6%
----------------------------------------------------------------------------
7,000 (a)Amrion, Inc. 160,125
----------------------------------------------------------------------------
3,020 (a)MSC Industrial Direct Co. 112,873
----------------------------------------------------------------------------
6,500 (a)Microage, Inc. 147,063
----------------------------------------------------------------------------
5,100 (a)Pacific Sunwear of California 137,700
----------------------------------------------------------------------------
8,400 (a)Paul Harris Stores, Inc. 153,300
----------------------------------------------------------------------------
5,000 (a)Pomeroy Computer Resources 136,875
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
SMALL-COMPANY--CONTINUED
----------------------------------------------------------------------------
RETAIL TRADE--CONTINUED
----------------------------------------------------------------------------
3,300 (a)Regis Corp. Minnesota $ 82,500
----------------------------------------------------------------------------
4,200 Riser Foods, Inc. 128,100
----------------------------------------------------------------------------
3,900 (a)Stein Mart, Inc. 74,588
---------------------------------------------------------------------------- --------------
Total 1,133,124
---------------------------------------------------------------------------- --------------
SERVICES--1.1%
----------------------------------------------------------------------------
7,100 (a)ATC Communications, Inc. 109,163
----------------------------------------------------------------------------
2,400 American List Corp. 70,800
----------------------------------------------------------------------------
4,000 (a)BARRA, Inc. 104,000
----------------------------------------------------------------------------
4,200 (a)CDI Corp. 122,325
----------------------------------------------------------------------------
1,700 (a)Caribiner International, Inc. 75,013
----------------------------------------------------------------------------
2,200 (a)Catalina Marketing Corp. 112,200
----------------------------------------------------------------------------
4,800 (a)Consolidated Graphics, Inc. 218,400
----------------------------------------------------------------------------
7,400 Employee Solutions, Inc. 136,900
----------------------------------------------------------------------------
7,100 FactSet Research Systems 166,850
----------------------------------------------------------------------------
2,000 HA-LO Industries, Inc. 77,000
----------------------------------------------------------------------------
6,700 (a)National Education Corp. 94,638
----------------------------------------------------------------------------
3,500 (a)Newpark Resources, Inc. 122,500
----------------------------------------------------------------------------
4,500 (a)Personnel Group of America, Inc. 101,813
----------------------------------------------------------------------------
3,000 (a)Premier Parks, Inc. 96,375
----------------------------------------------------------------------------
7,300 (a)Prepaid Legal Services, Inc. 101,288
----------------------------------------------------------------------------
6,500 (a)Prime Hospitality Corp. 108,063
----------------------------------------------------------------------------
4,650 (a)Right Management Consultants 90,094
----------------------------------------------------------------------------
1,500 (a)Univision Communications, Inc., Class A 59,625
----------------------------------------------------------------------------
1,500 (a)Volt Information Science, Inc. 52,500
---------------------------------------------------------------------------- --------------
Total 2,019,547
---------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
SMALL-COMPANY--CONTINUED
----------------------------------------------------------------------------
TECHNOLOGY--1.6%
----------------------------------------------------------------------------
9,200 (a)Alphanet Solutions, Inc. $ 112,700
----------------------------------------------------------------------------
12,600 (a)Award Software International, Inc. 113,400
----------------------------------------------------------------------------
3,400 (a)Burr Brown Corp. 88,400
----------------------------------------------------------------------------
1,900 (a)Claremont Technology Group 46,550
----------------------------------------------------------------------------
7,300 (a)Cognex Corp. 144,175
----------------------------------------------------------------------------
3,800 Computer Task Group, Inc. 159,125
----------------------------------------------------------------------------
6,800 (a)Digital Systems Int., Inc. 104,550
----------------------------------------------------------------------------
4,000 (a)Ducommun, Inc. 88,500
----------------------------------------------------------------------------
2,400 (a)Dupont Photomasks, Inc. 99,600
----------------------------------------------------------------------------
7,700 (a)EIS International, Inc. 67,375
----------------------------------------------------------------------------
7,000 (a)ESS Technology, Inc. 138,250
----------------------------------------------------------------------------
4,900 (a)Elexsys International, Inc. 81,463
----------------------------------------------------------------------------
8,000 (a)Firearms Training Systems, Inc. 110,500
----------------------------------------------------------------------------
2,800 (a)IA Corporation I 15,750
----------------------------------------------------------------------------
5,900 (a)II-VI, Inc. 155,613
----------------------------------------------------------------------------
5,500 Innovex, Inc. 223,438
----------------------------------------------------------------------------
4,500 (a)Integrated Measurement Systems, Inc 79,875
----------------------------------------------------------------------------
5,800 (a)Intervoice, Inc. 73,225
----------------------------------------------------------------------------
3,400 (a)Perceptron, Inc. 117,725
----------------------------------------------------------------------------
5,000 (a)Photronic Labs, Inc. 157,500
----------------------------------------------------------------------------
9,500 (a)Raster Graphics Inc. 99,750
----------------------------------------------------------------------------
5,600 (a)Sandisk Corp. 77,000
----------------------------------------------------------------------------
9,500 (a)StorMedia, Inc. 121,125
----------------------------------------------------------------------------
5,500 (a)Stratasys, Inc. 91,438
----------------------------------------------------------------------------
2,500 (a)Supertex, Inc. 47,500
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
SMALL-COMPANY--CONTINUED
----------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
----------------------------------------------------------------------------
3,700 (a)Tollgrade Communications, Inc. $ 89,725
----------------------------------------------------------------------------
4,100 (a)Tracor, Inc. 90,200
----------------------------------------------------------------------------
4,500 (a)Trident International, Inc. 88,875
----------------------------------------------------------------------------
6,600 (a)Trusted Information Systems 79,200
----------------------------------------------------------------------------
3,400 (a)USCS International, Inc. 56,950
----------------------------------------------------------------------------
6,000 (a)Voxware, Inc. 46,500
----------------------------------------------------------------------------
2,400 Wyle Labs 86,400
---------------------------------------------------------------------------- --------------
Total 3,152,377
---------------------------------------------------------------------------- --------------
TRANSPORTATION--0.2%
----------------------------------------------------------------------------
3,200 Airlines Express International Corp. 104,600
----------------------------------------------------------------------------
2,100 (a)Alaska Air Group, Inc. 50,663
----------------------------------------------------------------------------
2,000 Expeditors International Washington, Inc. 89,000
----------------------------------------------------------------------------
4,400 USFreightways Corp. 114,125
---------------------------------------------------------------------------- --------------
Total 358,388
---------------------------------------------------------------------------- --------------
UTILITIES--0.2%
----------------------------------------------------------------------------
3,000 (a)Atlantic Telephone Network, Inc. 56,625
----------------------------------------------------------------------------
1,200 (a)Columbia Gas System, Inc. 77,550
----------------------------------------------------------------------------
2,700 Leviathan Gas Pipe Line, Inc. 122,850
----------------------------------------------------------------------------
4,200 (b)NGC Corp. 91,350
----------------------------------------------------------------------------
3,000 TNP Enterprises, Inc. 76,500
----------------------------------------------------------------------------
3,300 Trescomm International, Inc. 34,238
---------------------------------------------------------------------------- --------------
Total 459,113
---------------------------------------------------------------------------- --------------
TOTAL SMALL-COMPANY 15,103,515
---------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
UTILITY STOCKS--2.7%
----------------------------------------------------------------------------
ELECTRIC UTILITIES: CENTRAL--0.7%
----------------------------------------------------------------------------
8,300 CMS Energy Corp. $ 269,750
----------------------------------------------------------------------------
8,239 Cinergy Corp. 276,007
----------------------------------------------------------------------------
11,000 DPL, Inc. 268,125
----------------------------------------------------------------------------
9,600 Illinova Corp. 254,400
----------------------------------------------------------------------------
7,100 NIPSCO Industries, Inc. 275,125
---------------------------------------------------------------------------- --------------
Total 1,343,407
---------------------------------------------------------------------------- --------------
ELECTRIC UTILITIES: EAST--0.4%
----------------------------------------------------------------------------
8,950 DQE, Inc. 264,025
----------------------------------------------------------------------------
8,200 GPU, Inc. 275,725
----------------------------------------------------------------------------
10,500 Peco Energy Co. 267,750
---------------------------------------------------------------------------- --------------
Total 807,500
---------------------------------------------------------------------------- --------------
ELECTRIC UTILITIES: SOUTH--0.7%
----------------------------------------------------------------------------
5,500 Duke Power Co. 255,063
----------------------------------------------------------------------------
5,900 FPL Group, Inc. 272,138
----------------------------------------------------------------------------
11,500 Southern Co. 255,875
----------------------------------------------------------------------------
10,700 TECO Energy, Inc. 260,813
----------------------------------------------------------------------------
6,400 Texas Utilities Co. 252,800
---------------------------------------------------------------------------- --------------
Total 1,296,689
---------------------------------------------------------------------------- --------------
ELECTRIC UTILITIES: WEST--0.3%
----------------------------------------------------------------------------
12,400 Pacificorp 260,400
----------------------------------------------------------------------------
8,600 Pinnacle West Capital Corp. 267,675
---------------------------------------------------------------------------- --------------
Total 528,075
---------------------------------------------------------------------------- --------------
NATURAL GAS DISTRIBUTION--0.2%
----------------------------------------------------------------------------
8,700 MCN Corp. 250,125
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
UTILITY STOCKS--CONTINUED
----------------------------------------------------------------------------
NATURAL GAS DISTRIBUTION--CONTINUED
----------------------------------------------------------------------------
7,800 Pacific Enterprises $ 238,875
---------------------------------------------------------------------------- --------------
Total 489,000
---------------------------------------------------------------------------- --------------
OIL/GAS TRANSMISSION--0.4%
----------------------------------------------------------------------------
5,700 Enron Corp. 260,775
----------------------------------------------------------------------------
6,800 Panenergy Corp. 299,200
----------------------------------------------------------------------------
4,700 Williams Companies, Inc. 263,788
---------------------------------------------------------------------------- --------------
Total 823,763
---------------------------------------------------------------------------- --------------
TOTAL UTILITY STOCKS 5,288,434
---------------------------------------------------------------------------- --------------
FOREIGN EQUITY--12.8%
----------------------------------------------------------------------------
ARGENTINA--0.1%
----------------------------------------------------------------------------
1,705 Banco Frances del Rio de la Plata S.A., ADR 51,576
----------------------------------------------------------------------------
7,237 Compania Naviera Perez Companc S.A., Class B 49,521
----------------------------------------------------------------------------
1,405 (a)IRSA Inversiones y Representaciones S.A., GDR 43,555
----------------------------------------------------------------------------
1,800 YPF Sociedad Anonima, ADR 41,850
---------------------------------------------------------------------------- --------------
Total 186,502
---------------------------------------------------------------------------- --------------
AUSTRALIA--0.4%
----------------------------------------------------------------------------
21,000 (a)Aristocrat Leisure Ltd. 59,482
----------------------------------------------------------------------------
10,500 (b)Commonwealth Installment 66,319
----------------------------------------------------------------------------
12,400 Lend Lease Corp., Ltd. 230,116
----------------------------------------------------------------------------
31,000 News Corp., Ltd. 165,017
----------------------------------------------------------------------------
25,000 Woodside Petroleum Ltd. 175,606
---------------------------------------------------------------------------- --------------
Total 696,540
---------------------------------------------------------------------------- --------------
AUSTRIA--0.0%
----------------------------------------------------------------------------
370 Vae Eisenbahnsysteme AG 34,191
---------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
----------------------------------------------------------------------------
BELGIUM--0.1%
----------------------------------------------------------------------------
2,000 Delhaize-Le Lion $ 117,387
---------------------------------------------------------------------------- --------------
BRAZIL--0.3%
----------------------------------------------------------------------------
5,460,000 Banco Bradesco S.A., Preference 39,906
----------------------------------------------------------------------------
113,000 Banco Itau S.A., Preference 44,303
----------------------------------------------------------------------------
210,000 Centrais Eletricas Brasileiras, Preference, Series B 68,916
----------------------------------------------------------------------------
6,200 (a)Cofap-Cia Fab Peca, Preference 50,716
----------------------------------------------------------------------------
1,523,000 Companhia Energetica de Minas Gerais, Preference 49,095
----------------------------------------------------------------------------
20,000 (a)Cosipa Pnb 18,199
----------------------------------------------------------------------------
4,100 (a)(b)Elevadores Atlas 44,056
----------------------------------------------------------------------------
156,000 (a)Light Participacoes S.A. 29,312
----------------------------------------------------------------------------
1,157,000 Lojas Renner S.A., Preference 57,122
----------------------------------------------------------------------------
340,000 (a)Petroleo Brasileiro S.A., Preference 46,738
----------------------------------------------------------------------------
865 Telecomunicacoes Brasileras, ADR 65,524
----------------------------------------------------------------------------
235,000 (a)Telecomunicacoes de Sao Paulo S.A., Preference 41,631
----------------------------------------------------------------------------
17,784,000 (a)Usinas Siderurgicas de Minas Gerais, Pfd. 17,732
---------------------------------------------------------------------------- --------------
Total 573,250
---------------------------------------------------------------------------- --------------
CHILE--0.0%
----------------------------------------------------------------------------
900 (a)Banco BHIF, ADR 15,188
----------------------------------------------------------------------------
600 (a)Banco de A. Edwards, ADR 11,100
----------------------------------------------------------------------------
300 (a)(b)Chilectra S.A., ADR 16,500
----------------------------------------------------------------------------
200 Compania Telecomunicacion Chile, ADR 19,025
----------------------------------------------------------------------------
600 (a)Santa Isabel S.A., ADR 15,075
----------------------------------------------------------------------------
300 Sociedad Quimica Y Minera De Chile, ADR 15,600
---------------------------------------------------------------------------- --------------
Total 92,488
---------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
----------------------------------------------------------------------------
COLOMBIA--0.0%
----------------------------------------------------------------------------
1,400 Banco Ganadero S.A., ADR $ 34,650
----------------------------------------------------------------------------
1,500 Banco Industrial Colombiano, ADR 24,188
---------------------------------------------------------------------------- --------------
Total 58,838
---------------------------------------------------------------------------- --------------
FRANCE--0.9%
----------------------------------------------------------------------------
2,100 AXA 126,190
----------------------------------------------------------------------------
765 Accor S.A. 98,118
----------------------------------------------------------------------------
1,820 Casino Ord 82,398
----------------------------------------------------------------------------
1,556 Compagnie Financiere de Paribas, Class A 106,905
----------------------------------------------------------------------------
710 Compagnie de Saint Gobain 102,073
----------------------------------------------------------------------------
2,447 Credit Commerical De France 118,514
----------------------------------------------------------------------------
1,240 Credit Local de France 112,255
----------------------------------------------------------------------------
800 Groupe Danon BSN S.A. 117,769
----------------------------------------------------------------------------
850 Havas S.A. 60,205
----------------------------------------------------------------------------
600 LVMH (Moet-Hennessy) 152,073
----------------------------------------------------------------------------
1,810 Lafarge-Coppee 114,342
----------------------------------------------------------------------------
1,162 Lyonnaise des Eaux S.A. 110,599
----------------------------------------------------------------------------
1,010 Peugeot S.A. 124,128
----------------------------------------------------------------------------
1,100 Rhone-Poulenc Rorer, Inc. 81,813
----------------------------------------------------------------------------
2,648 Schneider S.A. 125,967
----------------------------------------------------------------------------
1,600 Total S.A. 127,938
---------------------------------------------------------------------------- --------------
Total 1,761,287
---------------------------------------------------------------------------- --------------
GERMANY, FEDERAL REPUBLIC OF--0.9%
----------------------------------------------------------------------------
4,000 BASF AG 147,949
----------------------------------------------------------------------------
3,040 Bayer AG 122,323
----------------------------------------------------------------------------
3,550 (a)Commerzbank AG, Frankfurt 87,244
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
----------------------------------------------------------------------------
GERMANY, FEDERAL REPUBLIC OF--CONTINUED
----------------------------------------------------------------------------
4,000 (a)Daimler Benz AG $ 261,231
----------------------------------------------------------------------------
2,230 Deutsche Bank, AG 106,273
----------------------------------------------------------------------------
3,800 Dresdner Bank AG, Frankfurt 112,782
----------------------------------------------------------------------------
270 Gea AG, Vorzugsaktien 80,925
----------------------------------------------------------------------------
275 (a)Henkel KGAA 13,409
----------------------------------------------------------------------------
1,475 Henkel KGAA, Pfd. 73,458
----------------------------------------------------------------------------
105 Linde AG 63,760
----------------------------------------------------------------------------
285 Mannesmann AG 118,866
----------------------------------------------------------------------------
2,300 RWE AG 101,684
----------------------------------------------------------------------------
6,200 (a)Rofin-Sinar Technologies, Inc. 79,825
----------------------------------------------------------------------------
1,400 Schering Ag 114,960
----------------------------------------------------------------------------
1,550 Schwarz Pharma 115,386
----------------------------------------------------------------------------
2,000 Siemens AG 96,353
----------------------------------------------------------------------------
1,780 Veba AG 104,097
---------------------------------------------------------------------------- --------------
Total 1,800,525
---------------------------------------------------------------------------- --------------
HONG KONG--0.8%
----------------------------------------------------------------------------
220,000 Aeon Credit Service 73,978
----------------------------------------------------------------------------
102,500 Amoy Properties Ltd. 143,171
----------------------------------------------------------------------------
13,000 Cheung Kong 114,330
----------------------------------------------------------------------------
36,000 (a)(b)Cheung Kong Infrastructure 87,532
----------------------------------------------------------------------------
17,900 (a)(b)China Resources Bejing Land 11,112
----------------------------------------------------------------------------
3,751 HSBC Holdings PLC 78,105
----------------------------------------------------------------------------
117,000 Henderson Investment Ltd. 142,240
----------------------------------------------------------------------------
48,000 Hong Kong Telecom 83,187
----------------------------------------------------------------------------
17,000 Hutchison Whampoa 131,370
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
----------------------------------------------------------------------------
HONG KONG--CONTINUED
----------------------------------------------------------------------------
13,000 New World Development Co. Ltd. $ 87,849
----------------------------------------------------------------------------
174,000 Oriental Press Group 97,892
----------------------------------------------------------------------------
67,000 Peregrine Investments 123,914
----------------------------------------------------------------------------
52,000 (a)(b)Shanghai Industrial Holdings Ltd. 169,141
----------------------------------------------------------------------------
8,000 Sun Hung Kai Properties 99,327
----------------------------------------------------------------------------
64,000 (a)Winsor Property Holdings Ltd. 96,430
---------------------------------------------------------------------------- --------------
Total 1,539,578
---------------------------------------------------------------------------- --------------
INDIA--0.1%
----------------------------------------------------------------------------
3,100 (a)(b)Bombay Suburban Electric Supply, GDR 61,225
----------------------------------------------------------------------------
7,200 (a)(b)Crompton Greaves Ltd., GDR 23,400
----------------------------------------------------------------------------
1,950 (a)Hindalco Industries, GDR 39,780
----------------------------------------------------------------------------
3,000 (a)(b)Larsen & Toubro Ltd., GDR 43,500
----------------------------------------------------------------------------
4,200 (a)(b)Mahindra and Mahindra, GDR 44,100
----------------------------------------------------------------------------
2,050 (a)(b)Steel Authority of India, GDR 17,425
---------------------------------------------------------------------------- --------------
Total 229,430
---------------------------------------------------------------------------- --------------
INDONESIA--0.2%
----------------------------------------------------------------------------
65,000 (a)Bank Negara Indonesia 32,569
----------------------------------------------------------------------------
36,000 Citra Marga Nusaphala Persada 30,320
----------------------------------------------------------------------------
9,000 Gudang Garam 38,284
----------------------------------------------------------------------------
20,500 Modern Photo Film Co. 51,359
----------------------------------------------------------------------------
16,000 Semen Gresik 48,785
----------------------------------------------------------------------------
48,733 Steady Safe 57,150
----------------------------------------------------------------------------
65,340 Pab K Tjiwi Kimia 62,693
----------------------------------------------------------------------------
19,000 Tambang Timah 29,979
---------------------------------------------------------------------------- --------------
Total 351,139
---------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
----------------------------------------------------------------------------
ITALY--0.3%
----------------------------------------------------------------------------
13,500 Banca Popolare Milano $ 69,016
----------------------------------------------------------------------------
17,150 Eni 90,278
----------------------------------------------------------------------------
8,400 Imi Istituto Mobiliare 70,566
----------------------------------------------------------------------------
890 (a)La Rinascente S.P.A. Warrants, 12/31/1999 417
----------------------------------------------------------------------------
63,000 Telecom Italia Mobile 148,155
----------------------------------------------------------------------------
9,700 (a)Unicem S.P.A. 65,458
---------------------------------------------------------------------------- --------------
Total 443,890
---------------------------------------------------------------------------- --------------
JAPAN--3.3%
----------------------------------------------------------------------------
21,000 Amada Co 175,522
----------------------------------------------------------------------------
300 Asahi Broadcasting Corp. 32,924
----------------------------------------------------------------------------
5,000 Canare Electric Co. Ltd. 105,356
----------------------------------------------------------------------------
22,000 Casio Computer Co 178,472
----------------------------------------------------------------------------
29 DDI Corp. 207,507
----------------------------------------------------------------------------
14,000 Dai Nippon Printing Co. Ltd. 255,663
----------------------------------------------------------------------------
19,000 Daito Trust Construction 248,551
----------------------------------------------------------------------------
8,000 Fuji Photo Film Co. 250,746
----------------------------------------------------------------------------
4,000 Hirose Electric Co 242,318
----------------------------------------------------------------------------
10,000 Hitachi Maxell 206,321
----------------------------------------------------------------------------
12,000 Ikegami Tsushinki 80,070
----------------------------------------------------------------------------
18,000 JGC Corp. 165,935
----------------------------------------------------------------------------
4,000 Japan Cash Machine Co. Ltd. 71,291
----------------------------------------------------------------------------
9,000 Japan Radio Co. 109,833
----------------------------------------------------------------------------
36 (a)(b)Japan Tobacco 256,330
----------------------------------------------------------------------------
8,000 Konami Co 273,222
----------------------------------------------------------------------------
9,000 Matsushita Kotobuk Electric 230,729
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
----------------------------------------------------------------------------
JAPAN--CONTINUED
----------------------------------------------------------------------------
7,000 (a)Meiwa Estate $ 204,039
----------------------------------------------------------------------------
36,000 Minolta Co 226,620
----------------------------------------------------------------------------
26,000 Mitsubishi Heavy Industries Ltd. 212,291
----------------------------------------------------------------------------
16,000 Mycal Corp. 238,806
----------------------------------------------------------------------------
4,000 Nintendo Corp. Ltd. 282,704
----------------------------------------------------------------------------
9,000 Nippon Comsys Corp. 112,204
----------------------------------------------------------------------------
2,000 Nissei ASB Machine Co. 27,919
----------------------------------------------------------------------------
5,000 Pioneer Electronic Corp 107,550
----------------------------------------------------------------------------
4,000 Promise Co. Ltd. 200,176
----------------------------------------------------------------------------
3 (b)Sakura Finance (Bermuda), Conv. Pfd. 170,496
----------------------------------------------------------------------------
7,000 Sankyo Co 187,445
----------------------------------------------------------------------------
16,000 Shiseido Co 192,450
----------------------------------------------------------------------------
7,000 Shochiku Co 65,145
----------------------------------------------------------------------------
4,000 Sony Corp. 256,014
----------------------------------------------------------------------------
6,000,000 (b)Sumitomo Bank Int'l, Conv. Bond, 0.75%, 5/31/2001 57,221
----------------------------------------------------------------------------
12,000 Sumitomo Trust & Banking 132,748
----------------------------------------------------------------------------
10,000 Taisho Pharmaceutical Co 223,003
----------------------------------------------------------------------------
9,000 Takashimaya Co 120,105
----------------------------------------------------------------------------
14,000 Tokio Marine and Fire Insurance Co. 154,873
----------------------------------------------------------------------------
36,000 (a)Tokyo Tatemono Co., Ltd. 164,987
----------------------------------------------------------------------------
7,000 Tsubakimoto Chain Co 41,238
---------------------------------------------------------------------------- --------------
Total 6,468,824
---------------------------------------------------------------------------- --------------
KOREA, REPUBLIC OF--0.2%
----------------------------------------------------------------------------
2,500 Chonggu Housing & Construction 57,301
----------------------------------------------------------------------------
2,300 Dongkuk Steel Mill Co 44,671
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
----------------------------------------------------------------------------
KOREA, REPUBLIC OF--CONTINUED
----------------------------------------------------------------------------
1,700 Hankuk Paper Manufacturing Co. $ 38,555
----------------------------------------------------------------------------
4,900 Korea Exchange Bank 46,107
----------------------------------------------------------------------------
4,200 (a)Korea Mobile Telecomm Corp., ADR 54,600
----------------------------------------------------------------------------
2,700 Pacific Corporation 50,486
----------------------------------------------------------------------------
1,240 Shinhan Bank 21,900
---------------------------------------------------------------------------- --------------
Total 313,620
---------------------------------------------------------------------------- --------------
MALAYSIA--0.3%
----------------------------------------------------------------------------
42,000 Eastern and Oriental 91,413
----------------------------------------------------------------------------
27,999 (a)Kentucky Fried Chicken 109,102
----------------------------------------------------------------------------
8,000 Malayan Banking 79,145
----------------------------------------------------------------------------
56,000 Malaysian Industrial Development 115,235
----------------------------------------------------------------------------
19,000 Malaysian Pacific Industries 77,444
----------------------------------------------------------------------------
22,000 Metacorp 67,907
----------------------------------------------------------------------------
23,000 UMW Holdings 109,220
---------------------------------------------------------------------------- --------------
Total 649,466
---------------------------------------------------------------------------- --------------
MEXICO--0.2%
----------------------------------------------------------------------------
1,450 (a)(b)Acer, Inc., ADR 26,463
----------------------------------------------------------------------------
5,900 (a)Cemex S.A., Class B, ADR 42,591
----------------------------------------------------------------------------
24,000 (a)Cifra S.A. de CV, Class B 33,108
----------------------------------------------------------------------------
3,600 (a)Empresas ICA Sociedad Controladora S.A., ADR 51,750
----------------------------------------------------------------------------
9,000 Fomento Economico Mexicano, S.A. de C.V., Class B 30,753
----------------------------------------------------------------------------
26,000 (a)Grupo Corvi S.A., Class UBL 21,757
----------------------------------------------------------------------------
5,500 (a)(b)Grupo Financiero Bancomer, S.A. de C.V., Class B, ADR 44,308
----------------------------------------------------------------------------
1,300 Pan American Beverage, Class A 60,775
----------------------------------------------------------------------------
1,400 Telefonos de Mexico, Class L, ADR 42,525
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
----------------------------------------------------------------------------
MEXICO--CONTINUED
----------------------------------------------------------------------------
3,000 (a)Tubos de Acero de Mexico S.A., ADR $ 40,875
---------------------------------------------------------------------------- --------------
Total 394,905
---------------------------------------------------------------------------- --------------
NETHERLANDS--0.5%
----------------------------------------------------------------------------
3,300 ABN Amro Holding 213,774
----------------------------------------------------------------------------
960 Akzo Nobel N.V. 127,440
----------------------------------------------------------------------------
7,470 Boskalis Westminster N.V. 148,161
----------------------------------------------------------------------------
1,600 Hunter Douglas N.V. 104,669
----------------------------------------------------------------------------
3,180 ING Groep, N.V. 111,391
----------------------------------------------------------------------------
3,000 Vendex International A 130,314
----------------------------------------------------------------------------
950 Wolters Kluwer N.V. 124,239
---------------------------------------------------------------------------- --------------
Total 959,988
---------------------------------------------------------------------------- --------------
NEW ZEALAND--0.1%
----------------------------------------------------------------------------
32,000 Air New Zealand Ltd., Class B 84,210
----------------------------------------------------------------------------
31,000 Fletcher Challenge Building 87,091
----------------------------------------------------------------------------
106,000 Wrightson Ltd. 94,239
---------------------------------------------------------------------------- --------------
Total 265,540
---------------------------------------------------------------------------- --------------
NORWAY--0.1%
----------------------------------------------------------------------------
5,750 Elkem A/S, Class A 89,592
----------------------------------------------------------------------------
15,500 (a)Storebrand ASA 92,498
---------------------------------------------------------------------------- --------------
Total 182,090
---------------------------------------------------------------------------- --------------
PAKISTAN--0.0%
----------------------------------------------------------------------------
700 (a)Hub Power Co., GDR 15,050
---------------------------------------------------------------------------- --------------
PHILIPPINES--0.1%
----------------------------------------------------------------------------
179,000 (a)Belle Corp. 47,668
----------------------------------------------------------------------------
91,812 (a)Davao Union Cement Corp., Class B 30,038
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
----------------------------------------------------------------------------
PHILIPPINES--CONTINUED
----------------------------------------------------------------------------
108,150 (a)Filinvest Land, Inc. $ 38,263
----------------------------------------------------------------------------
2,700 Philippine Commercial International Bank 35,951
---------------------------------------------------------------------------- --------------
Total 151,920
---------------------------------------------------------------------------- --------------
SINGAPORE--0.3%
----------------------------------------------------------------------------
11,000 City Developments 97,255
----------------------------------------------------------------------------
17,000 Hong Leong Finance Ltd. 58,909
----------------------------------------------------------------------------
131,000 Roly International Holdings 86,460
----------------------------------------------------------------------------
16,000 Sembawang Corp. Ltd. 86,702
----------------------------------------------------------------------------
3,000 Singapore Press Holdings Ltd. 56,684
----------------------------------------------------------------------------
16,000 Straits Steamship Land Ltd. 51,109
----------------------------------------------------------------------------
4,000 (a)Straits Steamship Land Ltd. Warrants, 12/12/2000 4,478
----------------------------------------------------------------------------
10,000 United Overseas Bank Ltd. 106,239
----------------------------------------------------------------------------
27,000 Wing Tai Holdings, Ltd. 73,925
---------------------------------------------------------------------------- --------------
Total 621,761
---------------------------------------------------------------------------- --------------
SPAIN--0.4%
----------------------------------------------------------------------------
1,900 Empresa Nac De Electridad 128,339
----------------------------------------------------------------------------
1,360 Fomento de Construcciones y Contratas S.A. 114,961
----------------------------------------------------------------------------
11,700 Iberdrola S.A. 135,028
----------------------------------------------------------------------------
2,200 Mapfre (corporacion) 116,335
----------------------------------------------------------------------------
3,000 Repsol S.A. 111,047
----------------------------------------------------------------------------
5,950 Telefonica de Espana 130,446
----------------------------------------------------------------------------
1,100 Zardoya-Otis S.A. 117,184
---------------------------------------------------------------------------- --------------
Total 853,340
---------------------------------------------------------------------------- --------------
SWEDEN--0.1%
----------------------------------------------------------------------------
2,350 Skandia Forsakrings AB 67,012
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
----------------------------------------------------------------------------
SWEDEN--CONTINUED
----------------------------------------------------------------------------
7,950 Stora Kopparbergs, Class A $ 108,911
---------------------------------------------------------------------------- --------------
Total 175,923
---------------------------------------------------------------------------- --------------
SWITZERLAND--0.6%
----------------------------------------------------------------------------
100 ABB AG 125,125
----------------------------------------------------------------------------
1,500 CS Holding AG-Registered 159,666
----------------------------------------------------------------------------
100 Ciba-Giegy AG-Registered 123,744
----------------------------------------------------------------------------
90 Nestle S.A. 97,699
----------------------------------------------------------------------------
800 (a)Oerlikon-Buhrle Holding AG 82,547
----------------------------------------------------------------------------
50 Reiseburo Kuoni AG, Class B 111,239
----------------------------------------------------------------------------
20 Roche Holding AG 153,740
----------------------------------------------------------------------------
100 Sandoz AG-R 116,302
----------------------------------------------------------------------------
125 Sulzer AG-Reg 71,922
----------------------------------------------------------------------------
100 (a)Swissair AG 75,949
----------------------------------------------------------------------------
253 Zurich Versicherungsgesellschaft 71,814
---------------------------------------------------------------------------- --------------
Total 1,189,747
---------------------------------------------------------------------------- --------------
THAILAND--0.1%
----------------------------------------------------------------------------
1,800 Bangkok Bank Public Co., Ltd. 20,579
----------------------------------------------------------------------------
19,600 Industrial Finance Corporation of Thailand 61,776
----------------------------------------------------------------------------
5,000 Krung Thai Bank PLC 14,291
----------------------------------------------------------------------------
2,200 PTT Exploration and Production Public Co. 32,388
----------------------------------------------------------------------------
46,500 Siam City Bank 54,619
---------------------------------------------------------------------------- --------------
Total 183,653
---------------------------------------------------------------------------- --------------
UNITED KINGDOM--2.4%
----------------------------------------------------------------------------
32,000 Asda Group 63,753
----------------------------------------------------------------------------
13,700 BAA PLC 112,861
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
----------------------------------------------------------------------------
UNITED KINGDOM--CONTINUED
----------------------------------------------------------------------------
30,000 BTR PLC $ 120,545
----------------------------------------------------------------------------
7,172 Barclays PLC 123,344
----------------------------------------------------------------------------
4,159 Boc Group PLC 61,951
----------------------------------------------------------------------------
6,200 Boots Co. PLC 66,086
----------------------------------------------------------------------------
5,432 British Aerospace PLC 105,663
----------------------------------------------------------------------------
10,464 British Petroleum Co. PLC 120,992
----------------------------------------------------------------------------
12,100 British Telecommunication PLC 76,591
----------------------------------------------------------------------------
28,801 Bunzl PLC 107,495
----------------------------------------------------------------------------
14,300 Cadbury Schweppes PLC 122,973
----------------------------------------------------------------------------
23,200 Caradon PLC 93,026
----------------------------------------------------------------------------
11,250 Carlton Communications PLC 95,137
----------------------------------------------------------------------------
10,785 Chubb Security 62,193
----------------------------------------------------------------------------
12,500 Compass Group 127,459
----------------------------------------------------------------------------
26,380 Cookson Group 100,233
----------------------------------------------------------------------------
18,700 Cowie Group PLC 124,499
----------------------------------------------------------------------------
16,600 David S. Smith (Holdings) PLC 88,051
----------------------------------------------------------------------------
18,400 Delta PLC 112,448
----------------------------------------------------------------------------
5,050 EMI Group PLC 116,656
----------------------------------------------------------------------------
34,200 FKI PLC 123,909
----------------------------------------------------------------------------
10,030 General Accident 123,520
----------------------------------------------------------------------------
17,450 General Electric Co. PLC 109,283
----------------------------------------------------------------------------
5,600 Glaxo Wellcome PLC 92,102
----------------------------------------------------------------------------
12,719 Grand Metropolitan PLC 99,333
----------------------------------------------------------------------------
28,186 Guardian Royal Exchange 126,998
----------------------------------------------------------------------------
2,640 Imperial Chemical Industries PLC 34,243
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
----------------------------------------------------------------------------
UNITED KINGDOM--CONTINUED
----------------------------------------------------------------------------
14,800 Inchcape PLC $ 67,058
----------------------------------------------------------------------------
21,649 Ladbroke Group PLC 74,614
----------------------------------------------------------------------------
13,500 Marks & Spencer PLC 114,845
----------------------------------------------------------------------------
32,300 Mirror Group PLC 124,899
----------------------------------------------------------------------------
15,300 Morgan Crucible Co 117,554
----------------------------------------------------------------------------
16,980 National Power Co. PLC 131,604
----------------------------------------------------------------------------
9,980 Pearson 123,324
----------------------------------------------------------------------------
8,693 Peninsular & Oriental Steam Navigation Co. 86,448
----------------------------------------------------------------------------
10,500 Premier Farnell PLC 125,689
----------------------------------------------------------------------------
4,249 RTZ Corp. PLC 71,436
----------------------------------------------------------------------------
8,800 Rank Group PLC 64,358
----------------------------------------------------------------------------
7,125 Reckitt & Colman PLC 83,972
----------------------------------------------------------------------------
10,736 Redland PLC 66,784
----------------------------------------------------------------------------
8,200 Reed International PLC 158,885
----------------------------------------------------------------------------
17,800 Rexam 101,150
----------------------------------------------------------------------------
48,600 Rugby Group PLC 78,440
----------------------------------------------------------------------------
10,000 Safeway PLC 65,568
----------------------------------------------------------------------------
42,200 Sedgwick Group PLC 89,040
----------------------------------------------------------------------------
4,746 Siebe PLC 75,762
----------------------------------------------------------------------------
5,648 Smithkline Beecham PLC 77,866
----------------------------------------------------------------------------
19,300 Tomkins PLC 80,633
----------------------------------------------------------------------------
4,350 Zeneca Group 119,939
---------------------------------------------------------------------------- --------------
Total 4,811,212
---------------------------------------------------------------------------- --------------
TOTAL FOREIGN EQUITIES 25,122,084
---------------------------------------------------------------------------- --------------
TOTAL STOCKS (IDENTIFIED COST $84,187,732) 95,669,379
---------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
BONDS--44.4%
- ----------------------------------------------------------------------------------------------
TREASURY--21.9%
----------------------------------------------------------------------------
$ 10,840,000 United States Treasury Note, 5.500%, 12/31/2000 $ 10,730,841
----------------------------------------------------------------------------
8,385,000 United States Treasury Note, 5.625%, 11/30/2000 8,340,727
----------------------------------------------------------------------------
2,000,000 United States Treasury Note, 5.875%, 4/30/1998 2,010,340
----------------------------------------------------------------------------
2,500,000 United States Treasury Note, 6.125%, 3/31/1998 2,520,475
----------------------------------------------------------------------------
6,455,000 United States Treasury Note, 6.125%, 7/31/2000 6,533,686
----------------------------------------------------------------------------
3,400,000 United States Treasury Note, 6.250%, 8/31/2000 3,455,250
----------------------------------------------------------------------------
9,165,000 United States Treasury Note, 6.375%, 8/15/2002 9,393,575
---------------------------------------------------------------------------- --------------
TOTAL TREASURY 42,984,894
---------------------------------------------------------------------------- --------------
MORTGAGE-BACKED SECURITIES--7.3%
----------------------------------------------------------------------------
GOVERNMENT AGENCY--7.3%
----------------------------------------------------------------------------
764,153 Federal Home Loan Mortgage Corp., 9.500%, 6/1/2021 825,438
----------------------------------------------------------------------------
1,028,483 Federal Home Loan Mortgage Corp., 7.000%, 2/1/2026 1,023,330
----------------------------------------------------------------------------
1,279,063 Federal Home Loan Mortgage Corp., 7.500%, 7/1/2026 1,296,624
----------------------------------------------------------------------------
669,320 Federal Home Loan Mortgage Corp., 8.000%, 10/1/2010 691,067
----------------------------------------------------------------------------
919,511 Federal Home Loan Mortgage Corp., 7.000%, 1/1/2011 928,117
----------------------------------------------------------------------------
1,009,913 Federal Home Loan Mortgage Corp., 6.000%, 7/1/2011 985,282
----------------------------------------------------------------------------
288,390 Federal National Mortgage Association, 7.000%, 5/1/2001 293,884
----------------------------------------------------------------------------
733,148 Federal National Mortgage Association, 8.500%, 3/1/2025 764,988
----------------------------------------------------------------------------
485,130 Federal National Mortgage Association, 6.000%, 2/1/2003 478,304
----------------------------------------------------------------------------
488,702 Federal National Mortgage Association, 6.500%, 4/1/2001 484,648
----------------------------------------------------------------------------
198,009 Federal National Mortgage Association, 6.500%, 5/1/2011 196,458
----------------------------------------------------------------------------
465,606 Federal National Mortgage Association, 8.000%, 11/1/2024 478,838
----------------------------------------------------------------------------
871,681 Federal National Mortgage Association, 7.500%, 7/1/2025 883,388
----------------------------------------------------------------------------
466,795 Federal National Mortgage Association, 7.000%, 8/1/2025 463,434
----------------------------------------------------------------------------
1,694,302 Federal National Mortgage Association, 6.500%, 10/1/2025 1,645,557
----------------------------------------------------------------------------
788,117 Government National Mortgage Association, 9.000%, 2/15/2020 849,432
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT IN U.S.
OR SHARES DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES--CONTINUED
----------------------------------------------------------------------------
GOVERNMENT AGENCY--CONTINUED
----------------------------------------------------------------------------
$ 527,367 Government National Mortgage Association, 6.500%, 1/15/2024 $ 516,651
----------------------------------------------------------------------------
246,064 Government National Mortgage Association, 7.000%, 5/15/2024 244,831
----------------------------------------------------------------------------
500,121 Government National Mortgage Association, 7.500%, 3/15/2026 507,457
----------------------------------------------------------------------------
274,342 Government National Mortgage Association, 8.000%, 11/15/2024 282,909
----------------------------------------------------------------------------
467,853 Government National Mortgage Association, 8.000%, 5/15/2025 482,424
---------------------------------------------------------------------------- --------------
TOTAL MORTGAGE-BACKED SECURITIES 14,323,061
---------------------------------------------------------------------------- --------------
HIGH YIELD BONDS--5.2%
----------------------------------------------------------------------------
AUTOMOTIVE--0.1%
----------------------------------------------------------------------------
100,000 Aftermarket Technology Co., Sr. Sub. Note, 12.00%, 8/1/2004 111,500
----------------------------------------------------------------------------
50,000 (b)Blue Bird Body Co., Sr. Sub. Note, 10.75%, 11/15/2006 51,875
----------------------------------------------------------------------------
100,000 Collins & Aikman Products, Sr. Sub. Note, 11.50%, 4/15/2006 107,250
---------------------------------------------------------------------------- --------------
Total 270,625
---------------------------------------------------------------------------- --------------
BANKING--0.1%
----------------------------------------------------------------------------
100,000 (b)First Nationwide Escrow, Sr. Sub. Note, 10.625%, 10/1/2003 107,000
----------------------------------------------------------------------------
75,000 First Nationwide Holdings, Sr. Note, 12.25%, 5/15/2001 84,563
---------------------------------------------------------------------------- --------------
Total 191,563
---------------------------------------------------------------------------- --------------
BEVERAGE & TOBACCO--0.1%
----------------------------------------------------------------------------
100,000 Dimon Inc., Sr. Note, 8.875%, 6/1/2006 105,750
----------------------------------------------------------------------------
100,000 Dr Pep Btlg Hldgs, Sr. Disc. Note, 0/11.625%, 2/15/2003 93,000
---------------------------------------------------------------------------- --------------
Total 198,750
---------------------------------------------------------------------------- --------------
BROADCAST RADIO & TV--0.4%
----------------------------------------------------------------------------
38,000 Chancellor Broadcasting Co., Sr. Sub. Note, 12.50%, 10/1/2004 42,370
----------------------------------------------------------------------------
Chancellor Broadcasting Co., 1,000 PIK Pfd. Shares, 12.25% 111,000
----------------------------------------------------------------------------
50,000 Granite Broadcasting Corp, Sr. Sub. Note, 9.375%, 12/1/2005 47,875
----------------------------------------------------------------------------
100,000 Heritage Media Corp., Sr. Sub. Note, 8.75%, 2/15/2006 97,000
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
----------------------------------------------------------------------------
BROADCAST RADIO & TV--CONTINUED
----------------------------------------------------------------------------
$ 100,000 Pegasus Media, Note, 12.50%, 7/1/2005 $ 108,500
----------------------------------------------------------------------------
100,000 SFX Broadcasting, Inc., Sr. Sub. Note, 10.75%, 5/15/2006 105,250
----------------------------------------------------------------------------
150,000 Sinclair Broadcast Group, Sr. Sub. Note, 10.00%, 9/30/2005 151,125
----------------------------------------------------------------------------
100,000 Sullivan Broadcasting, Sr. Sub. Note, 10.25%, 12/15/2005 100,250
----------------------------------------------------------------------------
50,000 Young Broadcasting Corp., Sr. Sub. Note, 10.125%, 2/15/2005 50,500
---------------------------------------------------------------------------- --------------
Total 813,870
---------------------------------------------------------------------------- --------------
BUSINESS EQUIPMENT & SERVICES--0.2%
----------------------------------------------------------------------------
150,000 Knoll, Inc., Sr. Sub. Note, 10.875%, 3/15/2006 164,250
----------------------------------------------------------------------------
100,000 Monarch Acquisition Corp., Sr. Note, 12.50%, 7/1/2003 111,500
----------------------------------------------------------------------------
50,000 (b)Outsourcing Solutions, Sr. Sub. Note, 11.00%, 11/1/2006 52,250
----------------------------------------------------------------------------
100,000 United Stationers Supply, Sr. Sub. Note, 12.75%, 5/1/2005 110,875
---------------------------------------------------------------------------- --------------
Total 438,875
---------------------------------------------------------------------------- --------------
CABLE TELEVISION--0.6%
----------------------------------------------------------------------------
100,000 (b)Australis Holdings Pty, Unit, 0/15.00%, 11/1/2002 56,750
----------------------------------------------------------------------------
100,000 Bell Cablemedia PLC, Sr. Disc. Note, 0/11.95%, 7/15/2004 86,500
----------------------------------------------------------------------------
100,000 CF Cable TV Inc., Sr. Secd. 2nd Priority Note, 11.625%,
2/15/2005 116,500
----------------------------------------------------------------------------
100,000 Cablevision Systems Corp., Sr. Sub. Note, 9.875%, 5/15/2006 101,250
----------------------------------------------------------------------------
50,000 Cai Wireless Systems, Sr. Note, 12.25%, 9/15/2002 41,250
----------------------------------------------------------------------------
50,000 Charter Communication Southeast, Sr. Note, 11.25%, 3/15/2006 51,750
----------------------------------------------------------------------------
175,000 Comcast UK Cable, Deb., 0/11.20%, 11/15/2007 122,063
----------------------------------------------------------------------------
100,000 Echostar Satellite Broadcasting Corp. Sr. Disc. Note, 0/13.125%, 3/15/2004 76,500
----------------------------------------------------------------------------
100,000 International Cabletel, Sr. Disc. Note, 0/12.75%, 4/15/2005 72,000
----------------------------------------------------------------------------
100,000 International Cabletel, Sr. Note, 0/11.50%, 2/1/2006 64,625
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
----------------------------------------------------------------------------
CABLE TELEVISION--CONTINUED
----------------------------------------------------------------------------
$ 100,000 People's Choice--TV, Unit, 0/13.125%, 6/1/2004 $ 39,500
----------------------------------------------------------------------------
50,000 Rogers Cablesystems Inc., Sr. Secd. 2nd Priority Note, 10.00%, 12/1/2007 53,000
----------------------------------------------------------------------------
50,000 Rogers Cablesystems Ltd., Sr. Secd. 2nd Priority Note, 10.00%, 3/15/2005 53,750
----------------------------------------------------------------------------
275,000 Telewest PLC, Sr. Disc. Deb., 0/11.00%, 10/1/2007 188,375
----------------------------------------------------------------------------
100,000 UIH Australia/Pacific, Sr. Disc. Note, 0/14.00%, 5/15/2006 53,500
---------------------------------------------------------------------------- --------------
Total 1,177,313
---------------------------------------------------------------------------- --------------
CHEMICALS & PLASTICS--0.4%
----------------------------------------------------------------------------
50,000 (b)Astor Corp., Sr. Sub. Note, 10.50%, 10/15/2006 51,000
----------------------------------------------------------------------------
100,000 Crain Industries Inc., Sr. Sub. Note, 13.50%, 8/15/2005 112,750
----------------------------------------------------------------------------
35,000 Foamex Capital Corp., Sr. Sub. Deb., 11.875%, 10/1/2004 37,800
----------------------------------------------------------------------------
50,000 Foamex L.P., Sr. Note, 11.25%, 10/1/2002 53,125
----------------------------------------------------------------------------
150,000 Harris Chemical, Sr. Note, 10.25%, 7/15/2001 154,875
----------------------------------------------------------------------------
83,000 Polymer Group, Sr. Note, 12.25%, 7/15/2002 90,055
----------------------------------------------------------------------------
100,000 RBX Corp., Sr. Sub. Note, Series B, 11.25%, 10/15/2005 86,500
----------------------------------------------------------------------------
75,000 Sterling Chemical Holding, Sr. Disc. Note, 0/13.50%, 8/15/2008 42,563
----------------------------------------------------------------------------
Sterling Chemicals Holdings, Inc. 75 Warrants, 8/15/2008 2,625
----------------------------------------------------------------------------
50,000 Sterling Chemicals, Inc., Sr. Sub. Note, 11.75%, 8/15/2006 51,875
----------------------------------------------------------------------------
50,000 Uniroyal Technology Corporation, Sr. Secd. Note, 11.75%,
6/1/2003 50,000
----------------------------------------------------------------------------
75,000 Viridian Inc., Note, 9.75%, 4/1/2003 82,115
---------------------------------------------------------------------------- --------------
Total 815,283
---------------------------------------------------------------------------- --------------
CLOTHING & TEXTILES--0.1%
----------------------------------------------------------------------------
150,000 Westpoint Stevens, Inc., Sr. Sub. Deb., 9.375%, 12/15/2005 154,875
---------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT IN U.S.
OR SHARES DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
----------------------------------------------------------------------------
CONSUMER PRODUCTS--0.2%
----------------------------------------------------------------------------
$ 50,000 American Safety Razor Co., Sr. Note, 9.875%, 8/1/2005 $ 53,750
----------------------------------------------------------------------------
100,000 Hosiery Corp. of America, Sr. Sub. Note, 13.75%, 8/1/2002 110,500
----------------------------------------------------------------------------
Hosiery Corp. of America, 50 Common Shares 275
----------------------------------------------------------------------------
100,000 (b)ICON Fitness Corp., Sr. Disc. Note, 0/14.00%, 11/15/2006 52,250
----------------------------------------------------------------------------
100,000 Playtex Family Products Corp., Sr. Sub. Note, 9.00%, 12/15/2003 99,500
----------------------------------------------------------------------------
75,000 Simmons Co., Sr. Sub. Note, 10.75%, 4/15/2006 78,375
---------------------------------------------------------------------------- --------------
Total 394,650
---------------------------------------------------------------------------- --------------
CONTAINER & GLASS PRODUCTS--0.1%
----------------------------------------------------------------------------
100,000 Owens Illinois, Inc., Sr. Sub. Note, 10.50%, 6/15/2002 106,375
----------------------------------------------------------------------------
50,000 Owens Illinois, Inc., Sr. Sub. Note, 9.75%, 8/15/2004 52,250
----------------------------------------------------------------------------
100,000 Packaging Resources Inc., Sr. Note, 11.625%, 5/1/2003 105,500
---------------------------------------------------------------------------- --------------
Total 264,125
---------------------------------------------------------------------------- --------------
COSMETICS & TOILETRIES--0.1%
----------------------------------------------------------------------------
100,000 Revlon Consumer Products, Sr. Sub. Note, 10.50%, 2/15/2003 105,250
---------------------------------------------------------------------------- --------------
ECOLOGICAL SERVICES & EQUIPMENT--0.1%
----------------------------------------------------------------------------
50,000 (b)Allied Waste, Sr. Sub. Note, 10.25%, 12/1/2006 51,313
----------------------------------------------------------------------------
ICF Kaiser International, 120 Warrants, 12/31/1998 60
----------------------------------------------------------------------------
75,000 ICF Kaiser International, Sr. Sub. Note, 12.00%, 12/31/2003 71,250
----------------------------------------------------------------------------
100,000 (a)*Mid-American Waste System, Sr. Sub. Note, 12.25%, 2/15/2003 41,000
---------------------------------------------------------------------------- --------------
Total 163,623
---------------------------------------------------------------------------- --------------
ELECTRONICS--0.0%
----------------------------------------------------------------------------
50,000 Advanced Micro Devices, Sr. Secd. Note, 11.00%, 8/1/2003 54,438
---------------------------------------------------------------------------- --------------
FOOD & DRUG RETAILERS--0.2%
----------------------------------------------------------------------------
100,000 Carr Gottstein Foods Co., Sr. Sub. Note, 12.00%, 11/15/2005 107,000
----------------------------------------------------------------------------
Grand Union Co., 1,325 Common Shares 7,619
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
----------------------------------------------------------------------------
FOOD & DRUG RETAILERS--CONTINUED
----------------------------------------------------------------------------
$ 150,000 Ralph's Grocery Co., Sr. Note, 10.45%, 6/15/2004 $ 155,813
----------------------------------------------------------------------------
50,000 Smith's Food & Drug, Sr. Sub. Note, 11.25%, 5/15/2007 55,000
---------------------------------------------------------------------------- --------------
Total 325,432
---------------------------------------------------------------------------- --------------
FOOD PRODUCTS--0.1%
----------------------------------------------------------------------------
75,000 (b)International Home Foods, Sr. Sub. Note, 10.375%, 11/1/2006 77,063
----------------------------------------------------------------------------
50,000 Specialty Foods, Sr. Sub. Note, 11.75%, 8/15/2003 42,750
----------------------------------------------------------------------------
100,000 Van De Kamp's, Inc., Sr. Sub. Note, 12.00%, 9/15/2005 110,000
---------------------------------------------------------------------------- --------------
Total 229,813
---------------------------------------------------------------------------- --------------
FOREST PRODUCTS--0.2%
----------------------------------------------------------------------------
75,000 Four M Corp, Sr. Note, 12.00%, 6/1/2006 77,438
----------------------------------------------------------------------------
50,000 Repap New Brunswick, 2nd Priority Sr. Secd. Note, 10.625%,
4/15/2005 48,750
----------------------------------------------------------------------------
100,000 Riverwood International, Sr. Sub. Note, 10.875%, 4/1/2008 91,000
----------------------------------------------------------------------------
75,000 Stone Container, Sr. Note, 11.50%, 10/1/2004 79,125
---------------------------------------------------------------------------- --------------
Total 296,313
---------------------------------------------------------------------------- --------------
HEALTHCARE--0.2%
----------------------------------------------------------------------------
125,000 (b)Dade International, Inc., Sr. Sub. Note, 11.125%, 5/1/2006 135,625
----------------------------------------------------------------------------
50,000 (b)Prime Succession Acq., Sr. Sub. Note, 10.75%, 8/15/2004 54,250
----------------------------------------------------------------------------
100,000 Tenet Healthcare, Sr. Sub. Note, 10.125%, 3/1/2005 111,000
---------------------------------------------------------------------------- --------------
Total 300,875
---------------------------------------------------------------------------- --------------
HOTELS, MOTELS, INNS & CASINOS--0.0%
----------------------------------------------------------------------------
50,000 Courtyard By Marriott, Sr. Note, 10.75%, 2/1/2008 53,000
---------------------------------------------------------------------------- --------------
INDUSTRIAL PRODUCTS & EQUIPMENT--0.2%
----------------------------------------------------------------------------
100,000 Cabot Safety Corp., Sr. Sub. Note, 12.50%, 7/15/2005 112,250
----------------------------------------------------------------------------
75,000 (b)Euramax International PLC, Sr. Sub. Note, 11.25%, 10/1/2006 77,250
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
----------------------------------------------------------------------------
INDUSTRIAL PRODUCTS & EQUIPMENT--CONTINUED
----------------------------------------------------------------------------
$ 50,000 Fairfield Manufacturing Co., Inc., Sr. Sub. Note, 11.375%,
7/1/2001 $ 51,250
----------------------------------------------------------------------------
50,000 (b)Intl Knife & Saw, Inc., Sr. Sub. Note, 11.375%, 11/15/2006 51,500
----------------------------------------------------------------------------
50,000 Mettler-Toledo, Inc., Sr. Sub. Note, 9.75%, 10/1/2006 52,625
---------------------------------------------------------------------------- --------------
Total 344,875
---------------------------------------------------------------------------- --------------
LEISURE & ENTERTAINMENT--0.2%
----------------------------------------------------------------------------
50,000 AMF Group, Inc., Sr. Sub. Note, 10.875%, 3/15/2006 52,688
----------------------------------------------------------------------------
100,000 AMF Group, Inc., Sr. Sub. Disc. 0/12.25%, Note, 3/15/2006 63,750
----------------------------------------------------------------------------
50,000 Cobblestone Golf, Sr. Note, 11.50%, 6/1/2003 52,375
----------------------------------------------------------------------------
100,000 Premier Parks, Sr. Note, 12.00%, 8/15/2003 109,500
----------------------------------------------------------------------------
150,000 Six Flags Theme Parks, Sr. Sub. Disc. Note, 0/12.25%, 6/15/2005 138,750
---------------------------------------------------------------------------- --------------
Total 417,063
---------------------------------------------------------------------------- --------------
MACHINERY & EQUIPMENT--0.2%
----------------------------------------------------------------------------
100,000 Alvey Systems, Sr. Sub. Note, 11.375%, 1/31/2003 105,000
----------------------------------------------------------------------------
50,000 (b)Clark Material, Sr. Note, 10.75%, 11/15/2006 51,375
----------------------------------------------------------------------------
67,000 Primeco Inc., Sr. Sub. Note, 12.75%, 3/1/2005 76,380
----------------------------------------------------------------------------
75,000 (b)Tokheim Corporation, Sr. Sub. Note, 11.50%, 8/1/2006 79,313
---------------------------------------------------------------------------- --------------
Total 312,068
---------------------------------------------------------------------------- --------------
OIL & GAS--0.1%
----------------------------------------------------------------------------
100,000 (b)HS Resources, Inc., Sr. Sub. Note, 9.25%, 11/15/2006 102,250
----------------------------------------------------------------------------
50,000 Mesa Operating Company, Sr. Sub. Note, 10.625%, 7/1/2006 54,125
----------------------------------------------------------------------------
100,000 United Meridian Corp., Sr. Sub. Note, 10.375%, 10/15/2005 109,250
---------------------------------------------------------------------------- --------------
Total 265,625
---------------------------------------------------------------------------- --------------
PRINTING & PUBLISHING--0.1%
----------------------------------------------------------------------------
100,000 Garden State Newspapers, Inc., Sr. Sub. Note, 12.00%, 7/1/2004 107,250
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT IN U.S.
OR SHARES DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
----------------------------------------------------------------------------
PRINTING & PUBLISHING--CONTINUED
----------------------------------------------------------------------------
K-III Communications Corp., 1,044 PIK Pfd. Shares, Series B, 11.625% $ 104,923
----------------------------------------------------------------------------
$ 50,000 (b)Petersen Publishing, Sr. Sub. Note, 11.125%, 11/15/2006 51,313
---------------------------------------------------------------------------- --------------
Total 263,486
---------------------------------------------------------------------------- --------------
REAL ESTATE--0.1%
----------------------------------------------------------------------------
100,000 Trizec Finance, Sr. Note, 10.875%, 10/15/2005 110,750
---------------------------------------------------------------------------- --------------
SERVICES--0.0%
----------------------------------------------------------------------------
50,000 (b)Ryder TRS, Inc., Sr. Sub. Note, 10.00%, 12/1/2006 51,188
---------------------------------------------------------------------------- --------------
STEEL--0.2%
----------------------------------------------------------------------------
(b)Bar Technologies, Inc. 50 Warrants, 4/1/2001 3,000
----------------------------------------------------------------------------
50,000 Bar Technologies, Inc., Company Guarantee, 13.50%, 4/1/2001 50,750
----------------------------------------------------------------------------
50,000 Bayou Steel Corp., 1st Mtg. Note, 10.25%, 3/1/2001 46,750
----------------------------------------------------------------------------
75,000 EnviroSource, Inc., Sr. Note, 9.75%, 6/15/2003 70,065
----------------------------------------------------------------------------
100,000 GS Technologies Operating Co., Inc., Sr. Note, 12.00%, 9/1/2004 103,500
----------------------------------------------------------------------------
75,000 Republic Engineered Steel, 1st Mtg. Note, 9.875%, 12/15/2001 68,531
---------------------------------------------------------------------------- --------------
Total 342,596
---------------------------------------------------------------------------- --------------
SURFACE TRANSPORTATION--0.3%
----------------------------------------------------------------------------
50,000 Ameritruck Distribution, Sr. Sub. Note, 12.25%, 11/15/2005 49,750
----------------------------------------------------------------------------
100,000 Gearbulk Holding Limited, Sr. Note, 11.25%, 12/1/2004 109,000
----------------------------------------------------------------------------
50,000 Great Dane Holdings, Sr. Sub. Deb., 12.75%, 8/1/2001 50,250
----------------------------------------------------------------------------
75,000 (b)Statia Terminals, 1st Mtg. Note, 11.75%, 11/15/2003 76,125
----------------------------------------------------------------------------
100,000 Stena AB, Sr. Note, 10.50%, 12/15/2005 107,125
----------------------------------------------------------------------------
100,000 Trism, Inc., Sr. Sub. Note, 10.75%, 12/15/2000 96,500
---------------------------------------------------------------------------- --------------
Total 488,750
---------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT IN U.S.
OR SHARES DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
----------------------------------------------------------------------------
TELECOMMUNICATIONS & CELLULAR--0.5%
----------------------------------------------------------------------------
$ 100,000 American Communications, Sr. Disc. Note, 0/12.75%, 4/1/2006 $ 54,750
----------------------------------------------------------------------------
175,000 Arch Communications, Sr. Disc. Note, 0/10.875%, 3/15/2008 101,938
----------------------------------------------------------------------------
250,000 Brooks Fiber Properties, Inc. Sr. Disc. Note, 0/10.875%, 3/1/2006 166,250
----------------------------------------------------------------------------
150,000 Cellular Communication, Sr. Disc. Note, 0/10.875%, 8/15/2000 102,750
----------------------------------------------------------------------------
Cellular Communications International, Inc. 150 Warrants,
8/15/2003 1,875
----------------------------------------------------------------------------
25,000 Fonorola, Inc., Sr. Secd. Note, 12.50%, 8/15/2002 27,313
----------------------------------------------------------------------------
200,000 Millicom International, Sr. Disc. Note, 13.50%, 6/1/2006 118,500
----------------------------------------------------------------------------
25,000 (a)**Mobilemedia Communication, Sr. Sub. Note, 9.375%, 11/1/2007 13,750
----------------------------------------------------------------------------
75,000 Nextel Communications, Inc., Sr. Disc. Note, 0/11.50%, 9/1/2003 56,813
----------------------------------------------------------------------------
50,000 Paging Network, Sr. Sub. Note, 10.125%, 8/1/2007 50,313
----------------------------------------------------------------------------
PanAmSat Corp., 52 PIK Pfd. Shares, 12.75% 63,700
----------------------------------------------------------------------------
50,000 Sygnet Wireless, Inc., Sr. Note, 11.50%, 10/1/2006 50,500
----------------------------------------------------------------------------
150,000 Teleport Communications, Sr. Disc. Note, 0/11.125%, 7/1/2007 102,750
----------------------------------------------------------------------------
125,000 Vanguard Cellular Systems, Deb., 9.375%, 4/15/2006 125,938
---------------------------------------------------------------------------- --------------
Total 1,037,140
---------------------------------------------------------------------------- --------------
UTILITIES--0.1%
----------------------------------------------------------------------------
125,000 California Energy Co., Sr. Disc. Note, 0/10.25%, 1/15/2004 130,938
----------------------------------------------------------------------------
El Paso Electric Co., 1,084 PIK Pfd. Shares, Series A, 11.40% 119,541
---------------------------------------------------------------------------- --------------
Total 250,479
---------------------------------------------------------------------------- --------------
TOTAL HIGH YIELD BONDS 10,132,693
---------------------------------------------------------------------------- --------------
INVESTMENT GRADE BONDS--2.7%
----------------------------------------------------------------------------
BANKING--0.3%
----------------------------------------------------------------------------
250,000 Bank Of Montreal, Sub. Note, 7.80%, 4/1/2007 270,648
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
INVESTMENT GRADE BONDS--CONTINUED
----------------------------------------------------------------------------
BANKING--CONTINUED
----------------------------------------------------------------------------
$ 250,000 National Bank of Canada, Sub. Note, 8.125%, 8/15/2004 $ 272,193
---------------------------------------------------------------------------- --------------
Total 542,841
---------------------------------------------------------------------------- --------------
BEVERAGE & TOBACCO--0.0%
----------------------------------------------------------------------------
50,000 Philip Morris Cos., Inc., Deb., 6.00%, 7/15/2001 48,938
---------------------------------------------------------------------------- --------------
CABLE TELEVISION--0.3%
----------------------------------------------------------------------------
230,000 Continental Cablevision, Sr. Deb., 9.50%, 8/1/2013 270,393
----------------------------------------------------------------------------
250,000 TKR Cable, Inc., Sr. Note, 10.50%, 10/30/2007 276,955
---------------------------------------------------------------------------- --------------
Total 547,348
---------------------------------------------------------------------------- --------------
CHEMICALS & PLASTICS--0.1%
----------------------------------------------------------------------------
250,000 (b)Bayer Corp., Deb., 6.50%, 10/1/2002 253,930
---------------------------------------------------------------------------- --------------
FINANCIAL INTERMEDIARIES--0.6%
----------------------------------------------------------------------------
200,000 American General Corp., S.F. Deb., 9.625%, 2/1/2018 216,398
----------------------------------------------------------------------------
300,000 DLJ, Note, 6.875%, 11/1/2005 300,798
----------------------------------------------------------------------------
250,000 Green Tree Financial Corp, Sr. Sub. Note, 10.25%, 6/1/2002 294,400
----------------------------------------------------------------------------
100,000 Lehman Bros Inc, Sr. Sub. Note, 6.125%, 2/1/2001 98,728
----------------------------------------------------------------------------
150,000 Salomon Inc, Sr. Note, 9.00%, 2/15/1999 158,312
----------------------------------------------------------------------------
100,000 Salomon Inc., Sr. Note, 7.02%, 9/25/1998 101,491
---------------------------------------------------------------------------- --------------
Total 1,170,127
---------------------------------------------------------------------------- --------------
FOOD & DRUG RETAILERS--0.1%
----------------------------------------------------------------------------
250,000 Hook-Superx, Inc., Sr. Note, 10.125%, 6/1/2002 266,478
---------------------------------------------------------------------------- --------------
INDUSTRIAL PRODUCTS & EQUIPMENT--0.1%
----------------------------------------------------------------------------
250,000 Joy Technologies Inc, Sr. Note, 10.25%, 9/1/2003 276,850
---------------------------------------------------------------------------- --------------
INSURANCE--0.3%
----------------------------------------------------------------------------
225,000 Conseco, Inc., Sr. Note, 10.50%, 12/15/2004 273,431
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OR
FOREIGN VALUE
CURRENCY IN U.S.
PAR AMOUNT DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
INVESTMENT GRADE BONDS--CONTINUED
----------------------------------------------------------------------------
INSURANCE--CONTINUED
----------------------------------------------------------------------------
$ 250,000 Sunamerica Inc, Medium Term Note, 7.34%, 8/30/2005 $ 260,716
---------------------------------------------------------------------------- --------------
Total 534,147
---------------------------------------------------------------------------- --------------
METALS & MINING--0.2%
----------------------------------------------------------------------------
250,000 Santa Fe Pacific Gold Co, Note, 8.375%, 7/1/2005 262,795
---------------------------------------------------------------------------- --------------
PRINTING & PUBLISHING--0.1%
----------------------------------------------------------------------------
250,000 News Amer Hldgs, Sr. Note, 7.50%, 3/1/2000 258,283
---------------------------------------------------------------------------- --------------
SERVICES--0.1%
----------------------------------------------------------------------------
200,000 Loewen Group Int'l, Sr. Note, 8.25%, 4/15/2003 206,262
---------------------------------------------------------------------------- --------------
SOVEREIGN GOVERNMENT--0.3%
----------------------------------------------------------------------------
250,000 (b)Freeport Terminal (Malta), GTD. Global Note, 7.50%, 3/29/2009 262,878
----------------------------------------------------------------------------
285,000 Republic of Colombia, Note, 7.25%, 2/15/2003 283,481
---------------------------------------------------------------------------- --------------
Total 546,359
---------------------------------------------------------------------------- --------------
SURFACE TRANSPORTATION--0.2%
----------------------------------------------------------------------------
250,000 Trans Ocean Container Corp., Sr. Sub. Note, 12.25%, 7/1/2004 300,815
---------------------------------------------------------------------------- --------------
TOTAL INVESTMENT GRADE BONDS 5,215,173
---------------------------------------------------------------------------- --------------
FOREIGN BONDS--7.3%
----------------------------------------------------------------------------
AUSTRALIAN DOLLAR--0.3%
----------------------------------------------------------------------------
224,000 Queensland Treas Global, Local Government Guarantee, 8.00%, 5/14/2003 191,323
----------------------------------------------------------------------------
283,000 Queensland Treas Global, Local Government Guarantee, 8.00%, 8/14/2001 239,470
----------------------------------------------------------------------------
150,000 State Bank Of New South Wales, 12.25%, 2/26/2001 144,601
---------------------------------------------------------------------------- --------------
Total 575,394
---------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN VALUE
CURRENCY IN U.S.
PAR AMOUNT DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN BONDS--CONTINUED
----------------------------------------------------------------------------
BELGIAN FRANC--0.2%
----------------------------------------------------------------------------
2,570,000 Belgian Government, Bond, 6.50%, 3/31/2005 $ 85,534
----------------------------------------------------------------------------
9,000,000 Belgium Kingdom, 7.75%, 10/15/2004 323,250
---------------------------------------------------------------------------- --------------
Total 408,784
---------------------------------------------------------------------------- --------------
CANADIAN DOLLAR--0.4%
----------------------------------------------------------------------------
569,000 Canada Government, Deb., 6.50%, 6/1/2004 441,091
----------------------------------------------------------------------------
400,000 Ontario Hydro, 9.00%, 6/24/2002 346,470
---------------------------------------------------------------------------- --------------
Total 787,561
---------------------------------------------------------------------------- --------------
DANISH KRONE--0.4%
----------------------------------------------------------------------------
2,931,000 Denmark--Bullet, Bond, 8.00%, 3/15/2006 542,851
----------------------------------------------------------------------------
1,200,000 Denmark, 8.00%, 5/15/2003 224,757
---------------------------------------------------------------------------- --------------
Total 767,608
---------------------------------------------------------------------------- --------------
FRENCH FRANC--0.3%
----------------------------------------------------------------------------
1,352,000 France O.a.t., Bond, 7.25%, 4/25/2006 290,132
----------------------------------------------------------------------------
319,000 France O.a.t., Bond, 7.50%, 4/25/2005 441,690
---------------------------------------------------------------------------- --------------
Total 731,822
---------------------------------------------------------------------------- --------------
DEUTSCHE MARK--1.4%
----------------------------------------------------------------------------
400,000 Bundesobligationen, Deb., 7.25%, 10/20/1997 268,929
----------------------------------------------------------------------------
195,000 Deutschland Republic, Deb., 6.25%, 1/4/2024 121,328
----------------------------------------------------------------------------
42,000,000 KFW International Finance, 6.00%, 11/29/1999 422,212
----------------------------------------------------------------------------
500,000 KFW International Finance, Bank Guarantee, 6.75%, 6/20/2005 347,308
----------------------------------------------------------------------------
800,000 KFW International Finance, 7.00%, 5/12/2000 165,684
----------------------------------------------------------------------------
1,050,000 Treuhandanstalt, 7.75%, 10/1/2002 773,113
----------------------------------------------------------------------------
960,000 Treuhandanstalt, Foreign Gov't. Guarantee, 6.875%, 6/11/2003 677,948
---------------------------------------------------------------------------- --------------
Total 2,776,522
---------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN VALUE
CURRENCY IN U.S.
PAR AMOUNT DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN BONDS--CONTINUED
----------------------------------------------------------------------------
IRISH POUND--0.3%
----------------------------------------------------------------------------
180,000 Irish Government, Bond, 6.50%, 10/18/2001 $ 310,642
----------------------------------------------------------------------------
180,000 Treasury, Deb., 6.25%, 4/1/1999 305,952
---------------------------------------------------------------------------- --------------
Total 616,594
---------------------------------------------------------------------------- --------------
ITALIAN LIRA--0.6%
----------------------------------------------------------------------------
265,000,000 Btps, Bond, 10.50%, 11/1/2000 196,851
----------------------------------------------------------------------------
1,225,000,000 Buoni Poliennali Del Tes, 9.50%, 1/1/2005 907,144
---------------------------------------------------------------------------- --------------
Total 1,103,995
---------------------------------------------------------------------------- --------------
JAPANESE YEN--0.6%
----------------------------------------------------------------------------
100,000,000 Export-Import Bank Japan, 4.375%, 10/1/2003 999,780
----------------------------------------------------------------------------
10,000,000 Interamerican Development, Deb., 7.25%, 5/15/2000 105,465
---------------------------------------------------------------------------- --------------
Total 1,105,245
---------------------------------------------------------------------------- --------------
NETHERLANDS GUILDER--0.4%
----------------------------------------------------------------------------
285,000 Bank Ned Gemeenten, Bond, 6.375%, 1/4/2006 172,489
----------------------------------------------------------------------------
220,000 Lkb-global Bd, Bank Guarantee, 6.00%, 1/25/2006 144,178
----------------------------------------------------------------------------
650,000 Netherlands Government, 5.75%, 1/15/2004 386,389
----------------------------------------------------------------------------
300,000 Netherlands Government, 6.00%, 1/15/2006 178,855
---------------------------------------------------------------------------- --------------
Total 881,911
---------------------------------------------------------------------------- --------------
NEW ZEALAND DOLLAR--0.2%
----------------------------------------------------------------------------
205,000 New Zealand Government, 8.00%, 2/15/2001 151,629
----------------------------------------------------------------------------
270,000 New Zealand Government, Bond, 8.00%, 7/15/1998 195,293
---------------------------------------------------------------------------- --------------
Total 346,922
---------------------------------------------------------------------------- --------------
NORWEGIAN KRONE--0.3%
----------------------------------------------------------------------------
1,429,000 NGB Bond, 9.00%, 1/31/1999 242,249
----------------------------------------------------------------------------
1,620,000 Norwegian Government, Bond, 7.00%, 5/31/2001 268,999
----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN VALUE
CURRENCY IN U.S.
PAR AMOUNT DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN BONDS--CONTINUED
----------------------------------------------------------------------------
NORWEGIAN KRONE--CONTINUED
----------------------------------------------------------------------------
1,215,000 Norwegian Government, Foreign Gov't. Guarantee, 5.75%,
11/30/2004 $ 185,961
---------------------------------------------------------------------------- --------------
Total 697,209
---------------------------------------------------------------------------- --------------
PORTUGESE ESCUDO--0.1%
----------------------------------------------------------------------------
33,000,000 Portuguese Ot's, Bond, 11.875%, 2/23/2000 246,597
---------------------------------------------------------------------------- --------------
SPANISH PESETA--0.5%
----------------------------------------------------------------------------
40,000,000 Spanish Government, 10.00%, 2/28/2005 366,898
----------------------------------------------------------------------------
30,000,000 Spanish Government, Bond, 8.80%, 4/30/2006 254,863
----------------------------------------------------------------------------
16,740,000 Spanish Government, Bond, 9.40%, 4/30/1999 138,944
----------------------------------------------------------------------------
15,030,000 Spanish Government, Deb., 10.10%, 2/28/2001 132,501
---------------------------------------------------------------------------- --------------
Total 893,206
---------------------------------------------------------------------------- --------------
SWEDISH KRONA--0.3%
----------------------------------------------------------------------------
1,000,000 Stadshypotekskas, Foreign Spanish Government Guarantee, Series 1551, 7.50%,
3/17/1999 155,221
----------------------------------------------------------------------------
2,400,000 Sweden, 6.00%, 2/9/2005 338,504
---------------------------------------------------------------------------- --------------
Total 493,725
---------------------------------------------------------------------------- --------------
UNITED KINGDOM POUND--1.0%
----------------------------------------------------------------------------
366,000 British Gas PLC, 8.875%, 7/8/2008 646,484
----------------------------------------------------------------------------
145,000 UK Treasury, Deb., 8.50%, 12/7/2005 262,444
----------------------------------------------------------------------------
375,000 UK Conversion, 9.00%, 3/3/2000 668,095
----------------------------------------------------------------------------
60,000 UK Treasury, Bond, 8.00%, 12/7/2015 105,855
----------------------------------------------------------------------------
180,000 United Kingdom Treasury, Bond, 7.50%, 12/7/2006 302,244
---------------------------------------------------------------------------- --------------
Total 1,985,122
---------------------------------------------------------------------------- --------------
TOTAL FOREIGN BONDS 14,418,217
---------------------------------------------------------------------------- --------------
TOTAL BONDS (IDENTIFIED COST $84,813,883) 87,074,038
---------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- ---------------- ---------------------------------------------------------------------------- --------------
CASH EQUIVALENT--6.5%
- ----------------------------------------------------------------------------------------------
(C)REPURCHASE AGREEMENT--6.5%
----------------------------------------------------------------------------
$ 12,760,000 BT Securities Corporation, 5.720%, dated 11/29/1996, due
12/2/1996 (AT AMORTIZED COST) $ 12,760,000
---------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (IDENTIFIED COST $181,761,615)(D) $ 195,503,417
---------------------------------------------------------------------------- --------------
</TABLE>
(a) Non-income producing security.
(b) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. At November 30, 1996, these securities
amounted to $3,749,206 which represents 1.9% of net assets.
(c) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investment in the repurchase agreement is through participation in a joint
account with other Federated Funds.
(d) The cost of investments for federal tax purposes amounts to $181,859,746.
The net unrealized appreciation of investments on a federal tax basis
amounts to $13,643,671 which is comprised of $15,792,579 appreciation and
$2,148,908 depreciation at November 30, 1996.
Note: The categories of investments are shown as a percentage of net assets
($196,463,347) at November 30, 1996.
The following acronyms are used throughout this portfolio:
ACES--Adjustable Convertible Extendable Securities
ADR--American Depository Receipt
GDR--Global Depository Receipt
GTD--Guaranty
PEPS--Participating Equity Preferred Stock
PIK--Payment in Kind
PLC--Public Limited Company
SPA--Standby Purchase Agreement
*MID-AMERICAN WASTE SYSTEMS, INC.
On February 15, 1996 and August 15, 1996, Mid-American Waste Systems failed to
make its scheduled interest payment. Currently, the company is in negotiations
with its debt holders and has retained an investment bank to evaluate its
options. The unofficial subordinated bondholders group has retained legal
counsel and financial advisors and is monitoring the situation closely.
FEDERATED MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
**MOBILEMEDIA COMMUNICATIONS
On November 1, 1996, MobileMedia Communications failed to make its scheduled
interest payment. Subsequent to November 30, 1996 holdings in these securities
have been sold.
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------------------------
Total investments in securities, at value (identified cost $181,761,615, and tax cost $181,859,746)
$ 195,503,417
- ---------------------------------------------------------------------------------------------------
Cash denominated in foreign currencies (identified cost $18,886) 18,886
- ---------------------------------------------------------------------------------------------------
Income receivable 2,023,744
- ---------------------------------------------------------------------------------------------------
Receivable for investments sold 499,775
- ---------------------------------------------------------------------------------------------------
Receivable for shares sold 178,038
- ---------------------------------------------------------------------------------------------------
Deferred expenses 24,672
- --------------------------------------------------------------------------------------------------- -------------
Total assets 198,248,532
- ---------------------------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------------
Payable for investments purchased $ 1,464,746
- --------------------------------------------------------------------------------------
Payable for shares redeemed 71,663
- --------------------------------------------------------------------------------------
Payable to Bank 104,277
- --------------------------------------------------------------------------------------
Payable for taxes withheld 8,594
- --------------------------------------------------------------------------------------
Payable for foreign currency exchange contracts 841
- --------------------------------------------------------------------------------------
Accrued expenses 135,064
- -------------------------------------------------------------------------------------- -----------
Total liabilities 1,785,185
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS for 16,073,938 shares outstanding $ 196,463,347
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------------------------
Paid in capital $ 176,771,334
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments, translation of assets and liabilities
in foreign currency and futures contracts 13,742,353
- ---------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments, foreign currency transactions
and futures contracts 4,772,024
- ---------------------------------------------------------------------------------------------------
Undistributed net investment income 1,177,636
- --------------------------------------------------------------------------------------------------- -------------
Total Net Assets $ 196,463,347
- --------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ---------------------------------------------------------------------------------------------------
Institutional Shares: $136,255,381 / 11,139,678 shares outstanding $12.23
- --------------------------------------------------------------------------------------------------- -------------
Select Shares: $60,207,966 / 4,934,260 shares outstanding $12.20
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED GROWTH FUND
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Dividends (net of foreign taxes withheld of $53,139) $1,346,574
- ----------------------------------------------------------------------------------------------------
Interest (net of dollar roll expense of $28,552) (net of foreign taxes withheld of $9,019) 5,772,747
- ---------------------------------------------------------------------------------------------------- ----------
Total income 7,119,321
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- -----------------------------------------------------------------------------------------
Investment advisory fee $1,108,082
- -----------------------------------------------------------------------------------------
Administrative personnel and services fee 155,001
- -----------------------------------------------------------------------------------------
Custodian fees 136,787
- -----------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 105,068
- -----------------------------------------------------------------------------------------
Directors'/Trustees' fees 4,817
- -----------------------------------------------------------------------------------------
Auditing fees 14,561
- -----------------------------------------------------------------------------------------
Legal fees 4,122
- -----------------------------------------------------------------------------------------
Portfolio accounting fees 88,456
- -----------------------------------------------------------------------------------------
Distribution services fee--Select Shares 331,734
- -----------------------------------------------------------------------------------------
Shareholder services fee--Institutional Shares 258,783
- -----------------------------------------------------------------------------------------
Shareholder services fee--Select Shares 110,578
- -----------------------------------------------------------------------------------------
Share registration costs 69,233
- -----------------------------------------------------------------------------------------
Printing and postage 70,759
- -----------------------------------------------------------------------------------------
Insurance premiums 5,003
- -----------------------------------------------------------------------------------------
Taxes 2,783
- -----------------------------------------------------------------------------------------
Miscellaneous 18,452
- ----------------------------------------------------------------------------------------- ---------
Total expenses 2,484,219
- -----------------------------------------------------------------------------------------
Waivers--
- ------------------------------------------------------------------------------
Waiver of investment advisory fee $(299,180)
- ------------------------------------------------------------------------------
Waiver of distribution services fee--Select Shares (110,578)
- ------------------------------------------------------------------------------
Waiver of shareholder services fee--Institutional Shares (207,026)
- ------------------------------------------------------------------------------ ---------
Total waivers (616,784)
- ----------------------------------------------------------------------------------------- ---------
Net expenses 1,867,435
- ---------------------------------------------------------------------------------------------------- ----------
Net investment income 5,251,886
- ---------------------------------------------------------------------------------------------------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FOREIGN CURRENCY AND FUTURES CONTRACTS:
- ----------------------------------------------------------------------------------------------------
Net realized gain on investments, foreign currency transactions and futures contracts 5,108,532
- ----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments, translation of assets and liabilities
in foreign currency and futures contracts 7,820,439
- ---------------------------------------------------------------------------------------------------- ----------
Net realized and unrealized gain on investments, foreign currency and futures contracts 12,928,971
- ---------------------------------------------------------------------------------------------------- ----------
Change in net assets resulting from operations $18,180,857
- ---------------------------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
NOVEMBER 30,
<S> <C> <C>
1996 1995
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------------------------------------------------------
OPERATIONS--
- ------------------------------------------------------------------------------------
Net investment income $ 5,251,886 $ 2,388,609
- ------------------------------------------------------------------------------------
Net realized gain (loss) on investments, foreign currency
transactions, and futures contracts ($4,840,279 and $2,146,546
net gains, respectively, as computed for federal tax purposes) 5,108,532 1,792,344
- ------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of
investments, translation of assets and liabilities in foreign
currency and futures contracts 7,820,439 6,797,361
- ------------------------------------------------------------------------------------ ------------- ------------
Change in net assets resulting from operations 18,180,857 10,978,314
- ------------------------------------------------------------------------------------ ------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ------------------------------------------------------------------------------------
Distributions from net investment income
- ------------------------------------------------------------------------------------
Institutional Shares (3,611,245) (1,589,524)
- ------------------------------------------------------------------------------------
Select Shares (1,261,400) (320,621)
- ------------------------------------------------------------------------------------
Distributions from net realized gains on investments,
foreign currency transactions and futures contracts
- ------------------------------------------------------------------------------------
Institutional Shares (1,417,081) --
- ------------------------------------------------------------------------------------
Select Shares (583,800) --
- ------------------------------------------------------------------------------------ ------------- ------------
Change in net assets resulting from distributions to
shareholders (6,873,526) (1,910,145)
- ------------------------------------------------------------------------------------ ------------- ------------
SHARE TRANSACTIONS--
- ------------------------------------------------------------------------------------
Proceeds from sale of shares 111,287,688 63,762,378
- ------------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment
of distributions declared 4,340,056 1,014,253
- ------------------------------------------------------------------------------------
Cost of shares redeemed (26,142,343) (10,099,348)
- ------------------------------------------------------------------------------------ ------------- ------------
Change in net assets resulting from share transactions 89,485,401 54,677,283
- ------------------------------------------------------------------------------------ ------------- ------------
Change in net assets 100,792,732 63,745,452
- ------------------------------------------------------------------------------------
NET ASSETS:
- ------------------------------------------------------------------------------------
Beginning of period 95,670,615 31,925,163
- ------------------------------------------------------------------------------------ ------------- ------------
End of period (including undistributed net investment income
of $1,177,636 and $885,488, respectively) $ 196,463,347 $ 95,670,615
- ------------------------------------------------------------------------------------ ------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
(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 portfolios. The financial statements
included herein are only those of Federated Managed Growth Fund (the "Fund"), a
diversified portfolio. The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held. The
investment objective of the Fund is to seek capital appreciation.
The Fund offers two classes of shares: Institutional Shares and Select Shares.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Listed equity securities are valued at the last sale
price reported on a national securities exchange. U.S. government
securities, listed corporate bonds, other fixed income and asset-backed
securities, and unlisted securities and private placement securities are
generally valued at the mean of the latest bid and asked price as furnished
by an independent pricing service. Short-term securities are valued at the
prices provided by an independent pricing service. However, short-term
securities with remaining maturities of sixty days or less at the time of
purchase may be valued at amortized cost, which approximates fair market
value.
With respect to valuation of foreign securities, trading in foreign
countries may be completed at times which vary from the closing of the New
York Stock Exchange. Therefore, foreign securities are valued at the latest
closing price on the exchange on which they are traded prior to the closing
of the New York Stock Exchange. Foreign securities quoted in foreign
currencies are translated into U.S. dollars at the foreign exchange rate in
effect at noon, eastern time, on the day the value of the foreign security
is determined.
REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral
securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code"). Dividend
income and distributions to shareholders are recorded on the ex-dividend
date.
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 passive foreign investment companies. The
following reclassifications have been made to the financial statements.
<TABLE>
<CAPTION>
INCREASE (DECREASE)
<S> <C>
ACCUMULATED UNDISTRIBUTED NET
NET REALIZED GAIN INVESTMENT INCOME
$87,093 ($87,093)
</TABLE>
Net investment income, net realized gains/losses, and net assets were not
affected by this reclassification.
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
However, federal taxes may be imposed on the Fund upon the disposition of
certain investments in passive foreign investment companies. Withholding
taxes on foreign interest and dividends have been provided for in
accordance with the Fund's understanding of the applicable country's tax
rules and rates.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred
and are being amortized over a period not to exceed five years from the
Fund's commencement date.
FUTURES CONTRACTS--The Fund purchases stock index futures contracts to
manage cashflows, enhance yield, and to potentially reduce transaction
costs. Upon entering into a stock index futures contract with a broker, the
Fund is required to deposit in a segregated account a specified amount of
cash or U.S. government securities. Futures contracts are valued daily and
unrealized gains or losses are recorded in a "variation margin" account.
Daily, the Fund receives from or pays to the broker a specified amount of
cash based upon changes in the variation margin account. When a contract is
closed, the Fund recognizes a realized gain or loss. 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 year ended November 30, 1996, the Fund had realized
gains of $1,052,413 on futures contracts. As of November 30, 1996, the Fund
had no outstanding futures contracts.
FOREIGN EXCHANGE CONTRACTS--The Fund may enter into foreign currency
contracts for the delayed delivery of securities or foreign currency
exchange transactions. These contracts are used to hedge the Fund
securities against currency fluctuations. Risks may arise upon entering
these transactions from the potential inability of counter-parts 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 purposes as unrealized
until the settlement date. At November 30, 1996, the Fund had outstanding
foreign currency commitments as set forth below:
<TABLE>
<CAPTION>
IN UNREALIZED
CONTRACTS TO EXCHANGE CONTRACTS APPRECIATION
CONTRACTS SOLD SETTLEMENT DATE DELIVER/RECEIVE FOR AT VALUE (DEPRECIATION)
<S> <C> <C> <C> <C> <C>
Brazilian Real December 2, 1996 11,402 $ 11,054 $ 11,038 $ 16
Brazilian Real December 2, 1996 7,594 7,353 7,351 2
New Zealand Dollar December 3, 1996 118,720 83,579 84,438 (859)
----------- ------
Total ($ 841)
------
</TABLE>
FOREIGN CURRENCY TRANSLATION--The accounting records of the Fund are
maintained in U.S. dollars. All assets and liabilities denominated in
foreign currencies ("FC") are translated into U.S. dollars based on the
rate of exchange of such currencies against U.S. dollars on the date of
valuation. Purchases and sales of securities, income and expenses are
translated at the rate of exchange quoted on the respective date that such
transactions are recorded. Differences between income and expense amounts
recorded and collected or paid are adjusted when reported by the custodian
bank. The Fund does not isolate that portion of the results of
operations resulting from changes in foreign exchange rates on investments
from the fluctuations arising from changes in market prices of securities
held. Such fluctuations are included with the net realized and unrealized
gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales
of FCs, currency gains or losses realized between the trade and settlement
dates on securities transactions, the difference between the amounts of
dividends, interest, and foreign withholding taxes recorded on the Fund's
books, and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes
in the value of assets and liabilities other than investments in securities
at fiscal year end, resulting from changes in the exchange rate.
RESTRICTED SECURITIES--Restricted securities are securities that may only
be resold upon registration under federal securities laws or in
transactions exempt from such registration. In some cases, the issuer of
restricted securities has agreed to register such securities for resale, at
the issuer's expense either upon demand by the Fund or in connection with
another registered offering of the securities. Many restricted securities
may be resold in the secondary market in transactions exempt from
registration. Such restricted securities may be determined to be liquid
under criteria established by the Trustees. The Fund will not incur any
registration costs upon such resales. The Fund's restricted securities are
valued at the price provided by dealers in the secondary market or, if no
market prices are available, at the fair value as determined by the Fund's
pricing committee.
Additional information on each restricted security held at November 30,
1996 is as follows:
<TABLE>
<CAPTION>
ACQUISITION
SECURITY ACQUISITION DATE COST
<S> <C> <C>
Acer, Inc., ADR 7/19/1996 $ 20,900
Allied Waste 11/25/1996 50,000
Astor Corp. 10/2/1996 49,750
Australis Holdings Pty, Unit 10/29/1996 56,880
Bar Technologies, Inc. 8/28/1996 2,794
Bayer Corp. 5/21/1996 245,903
Blue Bird Body Co. 11/13/1996 49,848
Bombay Suburban Electric Supply, GDR 2/29/1996 44,640
Cheung Kong Infrastructure 7/11/1996-8/22/1996 59,912
China Resources Bejing Land 11/5/1996 5,519
Chilectra S.A., ADR 2/28/1996 16,284
Clark Material 11/22/1996 50,000
Commonwealth Installment 7/15/1996 50,502
Crompton Greaves Ltd., GDR 7/1/1996-7/2/1996 60,493
Dade International, Inc. 4/30/1996-6/13/1996 128,156
Elevadores Atlas 9/25/1996 44,224
Euramax International Plc 9/18/1996 75,375
First Nationwide Escrow 9/13/1996 101,250
Freeport Terminal (Malta) 5/12/1995 247,740
Grupo Financiero Bancomer, S.A. de C.V., Class B, ADR 11/6/1995-1/29/1996 33,772
HS Resources, Inc. 11/22/1996 99,482
ICON Fitness Corp. 11/15/1996 51,224
Intl Knife & Saw, Inc. 10/31/1996 50,000
International Home Foods 10/29/1996 75,000
Japan Tobacco, 6/17/1996-7/26/1996 273,048
Larsen & Toubro Ltd., GDR 6/5/1996 59,700
Mahindra and Mahindra, GDR 1/22/1996-2/2/1996 31,500
NGC Corp. 11/15/1996 77,934
Outsourcing Solutions 10/31/1996 50,000
Petersen Publishing 11/20/1996 50,000
Prime Succession Acq. 8/13/1996 50,000
Ryder TRS, Inc. 11/20/1996 50,000
Sakura Finance (Bermuda) 9/12/1996 163,191
Shanghai Industrial Holdings LTD 5/23/1996 49,439
Steel Authority of India, GDR 4/22/1996-4/23/1996 32,044
Statia Terminals 11/22/1996 75,000
Sumitomo Bank Int'l 6/6/1996 55,081
Tokheim Corporation 8/16/1996-9/4/1996 76,625
Westinghouse Electric Corp. 9/27/1995-3/14/1996 760,588
</TABLE>
DOLLAR ROLL TRANSACTIONS--The Fund enters into dollar roll transactions,
with respect to mortgage securities issued by GNMA, FNMA and FHLMC, in
which the Fund sells mortgage securities to financial institutions and
simultaneously agrees to accept substantially similar (same type, coupon
and maturity) securities at a later date at an agreed upon price. Dollar
roll transactions are short-term financing arrangements which will not
exceed twelve months. The Fund will use the proceeds generated from the
transactions to invest in short-term investments, which may enhance the
Fund's current yield and total return.
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1996 1995
INSTITUTIONAL SHARES SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 6,436,864 $ 74,361,820 3,678,939 $ 39,452,689
- --------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 233,538 2,669,402 72,763 769,585
- --------------------------------------------------------
Shares redeemed (1,460,401) (16,943,185) (772,807) (8,225,144)
- -------------------------------------------------------- ----------- -------------- ---------- -------------
Net change resulting from Institutional Shares
transactions 5,210,001 $ 60,088,037 2,978,895 $ 31,997,130
- -------------------------------------------------------- ----------- -------------- ---------- -------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1996 1995
SELECT SHARES SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Shares sold 3,200,775 $ 36,925,868 2,233,281 $ 24,309,689
- ---------------------------------------------------------
Shares issued to shareholders in payment of distributions
declared 146,513 1,670,654 22,609 244,668
- ---------------------------------------------------------
Shares redeemed (792,466) (9,199,158) (177,462) (1,874,204)
- --------------------------------------------------------- ---------- ------------- ---------- -------------
Net change resulting from Select Shares transactions 2,554,822 $ 29,397,364 2,078,428 $ 22,680,153
- --------------------------------------------------------- ---------- ------------- ---------- -------------
Net change resulting from share transactions 7,764,823 $ 89,485,401 5,057,323 $ 54,677,283
- --------------------------------------------------------- ---------- ------------- ---------- -------------
</TABLE>
(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 0.75% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive any portion of its fee. The Adviser can modify or
terminate this voluntary waiver at any time at its sole discretion.
Under the terms of a sub-advisory agreement between the Adviser and Federated
Global Research Corp. (the "Sub-Adviser"), 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.
ADMINISTRATIVE FEE--Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ is based on the level of average
aggregate daily net assets of all funds advised by subsidiaries of Federated
Investors for the period. The administrative fee received during the period of
the Administrative Services Agreement shall be at least $125,000 per portfolio
and $30,000 per each additional class of shares.
DISTRIBUTION SERVICES FEE--The Fund has adopted a Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will
compensate Federated Securities Corp. ("FSC"), the principal distributor, from
the net assets of the Fund to finance activities intended to result in the sale
of the Fund's Select Shares. The Plan provides that the Fund may incur
distribution expenses of up to 0.75% 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 0.25%
of average daily net assets of the Fund for the period. The fee paid to FSS is
used to finance certain services for shareholders and to maintain shareholder
accounts. FSS may voluntarily choose to waive any portion of its fee. FSS can
modify or terminate this voluntary waiver at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--FServ, through its
subsidiary, Federated Shareholder Services Company ("FSSC") serves as transfer
and dividend disbursing agent for the Fund. The fee paid to FSSC is based on the
size, type, and number of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses of $88,474 were borne initially
by Adviser. The Fund has agreed to reimburse Adviser for the organizational
expenses during the five year period following effective date. For the period
ended November 30, 1996, the Fund paid $12,897 pursuant to this agreement.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended November 30, 1996, were as follows:
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------------------------
PURCHASES $ 214,892,993
- -------------------------------------------------------------------------------------------------- --------------
SALES $ 128,619,370
- -------------------------------------------------------------------------------------------------- --------------
</TABLE>
(6) CONCENTRATION OF CREDIT RISK
The Fund invests in securities of non-U.S. issuers. Although the Fund maintains
a diversified investment portfolio, the political or economic developments
within a particular country or region may have an adverse effect on the ability
of domiciled issuers to meet their obligations. Additionally, political or
economic developments may have an effect on the liquidity and volatility of
portfolio securities and currency holdings. At November 30, 1996, the
diversification of industries was as follows:
<TABLE>
<CAPTION>
INDUSTRY % OF NET ASSETS
<S> <C>
Aerospace & Military Technology 0.1
Agency 1.6
Automotive 0.5
Banking 1.3
Basic Industry 2.7
Beverage & Tobacco 0.2
Broadcast Radio & T.V. 0.5
Broadcasting & Publishing 0.5
Building Materials & Components 0.1
Business & Public Services 0.2
Business Equipment & Services 0.3
Cable Television 0.6
Cash Equivalents 6.7
Chemicals & Plastics 0.7
Clothing & Textiles 0.1
Construction & Housing 0.4
Consumer Durables 1.6
Consumer Non-Durables 4.3
Container & Glass Products 0.2
Cosmetics & Toiletries 0.1
Electric Utilities 1.5
Electrical & Electronics 0.7
Electronic Components, Instruments 0.5
Energy Minerals 3.4
Energy Sources 0.4
Finance 5.0
Financial Intermediaries 0.7
Finance Services 0.5
Food & Drug Retailers 0.3
Food & Household Products 0.4
Forest Products & Paper 0.2
Government Agency 7.2
Health & Personal Care 0.7
Health Care 4.0
Industrial Components 0.1
Industrial Products & Equipment 0.2
Insurance 0.7
Leisure & Entertainment 0.2
Leisure & Tourism 0.2
Machinery & Engineering 0.7
Machinery & Equipment 0.1
Manufacturing 0.3
Merchandising 0.6
Metals & Mining 0.1
Miscellaneous Materials & Commodities 0.2
Multi-Industry 0.4
Oil & Gas 0.8
Pharmaceutical 0.2
Printing & Publishing 0.3
Producer Manufacturing 2.2
Real Estate 0.8
Recreation, Other Consumer Goods 0.4
Retail Trade 1.9
Services 2.2
Sovereign 5.2
State & Provincial 0.3
Steel 0.2
Supranational 0.1
Surface Transportation 0.4
Tobacco 0.1
Technology 3.6
Telecommunications 0.3
Telecommunications & Cellular 0.6
Transportation 0.5
Treasury Securities 21.9
Utilities--Electronic & Gas 4.0
</TABLE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
MANAGED SERIES TRUST
(Federated Managed Growth Fund):
We have audited the accompanying statement of assets and liabilities of
Federated Managed Growth Fund (an investment portfolio of Managed Series Trust,
a Massachusetts business trust), including the schedule of portfolio
investments, as of November 30, 1996, and 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, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Federated Managed Growth Fund, an investment portfolio of Managed Series Trust,
as of November 30, 1996, 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 15, 1997
APPENDIX
- --------------------------------------------------------------------------------
STANDARD AND POOR'S RATINGS GROUP LONG-TERM DEBT RATINGS
AAA--Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.
A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB--Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.
B--Debt rated B has greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or
BB- rating.
CCC--Debt rated CCC has currently identifiable vulnerability to default and is
dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating.
CC--The rating CC typically is applied to debt subordinated to senior debt that
is assigned an actual or implied CCC debt rating.
C--The rating C typically is applied to debt subordinated to senior debt which
is assigned an actual or implied CCC- debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.
CI--The rating CI is reserved for income bonds on which no interest is being
paid.
D--Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if
the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. The D rating also will be used
upon the filing of a bankruptcy petition if debt service payments are
jeopardized.
MOODY'S INVESTORS SERVICE, INC., CORPORATE BOND RATINGS
Aaa--Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment some time in the future.
Baa--Bonds which are rated Baa are considered as medium-grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well.
Ba--Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca--Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C--Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
FITCH INVESTORS SERVICE, INC., LONG-TERM DEBT RATINGS
AAA--Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA--Bonds considered to be investment grade and of very high quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F-1+.
A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB--Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds and, therefore, impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.
BB--Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.
B--Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.
CCC--Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.
CC--Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C--Bonds are in imminent default in payment of interest or principal.
DDD, DD, AND D--Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. DDD
represents the highest potential for recovery on these bonds, and D represents
the lowest potential for recovery.
NR--NR indicates that Fitch does not rate the specific issue.
PLUS (+) OR MINUS (-): Plus or minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the AAA category.
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Federated Managed Growth Fund
Select Shares Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Sub-Adviser
Federated Global 175 Water Street
Research Corp. New York, NY 10038-4965
- ---------------------------------------------------------------------------------------------------------------------
Custodian
State Street Bank and P.O. Box 8600
Trust Company Boston, Massachusetts 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Shareholder Services Company P.O. Box 8600
Boston, Massachusetts 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED
GROWTH FUND
SELECT SHARES
PROSPECTUS
A Diversified Portfolio
of Managed Series Trust,
an Open-End Management
Investment Company
Prospectus dated January 31, 1997
[LOGO FEDERATED INVESTORS]
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
FEDERATED SECURITIES CORP. IS THE DISTRIBUTOR OF THE FUND
AND IS A SUBSIDIARY OF FEDERATED INVESTORS.
Cusip 56166K602
3122011A-SEL
FEDERATED MANAGED GROWTH AND INCOME FUND
(A PORTFOLIO OF MANAGED SERIES TRUST)
INSTITUTIONAL SHARES
PROSPECTUS
The Institutional Shares of Federated Managed Growth and Income Fund (the
"Fund") offered by this prospectus represent interests in the Fund, which is a
diversified investment portfolio of Managed Series Trust (the "Trust"). The
Trust is an open-end management investment company (a mutual fund).
The investment objective of the Fund is to seek current income and capital
appreciation. The Fund invests in both bonds and stocks. Institutional Shares
are sold at net asset value.
THE INSTITUTIONAL SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR
OBLIGATIONS OF ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD,
OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE INSTITUTIONAL SHARES
INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
This prospectus contains the information you should read and know before you
invest in Institutional Shares of the Fund. Keep this prospectus for future
reference.
The Fund has also filed a Statement of Additional Information for Institutional
Shares and Select Shares of all portfolios of the Trust dated January 31, 1997,
with the Securities and Exchange Commission ("SEC"). The information contained
in the Statement of Additional Information is incorporated by reference into
this prospectus. You may request a copy of the Statement of Additional
Information or a paper copy of this prospectus, if you have received your
prospectus electronically, free of charge by calling 1-800-341-7400. To obtain
other information or to make inquiries about the Fund, contact the Fund at the
address listed in the back of this prospectus. The Statement of Additional
Information, material incorporated by reference into this document, and other
information regarding the Fund are maintained electronically with the SEC at
Internet Web site (http:// www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
Prospectus dated January 31, 1997
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Investment Limitations 15
TRUST INFORMATION 15
- ------------------------------------------------------
Management of the Trust 15
Distribution of Institutional Shares 19
Administration of the Fund 19
Brokerage Transactions 20
NET ASSET VALUE 21
- ------------------------------------------------------
INVESTING IN INSTITUTIONAL SHARES 21
- ------------------------------------------------------
Share Purchases 21
Minimum Investment Required 22
What Shares Cost 22
Systematic Investment Program 22
Certificates and Confirmations 22
Dividends 22
Capital Gains 22
REDEEMING INSTITUTIONAL SHARES 23
- ------------------------------------------------------
Through a Financial Institution 23
Telephone Redemption 23
Written Requests 23
Systematic Withdrawal Program 24
Accounts with Low Balances 24
SHAREHOLDER INFORMATION 25
- ------------------------------------------------------
Voting Rights 25
TAX INFORMATION 25
- ------------------------------------------------------
Federal Income Tax 25
State and Local Taxes 25
PERFORMANCE INFORMATION 25
- ------------------------------------------------------
OTHER CLASSES OF SHARES 26
- ------------------------------------------------------
Financial Highlights--Select Shares 27
FINANCIAL STATEMENTS 28
- ------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 83
- ------------------------------------------------------
APPENDIX 84
- ------------------------------------------------------
ADDRESSES 87
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price)........................... None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price)................................................................... None
Contingent Deferred Sales Charge (as a percentage of original purchase price or redemption proceeds, as
applicable)........................................................................................... None
Redemption Fee (as a percentage of amount redeemed, if applicable)...................................... None
Exchange Fee............................................................................................ None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver) (1)....................................................................... 0.64%
12b-1 Fee............................................................................................... None
Total Other Expenses.................................................................................... 0.36%
Shareholder Services Fee (after waiver) (2)............................................. 0.05%
Total Operating Expenses (3).................................................................. 1.00%
</TABLE>
- ------------
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.75%.
(2) The shareholder services fee has been reduced to reflect the voluntary
waiver of a portion of the shareholder services fee. The shareholder service
provider can terminate this voluntary waiver at any time at its sole
discretion. The maximum shareholder services fee is 0.25%.
(3) The total operating expenses expected in the table above are based on
expenses expected during the fiscal year ending November 30, 1997. The total
operating expenses were 1.05% for the fiscal year ended November 30, 1996
and would have been 1.36% absent the voluntary waivers of portions of the
management fee and shareholder services fee.
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of Institutional Shares of the
Fund will bear, either directly or indirectly. For more complete descriptions of
the various costs and expenses, see "Investing in Institutional Shares" and
"Trust Information". Wire-transferred redemptions of less than $5,000 may be
subject to additional fees.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment assuming
(1) 5% annual return and (2) redemption at the end of each time
period................................................................ $10 $32 $55 $122
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
FEDERATED MANAGED GROWTH AND INCOME FUND
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 83.
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
<S> <C> <C> <C>
1996 1995 1994(A)
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.14 $ 9.85 $ 10.00
- ----------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------------
Net investment income 0.50 0.50 0.25
- ----------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments,
foreign currency, and futures contracts 0.41 1.28 (0.25)
- ---------------------------------------------------------------------------------- --------- --------- -----------
Total from investment operations 0.91 1.78 0.00
- ---------------------------------------------------------------------------------- --------- --------- -----------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------------------
Distributions from net investment income (0.52) (0.49) (0.15)
- ----------------------------------------------------------------------------------
Distributions from net realized gain on investments, foreign
currency transactions, and future contracts (0.16) -- --
- ---------------------------------------------------------------------------------- --------- --------- -----------
Total distributions (0.68) (0.49) (0.15)
- ---------------------------------------------------------------------------------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 11.37 $ 11.14 $ 9.85
- ---------------------------------------------------------------------------------- --------- --------- -----------
TOTAL RETURN (B) 8.54% 18.51% 0.02%
- ----------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------------
Expenses 1.05% 1.00% 0.88%*
- ----------------------------------------------------------------------------------
Net investment income 4.72% 5.10% 5.07%*
- ----------------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.31% 0.55% 0.59%*
- ----------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $156,635 $103,715 $43,793
- ----------------------------------------------------------------------------------
Average commission rate paid $0.0043
- ----------------------------------------------------------------------------------
Portfolio turnover 154% 157% 132%
- ----------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 25, 1994 (date of initial
public investment) to November 30, 1994. For the period from January 27,
1994 (start of business) to May 24, 1994, the Fund had no investment
activity.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
Further information about the Fund's performance is contained in the Fund's
annual report for the fiscal year ended November 30, 1996, which can be obtained
free of charge.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated November 15, 1993. The Declaration of Trust permits the Trust to
offer separate series of shares of beneficial interest representing interests in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. As of the date of this prospectus, the Board of
Trustees ("Trustees") have established two classes of shares of the Fund, known
as Institutional Shares and Select Shares. This prospectus relates only to
Institutional Shares.
Institutional Shares ("Shares") of the Fund are designed to give institutions,
individuals, and financial institutions acting in a fiduciary or agency capacity
a convenient means of accumulating an interest in a professionally managed,
diversified investment portfolio. A minimum initial investment of $25,000 over a
90-day period is required.
Shares are currently sold and redeemed at net asset value without a sales charge
imposed by the Fund.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is to seek current income and capital
appreciation. The Fund will attempt to minimize investment risk by allocating
its assets across various stock and bond categories. There can be, of course, no
assurance that the Fund will achieve its investment objective. The Fund's
investment objective cannot be changed without the approval of shareholders.
Unless otherwise noted, the Fund's investment policies may be changed by the
Trustees without shareholder approval.
INVESTMENT POLICIES
ASSET ALLOCATION. The Fund will primarily invest in two types of assets: bonds
and equities. The Fund's investment approach is based on the conviction that,
over time, the choice of investment asset categories and their relative
long-term weightings within the portfolio will have the primary impact on its
investment performance. Of secondary importance to the Fund's performance are
the shifting of money among asset categories and the selection of securities
within asset categories. Therefore, the Fund will pursue its investment
objective in the following manner: (1) by setting long-term ranges for each
asset category; (2) by moving money among asset categories within those defined
ranges; and (3) by actively selecting securities within each of the asset
categories. The Fund attempts to minimize risk by allocating its assets in such
a fashion.
Within each of these types of investments, the Fund has designated asset
categories. As a matter of investment policy, ranges have been set for each
asset category's portfolio commitment.
The Fund will invest between 50 and 70 percent of its assets in bonds. The bond
asset categories are U.S. Treasury securities, mortgage-backed securities,
investment-grade corporate bonds, high yield corporate bonds and foreign bonds.
The Fund will invest between 30 and 50 percent of its assets in equities. The
equities asset categories are large company stocks, utility stocks, small
company stocks, foreign stocks and equity reserves.
The following is a summary of the asset categories and the amount of the Fund's
total assets which may be invested in each asset category:
<TABLE>
<S> <C>
ASSET CATEGORY RANGE
BONDS 50-70%
U.S. Treasury Securities 0-70%
Mortgage-Backed Securities 0-35%
Investment-Grade Corporate Bonds 0-35%
High Yield Corporate Bonds 0-7.5%
Foreign Bonds 0-7.5%
EQUITIES 30-50%
Large Company Stocks 0-50%
Utility Stocks 0-20%
Small Company Stocks 0-7.5%
Foreign Stocks 0-7.5%
Equity Reserves 0-15%
</TABLE>
The Fund's adviser will regularly review the Fund's allocation among the asset
categories and make any changes, within the ranges established for each asset
category, that it believes will provide the most favorable outlook for achieving
the Fund's investment objective. The Fund's adviser will attempt to exploit
inefficiencies among the various asset categories. If, for example, foreign
stocks are judged to be unusually attractive relative to other asset categories,
the allocation for foreign stocks may be moved to its upper limit. At other
times, when foreign stocks appear to be overvalued, the commitment may be moved
down to a lesser allocation. There is no assurance, however, that the adviser's
attempts to pursue this strategy will result in a benefit to the Fund.
Each asset category within the Fund will be a managed portfolio. The Fund will
seek superior investment performance through security selection in addition to
determining the percentage of its assets to allocate to each of the asset
categories.
BOND ASSET CATEGORIES. The portion of the Fund's assets which is invested in
bonds ("Bond Assets") will be allocated among the following asset categories
within the ranges specified. The prices of fixed income securities fluctuate
inversely to the direction of interest rates. The average duration of the Fund's
Bond Assets will be not less than three nor more than five years. Duration is a
commonly used measure of the potential volatility of the price of a debt
security, or the aggregate market value of a portfolio of debt securities, prior
to maturity. Securities with shorter durations generally have less volatile
prices than securities of comparable quality with longer durations. The Fund
should be expected to maintain a higher average duration during periods of lower
expected market volatility, and a lower average duration during periods of
higher expected market volatility.
U.S. TREASURY SECURITIES. U.S. Treasury securities are direct obligations
of the U.S. Treasury, such as U.S. Treasury bills, notes, and bonds. The
Fund may invest up to 70 percent of its total assets in U.S. Treasury
securities. The Fund may invest in other U.S. government securities if,
in the judgment of the adviser, other U.S. government securities are more
attractive than U.S. Treasury securities.
MORTGAGE-BACKED SECURITIES. Mortgage-backed securities represent an
undivided interest in a pool of residential mortgages or may be
collateralized by a pool of residential mortgages. Mortgage-backed
securities are generally either issued or guaranteed by the Government
National Mortgage Association ("GNMA"), Federal National Mortgage
Association ("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC") or
other U.S. government agencies or instrumentalities. Mortgage-backed
securities may also be issued by single-purpose, stand-alone finance
subsidiaries or trusts of financial institutions, government agencies,
investment bankers, or companies related to the construction industry.
The Fund may invest up to 35 percent of its total assets in
mortgage-backed securities.
INVESTMENT-GRADE CORPORATE BONDS. Investment-grade corporate bonds are
corporate debt obligations having fixed or floating rates of interest and
which are rated BBB or higher by a nationally recognized statistical rating
organization ("NRSRO"). The Fund may invest up to 35 percent of its total
assets in investment-grade corporate bonds. In certain cases, the Fund's
adviser may choose bonds which are unrated if it determines that such bonds
are of comparable quality or have similar characteristics to the
investment-grade bonds described above. Yankee bonds, which are U.S.
dollar-denominated bonds issued and traded in the United States by foreign
issuers, are treated as investment-grade corporate bonds for purposes of
the asset category ranges.
HIGH YIELD CORPORATE BONDS. High yield corporate bonds are corporate debt
obligations having fixed or floating rates of interest and which are rated
BB or lower by NRSROs (commonly known as junk bonds). The Fund may invest
up to 7.5 percent of its total assets in high yield corporate bonds. There
is no minimal acceptable rating for a security to be purchased or held in
the Fund's portfolio, and the Fund may, from time to time, purchase or hold
securities rated in the lowest rating category. (See "Appendix.") In
certain cases the Fund's adviser may choose bonds which are unrated if it
determines that such bonds are of comparable quality or have similar
characteristics to the high yield bonds described above.
INVESTMENT RISKS. Lower-rated securities will usually offer higher
yields than higher-rated securities. However, there is more risk
associated with these investments. This is because of reduced
creditworthiness and increased risk of default. Lower-rated securities
generally tend to reflect short-term corporate and market developments
to a greater extent than higher-rated securities which react primarily
to fluctuations in the general level of interest rates. Short-term
corporate and market developments affecting the price or liquidity of
lower-rated securities could include adverse news affecting major
issuers, underwriters, or dealers of lower-rated corporate debt
obligations. In addition, since there are fewer investors in
lower-rated securities, it may be harder to sell the securities at an
optimum time. As a result of these factors, lower-rated securities tend
to have more price volatility and carry more risk to principal than
higher-rated securities.
Many corporate debt obligations, including many lower-rated bonds,
permit the issuers to call the security and thereby redeem their
obligations earlier than the stated maturity dates. Issuers are more
likely to call bonds during periods of declining interest rates. In
these cases, if the Fund owns a bond which is called, the Fund will
receive its return of principal earlier than expected and would likely
be required to reinvest the proceeds at lower interest rates, thus
reducing income to the Fund.
FOREIGN BONDS. Foreign bonds are high-quality debt securities of countries
other than the United States. The Fund's portfolio of foreign bonds will be
comprised mainly of foreign government, foreign governmental agency or
supranational institution bonds. The Fund will also invest in high-quality
debt securities issued by established corporations located primarily in
economically developed countries other than the United States and subject
to the Fund's credit limitations for foreign bonds. The Fund may invest up
to 7.5 percent of its total assets in foreign bonds.
EQUITY ASSET CATEGORIES. The portion of the Fund's assets which is invested in
equities will be allocated among the following asset categories within the
ranges specified:
LARGE COMPANY STOCKS. Large company stocks are common stocks and
securities convertible into or exchangeable for common stocks, such as
rights and warrants, of high-quality companies selected by the Fund's
adviser. Ordinarily, these companies will be in the top 25 percent of their
industries with regard to revenues and have a market capitalization of
$500,000,000 or more. However, other factors, such as a company's product
position, market share, current earnings and/or dividend and earnings
growth prospects, will be considered by the Fund's adviser and may outweigh
revenues. The Fund may invest up to 50 percent of its total assets in large
company stocks.
UTILITY STOCKS. Utility stocks are common stocks and securities
convertible into or exchangeable for common stocks, such as rights and
warrants, of utility companies. The Fund may invest up to 20 percent of its
total assets in utility stocks. Common stocks of utilities are generally
characterized by higher dividend yields and lower growth rates than common
stocks of industrial companies. Under normal market conditions, the higher
income stream from utility stocks tends to make them less volatile than
stocks of industrial companies.
SMALL COMPANY STOCKS. Small company stocks are common stocks and
securities convertible into or exchangeable for common stocks, such as
rights and warrants, of companies with a market capitalization (market
price x number of shares outstanding) below the top 1,000 stocks that
comprise the large and mid-range capitalization sector of the United States
equity market. These stocks are comparable to, but not limited to, the
stocks comprising the Russell 2000 Index, an index of small capitalization
stocks. The Fund may invest up to 7.5 percent of its total assets in small
company stocks.
INVESTMENT RISKS. Stocks in the small capitalization sector of the
United States equity market have historically been more volatile in
price than larger capitalization stocks, such as those included in the
Standard & Poor's Ratings Group 500 Index. This is because, among other
things, small companies have less certain growth prospects than larger
companies; have a lower degree of liquidity in the equity market; and
tend to have a greater sensitivity to changing economic conditions.
Further, in addition to exhibiting greater volatility, the stocks of
small companies may, to some degree, fluctuate independently of the
stocks of large companies; that is, small company stocks may decline
in price as large company stocks rise in price or vice versa.
FOREIGN STOCKS. The Fund invests in non-U.S. equity securities. A
substantial portion of these will be equity securities of established
companies in economically developed countries. These securities may be
either dollar-denominated or denominated in foreign currencies. American
Depository Receipts ("ADRs"), including dollar denominated ADRs which are
issued by domestic banks and traded in the United States on exchanges or
over-the-counter, are treated as foreign stocks for purposes of the asset
category ranges. The Fund may invest up to 7.5 percent of its total assets
in foreign stocks.
EQUITY RESERVES. When the adviser believes that a temporary defensive
position is desirable, the Fund may invest in equity reserves. Equity
reserves will be used to adjust the risk level of the equity portion of the
Fund in response to market conditions. Equity reserves will consist of U.S.
and foreign short-term money market instruments such as commercial paper
rated A-1 by Standard and Poor's Ratings Group ("Standard & Poor's"),
Prime-1 by Moody's Investors Service, Inc. ("Moody's"), or F-1 by Fitch
Investors Service, Inc. ("Fitch"). The Fund may invest up to 15 percent of
its total assets in equity reserves.
ACCEPTABLE INVESTMENTS
U.S. TREASURY AND OTHER U.S. GOVERNMENT SECURITIES. The U.S. Treasury and
other U.S. government securities in which the Fund invests are either
issued or guaranteed by the U.S. government, its agencies or
instrumentalities. The U.S. government securities in which the Fund may
invest are limited to:
. direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds;
. notes, bonds, and discount notes issued or guaranteed by U.S. government
agencies and instrumentalities supported by the full faith and credit of
the United States;
. notes, bonds, and discount notes of U.S. government agencies or
instrumentalities which receive or have access to federal funding; and
. notes, bonds, and discount notes of other U.S. government
instrumentalities supported only by the credit of the instrumentalities.
The Fund may also purchase U.S. Treasury securities and the U.S.
government securities noted above pursuant to repurchase agreements.
MORTGAGE-BACKED SECURITIES. Mortgaged-backed securities are securities
collateralized by residential mortgages. The mortgage-backed securities in
which the Fund may invest may be:
. issued by an agency of the U.S. government, typically GNMA, FNMA or
FHLMC;
. privately issued securities which are collateralized by pools of
mortgages in which each mortgage is guaranteed as to payment of principal
and interest by an agency or instrumentality of the U.S. government;
. privately issued securities which are collateralized by pools of
mortgages in which payment of principal and interest are guaranteed by
the issuer and such guarantee is collateralized by U.S. government
securities; and
. other privately issued securities in which the proceeds of the issuance
are invested in mortgage-backed securities and payment of the principal
and interest are supported by the credit of an agency or instrumentality
of the U.S. government.
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"). CMOs are bonds issued by
single-purpose, stand-alone finance subsidiaries or trusts of financial
institutions, government agencies, investment bankers, or companies
related to the construction industry. Most of the CMOs in which the
Fund would invest use the same basic structure:
Several classes of securities are issued against a pool of mortgage
collateral. The most common structure contains four classes of
securities. The first three (A, B, and C bonds) pay interest at
their stated rates beginning with the issue date; the final class
(or Z bond) typically receives the residual income from the
underlying investments after payments are made to the other
classes.
The cash flows from the underlying mortgages are applied first to
pay interest and then to retire securities.
The classes of securities are retired sequentially. All principal
payments are directed first to the shortest-maturity class (or A
bonds). When those securities are completely retired, all principal
payments are then directed to the next-shortest maturity security
(or B bond). This process continues until all of the classes have
been paid off.
Because the cash flow is distributed sequentially instead of pro rata
as with pass-through securities, the cash flows and average lives of
CMOs are more predictable, and there is a period of time during which
the investors in the longer-maturity classes receive no principal
paydowns. The interest portion of these payments is distributed by the
Fund as income and the capital portion is reinvested.
The Fund will invest only in CMOs which are rated AAA or Aaa by an
NRSRO.
REAL ESTATE MORTGAGE INVESTMENT CONDUITS ("REMICS"). REMICs are
offerings of multiple class real estate mortgage-backed securities
which qualify and elect treatment as such under provisions of the
Internal Revenue Code. Issuers of REMICs may take several forms, such
as trusts, partnerships, corporations, associations or a segregated
pool of mortgages. Once REMIC status is elected and obtained, the
entity is not subject to federal income taxation. Instead, income is
passed through the entity and is taxed to the person or persons who
hold interests in the REMIC. A REMIC interest must consist of one or
more classes of "regular interests," some of which may offer adjustable
rates, and a single class of "residual interests." To qualify as a
REMIC, substantially all of the assets of the entity must be in assets
directly or indirectly secured principally by real property.
CHARACTERISTICS OF MORTGAGE-BACKED SECURITIES. Mortgage-backed
securities have yield and maturity characteristics corresponding to the
underlying mortgages. Distributions to holders of mortgage-backed
securities include both interest and principal payments. Principal
payments represent the amortization of the principal of the underlying
mortgages and any prepayments of principal due to prepayment,
refinancing, or foreclosure of the underlying mortgages. Although
maturities of the underlying mortgage loans may range up to 30 years,
amortization and prepayments substantially shorten the effective
maturities of mortgage-backed securities. Due to these features,
mortgage-backed securities are less effective as a means of "locking
in" attractive long-term interest rates than fixed-income securities
which pay only a stated amount of interest until maturity, when the
entire principal amount is returned. This is caused by the need to
reinvest at lower interest rates both distributions of principal
generally and significant prepayments which become more likely as
mortgage interest rates decline. Since comparatively high interest
rates cannot be effectively "locked in," mortgage-backed securities may
have less potential for capital appreciation during periods of
declining interest rates than other non-callable, fixed-income
government securities of comparable stated maturities. However,
mortgage-backed securities may experience less pronounced declines in
value during periods of rising interest rates.
In addition, some of the CMOs purchased by the Fund may represent an
interest solely in the principal repayments or solely in the interest
payments on mortgage-backed securities (stripped mortgage-backed
securities or "SMBSs"). Due to the possibility of prepayments on the
underlying mortgages, SMBSs may be more interest-rate sensitive than
other securities purchased by the Fund. If prevailing interest rates
fall below the level at which SMBSs were issued, there may be
substantial prepayments on the underlying mortgages, leading to the
relatively early prepayments of principal-only SMBSs and a reduction in
the amount of payments made to holders of interest-only SMBSs. It is
possible that the Fund might not recover its original investment in
interest-only SMBSs if
there are substantial prepayments on the underlying mortgages.
Therefore, interest-only SMBSs generally increase in value as interest
rates rise and decrease in value as interest rates fall, counter to
changes in value experienced by most fixed income securities. The
Fund's adviser intends to use this characteristic of interest-only
SMBSs to reduce the effects of interest rate changes on the value of
the Fund's portfolio, while continuing to pursue the Fund's investment
objective.
CORPORATE BONDS. The investment-grade corporate bonds in which the Fund
invests are:
. rated within the four highest ratings for corporate bonds by Moody's
(Aaa, Aa, A, or Baa), Standard & Poor's (AAA, AA, A, or BBB), or Fitch
(AAA, AA, A, or BBB);
. unrated if other long-term debt securities of that issuer are rated, at
the time of purchase, Baa or better by Moody's or BBB or better by
Standard & Poor's or Fitch; or
. unrated if determined to be of equivalent quality to one of the foregoing
rating categories by the Fund's adviser.
Securities which are rated BBB by Standard & Poor's or Fitch or Baa by
Moody's have speculative characteristics. Changes in economic conditions or
other circumstances are more likely to lead to weakened capacity to make
principal and interest payments than higher rated bonds. If a security's
rating is reduced below the required minimum after the Fund has purchased
it, the Fund is not required to sell the security, but may consider doing
so.
The high yield corporate bonds in which the Fund invests are rated Ba or
lower by Moody's or BB or lower by Standard & Poor's or Fitch (commonly
known as junk bonds). A description of the rating categories is contained
in the Appendix to this prospectus.
EQUITY SECURITIES. Common stocks represent ownership interest in a
corporation. Unlike bonds, which are debt securities, common stocks have
neither fixed maturity dates nor fixed schedules of promised payments.
Utility stocks are common stocks of utility companies, including water
companies, companies that produce, transmit, or distribute gas and electric
energy and those companies that provide communications facilities, such as
telephone and telegraph companies. Foreign stocks are equity securities of
foreign issuers.
FOREIGN SECURITIES. The foreign bonds in which the Fund invests are rated
within the four highest ratings for bonds by Moody's (Aaa, Aa, A or Baa) or
by Standard & Poor's (AAA, AA, A or BBB) or are unrated if determined to be
of equivalent quality by the Fund's adviser.
INVESTMENT RISKS. Investments in foreign securities involve special
risks that differ from those associated with investments in domestic
securities. The risks associated with investments in foreign securities
apply to securities issued by foreign corporations and sovereign
governments. These risks relate to political and economic developments
abroad, as well as those that result from the differences between the
regulation of domestic securities and issuers and foreign securities
and issuers. These risks may include, but are not limited to,
expropriation, confiscatory taxation, currency fluctuations,
withholding taxes on interest, limitations on the use or transfer of
Fund assets, political or social instability and adverse diplomatic
developments. It may also be more difficult to enforce contractual
obligations or obtain court judgments abroad than would be the case in
the United States because of differences in the legal systems. If the
issuer of the debt or the governmental authorities that control the
repayment of the debt would be unable or unwilling to repay principal
or interest when due in accordance with the terms of such debt, the
Fund may have limited legal recourse in the event of default. Moreover,
individual foreign economies may differ favorably or unfavorably from
the domestic economy in such respects as growth of gross national
product, the rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position.
Additional differences exist between investing in foreign and domestic
securities. Examples of such differences include: less publicly
available information about foreign issuers; credit risks associated
with certain foreign governments; the lack of uniform financial
accounting standards applicable to foreign issuers; less readily
available market quotations on foreign issuers; the likelihood that
securities of foreign issuers may be less liquid or more volatile;
generally higher foreign brokerage commissions; and unreliable mail
service between countries.
EQUITY RESERVES. The Fund's equity reserves may be cash received from the
sale of Fund shares, reserves for temporary defensive purposes or to take
advantage of market opportunities.
REPURCHASE AGREEMENTS. Repurchase agreements are arrangements in which
banks, broker/dealers, and other recognized financial institutions sell
securities to the Fund and agree at the time of sale to repurchase them
at a mutually agreed upon time and price. To the extent that the
original seller does not repurchase the securities from the Fund, the
Fund could receive less than the repurchase price on any sale of such
securities.
CONVERTIBLE SECURITIES. Convertible securities are fixed-income securities
which may be exchanged or converted into a predetermined number of the
issuer's underlying common stock at the option of the holder during a
specified time period. Convertible securities may take the form of
convertible preferred stock, convertible bonds or debentures, units
consisting of "usable" bonds and warrants or a combination of the features
of several of these securities. The investment characteristics of each
convertible security vary widely, which allows convertible securities to be
employed for different investment objectives. The adviser may treat
convertible securities as large company stocks, small company stocks, or
high yield bonds for purposes of the asset category ranges, depending upon
current market conditions, including the relationship of the then-current
price to the conversion price. The convertible securities in which the Fund
invests may be rated "high yield" or of comparable quality at the time of
purchase.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Fund may invest in
the securities of other investment companies, but it will not own more than 3
percent of the total outstanding voting stock of any such investment company,
invest more than 5 percent of its total assets in any one such investment
company, or invest more than 10 percent of its total assets in such other
investment companies in general. To the extent that the Fund invests in
securities issued by other investment companies, the Fund will indirectly bear
its proportionate share of any fees and expenses paid by such companies in
addition to the fees and expenses payable directly by the Fund.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies but which are
subject to restrictions on resale under federal securities law. Under criteria
established by the Trustees, certain restricted securities are determined to be
liquid. To the extent that restricted securities are not determined to be
liquid, the Fund will limit their purchase, together with other illiquid
securities including 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.
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.
FOREIGN CURRENCY TRANSACTIONS. The Fund will enter into foreign currency
transactions to obtain the necessary currencies to settle securities
transactions. Currency transactions may be conducted either on a spot or cash
basis at prevailing rates or through forward foreign currency exchange
contracts.
The Fund may also enter into foreign currency transactions to protect Fund
assets against adverse changes in foreign currency exchange rates or exchange
control regulations. Such changes could unfavorably affect the value of Fund
assets which are denominated in foreign currencies, such as foreign securities
or funds deposited in foreign banks, as measured in U.S. dollars. Although
foreign currency exchanges may be used by the Fund to protect against a decline
in the value of one or more currencies, such efforts may also limit any
potential gain that might result from a relative increase in the value of such
currencies and might, in certain cases, result in losses to the Fund.
CURRENCY RISKS. To the extent that debt securities purchased by the Fund
are denominated in currencies other than the U.S. dollar, changes in
foreign currency exchange rates will affect the Fund's net asset value; the
value of interest earned; gains and losses realized on the sale of
securities; and net investment income and capital gain, if any, to be
distributed to shareholders by the Fund. If the value of a foreign currency
rises against the U.S. dollar, the value of the Fund's assets denominated
in that currency will increase; correspondingly, if the value of a foreign
currency declines against the U.S. dollar, the value of the Fund's assets
denominated in that currency will decrease.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward foreign currency
exchange contract ("forward contract") is an obligation to purchase or sell an
amount of a particular currency at a specific price and on a future date agreed
upon by the parties.
Generally, no commission charges or deposits are involved. At the time the Fund
enters into a forward contract, Fund assets with a value equal to the Fund's
obligation under the forward contract are segregated and are maintained until
the contract has been settled. The Fund will not enter into a forward contract
with a term of more than one year.
The Fund will generally enter into a forward contract to provide the proper
currency to settle a securities transaction at the time the transaction occurs
("trade date"). The period between trade date and settlement date will vary
between 24 hours and 30 days, depending upon local custom.
The Fund may also protect against the decline of a particular foreign currency
by entering into a forward contract to sell an amount of that currency
approximating the value of all or a portion of the Fund's assets denominated in
that currency ("hedging"). The success of this type of short-term hedging
strategy is highly uncertain due to the difficulties of predicting short-term
currency market movements and of precisely matching forward contract amounts and
the constantly changing value of the securities involved. Although the adviser
will consider the likelihood of changes in currency values when making
investment decisions, the adviser believes that it is important to be able to
enter into forward contracts when it believes the interests of the Fund will be
served. The Fund will not enter into forward contracts for hedging purposes in a
particular currency in an amount in excess of the Fund's assets denominated in
that currency. The Fund will not invest more than 21% of its total assets in
forward foreign currency exchange contracts.
OPTIONS. The Fund may deal in options on foreign currencies, foreign currency
futures, securities, and securities indices, which options may be listed for
trading on a national securities exchange or traded over-the-counter. The Fund
will use options only to manage interest rate and currency risks. The Fund may
write covered call options to generate income.
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.
When the Fund purchases futures contracts, an amount of cash and cash
equivalents, equal to the underlying commodity value of the futures contracts
(less any related margin deposits), will be deposited in a segregated account
with the custodian (or the broker, if legally permitted) to collateralize the
position and thereby insure that the use of such futures contracts are
unleveraged. When the Fund sells futures contracts, it will either own or have
the right to receive the underlying future or security or will make deposits to
collateralize the position as discussed above.
RISKS. When the Fund uses futures and options on futures as hedging
devices, there is a risk that the prices of the securities subject to the
futures contracts may not correlate perfectly with the prices of the
securities in the Fund's portfolio. This may cause the futures contract and
any related options to react differently than the portfolio securities to
market changes. In addition, the investment adviser could be incorrect in
its expectations about the direction or extent of market factors such as
stock price movements. In these events, the Fund may lose money on the
futures contract or option.
It is not certain that a secondary market for positions in futures
contracts or for options will exist at all times. Although the investment
adviser will consider liquidity before entering into these transactions,
there is no assurance that a liquid secondary market on an exchange or
otherwise will exist for any particular futures contract or option at any
particular time. The Fund's ability to establish and close out futures and
options positions depends on this secondary market.
PORTFOLIO TURNOVER. Although the Fund does not intend to invest for the
purpose of seeking short-term profits, securities in its portfolio will be sold
whenever the Fund's adviser believes it is appropriate to do so in light of the
Fund's investment objective, without regard to the length of time a particular
security may have been held. The Fund's rate of portfolio turnover may exceed
that of certain other mutual funds with the same investment objective. A higher
rate of portfolio turnover involves correspondingly greater transaction
expenses which must be borne directly by the Fund and, thus, indirectly by its
shareholders. In addition, a high rate of portfolio turnover may result in the
realization of larger amounts of capital gains which, when distributed to the
Fund's shareholders, are taxable to them. (Further information is contained in
the Fund's Statement of Additional Information within the sections "Brokerage
Transactions" and "Tax Status"). Nevertheless, transactions for the Fund's
portfolio will be based only upon investment considerations and will not be
limited by any other considerations when the Fund's adviser deems it
appropriate to make changes in the Fund's portfolio.
INVESTMENT LIMITATIONS
The Fund will not:
borrow money directly or through reverse repurchase agreements or pledge
securities except, under certain circumstances, the Fund may borrow up to
one-third of the value of its total assets and pledge up to 15 percent of
the value of those assets to secure such borrowings;
lend any securities except for portfolio securities; or
underwrite any issue of securities, except as it may be deemed to be an
underwriter under the Securities Act of 1933 in connection with the sale
of restricted securities which the Fund may purchase pursuant to its
investment objective, policies and limitations.
The above investment limitations cannot be changed without shareholder approval.
TRUST INFORMATION
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MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Trust's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. The Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Except as noted below with regard to the sub-adviser,
investment decisions for the Fund are made by Federated Management, the Fund's
investment adviser (the "Adviser"), subject to direction by the Trustees. The
Adviser continually conducts investment research and supervision for the Fund
and is responsible for the purchase or sale of portfolio instruments, for which
it receives an annual fee from the Fund.
ADVISORY FEES. The Fund's Adviser receives an annual investment advisory
fee equal to .75% of 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.
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 $76
billion invested across more than 338 funds under management and/or
administration by its subsidiaries, as of December 31, 1996, Federated Investors
is one of the largest mutual fund investment managers in the United States. With
more than 2,000 employees, Federated continues to be led by the management who
founded the company in 1955. Federated funds are presently at work in and
through 4,500 financial institutions nationwide.
The Trust, the Adviser, and the Sub-Adviser have adopted strict codes of ethics
governing the conduct of all employees who manage the Fund and its portfolio
securities. These codes recognize that such persons owe a fiduciary duty to the
Fund's shareholders and must place the interests of shareholders ahead of the
employees' own interest. Among other things, the codes: require preclearance and
periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered for
purchase or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less than sixty
days. Violations of the codes are subject to review by the Board of Trustees and
could result in severe penalties.
PORTFOLIO MANAGERS' BACKGROUNDS. Charles A. Ritter is the portfolio
manager for the Fund and performs the overall allocation of the assets of
the Fund among the various asset categories. He has performed these duties
since the Fund's inception. In allocating the Fund's assets, Mr. Ritter
evaluates the market environment and economic outlook, utilizing the
services of the Adviser's Investment Strategy Committee. 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:
Scott B. Schermerhorn and Peter R. Anderson are the portfolio managers for
the domestic large company stocks asset category.
Scott B. Schermerhorn has been the Fund's portfolio manager since July 1,
1996. Mr. Schermerhorn joined Federated Investors in 1996 as a Vice
President of the Fund's Adviser. From 1990 through 1996, Mr. Schermerhorn
was a Senior Vice President and Senior Investment Officer at J W Seligman &
Co., Inc. Mr. Schermerhorn received his M.B.A. in Finance and International
Business from Seton Hall University.
Peter R. Anderson has been the Fund's portfolio manager since the Fund's
inception. 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.
Aash M. Shah and James E. Grefenstette are the portfolio managers for the
domestic small company stocks asset category.
Aash M. Shah has been the Fund's portfolio manager since December 1995. 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. in Industrial Administration
from Carnegie Mellon University with a concentration in finance and
accounting. Mr. Shah is a Chartered Financial Analyst.
James E. Grefenstette has been the Fund's portfolio manager since August
1994. Mr. Grefenstette joined Federated Investors in 1992 and has been a
Vice President since July 1996. Mr. Grefenstette served as an Assistant
Vice President of the Fund's Adviser from 1994 to 1996, and an investment
analyst from 1992 to 1994. Mr. Grefenstette was a credit analyst at
Westinghouse Credit Corp. from 1990 until 1992. Mr. Grefenstette received
his M.S. in Industrial Administration from Carnegie Mellon University.
Henry A. Frantzen, Drew J. Collins, Mark S. Kopinski, Frank Semack, and
Alexandre de Bethmann are portfolio managers for the foreign stocks asset
category.
Henry A. Frantzen has been the Fund's portfolio manager 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.
Drew J. Collins has been the Fund's portfolio manager 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 the Fund's portfolio manager 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 the Fund's portfolio manager 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 1980 to 1993. Mr. Semack
received his M.Sc. in economics from the London School of Economics.
Alexandre de Bethmann has been the Fund's portfolio manager 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 A. Frantzen, Drew J. Collins, Robert M. Kowit and Micheal W. Casey
are portfolio managers for the foreign bonds asset category. Messrs.
Frantzen, Collins and Kowit 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.
Micheal W. Casey, Ph.D. has been the Fund's portfolio manager since January
1, 1997. Mr. Casey joined Federated Investors in 1996 as an Assistant Vice
President. Mr. Casey served as an International Economist and Portfolio
Strategist for Maria Fiorini Ramirez Inc. from 1990 to 1996. Mr. Casey
earned a Ph.D. concentrating in economics from The New School for Social
Research and a M.Sc. from the London School of Economics.
Susan M. Nason and Joseph M. Balestrino are portfolio managers for the U.S.
Treasury securities asset category.
Susan M. Nason has been the Fund's portfolio manager since the Fund's
inception. 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. in Industrial
Administration from Carnegie Mellon University.
Joseph M. Balestrino has been the Fund's portfolio manager since March
1995. 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. 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. in Industrial Administration from Carnegie Mellon
University.
Kathleen M. Foody-Malus is the portfolio manager for the mortgage-backed
securities asset category. Ms. Foody-Malus has performed this duty since
the Fund's inception. 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.
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 Services Company, a subsidiary of Federated
Investors, provides administrative personnel and services (including certain
legal and financial reporting services) necessary to operate the Fund. Federated
Services Company 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% on the first $250 million
.125% on the next $250 million
.10% on the next $250 million
.075% 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 Services Company 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 the average
daily net asset value of the Institutional Shares, computed at an annual rate,
to obtain certain personal services for shareholders and provide maintenance of
shareholder accounts ("shareholder services"). From time to time and for such
periods as deemed appropriate, the amount stated above may be reduced
voluntarily. Under the Shareholder Services Agreement, Federated Shareholder
Services will either perform shareholder services directly or will select
financial institutions to perform shareholder services. Financial institutions
will receive fees based upon Shares owned by their clients or customers. The
schedules of such fees and the basis upon which such fees will be paid will be
determined from time to time by the Fund and Federated Shareholder Services.
SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS. In addition to receiving the
payments under the Shareholder Services Agreement, Federated Securities Corp.
and Federated Shareholder Services, from their own assets, may pay financial
institutions supplemental fees for the performance of substantial sales
services, distribution-related support services, or shareholder services. The
support may include sponsoring sales, educational and training seminars for
their employees, providing sales literature, and engineering computer software
programs that emphasize the attributes of the Fund. Such assistance will be
predicated upon the amount of Shares the financial institution sells or may
sell, and/or upon the type and nature of sales or marketing support furnished by
the financial institution. Any payments made by the distributor may be
reimbursed by the Fund's Adviser or its affiliates.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the Adviser looks for prompt execution of the order at a favorable
price. In working with dealers, the Adviser will generally use those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. In selecting among firms
believed to meet these criteria, the Adviser may give consideration to those
firms which have sold or are selling shares of the Fund and other funds
distributed by Federated Securities Corp. The Adviser makes decisions on
portfolio transactions and selects brokers and dealers subject to review by the
Board of Trustees.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund's net asset value per Share fluctuates. The net asset value for Shares
is determined by adding the interest of the Shares in the market value of all
securities and other assets of the Fund, subtracting the interest of the Shares
in the liabilities of the Fund and those attributable to Shares, and dividing
the remainder by the total number of Shares outstanding. The net asset value for
Institutional Shares may exceed that of Select Shares due to the variance in
daily net income realized by each class. Such variance will reflect only accrued
net income to which the shareholders of a particular class are entitled.
INVESTING IN INSTITUTIONAL SHARES
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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 Shareholder Services Company, c/o State Street Bank
and Trust Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit to:
Federated Managed Growth and Income Fund--Institutional Shares; Fund Number
(this number can be found on the account statement or by contacting the Fund);
Group Number or Wire Order Number; Nominee or Institution Name; and ABA Number
011000028. Shares cannot be purchased by wire on holidays when wire transfers
are restricted. Questions on wire purchases should be directed to your
shareholder services representative at the telephone number listed on your
account statement.
BY MAIL. To purchase Shares by mail, send a check made payable to Federated
Managed Growth and Income Fund--Institutional Shares to Federated Shareholder
Services Company, P.O. Box 8600, Boston, Massachusetts 02266-8600. Orders by
mail are considered received when payment by check is converted by State Street
Bank into federal funds. This is normally the next business day after State
Street Bank receives the check.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in Shares is $25,000. However, an account may be
opened with a smaller amount as long as the $25,000 minimum is reached within 90
days. An institutional investor's minimum investment will be calculated by
combining all accounts it maintains with the Fund. Accounts established through
a financial intermediary 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 financial intermediary may be charged an additional service fee
by that financial intermediary.
The net asset value is determined as of the close of trading (normally 4:00 p.m.
Eastern time) on the New York Stock Exchange, Monday through Friday, except on:
(i) days on which there are not sufficient changes in the value of the Fund's
portfolio securities 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.
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 Shareholder Services Company maintains
a share account for each shareholder. Share certificates are not issued unless
requested by contacting the Fund.
Detailed confirmations of each purchase or redemption are sent to each
shareholder. Quarterly confirmations are sent to report dividends paid during
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. Investors who redeem Shares through a financial
intermediary may be charged a service fee by that financial intermediary.
Redemptions will be made on days on which the Fund computes its net asset value.
Redemption requests must be received in proper form and can be made 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
REDEEMING SHARES BY MAIL.Shares may be redeemed in any amount by mailing a
written request to: Federated Shareholder Services Company, P.O. Box 8600,
Boston, MA 02266-8600. If Share certificates have been issued, they should be
sent unendorsed with the written request by registered or certified mail to the
address noted above.
The written request should state: the Fund name and the class designation; the
account name as registered with the Fund; the account number; and the number of
shares to be redeemed or the dollar amount requested. All owners of the account
must sign the request exactly as the shares are registered. Normally, a check
for the proceeds is mailed within one business day, but in no event more than
seven days, after the receipt of a proper written redemption request. Dividends
are paid up to and including the day that a redemption request is processed.
Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Fund or a redemption payable other than to
the shareholder of record must have their signatures guaranteed by a commercial
or savings bank, trust company or savings association whose deposits are insured
by an organization which is administered by the Federal Deposit Insurance
Corporation; a member firm of a domestic stock exchange; 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.
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, other than retirement accounts subject to required
minimum distributions. 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, Donnelly and Meck, counsel to the Trust, Fund Shares
may be subject to personal property taxes imposed by counties, municipalities,
and school districts in Pennsylvania to the extent that the portfolio securities
in the Fund would be subject to such taxes if owned directly by residents of
those jurisdictions.
Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its total return and yield for Shares.
Total return represents the change, over a specified period of time, in the
value of an investment in Shares after reinvesting all income and capital gain
distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
The yield of Shares is calculated by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by Shares
over a thirty-day period by the maximum offering price per share of Shares on
the last day of the period. This number is then annualized using semi-annual
compounding. The yield does not necessarily reflect income actually earned by
Shares and, therefore, may not correlate to the dividends or other
distributions paid to shareholders.
Shares are sold without any sales charge or other similar non-recurring charges.
Total return and yield will be calculated separately for Institutional Shares
and Select Shares.
From time to time, advertisements for the Fund's Institutional Shares may refer
to ratings, rankings, and other information in certain financial publications
and/or compare the Fund's Institutional Shares performance to certain indices.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
The Fund also offers another class of shares called Select Shares which are sold
at net asset value primarily to retail and private banking customers of
financial institutions and are subject to a minimum initial investment of
$1,500.
Select Shares are distributed under a 12b-1 Plan adopted by the Fund and also
are subject to a shareholder services fees.
Select Shares and Institutional Shares are subject to certain of the same
expenses. Expense differences, however, between Select Shares and Institutional
Shares may affect the performance of each class.
To obtain more information and a prospectus for Select Shares, investors may
call 1-800-341-7400.
FEDERATED MANAGED GROWTH AND INCOME FUND
FINANCIAL HIGHLIGHTS--SELECT SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 83.
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
<S> <C> <C> <C>
1996 1995 1994(A)
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.12 $ 9.83 $ 10.00
- --------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------
Net investment income 0.43 0.37 0.21
- --------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments,
foreign currency, and futures contracts 0.41 1.34 (0.25)
- -------------------------------------------------------------------------------- --------- --------- -----------
Total from investment operations 0.84 1.71 (0.04)
- -------------------------------------------------------------------------------- --------- --------- -----------
LESS DISTRIBUTIONS
- --------------------------------------------------------------------------------
Distributions from net investment income (0.44) (0.42) (0.13)
- --------------------------------------------------------------------------------
Distributions from net realized gain on investments and foreign
currency transactions (0.16) -- --
- -------------------------------------------------------------------------------- --------- --------- -----------
Total distributions (0.60) (0.42) (0.13)
- -------------------------------------------------------------------------------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 11.36 $ 11.12 $ 9.83
- -------------------------------------------------------------------------------- --------- --------- -----------
TOTAL RETURN (B) 7.92% 17.76% (0.40%)
- --------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------------------------------------------
Expenses 1.75% 1.75% 1.64%*
- --------------------------------------------------------------------------------
Net investment income 4.02% 4.37% 4.33%*
- --------------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.36% 0.55% 0.84%*
- --------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $44,248 $24,787 $3,697
- --------------------------------------------------------------------------------
Average Commission rate paid $0.0043
- --------------------------------------------------------------------------------
Portfolio turnover 154% 157% 132%
- --------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 25, 1994 (date of initial
public investment) to November 30, 1994. For the period from January 27,
1994 (start of business) to May 24, 1994, the Fund had no investment
activity.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
Further information about the Fund's performance is contained in the Fund's
annual report for the fiscal year ended November 30, 1996, which can be obtained
free of charge.
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED GROWTH AND INCOME FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--29.8%
- ----------------------------------------------------------------------------------------------
LARGE COMPANY--13.3%
-----------------------------------------------------------------------------
BASIC INDUSTRY--0.9%
-----------------------------------------------------------------------------
16,800 Allegheny Teledyne, Inc. $ 392,700
-----------------------------------------------------------------------------
5,500 Betz Laboratories, Inc. 318,313
-----------------------------------------------------------------------------
3,000 Du Pont (E.I.) de Nemours & Co. 282,750
-----------------------------------------------------------------------------
5,400 Great Lakes Chemical Corp. 289,575
-----------------------------------------------------------------------------
25,800 LTV Corporation 277,350
-----------------------------------------------------------------------------
7,700 Morton International, Inc. 310,888
----------------------------------------------------------------------------- --------------
Total 1,871,576
----------------------------------------------------------------------------- --------------
CONSUMER DURABLES--0.5%
-----------------------------------------------------------------------------
7,300 General Motors Corp., Class H 397,850
-----------------------------------------------------------------------------
4,000 General Motors Corp. 230,500
-----------------------------------------------------------------------------
5,200 Martin Marietta Materials 122,200
-----------------------------------------------------------------------------
12,000 Rubbermaid, Inc. 288,000
----------------------------------------------------------------------------- --------------
Total 1,038,550
----------------------------------------------------------------------------- --------------
CONSUMER NON-DURABLES--1.8%
-----------------------------------------------------------------------------
4,900 Avon Products, Inc. 273,175
-----------------------------------------------------------------------------
3,300 CPC International, Inc. 274,725
-----------------------------------------------------------------------------
5,500 Dole Food, Inc., ACES, $2.7475 219,313
-----------------------------------------------------------------------------
4,800 Heinz (H.J.) Co. 181,800
-----------------------------------------------------------------------------
18,000 IBP, Inc. 445,500
-----------------------------------------------------------------------------
3,300 Kimberly-Clark Corp. 322,575
-----------------------------------------------------------------------------
7,100 Philip Morris Cos., Inc. 732,188
-----------------------------------------------------------------------------
5,900 Tambrands, Inc. 252,225
-----------------------------------------------------------------------------
4,000 Unilever N.V. 692,500
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
LARGE COMPANY--CONTINUED
-----------------------------------------------------------------------------
CONSUMER NON-DURABLES--CONTINUED
-----------------------------------------------------------------------------
4,100 V.F. Corp. $ 278,288
----------------------------------------------------------------------------- --------------
Total 3,672,289
----------------------------------------------------------------------------- --------------
ENERGY MINERALS--1.6%
-----------------------------------------------------------------------------
8,200 Baker Hughes, Inc. 300,325
-----------------------------------------------------------------------------
6,700 Chevron Corp. 448,900
-----------------------------------------------------------------------------
4,200 Exxon Corp. 397,425
-----------------------------------------------------------------------------
12,200 Occidental Petroleum Corp. 292,800
-----------------------------------------------------------------------------
1,500 Royal Dutch Petroleum Co. 254,813
-----------------------------------------------------------------------------
4,700 Texaco, Inc. 465,888
-----------------------------------------------------------------------------
16,900 USX-Marathon Group 386,588
-----------------------------------------------------------------------------
12,194 Union Pacific Resources Group, Inc. 364,296
-----------------------------------------------------------------------------
4,100 (b)Western Atlas, Inc. 289,050
----------------------------------------------------------------------------- --------------
Total 3,200,085
----------------------------------------------------------------------------- --------------
FINANCE--2.0%
-----------------------------------------------------------------------------
7,530 Allstate Corp. 453,683
-----------------------------------------------------------------------------
4,500 CIGNA Corp. 636,188
-----------------------------------------------------------------------------
4,600 Chase Manhattan Corp. 434,700
-----------------------------------------------------------------------------
3,000 Citicorp 327,750
-----------------------------------------------------------------------------
3,900 Dean Witter, Discover & Co. 266,663
-----------------------------------------------------------------------------
11,600 Federal National Mortgage Association 478,500
-----------------------------------------------------------------------------
5,200 Marsh & McLennan Cos., Inc. 589,550
-----------------------------------------------------------------------------
6,300 National City Corp. 292,163
-----------------------------------------------------------------------------
5,500 Providian Corp. 294,250
-----------------------------------------------------------------------------
6,666 Travelers Group, Inc. 299,970
----------------------------------------------------------------------------- --------------
Total 4,073,417
----------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
LARGE COMPANY--CONTINUED
-----------------------------------------------------------------------------
HEALTH CARE--1.6%
-----------------------------------------------------------------------------
7,300 Abbott Laboratories $ 406,975
-----------------------------------------------------------------------------
6,500 (b)American Home Products Corp. 417,625
-----------------------------------------------------------------------------
9,700 Bard (C.R.), Inc. 271,600
-----------------------------------------------------------------------------
13,600 (b)Biomet, Inc. 224,400
-----------------------------------------------------------------------------
4,500 Bristol-Myers Squibb Co. 511,875
-----------------------------------------------------------------------------
6,450 Columbia/HCA Healthcare Corp. 258,000
-----------------------------------------------------------------------------
16,800 (b)Healthsource, Inc. 189,000
-----------------------------------------------------------------------------
3,800 Merck & Co., Inc. 315,400
-----------------------------------------------------------------------------
3,900 Smithkline Beecham, ADR 268,613
-----------------------------------------------------------------------------
7,200 United Healthcare Corp. 310,500
----------------------------------------------------------------------------- --------------
Total 3,173,988
----------------------------------------------------------------------------- --------------
PRODUCER MANUFACTURING--0.9%
-----------------------------------------------------------------------------
3,500 (b)FMC Corp. 270,375
-----------------------------------------------------------------------------
3,600 General Electric Co. 374,400
-----------------------------------------------------------------------------
2,800 Loews Corp. 259,700
-----------------------------------------------------------------------------
5,300 Textron, Inc. 505,488
-----------------------------------------------------------------------------
21,900 (c)Westinghouse Electric Corp., PEPS, Series C, $1.30 374,359
----------------------------------------------------------------------------- --------------
Total 1,784,322
----------------------------------------------------------------------------- --------------
RETAIL TRADE--0.7%
-----------------------------------------------------------------------------
9,500 Dayton-Hudson Corp. 369,313
-----------------------------------------------------------------------------
9,300 Sears, Roebuck & Co. 462,675
-----------------------------------------------------------------------------
19,300 Wal-Mart Stores, Inc. 492,150
----------------------------------------------------------------------------- --------------
Total 1,324,138
----------------------------------------------------------------------------- --------------
SERVICES--0.5%
-----------------------------------------------------------------------------
10,000 Block (H&R), Inc. 292,500
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
LARGE COMPANY--CONTINUED
-----------------------------------------------------------------------------
SERVICES--CONTINUED
-----------------------------------------------------------------------------
15,300 Browning-Ferris Industries, Inc. $ 411,188
-----------------------------------------------------------------------------
4,400 Gannett Co., Inc. 345,400
----------------------------------------------------------------------------- --------------
Total 1,049,088
----------------------------------------------------------------------------- --------------
TECHNOLOGY--1.1%
-----------------------------------------------------------------------------
7,000 (b)Analog Devices, Inc. 224,875
-----------------------------------------------------------------------------
8,500 Electronic Data Systems Corp. 411,188
-----------------------------------------------------------------------------
3,000 Intel Corp. 380,625
-----------------------------------------------------------------------------
1,000 International Business Machines Corp. 159,375
-----------------------------------------------------------------------------
2,379 Lockheed Martin Corp. 215,597
-----------------------------------------------------------------------------
2,500 Lucent Technologies, Inc. 128,125
-----------------------------------------------------------------------------
4,600 Raytheon Co. 235,175
-----------------------------------------------------------------------------
6,100 (b)Rockwell International Corp. 391,925
----------------------------------------------------------------------------- --------------
Total 2,146,885
----------------------------------------------------------------------------- --------------
TRANSPORTATION--0.1%
-----------------------------------------------------------------------------
7,500 (b)KLM Royal Dutch Airlines 195,938
----------------------------------------------------------------------------- --------------
UTILITIES--1.6%
-----------------------------------------------------------------------------
7,800 AT&T Corp. 306,150
-----------------------------------------------------------------------------
7,900 CMS Energy Corp. 256,750
-----------------------------------------------------------------------------
5,400 (b)Columbia Gas System, Inc. 348,975
-----------------------------------------------------------------------------
8,200 Enron Corp. 375,150
-----------------------------------------------------------------------------
5,500 FPL Group, Inc. 253,688
-----------------------------------------------------------------------------
7,800 GTE Corp. 350,025
-----------------------------------------------------------------------------
20,500 MCI Communications Corp. 625,250
-----------------------------------------------------------------------------
10,800 Pacific Gas & Electric Co. 260,550
-----------------------------------------------------------------------------
10,400 Southern Co. 231,400
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
LARGE COMPANY--CONTINUED
-----------------------------------------------------------------------------
UTILITIES--CONTINUED
-----------------------------------------------------------------------------
9,300 TECO Energy, Inc. $ 226,688
----------------------------------------------------------------------------- --------------
Total 3,234,626
----------------------------------------------------------------------------- --------------
TOTAL LARGE COMPANY 26,764,902
----------------------------------------------------------------------------- --------------
SMALL COMPANY--3.1%
-----------------------------------------------------------------------------
BASIC INDUSTRY--0.2%
-----------------------------------------------------------------------------
4,200 (b)Chirex, Inc. 45,150
-----------------------------------------------------------------------------
1,400 Donaldson Company, Inc. 42,700
-----------------------------------------------------------------------------
1,500 (b)Fibreboard Corp. 51,938
-----------------------------------------------------------------------------
3,300 (b)Royal Plastics Group Ltd. 59,400
-----------------------------------------------------------------------------
4,900 Spartech Corp. 52,063
-----------------------------------------------------------------------------
4,700 (b)Synthetech, Inc. 38,775
-----------------------------------------------------------------------------
800 Texas Industries, Inc. 45,500
-----------------------------------------------------------------------------
1,700 (b)Titanium Metals Corp. 56,950
----------------------------------------------------------------------------- --------------
Total 392,476
----------------------------------------------------------------------------- --------------
CONSUMER DURABLES--0.2%
-----------------------------------------------------------------------------
3,100 Action Performance Companies, Inc. 53,088
-----------------------------------------------------------------------------
900 Carlisle Cos., Inc. 51,750
-----------------------------------------------------------------------------
2,500 Cavalier Homes, Inc. 28,125
-----------------------------------------------------------------------------
2,400 (b)Champion Enterprises, Inc. 50,100
-----------------------------------------------------------------------------
2,000 Coachmen Industries, Inc. 51,000
-----------------------------------------------------------------------------
2,700 (b)Equity Marketing, Inc. 62,100
-----------------------------------------------------------------------------
1,000 (b)K2, Inc. 26,000
-----------------------------------------------------------------------------
1,800 Lewis Galoob Toys, Inc. 52,425
-----------------------------------------------------------------------------
2,400 Norwood Promotional Products 38,700
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
SMALL COMPANY--CONTINUED
-----------------------------------------------------------------------------
CONSUMER DURABLES--CONTINUED
-----------------------------------------------------------------------------
1,000 Wynns International, Inc. $ 29,125
----------------------------------------------------------------------------- --------------
Total 442,413
----------------------------------------------------------------------------- --------------
CONSUMER NON-DURABLES--0.1%
-----------------------------------------------------------------------------
2,700 (b)Helen of Troy Ltd. 58,050
-----------------------------------------------------------------------------
5,000 (b)Morningstar Group, Inc. 86,250
-----------------------------------------------------------------------------
1,100 (b)Mossimo, Inc. 16,638
-----------------------------------------------------------------------------
1,100 Natures Sunshine Products, Inc. 22,275
-----------------------------------------------------------------------------
3,200 (b)Sport-Haley Inc. 47,200
-----------------------------------------------------------------------------
1,700 Worthington Foods, Inc. 43,350
----------------------------------------------------------------------------- --------------
Total 273,763
----------------------------------------------------------------------------- --------------
ENERGY MINERALS--0.1%
-----------------------------------------------------------------------------
1,700 (b)Belden & Blake Corp. 42,925
-----------------------------------------------------------------------------
900 (b)Cliffs Drilling Co. 46,800
-----------------------------------------------------------------------------
900 (b)Energy Ventures, Inc. 44,213
-----------------------------------------------------------------------------
3,100 (b)Key Production Co. 39,138
-----------------------------------------------------------------------------
2,700 Lomak Petroleum, Inc. 44,213
-----------------------------------------------------------------------------
2,300 (b)Pool Energy Services Co. 33,925
----------------------------------------------------------------------------- --------------
Total 251,214
----------------------------------------------------------------------------- --------------
FINANCE--0.5%
-----------------------------------------------------------------------------
2,200 (b)ACC Consumer Finance Corp. 20,075
-----------------------------------------------------------------------------
1,400 Aames Financial Corp 60,025
-----------------------------------------------------------------------------
800 CMAC Investment Corp. 61,000
-----------------------------------------------------------------------------
1,200 Capital Re Corp. 46,050
-----------------------------------------------------------------------------
4,100 Commonwealth Bancorp 59,450
-----------------------------------------------------------------------------
4,000 (b)Consumer Portfolio Services 51,500
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
SMALL COMPANY--CONTINUED
-----------------------------------------------------------------------------
FINANCE--CONTINUED
-----------------------------------------------------------------------------
1,800 (b)Delphi Financial Group, Inc., Class A $ 50,850
-----------------------------------------------------------------------------
1,300 (b)Delta Financial Corp. 29,738
-----------------------------------------------------------------------------
1,500 Donegal Group, Inc. 29,063
-----------------------------------------------------------------------------
2,000 (b)Electro Rent Corp. 48,000
-----------------------------------------------------------------------------
2,500 (b)Everen Capital Corp. 56,250
-----------------------------------------------------------------------------
1,700 Executive Risk, Inc. 68,000
-----------------------------------------------------------------------------
1,700 (b)First Merchants Acceptance Corp. 35,700
-----------------------------------------------------------------------------
1,300 Frontier Insurance Group, Inc. 49,725
-----------------------------------------------------------------------------
1,000 (b)Insignia Financial Group, Inc., Class A 22,750
-----------------------------------------------------------------------------
200 (b)Markel Corp. 17,000
-----------------------------------------------------------------------------
1,700 Penn-America Group, Inc. 26,988
-----------------------------------------------------------------------------
3,200 (b)Southern Pacific Funding 101,600
-----------------------------------------------------------------------------
2,000 (b)UICI 56,000
-----------------------------------------------------------------------------
1,800 Vesta Insurance Group, Inc. 58,050
----------------------------------------------------------------------------- --------------
Total 947,814
----------------------------------------------------------------------------- --------------
HEALTH CARE--0.3%
-----------------------------------------------------------------------------
2,100 (b)American HomePatient, Inc. 48,563
-----------------------------------------------------------------------------
1,770 (b)Bio Rad Laboratories, Inc., Class A 52,879
-----------------------------------------------------------------------------
3,500 (b)Biosource International, Inc. 24,719
-----------------------------------------------------------------------------
1,700 Chad Therapeutics Inc. 26,775
-----------------------------------------------------------------------------
2,300 (b)Curative Technologies, Inc. 59,800
-----------------------------------------------------------------------------
5,700 (b)Diagnostic Health Services, Inc. 39,900
-----------------------------------------------------------------------------
1,500 (b)Geltex Pharmaceuticals, Inc. 26,813
-----------------------------------------------------------------------------
1,800 (b)Genesis Health Ventures, Inc. 50,175
-----------------------------------------------------------------------------
700 (b)Medicis Pharmaceutical Corp., Class A 30,713
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
SMALL COMPANY--CONTINUED
-----------------------------------------------------------------------------
HEALTH CARE--CONTINUED
-----------------------------------------------------------------------------
3,300 (b)OrthoLogic Corp. $ 20,213
-----------------------------------------------------------------------------
4,100 (b)Physician Computer Network, Inc. 33,825
-----------------------------------------------------------------------------
3,700 (b)Prime Medical Services 43,013
-----------------------------------------------------------------------------
3,200 (b)Rotech Medical Corp. 54,400
-----------------------------------------------------------------------------
900 (b)Safeskin Corp. 46,575
-----------------------------------------------------------------------------
1,400 (b)Sierra Health Services, Inc. 34,475
-----------------------------------------------------------------------------
1,700 (b)Universal Health Services, Inc., Class B 48,025
-----------------------------------------------------------------------------
2,000 (b)UroCor, Inc. 19,250
-----------------------------------------------------------------------------
2,600 (b)Veterinary Centers of America 27,625
----------------------------------------------------------------------------- --------------
Total 687,738
----------------------------------------------------------------------------- --------------
PRODUCER MANUFACTURING--0.1%
-----------------------------------------------------------------------------
1,200 (b)Cable Design Technologies, Class A 35,100
-----------------------------------------------------------------------------
2,200 (b)Maverick Tube Corp. 34,925
-----------------------------------------------------------------------------
1,580 (b)NCI Building System, Inc. 45,425
-----------------------------------------------------------------------------
1,300 (b)Reliance Steel & Aluminum Co. 48,750
-----------------------------------------------------------------------------
1,400 (b)Sinter Metals, Inc. 35,000
-----------------------------------------------------------------------------
1,800 (b)US Office Products Co. 55,800
----------------------------------------------------------------------------- --------------
Total 255,000
----------------------------------------------------------------------------- --------------
RETAIL TRADE--0.3%
-----------------------------------------------------------------------------
2,500 (b)Amrion, Inc. 57,188
-----------------------------------------------------------------------------
1,580 (b)MSC Industrial Direct Co. 59,053
-----------------------------------------------------------------------------
2,600 (b)Microage, Inc. 58,825
-----------------------------------------------------------------------------
2,100 (b)Pacific Sunwear of California 56,700
-----------------------------------------------------------------------------
3,500 (b)Paul Harris Stores, Inc. 63,875
-----------------------------------------------------------------------------
2,000 (b)Pomeroy Computer Resources 54,750
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
SMALL COMPANY--CONTINUED
-----------------------------------------------------------------------------
RETAIL TRADE--CONTINUED
-----------------------------------------------------------------------------
1,400 (b)Regis Corp. Minnesota $ 35,000
-----------------------------------------------------------------------------
1,700 Riser Foods, Inc. 51,850
-----------------------------------------------------------------------------
1,600 (b)Stein Mart, Inc. 30,600
----------------------------------------------------------------------------- --------------
Total 467,841
----------------------------------------------------------------------------- --------------
SERVICES--0.4%
-----------------------------------------------------------------------------
2,900 (b)ATC Communications, Inc. 44,588
-----------------------------------------------------------------------------
1,000 American List Corp. 29,500
-----------------------------------------------------------------------------
1,700 (b)BARRA, Inc. 44,200
-----------------------------------------------------------------------------
1,700 (b)CDI Corp. 49,513
-----------------------------------------------------------------------------
700 (b)Caribiner International, Inc. 30,888
-----------------------------------------------------------------------------
800 (b)Catalina Marketing Corp. 40,800
-----------------------------------------------------------------------------
2,000 (b)Consolidated Graphics, Inc. 91,000
-----------------------------------------------------------------------------
3,000 Employee Solutions, Inc. 55,500
-----------------------------------------------------------------------------
2,900 FactSet Research Systems 68,150
-----------------------------------------------------------------------------
2,500 HA-LO Industries, Inc. 96,250
-----------------------------------------------------------------------------
2,800 (b)National Education Corp. 39,550
-----------------------------------------------------------------------------
1,400 (b)Newpark Resources, Inc. 49,000
-----------------------------------------------------------------------------
1,800 (b)Personnel Group of America, Inc. 40,725
-----------------------------------------------------------------------------
1,200 (b)Premier Parks, Inc. 38,550
-----------------------------------------------------------------------------
2,600 (b)Prepaid Legal Services, Inc. 36,075
-----------------------------------------------------------------------------
2,400 (b)Right Management Consultants 46,500
-----------------------------------------------------------------------------
500 (b)Univision Communications, Inc., Class A 19,875
-----------------------------------------------------------------------------
600 (b)Volt Information Science, Inc. 21,000
----------------------------------------------------------------------------- --------------
Total 841,664
----------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
SMALL COMPANY--CONTINUED
-----------------------------------------------------------------------------
TECHNOLOGY--0.7%
-----------------------------------------------------------------------------
3,700 (b)Alphanet Solutions, Inc. $ 45,325
-----------------------------------------------------------------------------
5,100 (b)Award Software International, Inc. 45,900
-----------------------------------------------------------------------------
1,400 (b)Burr Brown Corp. 36,400
-----------------------------------------------------------------------------
800 (b)Claremont Technology Group 19,600
-----------------------------------------------------------------------------
3,000 (b)Cognex Corp. 59,250
-----------------------------------------------------------------------------
1,500 Computer Task Group, Inc. 62,813
-----------------------------------------------------------------------------
3,400 (b)Digital Systems Int., Inc. 52,275
-----------------------------------------------------------------------------
1,600 (b)Ducommun, Inc. 35,400
-----------------------------------------------------------------------------
1,000 (b)Dupont Photomasks, Inc. 41,500
-----------------------------------------------------------------------------
3,200 (b)EIS International, Inc. 28,000
-----------------------------------------------------------------------------
3,000 (b)ESS Technology, Inc. 59,250
-----------------------------------------------------------------------------
2,000 (b)Elexsys International, Inc. 33,250
-----------------------------------------------------------------------------
1,100 (b)IA Corporation I 6,188
-----------------------------------------------------------------------------
3,200 (b)II-VI, Inc. 84,400
-----------------------------------------------------------------------------
2,300 Innovex, Inc. 93,438
-----------------------------------------------------------------------------
1,800 (b)Integrated Measurement Systems, Inc. 31,950
-----------------------------------------------------------------------------
2,300 (b)Intervoice, Inc. 29,038
-----------------------------------------------------------------------------
1,400 (b)Perceptron, Inc. 48,475
-----------------------------------------------------------------------------
2,000 (b)Photronic Labs, Inc. 63,000
-----------------------------------------------------------------------------
3,900 (b)Raster Graphics Inc. 40,950
-----------------------------------------------------------------------------
2,300 (b)Sandisk Corp. 31,625
-----------------------------------------------------------------------------
4,000 (b)StorMedia, Inc. 51,000
-----------------------------------------------------------------------------
2,300 (b)Stratasys, Inc. 38,238
-----------------------------------------------------------------------------
1,000 (b)Supertex, Inc. 19,000
-----------------------------------------------------------------------------
2,000 (b)Tollgrade Communications, Inc. 48,500
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
SMALL COMPANY--CONTINUED
-----------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
-----------------------------------------------------------------------------
1,700 (b)Tracor, Inc. $ 37,400
-----------------------------------------------------------------------------
2,000 (b)Trident International, Inc. 39,500
-----------------------------------------------------------------------------
3,900 (b)Trusted Information Systems 46,800
-----------------------------------------------------------------------------
1,400 (b)USCS International, Inc. 23,450
-----------------------------------------------------------------------------
2,500 (b)Voxware, Inc. 19,375
-----------------------------------------------------------------------------
1,000 Wyle Labs 36,000
----------------------------------------------------------------------------- --------------
Total 1,307,290
----------------------------------------------------------------------------- --------------
TRANSPORTATION--0.1%
-----------------------------------------------------------------------------
1,300 Airlines Express International Corp. 42,494
-----------------------------------------------------------------------------
900 (b)Alaska Air Group, Inc. 21,713
-----------------------------------------------------------------------------
800 Expeditors International Washington, Inc. 35,600
-----------------------------------------------------------------------------
1,800 USFreightways Corp. 46,688
----------------------------------------------------------------------------- --------------
Total 146,495
----------------------------------------------------------------------------- --------------
UTILITIES--0.1%
-----------------------------------------------------------------------------
1,200 (b)Atlantic Telephone Network, Inc. 22,650
-----------------------------------------------------------------------------
500 (b)Columbia Gas System, Inc. 32,313
-----------------------------------------------------------------------------
1,100 Leviathan Gas Pipe Line, Inc. 50,050
-----------------------------------------------------------------------------
1,700 (c)NGC Corp. 36,975
-----------------------------------------------------------------------------
1,200 TNP Enterprises, Inc. 30,600
-----------------------------------------------------------------------------
1,100 Trescomm International, Inc. 11,413
----------------------------------------------------------------------------- --------------
Total 184,001
----------------------------------------------------------------------------- --------------
TOTAL SMALL COMPANY 6,197,709
----------------------------------------------------------------------------- --------------
UTILITY STOCKS--7.6%
-----------------------------------------------------------------------------
ELECTRIC UTILITIES: CENTRAL--1.9%
-----------------------------------------------------------------------------
24,300 CMS Energy Corp. 789,750
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
UTILITY STOCKS--CONTINUED
-----------------------------------------------------------------------------
ELECTRIC UTILITIES: CENTRAL--CONTINUED
-----------------------------------------------------------------------------
23,821 Cinergy Corp. $ 798,004
-----------------------------------------------------------------------------
31,900 DPL, Inc. 777,563
-----------------------------------------------------------------------------
28,000 Illinova Corp. 742,000
-----------------------------------------------------------------------------
20,600 NIPSCO Industries, Inc. 798,250
----------------------------------------------------------------------------- --------------
Total 3,905,567
----------------------------------------------------------------------------- --------------
ELECTRIC UTILITIES: EAST--1.1%
-----------------------------------------------------------------------------
26,100 DQE, Inc. 769,950
-----------------------------------------------------------------------------
23,900 GPU, Inc. 803,638
-----------------------------------------------------------------------------
30,400 Peco Energy Co. 775,200
----------------------------------------------------------------------------- --------------
Total 2,348,788
----------------------------------------------------------------------------- --------------
ELECTRIC UTILITIES: SOUTH--1.9%
-----------------------------------------------------------------------------
15,900 Duke Power Co. 737,363
-----------------------------------------------------------------------------
17,200 FPL Group, Inc. 793,350
-----------------------------------------------------------------------------
33,300 Southern Co. 740,925
-----------------------------------------------------------------------------
31,200 TECO Energy, Inc. 760,500
-----------------------------------------------------------------------------
18,500 Texas Utilities Co. 730,750
----------------------------------------------------------------------------- --------------
Total 3,762,888
----------------------------------------------------------------------------- --------------
ELECTRIC UTILITIES: WEST--0.8%
-----------------------------------------------------------------------------
36,200 Pacificorp 760,200
-----------------------------------------------------------------------------
24,900 Pinnacle West Capital Corp. 775,013
----------------------------------------------------------------------------- --------------
Total 1,535,213
----------------------------------------------------------------------------- --------------
NATURAL GAS DISTRIBUTION--0.7%
-----------------------------------------------------------------------------
25,300 MCN Corp. 727,375
-----------------------------------------------------------------------------
22,600 Pacific Enterprises 692,125
----------------------------------------------------------------------------- --------------
Total 1,419,500
----------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
UTILITY STOCKS--CONTINUED
-----------------------------------------------------------------------------
OIL/GAS TRANSMISSION--1.2%
-----------------------------------------------------------------------------
16,600 Enron Corp. $ 759,450
-----------------------------------------------------------------------------
19,600 Panenergy Corp. 862,400
-----------------------------------------------------------------------------
13,700 Williams Companies, Inc. 768,913
----------------------------------------------------------------------------- --------------
Total 2,390,763
----------------------------------------------------------------------------- --------------
TOTAL UTILITY 15,362,719
----------------------------------------------------------------------------- --------------
FOREIGN EQUITY--5.8%
-----------------------------------------------------------------------------
ARGENTINA--0.1%
-----------------------------------------------------------------------------
770 Banco Frances del Rio de la Plata S.A., ADR 23,293
-----------------------------------------------------------------------------
3,785 Compania Naviera Perez Companc S.A., Class B 25,900
-----------------------------------------------------------------------------
702 (b)IRSA Inversiones y Representaciones S.A., GDR 21,762
-----------------------------------------------------------------------------
900 YPF Sociedad Anonima, ADR 20,925
----------------------------------------------------------------------------- --------------
Total 91,880
----------------------------------------------------------------------------- --------------
AUSTRALIA--0.2%
-----------------------------------------------------------------------------
11,000 (b)Aristocrat Leisure Ltd. 31,157
-----------------------------------------------------------------------------
5,250 (b)Commonwealth Installment 33,160
-----------------------------------------------------------------------------
6,080 Lend Lease Corp., Ltd. 112,831
-----------------------------------------------------------------------------
14,000 News Corp., Ltd. 74,524
-----------------------------------------------------------------------------
7,150 Woodside Petroleum Ltd. 50,223
----------------------------------------------------------------------------- --------------
Total 301,895
----------------------------------------------------------------------------- --------------
AUSTRIA--0.0%
-----------------------------------------------------------------------------
160 Vae Eisenbahnsysteme AG 14,785
----------------------------------------------------------------------------- --------------
BELGIUM--0.0%
-----------------------------------------------------------------------------
1,400 Delhaize-Le Lion 82,171
----------------------------------------------------------------------------- --------------
BRAZIL--0.1%
-----------------------------------------------------------------------------
2,929,500 Banco Bradesco S.A., Preference 21,411
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-----------------------------------------------------------------------------
BRAZIL--CONTINUED
-----------------------------------------------------------------------------
60,000 Banco Itau S.A., Preference $ 23,524
-----------------------------------------------------------------------------
100,000 Centrais Eletricas Brasileiras, Preference, Series B 32,817
-----------------------------------------------------------------------------
1,900 (b)Cofap-Cia Fab Peca, Preference 15,542
-----------------------------------------------------------------------------
817,000 Companhia Energetica de Minas Gerais, Preference 26,337
-----------------------------------------------------------------------------
9,000 (b)Cosipa Pnb 8,190
-----------------------------------------------------------------------------
1,900 (b)(c)Elevadores Atlas 20,416
-----------------------------------------------------------------------------
71,000 (b)Light Participacoes S.A. 13,341
-----------------------------------------------------------------------------
628,000 Lojas Renner S.A., Preference 31,005
-----------------------------------------------------------------------------
160,000 (b)Petroleo Brasileiro S.A., Preference 21,994
-----------------------------------------------------------------------------
325 Telecomunicacoes Brasileras, ADR 24,619
-----------------------------------------------------------------------------
126,000 (b)Telecomunicacoes de Sao Paulo S.A., Preference 22,321
-----------------------------------------------------------------------------
10,203,000 (b)Usinas Siderurgicas de Minas Gerais, Pfd. 10,173
----------------------------------------------------------------------------- --------------
Total 271,690
----------------------------------------------------------------------------- --------------
CHILE--0.0%
-----------------------------------------------------------------------------
400 (b)Banco BHIF, ADR 6,750
-----------------------------------------------------------------------------
300 (b)Banco de A. Edwards, ADR 5,550
-----------------------------------------------------------------------------
100 (b)(c)Chilectra S.A., ADR 5,500
-----------------------------------------------------------------------------
100 Compania Telecomunicacion Chile, ADR 9,513
-----------------------------------------------------------------------------
300 (b)Santa Isabel S.A., ADR 7,538
-----------------------------------------------------------------------------
100 Sociedad Quimica Y Minera De Chile, ADR 5,200
----------------------------------------------------------------------------- --------------
Total 40,051
----------------------------------------------------------------------------- --------------
COLOMBIA--0.0%
-----------------------------------------------------------------------------
700 Banco Ganadero S.A., ADR 17,325
-----------------------------------------------------------------------------
800 Banco Industrial Colombiano, ADR 12,900
----------------------------------------------------------------------------- --------------
Total 30,225
----------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-----------------------------------------------------------------------------
FRANCE--0.4%
-----------------------------------------------------------------------------
816 AXA $ 49,034
-----------------------------------------------------------------------------
451 Accor SA 57,845
-----------------------------------------------------------------------------
850 Casino Ord 38,482
-----------------------------------------------------------------------------
882 Compagnie Financiere de Paribas, Class A 60,598
-----------------------------------------------------------------------------
400 Compagnie de Saint Gobain 57,506
-----------------------------------------------------------------------------
1,223 Credit Commerical De France 59,233
-----------------------------------------------------------------------------
590 Credit Local de France 53,412
-----------------------------------------------------------------------------
350 Groupe Danon BSN SA 51,524
-----------------------------------------------------------------------------
380 Havas SA 26,915
-----------------------------------------------------------------------------
300 LVMH (Moet-Hennessy) 76,037
-----------------------------------------------------------------------------
860 Lafarge-Coppee 54,328
-----------------------------------------------------------------------------
470 Peugeot SA 57,763
-----------------------------------------------------------------------------
560 Rhone-Poulenc Rorer, Inc. 41,650
-----------------------------------------------------------------------------
1,527 Schneider SA 72,641
-----------------------------------------------------------------------------
460 Total SA-B 36,782
----------------------------------------------------------------------------- --------------
Total 793,750
----------------------------------------------------------------------------- --------------
GERMANY--0.4%
-----------------------------------------------------------------------------
1,910 BASF AG 70,645
-----------------------------------------------------------------------------
1,400 Bayer AG 56,333
-----------------------------------------------------------------------------
2,100 (b)Commerzbank AG, Frankfurt 51,609
-----------------------------------------------------------------------------
900 (b)Daimler Benz AG 58,777
-----------------------------------------------------------------------------
1,035 Deutsche Bank, AG 49,324
-----------------------------------------------------------------------------
2,000 Dresdner Bank AG, Frankfurt 59,359
-----------------------------------------------------------------------------
155 Gea AG, Vorzugsaktien 46,457
-----------------------------------------------------------------------------
150 (b)Henkel KGAA 7,314
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-----------------------------------------------------------------------------
GERMANY--CONTINUED
-----------------------------------------------------------------------------
850 Henkel KGAA, Pfd. $ 42,331
-----------------------------------------------------------------------------
65 Linde AG 39,471
-----------------------------------------------------------------------------
120 Mannesmann AG 50,049
-----------------------------------------------------------------------------
700 RWE AG 30,947
-----------------------------------------------------------------------------
3,100 (b)Rofin-Sinar Technologies, Inc. 39,913
-----------------------------------------------------------------------------
375 Schering AG 30,793
-----------------------------------------------------------------------------
785 Schwarz Pharma 58,437
-----------------------------------------------------------------------------
1,000 Siemens AG 48,176
-----------------------------------------------------------------------------
930 Veba AG 54,387
----------------------------------------------------------------------------- --------------
Total 794,322
----------------------------------------------------------------------------- --------------
HONG KONG--0.4%
-----------------------------------------------------------------------------
102,000 Aeon Credit Service 34,299
-----------------------------------------------------------------------------
54,000 Amoy Properties Ltd. 75,427
-----------------------------------------------------------------------------
7,000 Cheung Kong 61,562
-----------------------------------------------------------------------------
18,000 (b)(c)Cheung Kong Infrastructure 43,766
-----------------------------------------------------------------------------
8,500 (b)(c)China Resources Bejing Land 5,277
-----------------------------------------------------------------------------
1,839 HSBC Holdings PLC 38,293
-----------------------------------------------------------------------------
54,000 Henderson Investment Ltd. 65,649
-----------------------------------------------------------------------------
22,000 Hong Kong Telecom 38,127
-----------------------------------------------------------------------------
8,000 Hutchison Whampoa 61,821
-----------------------------------------------------------------------------
6,000 New World Development Co. Ltd. 40,546
-----------------------------------------------------------------------------
80,000 Oriental Press Group 45,008
-----------------------------------------------------------------------------
30,000 Peregrine Investments 55,484
-----------------------------------------------------------------------------
23,000 (b)(c)Shanghai Industrial Holdings LTD 74,812
-----------------------------------------------------------------------------
4,000 Sun Hung Kai Properties 49,664
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-----------------------------------------------------------------------------
HONG KONG--CONTINUED
-----------------------------------------------------------------------------
29,000 (b)Winsor Property Holdings Ltd. $ 43,695
----------------------------------------------------------------------------- --------------
Total 733,430
----------------------------------------------------------------------------- --------------
INDIA--0.1%
-----------------------------------------------------------------------------
1,700 (b)(c)Bombay Suburban Electric Supply, GDR 33,575
-----------------------------------------------------------------------------
3,600 (b)(c)Crompton Greaves Ltd., GDR 11,700
-----------------------------------------------------------------------------
1,050 (b)Hindalco Industries, GDR 21,420
-----------------------------------------------------------------------------
2,000 (b)(c)Larsen & Toubro Ltd., GDR 29,000
-----------------------------------------------------------------------------
2,600 (b)(c)Mahindra and Mahindra, GDR 27,300
-----------------------------------------------------------------------------
1,200 (b)(c)Steel Authority of India, GDR 10,200
----------------------------------------------------------------------------- --------------
Total 133,195
----------------------------------------------------------------------------- --------------
INDONESIA--0.1%
-----------------------------------------------------------------------------
29,000 (b)Bank Negara Indonesia 14,531
-----------------------------------------------------------------------------
18,000 Citra Marga Nusaphala Persada 15,160
-----------------------------------------------------------------------------
4,000 Gudang Garam 17,015
-----------------------------------------------------------------------------
10,500 Modern Photo Film Co. 26,306
-----------------------------------------------------------------------------
8,000 Semen Gresik 24,392
-----------------------------------------------------------------------------
24,933 Steady Safe 29,239
-----------------------------------------------------------------------------
32,670 Pab K Tjiwi Kimia 31,346
-----------------------------------------------------------------------------
9,000 Tambang Timah 14,200
----------------------------------------------------------------------------- --------------
Total 172,189
----------------------------------------------------------------------------- --------------
ITALY--0.1%
-----------------------------------------------------------------------------
7,000 Banca Popolare Milano 35,786
-----------------------------------------------------------------------------
8,000 Eni 42,112
-----------------------------------------------------------------------------
4,300 Imi Istituto Mobiliare 36,123
-----------------------------------------------------------------------------
520 (b)La Rinascente S.P.A. Warrants, 12/31/1999 244
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-----------------------------------------------------------------------------
ITALY--CONTINUED
-----------------------------------------------------------------------------
35,000 Telecom Italia Mobile $ 82,308
-----------------------------------------------------------------------------
5,100 (b)Unicem S.P.A. 34,416
----------------------------------------------------------------------------- --------------
Total 230,989
----------------------------------------------------------------------------- --------------
JAPAN--1.5%
-----------------------------------------------------------------------------
10,000 Amada Co. 83,582
-----------------------------------------------------------------------------
200 Asahi Broadcasting Corp. 21,949
-----------------------------------------------------------------------------
3,000 Canare Electric Co. Ltd. 63,213
-----------------------------------------------------------------------------
12,000 Casio Computer Co. 97,349
-----------------------------------------------------------------------------
14 DDI Corp. 100,176
-----------------------------------------------------------------------------
7,000 Dai Nippon Printing Co. Ltd. 127,831
-----------------------------------------------------------------------------
9,000 Daito Trust Construction 117,735
-----------------------------------------------------------------------------
4,000 Fuji Photo Film Co. 125,022
-----------------------------------------------------------------------------
2,000 Hirose Electric Co. 121,159
-----------------------------------------------------------------------------
4,000 Hitachi Maxell 82,529
-----------------------------------------------------------------------------
4,000 Ikegami Tsushinki 26,690
-----------------------------------------------------------------------------
8,000 JGC Corp. 73,749
-----------------------------------------------------------------------------
1,000 Japan Cash Machine Co. Ltd. 17,823
-----------------------------------------------------------------------------
4,000 Japan Radio Co. 48,815
-----------------------------------------------------------------------------
11 (b)(c)Japan Tobacco 78,323
-----------------------------------------------------------------------------
4,000 Konami Co. 136,611
-----------------------------------------------------------------------------
4,000 Matsushita Kotobuk Electric 102,546
-----------------------------------------------------------------------------
3,000 (b)Meiwa Estate 87,445
-----------------------------------------------------------------------------
16,000 Minolta Co. 100,720
-----------------------------------------------------------------------------
12,000 Mitsubishi Heavy Industries Ltd. 97,981
-----------------------------------------------------------------------------
6,000 Mycal Corp. 89,552
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-----------------------------------------------------------------------------
JAPAN--CONTINUED
-----------------------------------------------------------------------------
2,000 Nintendo Corp. Ltd. $ 141,352
-----------------------------------------------------------------------------
4,000 Nippon Comsys Corp. 49,868
-----------------------------------------------------------------------------
1,000 Nissei ASB Machine Co. 13,960
-----------------------------------------------------------------------------
2,000 Pioneer Electronic Corp. 43,020
-----------------------------------------------------------------------------
2,000 Promise Co. Ltd. 100,088
-----------------------------------------------------------------------------
1 (c)Sakura Finance (Bermuda), Conv. Pfd. 56,832
-----------------------------------------------------------------------------
4,000 Sankyo Co. 107,112
-----------------------------------------------------------------------------
8,000 Shiseido Co. 96,225
-----------------------------------------------------------------------------
9,000 Shochiku Co. 83,758
-----------------------------------------------------------------------------
2,000 Sony Corp. 128,007
-----------------------------------------------------------------------------
2,000,000 (c)Sumitomo Bank International Conv. Bond, .75%, 5/31/2001 19,074
-----------------------------------------------------------------------------
6,000 Sumitomo Trust & Banking 66,374
-----------------------------------------------------------------------------
4,000 Taisho Pharmaceutical Co. 89,201
-----------------------------------------------------------------------------
3,000 Takashimaya Co. 40,035
-----------------------------------------------------------------------------
8,000 Tokio Marine and Fire Insurance Co. 88,499
-----------------------------------------------------------------------------
18,000 (b)Tokyo Tatemono Co., Ltd. 82,493
-----------------------------------------------------------------------------
7,000 Tsubakimoto Chain Co. 41,238
----------------------------------------------------------------------------- --------------
Total 3,047,936
----------------------------------------------------------------------------- --------------
KOREA--0.1%
-----------------------------------------------------------------------------
1,300 Chonggu Housing & Construction 29,797
-----------------------------------------------------------------------------
800 Dongkuk Steel Mill Co. 15,538
-----------------------------------------------------------------------------
600 Hankuk Paper Manufacturing Co. 13,608
-----------------------------------------------------------------------------
2,600 Korea Exchange Bank 24,465
-----------------------------------------------------------------------------
2,100 (b)Korea Mobile Telecomm Corp., ADR 27,300
-----------------------------------------------------------------------------
1,240 Pacific Corporation 23,186
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-----------------------------------------------------------------------------
KOREA--CONTINUED
-----------------------------------------------------------------------------
540 Shinhan Bank $ 9,537
----------------------------------------------------------------------------- --------------
Total 143,431
----------------------------------------------------------------------------- --------------
MALAYSIA--0.2%
-----------------------------------------------------------------------------
22,000 Eastern and Oriental 47,883
-----------------------------------------------------------------------------
2,000 (b)Kentucky Fried Chicken 2,438
-----------------------------------------------------------------------------
10,000 Kentucky Fried Chicken 44,321
-----------------------------------------------------------------------------
3,000 Malayan Banking 29,679
-----------------------------------------------------------------------------
27,000 Malaysian Industrial Development 55,560
-----------------------------------------------------------------------------
10,000 Malaysian Pacific Industries 40,760
-----------------------------------------------------------------------------
10,000 Metacorp 30,867
-----------------------------------------------------------------------------
13,000 UMW Holdings 61,733
----------------------------------------------------------------------------- --------------
Total 313,241
----------------------------------------------------------------------------- --------------
MEXICO--0.1%
-----------------------------------------------------------------------------
700 (b)(c)Acer, Inc., ADR 12,775
-----------------------------------------------------------------------------
3,000 (b)Cemex S.A., Class B, ADR 21,656
-----------------------------------------------------------------------------
12,000 (b)Cifra S.A. de C.V., Class B 16,554
-----------------------------------------------------------------------------
1,900 (b)Empresas ICA Sociedad Controladora S.A., ADR 27,313
-----------------------------------------------------------------------------
5,000 Fomento Economico Mexicano, S.A. de C.V., Class B 17,085
-----------------------------------------------------------------------------
12,000 (b)Grupo Corvi S.A., Class UBL 10,042
-----------------------------------------------------------------------------
2,800 (b)(c)Grupo Financiero Bancomer, S.A. de C.V., Class B, ADR 22,557
-----------------------------------------------------------------------------
700 Pan American Beverage, Class A 32,725
-----------------------------------------------------------------------------
600 Telefonos de Mexico, Class L, ADR 18,225
-----------------------------------------------------------------------------
1,400 (b)Tubos de Acero de Mexico S.A., ADR 19,075
----------------------------------------------------------------------------- --------------
Total 198,007
----------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-----------------------------------------------------------------------------
NETHERLANDS--0.2%
-----------------------------------------------------------------------------
1,600 ABN Amro Holding $ 103,648
-----------------------------------------------------------------------------
2,750 Boskalis Westminster N.V. 54,544
-----------------------------------------------------------------------------
730 Hunter Douglas N.V. 47,755
-----------------------------------------------------------------------------
1,525 ING Groep, N.V. 53,419
-----------------------------------------------------------------------------
1,360 Vendex International A 59,076
-----------------------------------------------------------------------------
430 Wolters Kluwer N.V. 56,234
----------------------------------------------------------------------------- --------------
Total 374,676
----------------------------------------------------------------------------- --------------
NEW ZEALAND--0.1%
-----------------------------------------------------------------------------
16,000 Air New Zealand Ltd., Class B 42,105
-----------------------------------------------------------------------------
14,000 Fletcher Challenge Building 39,331
-----------------------------------------------------------------------------
40,000 Wrightson Ltd. 35,562
----------------------------------------------------------------------------- --------------
Total 116,998
----------------------------------------------------------------------------- --------------
NORWAY--0.0%
-----------------------------------------------------------------------------
2,600 Elkem A/S, Class A 40,511
-----------------------------------------------------------------------------
7,100 (b)Storebrand ASA 42,370
----------------------------------------------------------------------------- --------------
Total 82,881
----------------------------------------------------------------------------- --------------
PAKISTAN--0.0%
-----------------------------------------------------------------------------
350 (b)Hub Power Co., GDR 7,525
----------------------------------------------------------------------------- --------------
PHILIPPINES--0.0%
-----------------------------------------------------------------------------
84,000 (b)Belle Corp. 22,369
-----------------------------------------------------------------------------
42,740 (b)Davao Union Cement Corp., Class B 13,983
-----------------------------------------------------------------------------
58,050 (b)Filinvest Land, Inc. 20,538
-----------------------------------------------------------------------------
1,400 Philippine Commercial International Bank 18,641
----------------------------------------------------------------------------- --------------
Total 75,531
----------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-----------------------------------------------------------------------------
SINGAPORE--0.2%
-----------------------------------------------------------------------------
5,000 City Developments $ 44,207
-----------------------------------------------------------------------------
8,000 Hong Leong Finance Ltd. 27,722
-----------------------------------------------------------------------------
61,000 Roly International Holdings 40,260
-----------------------------------------------------------------------------
8,000 Sembawang Corp. Ltd. 43,750
-----------------------------------------------------------------------------
2,000 Singapore Press Holdings Ltd. 37,790
-----------------------------------------------------------------------------
9,000 Straits Steamship Land Ltd. 28,749
-----------------------------------------------------------------------------
2,250 (b)Straits Steamship Land Ltd. Warrants, 12/12/2000 2,519
-----------------------------------------------------------------------------
5,000 United Overseas Bank Ltd. 53,119
-----------------------------------------------------------------------------
12,000 Wing Tai Holdings, Ltd. 32,856
----------------------------------------------------------------------------- --------------
Total 310,972
----------------------------------------------------------------------------- --------------
SPAIN--0.2%
-----------------------------------------------------------------------------
860 Empresa Nac De Electridad 58,090
-----------------------------------------------------------------------------
630 Fomento de Construcciones y Contratas SA 53,254
-----------------------------------------------------------------------------
5,800 Iberdrola SA 66,937
-----------------------------------------------------------------------------
1,050 Mapfre (Corporacion) 55,523
-----------------------------------------------------------------------------
1,500 Repsol SA 55,523
-----------------------------------------------------------------------------
2,720 Telefonica de Espana 59,632
-----------------------------------------------------------------------------
638 Zardoya-Otis SA 67,967
----------------------------------------------------------------------------- --------------
Total 416,926
----------------------------------------------------------------------------- --------------
SWEDEN--0.0%
-----------------------------------------------------------------------------
4,400 Stora Kopparbergs, Class A 60,278
----------------------------------------------------------------------------- --------------
SWITZERLAND--0.2%
-----------------------------------------------------------------------------
35 ABB AG 43,794
-----------------------------------------------------------------------------
600 CS Holding AG-Registered 63,867
-----------------------------------------------------------------------------
50 Ciba-Giegy AG-Registered 61,872
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-----------------------------------------------------------------------------
SWITZERLAND--CONTINUED
-----------------------------------------------------------------------------
50 Nestle SA $ 54,277
-----------------------------------------------------------------------------
400 (b)Oerlikon-Buhrle Holding AG 41,273
-----------------------------------------------------------------------------
23 Reiseburo Kuoni AG, Class B 51,170
-----------------------------------------------------------------------------
5 Roche Holding AG 38,435
-----------------------------------------------------------------------------
45 Sandoz AG-R 52,336
-----------------------------------------------------------------------------
75 Sulzer AG-Reg 43,153
-----------------------------------------------------------------------------
48 (b)Swissair AG 36,456
-----------------------------------------------------------------------------
142 Zurich Versicherungsgesellschaft 40,307
----------------------------------------------------------------------------- --------------
Total 526,940
----------------------------------------------------------------------------- --------------
THAILAND--0.0%
-----------------------------------------------------------------------------
1,200 Bangkok Bank Public Co., Ltd. 13,719
-----------------------------------------------------------------------------
9,800 Industrial Finance Corporation of Thailand 30,888
-----------------------------------------------------------------------------
2,900 Krung Thai Bank PLC 8,289
-----------------------------------------------------------------------------
1,300 PTT Exploration and Production Public Co. 19,138
-----------------------------------------------------------------------------
21,000 Siam City Bank 24,667
----------------------------------------------------------------------------- --------------
Total 96,701
----------------------------------------------------------------------------- --------------
UNITED KINGDOM--1.1%
-----------------------------------------------------------------------------
15,000 Asda Group 29,884
-----------------------------------------------------------------------------
6,430 BAA PLC 52,971
-----------------------------------------------------------------------------
10,000 BTR PLC 40,182
-----------------------------------------------------------------------------
3,337 Barclays PLC 57,393
-----------------------------------------------------------------------------
2,231 Boc Group PLC 33,232
-----------------------------------------------------------------------------
3,400 Boots Co. PLC 36,241
-----------------------------------------------------------------------------
2,514 British Aerospace PLC 48,902
-----------------------------------------------------------------------------
4,974 British Petroleum Co. PLC 57,513
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-----------------------------------------------------------------------------
UNITED KINGDOM--CONTINUED
-----------------------------------------------------------------------------
6,300 British Telecommunication PLC $ 39,878
-----------------------------------------------------------------------------
13,492 Bunzl PLC 50,357
-----------------------------------------------------------------------------
3,882 Cadbury Schweppes PLC 33,383
-----------------------------------------------------------------------------
13,000 Caradon PLC 52,127
-----------------------------------------------------------------------------
5,750 Carlton Communications PLC 48,626
-----------------------------------------------------------------------------
5,800 Chubb Security 33,447
-----------------------------------------------------------------------------
5,860 Compass Group 59,753
-----------------------------------------------------------------------------
12,240 Cookson Group 46,507
-----------------------------------------------------------------------------
8,500 Cowie Group PLC 56,590
-----------------------------------------------------------------------------
7,560 David S. Smith (Holdings) PLC 40,101
-----------------------------------------------------------------------------
8,450 Delta PLC 51,640
-----------------------------------------------------------------------------
1,740 EMI Group PLC 40,194
-----------------------------------------------------------------------------
15,100 FKI PLC 54,708
-----------------------------------------------------------------------------
4,850 General Accident 59,728
-----------------------------------------------------------------------------
8,200 General Electric Co. PLC 51,353
-----------------------------------------------------------------------------
2,600 Glaxo Wellcome PLC 42,761
-----------------------------------------------------------------------------
5,211 Grand Metropolitan PLC 40,695
-----------------------------------------------------------------------------
12,897 Guardian Royal Exchange 58,110
-----------------------------------------------------------------------------
2,200 Imperial Chemical Industries PLC 28,536
-----------------------------------------------------------------------------
7,900 Inchcape PLC 35,794
-----------------------------------------------------------------------------
11,330 Ladbroke Group PLC 39,049
-----------------------------------------------------------------------------
4,000 Marks & Spencer PLC 34,028
-----------------------------------------------------------------------------
15,000 Mirror Group PLC 58,003
-----------------------------------------------------------------------------
8,060 National Power Co. PLC 62,469
-----------------------------------------------------------------------------
4,950 Pearson 61,168
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES
OR UNITS VALUE
OR PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-----------------------------------------------------------------------------
UNITED KINGDOM--CONTINUED
-----------------------------------------------------------------------------
4,500 Peninsular & Oriental Steam Navigation Co. $ 44,750
-----------------------------------------------------------------------------
4,800 Premier Farnell PLC 57,458
-----------------------------------------------------------------------------
3,427 RTZ Corp. PLC 57,616
-----------------------------------------------------------------------------
4,200 Rank Group PLC 30,716
-----------------------------------------------------------------------------
3,990 Reckitt & Colman PLC 47,024
-----------------------------------------------------------------------------
4,600 Reed International PLC 89,131
-----------------------------------------------------------------------------
27,300 Rugby Group PLC 44,062
-----------------------------------------------------------------------------
4,600 Safeway PLC 30,161
-----------------------------------------------------------------------------
15,700 Sedgwick Group PLC 33,126
-----------------------------------------------------------------------------
2,524 Siebe PLC 40,291
-----------------------------------------------------------------------------
2,976 Smithkline Beecham PLC 41,028
-----------------------------------------------------------------------------
10,600 Tomkins PLC 44,285
-----------------------------------------------------------------------------
2,050 Zeneca Group 56,523
----------------------------------------------------------------------------- --------------
Total 2,151,494
----------------------------------------------------------------------------- --------------
TOTAL FOREIGN EQUITY 11,614,109
----------------------------------------------------------------------------- --------------
TOTAL STOCKS (IDENTIFIED COST $52,555,328) 59,939,439
----------------------------------------------------------------------------- --------------
BONDS--63.8%
- ----------------------------------------------------------------------------------------------
TREASURY--29.1%
-----------------------------------------------------------------------------
$ 57,325,000 U.S. Treasury Notes, 5.50%-7.75%, 11/15/1998-3/31/2000 58,541,658
----------------------------------------------------------------------------- --------------
MORTGAGE-BACKED SECURITIES--19.5%
-----------------------------------------------------------------------------
GOVERNMENT AGENCY--19.5%
-----------------------------------------------------------------------------
384,260 Federal Home Loan Mortgage Corp., 9.50%, 6/1/2021 415,078
-----------------------------------------------------------------------------
116,849 Federal Home Loan Mortgage Corp., 8.00%, 11/1/2021 121,010
-----------------------------------------------------------------------------
354,997 Federal Home Loan Mortgage Corp., 7.50%, 5/1/2024 360,653
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES--CONTINUED
-----------------------------------------------------------------------------
GOVERNMENT AGENCY--CONTINUED
-----------------------------------------------------------------------------
$ 943,408 Federal Home Loan Mortgage Corp., 7.00%, 8/1/2025 $ 939,446
-----------------------------------------------------------------------------
794,104 Federal Home Loan Mortgage Corp., 8.00%, 11/1/2022 824,868
-----------------------------------------------------------------------------
239,440 Federal Home Loan Mortgage Corp., 7.00%, 7/1/2024 238,689
-----------------------------------------------------------------------------
502,925 Federal Home Loan Mortgage Corp., 8.00%, 4/1/2025 518,007
-----------------------------------------------------------------------------
970,311 Federal Home Loan Mortgage Corp., 6.50%, 9/1/2025 945,937
-----------------------------------------------------------------------------
1,030,455 Federal Home Loan Mortgage Corp., 7.00%, 1/1/2026 1,025,292
-----------------------------------------------------------------------------
972,347 Federal Home Loan Mortgage Corp., 7.00%, 2/1/2026 972,940
-----------------------------------------------------------------------------
1,804,600 Federal Home Loan Mortgage Corp., 7.50%, 6/1/2026 1,829,377
-----------------------------------------------------------------------------
355,365 Federal Home Loan Mortgage Corp., 8.00%, 11/1/2009 367,245
-----------------------------------------------------------------------------
1,871,521 Federal Home Loan Mortgage Corp., 6.50%, 3/1/2011 1,859,207
-----------------------------------------------------------------------------
306,398 Federal Home Loan Mortgage Corp., 7.00%, 4/1/2009 310,896
-----------------------------------------------------------------------------
592,961 Federal Home Loan Mortgage Corp., 7.00%, 4/1/2009 598,511
-----------------------------------------------------------------------------
997,960 Federal Home Loan Mortgage Corp., 6.00%, 6/1/2011 973,620
-----------------------------------------------------------------------------
993,181 Federal Home Loan Mortgage Corp., 7.50%, 8/1/2003 1,015,200
-----------------------------------------------------------------------------
775,836 Federal National Mortgage Association, 7.50%, 9/1/2009 794,735
-----------------------------------------------------------------------------
463,671 Federal National Mortgage Association, 7.00%, 7/1/2024 460,332
-----------------------------------------------------------------------------
873,677 Federal National Mortgage Association, 9.50%, 10/1/2024 947,564
-----------------------------------------------------------------------------
979,244 Federal National Mortgage Association, 7.50%, 5/1/2026 992,396
-----------------------------------------------------------------------------
198,732 Federal National Mortgage Association, 7.50%, 6/1/2009 203,015
-----------------------------------------------------------------------------
1,088,436 Federal National Mortgage Association, 8.00%, 11/1/2024 1,119,370
-----------------------------------------------------------------------------
1,400,106 Federal National Mortgage Association, 9.00%, 2/1/2025 1,481,033
-----------------------------------------------------------------------------
136,311 Federal National Mortgage Association, 8.50%, 2/1/2025 142,231
-----------------------------------------------------------------------------
740,049 Federal National Mortgage Association, 8.00%, 7/1/2025 761,688
-----------------------------------------------------------------------------
523,009 Federal National Mortgage Association, 7.50%, 7/1/2025 530,033
-----------------------------------------------------------------------------
471,470 Federal National Mortgage Association, 7.00%, 7/1/2025 468,458
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES--CONTINUED
-----------------------------------------------------------------------------
GOVERNMENT AGENCY--CONTINUED
-----------------------------------------------------------------------------
$ 961,968 Federal National Mortgage Association, 6.50%, 9/1/2025 $ 936,303
-----------------------------------------------------------------------------
1,116,217 Federal National Mortgage Association, 6.50%, 10/1/2025 1,084,103
-----------------------------------------------------------------------------
958,601 Federal National Mortgage Association, 6.50%, 1/1/2003 958,294
-----------------------------------------------------------------------------
980,787 Federal National Mortgage Association, 6.00%, 3/1/2011 955,640
-----------------------------------------------------------------------------
82,821 Federal National Mortgage Association, 6.50%, 4/1/2011 82,172
-----------------------------------------------------------------------------
967,083 Federal National Mortgage Association, 6.00%, 4/1/2011 942,287
-----------------------------------------------------------------------------
454,840 Federal National Mortgage Association, 6.50%, 4/1/2011 451,278
-----------------------------------------------------------------------------
1,025,116 Federal National Mortgage Association, 7.00%, 7/1/2026 1,017,735
-----------------------------------------------------------------------------
525,681 Federal National Mortgage Association, 10.50%, 1/1/2021 583,664
-----------------------------------------------------------------------------
834,659 Government National Mortgage Association, 10.00%, 10/15/2018 919,151
-----------------------------------------------------------------------------
883,793 Government National Mortgage Association, 8.50%, 10/15/2022 928,248
-----------------------------------------------------------------------------
926,007 Government National Mortgage Association, 6.50%, 1/15/2024 907,190
-----------------------------------------------------------------------------
965,438 Government National Mortgage Association, 8.00%, 1/15/2024 995,589
-----------------------------------------------------------------------------
455,746 Government National Mortgage Association, 9.50%, 12/15/2025 494,622
-----------------------------------------------------------------------------
236,231 Government National Mortgage Association, 7.00%, 8/15/2024 235,047
-----------------------------------------------------------------------------
1,885,214 Government National Mortgage Association, 7.50%, 4/15/2024 1,912,870
-----------------------------------------------------------------------------
854,584 Government National Mortgage Association, 8.00%, 9/15/2025 882,349
-----------------------------------------------------------------------------
1,714,124 Government National Mortgage Association, 7.00%, 3/15/2026 1,705,536
-----------------------------------------------------------------------------
1,004,272 Government National Mortgage Association, 7.00%, 4/15/2026 999,241
-----------------------------------------------------------------------------
910,000 (a)Government National Mortgage Association, 9.00%, 2/15/2026, TBA 965,155
----------------------------------------------------------------------------- --------------
TOTAL MORTGAGE-BACKED SECURITIES 39,173,305
----------------------------------------------------------------------------- --------------
INVESTMENT GRADE BONDS--7.2%
-----------------------------------------------------------------------------
AEROSPACE & DEFENSE--0.1%
-----------------------------------------------------------------------------
250,000 McDonnell Douglas Finance, Note, 9.40%, 10/15/2001 270,558
----------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
INVESTMENT GRADE BONDS--CONTINUED
-----------------------------------------------------------------------------
AUTOMOTIVE--0.1%
-----------------------------------------------------------------------------
$ 200,000 Chrysler Corp., Deb., 10.95%, 8/1/2017 $ 217,602
----------------------------------------------------------------------------- --------------
BANKING--1.0%
-----------------------------------------------------------------------------
525,000 Bank Of Montreal, Sub. Note, 7.80%, 4/1/2007 568,360
-----------------------------------------------------------------------------
330,000 Chase Manhattan, Sub. Note, 8.00%, 5/1/2005 337,887
-----------------------------------------------------------------------------
250,000 Crestar Financial Corp, Sub. Note, 8.75%, 11/15/2004 281,153
-----------------------------------------------------------------------------
300,000 National Bank of Canada, Sub. Note, 8.125%, 8/15/2004 326,631
-----------------------------------------------------------------------------
400,000 Santander Finance Issuances, Bank Guarantee, 7.875%, 4/15/2005 429,304
----------------------------------------------------------------------------- --------------
Total 1,943,335
----------------------------------------------------------------------------- --------------
BEVERAGE & TOBACCO--0.2%
-----------------------------------------------------------------------------
150,000 Philip Morris Cos., Inc., Deb., 6.00%, 7/15/2001 146,813
-----------------------------------------------------------------------------
250,000 RJR Nabisco, Inc., Note, 9.25%, 8/15/2013 257,910
----------------------------------------------------------------------------- --------------
Total 404,723
----------------------------------------------------------------------------- --------------
CABLE TELEVISION--0.2%
-----------------------------------------------------------------------------
400,000 TKR Cable, Inc., Sr. Note, 10.50%, 10/30/2007 443,128
----------------------------------------------------------------------------- --------------
CHEMICALS & PLASTICS--0.2%
-----------------------------------------------------------------------------
450,000 (c)Bayer Corp., Deb., 6.5%, 10/1/2002 457,074
----------------------------------------------------------------------------- --------------
ECOLOGICAL SERVICES & EQUIPMENT--0.2%
-----------------------------------------------------------------------------
275,000 Waste Management, Deb., 8.75%, 5/1/2018 312,331
----------------------------------------------------------------------------- --------------
ELECTRONICS--0.2%
-----------------------------------------------------------------------------
300,000 Harris Corp, Deb., 10.375%, 12/1/2018 336,948
----------------------------------------------------------------------------- --------------
FINANCE-RETAIL--0.1%
-----------------------------------------------------------------------------
150,000 Household Finance, Deb., 6.45%, 2/1/2009 146,396
----------------------------------------------------------------------------- --------------
FINANCIAL INTERMEDIARIES--1.4%
-----------------------------------------------------------------------------
450,000 American General Corp., S.F. Deb., 9.625%, 2/1/2018 486,896
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
INVESTMENT GRADE BONDS--CONTINUED
-----------------------------------------------------------------------------
FINANCIAL INTERMEDIARIES--CONTINUED
-----------------------------------------------------------------------------
$ 400,000 DLJ, Note, 6.875%, 11/1/2005 $ 401,064
-----------------------------------------------------------------------------
400,000 Green Tree Financial Corp, Sr. Sub. Note, 10.25%, 6/1/2002 471,040
-----------------------------------------------------------------------------
500,000 Lehman Bros Inc, Sr. Sub. Note, 6.125%, 2/1/2001 493,640
-----------------------------------------------------------------------------
300,000 Merrill Lynch, Medium Term Note, 7.25%, 6/14/2004 302,598
-----------------------------------------------------------------------------
225,000 Salomon Inc, Sr. Note, 9.00%, 2/15/1999 237,467
-----------------------------------------------------------------------------
225,000 Salomon Inc., Sr. Note, 7.02%, 9/25/1998 228,355
-----------------------------------------------------------------------------
250,000 (c)World Financial, Pass Thru Cert., Series 96 WFP-B, 6.91%,
9/1/2013 251,445
----------------------------------------------------------------------------- --------------
Total 2,872,505
----------------------------------------------------------------------------- --------------
FOOD & DRUG RETAILERS--0.2%
-----------------------------------------------------------------------------
300,000 Hook-Superx, Inc., Sr. Note, 10.125%, 6/1/2002 319,773
----------------------------------------------------------------------------- --------------
GOVERNMENT AGENCY--0.3%
-----------------------------------------------------------------------------
250,000 Federal National Mortgage Association, 7.430%, 8/4/2005 253,965
-----------------------------------------------------------------------------
250,000 Federal National Mortgage Association, 8.590%, 2/3/2005 257,453
----------------------------------------------------------------------------- --------------
Total 511,418
----------------------------------------------------------------------------- --------------
INDUSTRIAL PRODUCTS & EQUIPMENT--0.2%
-----------------------------------------------------------------------------
350,000 Joy Technologies Inc, Sr. Note, 10.25%, 9/1/2003 387,590
----------------------------------------------------------------------------- --------------
INSURANCE--0.6%
-----------------------------------------------------------------------------
350,000 Conseco, Inc., Sr. Note, 10.5%, 12/15/2004 425,338
-----------------------------------------------------------------------------
515,000 Continental Corp, Note, 8.25%, 4/15/1999 538,644
-----------------------------------------------------------------------------
250,000 Sunamerica Inc, Medium Term Note, 7.34%, 8/30/2005 260,716
----------------------------------------------------------------------------- --------------
Total 1,224,698
----------------------------------------------------------------------------- --------------
METALS & MINING--0.2%
-----------------------------------------------------------------------------
450,000 Santa Fe Pacific Gold Co, Note, 8.375%, 7/1/2005 473,031
----------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
INVESTMENT GRADE BONDS--CONTINUED
-----------------------------------------------------------------------------
OIL & GAS--0.3%
-----------------------------------------------------------------------------
$ 275,000 Tosco Corp, Sr. Note, 7.625%, 5/15/2006 $ 290,664
-----------------------------------------------------------------------------
350,000 USX Corp., Note, 6.375%, 7/15/1998 351,792
----------------------------------------------------------------------------- --------------
Total 642,456
----------------------------------------------------------------------------- --------------
PRINTING & PUBLISHING--0.2%
-----------------------------------------------------------------------------
400,000 News America Holdings, Sr. Note, 7.50%, 3/1/2000 413,252
----------------------------------------------------------------------------- --------------
RETAILERS--0.2%
-----------------------------------------------------------------------------
400,000 May Department Stores, Deb., 8.125%, 8/15/2035 433,076
----------------------------------------------------------------------------- --------------
SERVICES--0.1%
-----------------------------------------------------------------------------
250,000 Loewen Group International, Sr. Note, 8.25%, 4/15/2003 257,828
----------------------------------------------------------------------------- --------------
SOVEREIGN--0.2%
-----------------------------------------------------------------------------
375,000 Swedish Exp Cred, Deb., 9.875%, 3/15/2038 408,694
----------------------------------------------------------------------------- --------------
SOVEREIGN GOVERNMENT--0.7%
-----------------------------------------------------------------------------
300,000 (c)Freeport Terminal (Malta), Gtd. Global Note, 7.5%, 3/29/2009 315,453
-----------------------------------------------------------------------------
250,000 Quebec Province, Deb., 7.5%, 7/15/2023 257,623
-----------------------------------------------------------------------------
300,000 Republic Of South Africa, Global Bond Deb., 9.625%, 12/15/1999 321,375
-----------------------------------------------------------------------------
400,000 Republic of Colombia, Note, 7.25%, 2/15/2003 397,868
----------------------------------------------------------------------------- --------------
Total 1,292,319
----------------------------------------------------------------------------- --------------
UTILITIES--0.3%
-----------------------------------------------------------------------------
200,000 Duke Power Co., 1st Mtg. Note, 7.00%, 9/1/2005 203,188
-----------------------------------------------------------------------------
200,000 Gulf States Util, FMB, 6.75%, 10/1/1998 200,934
-----------------------------------------------------------------------------
125,000 Pedernales Electric Coop, 10.875%, 9/01/2017 136,294
-----------------------------------------------------------------------------
150,000 Quebec Hydro, Deb., 7.375%, 2/1/2003 157,482
----------------------------------------------------------------------------- --------------
Total 697,898
----------------------------------------------------------------------------- --------------
TOTAL INVESTMENT GRADE BONDS 14,466,633
----------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
HIGH YIELD BONDS--2.6%
-----------------------------------------------------------------------------
AEROSPACE & DEFENSE--0.0%
-----------------------------------------------------------------------------
$ 50,000 Tracor, Inc., Sr. Sub. Note, 10.875%, 8/15/2001 $ 53,625
----------------------------------------------------------------------------- --------------
AUTOMOTIVE--0.1%
-----------------------------------------------------------------------------
50,000 Aftermarket Technology Co., Sr. Sub. Note, 12.00%, 8/1/2004 55,750
-----------------------------------------------------------------------------
50,000 (c)Blue Bird Body Co., Sr. Sub. Note, 10.75%, 11/15/2006 51,875
-----------------------------------------------------------------------------
50,000 Collins & Aikman Products, Sr. Sub. Note, 11.50%, 4/15/2006 53,625
-----------------------------------------------------------------------------
50,000 Exide Corp., Sr. Note, 10.00%, 4/15/2005 52,375
----------------------------------------------------------------------------- --------------
Total 213,625
----------------------------------------------------------------------------- --------------
BANKING--0.0%
-----------------------------------------------------------------------------
50,000 (c)First Nationwide Escrow, Sr. Sub. Note, 10.625%, 10/1/2003 53,500
-----------------------------------------------------------------------------
25,000 First Nationwide Holdings, Sr. Note, 12.25%, 5/15/2001 28,188
----------------------------------------------------------------------------- --------------
Total 81,688
----------------------------------------------------------------------------- --------------
BEVERAGE & TOBACCO--0.0%
-----------------------------------------------------------------------------
25,000 Dr. Pepper Bottling Co., Sr. Disc. Note, 0/11.125%, 2/15/2003 23,250
----------------------------------------------------------------------------- --------------
BROADCAST RADIO & TV--0.2%
-----------------------------------------------------------------------------
38,000 Chancellor Broadcasting Co., Sr. Sub. Note, 12.50%, 10/1/2004 42,370
-----------------------------------------------------------------------------
25,000 Granite Broadcasting Corp, Sr. Sub. Note, 9.375%, 12/1/2005 23,938
-----------------------------------------------------------------------------
50,000 Heritage Media Corp., Sr. Sub. Note, 8.75%, 2/15/2006 48,500
-----------------------------------------------------------------------------
25,000 Pegasus Media, Note, 12.50%, 7/1/2005 27,125
-----------------------------------------------------------------------------
125,000 SCI Television, Sr. Secd. Note, 11.00%, 6/30/2005 134,688
-----------------------------------------------------------------------------
50,000 SFX Broadcasting, Inc., Sr. Sub. Note, 10.75%, 5/15/2006 52,625
-----------------------------------------------------------------------------
50,000 Sinclair Broadcast Group, Sr. Sub. Note, 10.00%, 9/30/2005 50,375
-----------------------------------------------------------------------------
50,000 Young Broadcasting Corp., Sr. Sub. Note, 10.125%, 2/15/2005 50,500
----------------------------------------------------------------------------- --------------
Total 430,121
----------------------------------------------------------------------------- --------------
BUSINESS EQUIPMENT & SERVICES--0.1%
-----------------------------------------------------------------------------
50,000 Knoll, Inc., Sr. Sub. Note, 10.875%, 3/15/2006 54,750
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
-----------------------------------------------------------------------------
BUSINESS EQUIPMENT & SERVICES--CONTINUED
-----------------------------------------------------------------------------
$ 25,000 Monarch Acquisition Corp., Sr. Note, 12.50%, 7/1/2003 $ 27,875
-----------------------------------------------------------------------------
50,000 (c)Outsourcing Solutions, Sr. Sub. Note, 11.00%, 11/1/2006 52,250
-----------------------------------------------------------------------------
25,000 United Stationers Supply, Sr. Sub. Note, 12.75%, 5/1/2005 27,719
----------------------------------------------------------------------------- --------------
Total 162,594
----------------------------------------------------------------------------- --------------
CABLE TELEVISION--0.3%
-----------------------------------------------------------------------------
50,000 Cablevision Systems Corp., Sr. Sub. Note, 9.875%, 5/15/2006 50,625
-----------------------------------------------------------------------------
50,000 Charter Communication Southeast, Sr. Note, 11.25%, 3/15/2006 51,750
-----------------------------------------------------------------------------
100,000 (c)CS Wireless Systems, Inc., Unit, 0/11.375%, 3/1/2006 38,500
-----------------------------------------------------------------------------
50,000 Diamond Cable Comm. Plc, Sr. Disc. Note, 0/11.75%, 12/15/2005 35,000
-----------------------------------------------------------------------------
50,000 Echostar Satellite Broadcasting Corp. Sr. Disc. Note, 0/13.125%,
3/15/2004 38,250
-----------------------------------------------------------------------------
100,000 International Cabletel, Sr. Disc. Note, 0/12.75%, 4/15/2005 72,000
-----------------------------------------------------------------------------
25,000 International Cabletel, Sr. Note, 0/11.50%, 2/1/2006 16,156
-----------------------------------------------------------------------------
50,000 Lenfest Communications, Sr. Sub. Note, 10.50%, 6/15/2006 52,625
-----------------------------------------------------------------------------
50,000 Rogers Cablesystems Ltd., Sr. Secd. 2nd Priority Note, 10.00%,
3/15/2005 53,750
-----------------------------------------------------------------------------
150,000 Telewest Plc, Sr. Disc. Deb., 0/11.00%, 10/1/2007 102,750
-----------------------------------------------------------------------------
50,000 Uih Australia/pacific, Sr. Disc. Note, 0/14.00%, 5/15/2006 26,750
----------------------------------------------------------------------------- --------------
Total 538,156
----------------------------------------------------------------------------- --------------
CHEMICALS & PLASTICS--0.2%
-----------------------------------------------------------------------------
75,000 Arcadian Partners LP, Sr. Note, Series B, 10.75%, 5/1/2005 83,063
-----------------------------------------------------------------------------
50,000 (c)Astor Corp., Sr. Sub. Note, 10.50%, 10/15/2006 51,000
-----------------------------------------------------------------------------
50,000 Crain Industries Inc., Sr. Sub. Note, 13.50%, 8/15/2005 56,375
-----------------------------------------------------------------------------
50,000 Harris Chemical, Sr. Note, 10.25%, 7/15/2001 51,625
-----------------------------------------------------------------------------
33,000 Polymer Group, Sr. Note, 12.25%, 7/15/2002 35,805
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
-----------------------------------------------------------------------------
CHEMICALS & PLASTICS--CONTINUED
-----------------------------------------------------------------------------
$ 25,000 RBX Corp., Sr. Sub. Note, Series B, 11.25%, 10/15/2005 $ 21,625
-----------------------------------------------------------------------------
50,000 Sterling Chemicals, Inc., Sr. Sub. Note, 11.75%, 8/15/2006 51,875
-----------------------------------------------------------------------------
75,000 Viridian Inc., Note, 9.75%, 4/1/2003 82,115
----------------------------------------------------------------------------- --------------
Total 433,483
----------------------------------------------------------------------------- --------------
CLOTHING & TEXTILES--0.0%
-----------------------------------------------------------------------------
75,000 Westpoint Stevens, Inc., Sr. Sub. Deb., 9.375%, 12/15/2005 77,438
----------------------------------------------------------------------------- --------------
CONSUMER PRODUCTS--0.1%
-----------------------------------------------------------------------------
50,000 Herff Jones, Inc., Sr. Sub. Note, 11.00%, 8/15/2005 53,750
-----------------------------------------------------------------------------
50,000 (c)ICON Fitness Corp., Sr. Disc. Note, 0/14.00%, 11/15/2006 26,125
-----------------------------------------------------------------------------
50,000 Playtex Family Products Corp., Sr. Sub. Note, 9.00%, 12/15/2003 49,750
-----------------------------------------------------------------------------
50,000 (c)Rayovac Corp., Sr. Sub. Note, 10.25%, 11/1/2006 51,875
-----------------------------------------------------------------------------
50,000 Simmons Co., Sr. Sub. Note, 10.75%, 4/15/2006 52,250
----------------------------------------------------------------------------- --------------
Total 233,750
----------------------------------------------------------------------------- --------------
CONTAINER & GLASS PRODUCTS--0.1%
-----------------------------------------------------------------------------
50,000 Owens Illinois, Inc., Sr. Sub. Note, 9.75%, 8/15/2004 52,250
-----------------------------------------------------------------------------
50,000 Packaging Resources Inc., Sr. Note, 11.625%, 5/1/2003 52,750
----------------------------------------------------------------------------- --------------
Total 105,000
----------------------------------------------------------------------------- --------------
COSMETICS & TOILETRIES--0.0%
-----------------------------------------------------------------------------
50,000 Revlon Consumer Products, Sr. Sub. Note, 10.50%, 2/15/2003 52,625
----------------------------------------------------------------------------- --------------
ECOLOGICAL SERVICES & EQUIPMENT--0.0%
-----------------------------------------------------------------------------
50,000 (c)Allied Waste, Sr. Sub. Note, 10.25%, 12/1/2006 51,313
-----------------------------------------------------------------------------
50,000 **(b)Mid-American Waste System, Sr. Sub. Note, 12.25%, 2/15/2003 20,500
----------------------------------------------------------------------------- --------------
Total 71,813
----------------------------------------------------------------------------- --------------
ELECTRONICS--0.0%
-----------------------------------------------------------------------------
50,000 Advanced Micro Devices, Sr. Secd. Note, 11.00%, 8/1/2003 54,438
----------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
-----------------------------------------------------------------------------
FOOD & DRUG RETAILERS--0.1%
-----------------------------------------------------------------------------
$ 25,000 Carr Gottstein Foods Co., Sr. Sub. Note, 12.00%, 11/15/2005 $ 26,750
-----------------------------------------------------------------------------
50,000 Ralph's Grocery Co., Sr. Note, 10.45%, 6/15/2004 51,938
-----------------------------------------------------------------------------
50,000 Smith's Food & Drug , Sr. Sub. Note, 11.25%, 5/15/2007 55,000
----------------------------------------------------------------------------- --------------
Total 133,688
----------------------------------------------------------------------------- --------------
FOOD PRODUCTS--0.1%
-----------------------------------------------------------------------------
50,000 (c)International Home Foods, Sr. Sub. Note, 10.375%, 11/1/2006 51,375
-----------------------------------------------------------------------------
50,000 Specialty Foods Corp., Sr. Note, 11.125%, 10/1/2002 48,750
-----------------------------------------------------------------------------
25,000 Van De Kamp's, Inc., Sr. Sub. Note, 12.00%, 9/15/2005 27,500
----------------------------------------------------------------------------- --------------
Total 127,625
----------------------------------------------------------------------------- --------------
FOREST PRODUCTS--0.1%
-----------------------------------------------------------------------------
25,000 Four M Corp, Sr. Note, 12.00%, 6/1/2006 25,813
-----------------------------------------------------------------------------
50,000 Repap New Brunswick, 2nd Priority Sr. Secd. Note, 10.625%,
4/15/2005 48,750
-----------------------------------------------------------------------------
50,000 Riverwood International, Sr. Sub. Note, 10.875%, 4/1/2008 45,500
-----------------------------------------------------------------------------
50,000 Stone Container, Sr. Note, 11.50%, 10/1/2004 52,750
----------------------------------------------------------------------------- --------------
Total 172,813
----------------------------------------------------------------------------- --------------
HEALTHCARE--0.1%
-----------------------------------------------------------------------------
50,000 (c)Dade International, Inc., Sr. Sub. Note, 11.125%, 5/1/2006 54,250
-----------------------------------------------------------------------------
50,000 (c)Prime Succession Acq., Sr. Sub. Note, 10.75%, 8/15/2004 54,250
-----------------------------------------------------------------------------
50,000 Tenet Healthcare, Sr. Sub. Note, 10.125%, 3/1/2005 55,500
----------------------------------------------------------------------------- --------------
Total 164,000
----------------------------------------------------------------------------- --------------
HOTELS, MOTELS, INNS & CASINOS--0.0%
-----------------------------------------------------------------------------
50,000 Courtyard By Marriott, Sr. Note, 10.75%, 2/1/2008 53,000
----------------------------------------------------------------------------- --------------
INDUSTRIAL PRODUCTS & EQUIPMENT--0.1%
-----------------------------------------------------------------------------
25,000 Cabot Safety Corp., Sr. Sub. Note, 12.50%, 7/15/2005 28,063
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
-----------------------------------------------------------------------------
INDUSTRIAL PRODUCTS & EQUIPMENT--CONTINUED
-----------------------------------------------------------------------------
$ 50,000 (c)Euramax International PLC, Sr. Sub. Note, 11.25%, 10/1/2006 $ 51,500
-----------------------------------------------------------------------------
50,000 Mettler-Toledo, Inc., Sr. Sub. Note, 9.75%, 10/1/2006 52,625
-----------------------------------------------------------------------------
50,000 Unifrax Investment Corp., Sr. Note, 10.50%, 11/1/2003 51,500
----------------------------------------------------------------------------- --------------
Total 183,688
----------------------------------------------------------------------------- --------------
LEISURE & ENTERTAINMENT--0.1%
-----------------------------------------------------------------------------
100,000 Amf Group, Inc., Sr. Sub. Disc. Note, 0/12.25%, 3/15/2006 63,750
-----------------------------------------------------------------------------
25,000 Cobblestone Golf, Sr. Note, 11.5%, 6/1/2003 26,188
-----------------------------------------------------------------------------
100,000 Six Flags Theme Parks, Sr. Sub. Disc. Note, 0/12.25%, 6/15/2005 92,500
----------------------------------------------------------------------------- --------------
Total 182,438
----------------------------------------------------------------------------- --------------
MACHINERY & EQUIPMENT--0.1%
-----------------------------------------------------------------------------
50,000 Alvey Systems, Sr. Sub. Note, 11.375%, 1/31/2003 52,500
-----------------------------------------------------------------------------
50,000 (c)Clark Material, Sr. Note, 10.75%, 11/15/2006 51,375
-----------------------------------------------------------------------------
33,000 Primeco Inc., Sr. Sub. Note, 12.75%, 3/1/2005 37,620
-----------------------------------------------------------------------------
50,000 (c)Tokheim Corporation, Sr. Sub. Note, 11.50%, 8/1/2006 52,875
----------------------------------------------------------------------------- --------------
Total 194,370
----------------------------------------------------------------------------- --------------
METALS & MINING--0.0%
-----------------------------------------------------------------------------
50,000 Royal Oak Mines, Sr. Sub. Note, 11.00%, 8/15/2006 51,125
----------------------------------------------------------------------------- --------------
OIL & GAS--0.1%
-----------------------------------------------------------------------------
50,000 (c)Abraxas Petroleum Corp., Sr. Note, 11.50%, 11/1/2004 51,875
-----------------------------------------------------------------------------
50,000 Falcon Drilling Company, Sr. Note, 9.75%, 1/15/2001 52,500
-----------------------------------------------------------------------------
50,000 Mesa Operating Company, Sr. Sub. Note, 10.625%, 7/1/2006 54,125
-----------------------------------------------------------------------------
50,000 United Meridian Corp., Sr. Sub. Note, 10.375%, 10/15/2005 54,625
----------------------------------------------------------------------------- --------------
Total 213,125
----------------------------------------------------------------------------- --------------
PRINTING & PUBLISHING--0.1%
-----------------------------------------------------------------------------
50,000 Garden State Newspapers, Inc., Sr. Sub. Note, 12.00%, 7/1/2004 53,625
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
-----------------------------------------------------------------------------
PRINTING & PUBLISHING--CONTINUED
-----------------------------------------------------------------------------
K-III Communications Corp., 500 Pfd. Shares, Series D, $10.00 $ 47,000
-----------------------------------------------------------------------------
$ 50,000 (c)Petersen Publishing, Sr. Sub. Note, 11.125%, 11/15/2006 51,313
----------------------------------------------------------------------------- --------------
Total 151,938
----------------------------------------------------------------------------- --------------
SERVICES--0.0%
-----------------------------------------------------------------------------
25,000 Coinmach Corp., Sr. Note, 11.75%, 11/15/2005 27,125
-----------------------------------------------------------------------------
50,000 (c)Ryder TRS, Inc., Sr. Sub. Note, 10%, 12/1/2006 51,188
----------------------------------------------------------------------------- --------------
Total 78,313
----------------------------------------------------------------------------- --------------
STEEL--0.1%
-----------------------------------------------------------------------------
25,000 Bayou Steel Corp., 1st Mtg. Note, 10.25%, 3/1/2001 23,375
-----------------------------------------------------------------------------
25,000 EnviroSource, Inc., Sr. Note, 9.75%, 6/15/2003 23,355
-----------------------------------------------------------------------------
50,000 GS Technologies Operating Co., Inc., Sr. Note, 12.00%, 9/1/2004 51,750
-----------------------------------------------------------------------------
25,000 Republic Engineered Steel, 1st Mtg. Note, 9.875%, 12/15/2001 22,844
----------------------------------------------------------------------------- --------------
Total 121,324
----------------------------------------------------------------------------- --------------
SURFACE TRANSPORTATION--0.1%
-----------------------------------------------------------------------------
25,000 Ameritruck Distribution, Sr. Sub. Note, 12.25%, 11/15/2005 24,875
-----------------------------------------------------------------------------
50,000 Gearbulk Holding Limited, Sr. Note, 11.25%, 12/1/2004 54,500
-----------------------------------------------------------------------------
25,000 Great Dane Holdings, Sr. Sub. Deb., 12.75%, 8/1/2001 25,125
-----------------------------------------------------------------------------
50,000 (c)Statia Terminals, 1st Mtg. Note, 11.75%, 11/15/2003 50,750
-----------------------------------------------------------------------------
50,000 Stena AB, Sr. Note, 10.50%, 12/15/2005 53,563
----------------------------------------------------------------------------- --------------
Total 208,813
----------------------------------------------------------------------------- --------------
TELECOMMUNICATIONS & CELLULAR--0.3%
-----------------------------------------------------------------------------
50,000 American Communications , Sr. Disc. Note, 0/12.75%, 4/1/2006 27,375
-----------------------------------------------------------------------------
100,000 (c)Brooks Fiber Properties, Sr. Disc. Note, 0/10.875%, 11/1/2006 63,500
-----------------------------------------------------------------------------
100,000 Intermedia Communications, Sr. Disc. Note, 0/12.50%, 5/15/2006 66,250
-----------------------------------------------------------------------------
50,000 Millicom International , Sr. Disc. Note, 13.50%, 6/1/2006 29,625
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OR FOREIGN VALUE
CURRENCY IN U.S.
PAR AMOUNT DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
-----------------------------------------------------------------------------
TELECOMMUNICATIONS & CELLULAR--CONTINUED
-----------------------------------------------------------------------------
$ 25,000 *(b)Mobilemedia Communication, Sr. Sub. Note, 9.375%, 11/1/2007 $ 13,750
-----------------------------------------------------------------------------
75,000 Nextel Communications, Inc., Sr. Disc. Note, 0/11.50%, 9/1/2003 56,813
-----------------------------------------------------------------------------
50,000 Paging Network, Sr. Sub. Note, 10.125%, 8/1/2007 50,313
-----------------------------------------------------------------------------
50,000 Sygnet Wireless, Inc., Sr. Note, 11.50%, 10/1/2006 50,500
-----------------------------------------------------------------------------
100,000 Teleport Communications, Sr. Disc. Note, 0/11.125%, 7/1/2007 68,500
-----------------------------------------------------------------------------
50,000 Vanguard Cellular Systems, Deb., 9.375%, 4/15/2006 50,375
----------------------------------------------------------------------------- --------------
Total 477,001
----------------------------------------------------------------------------- --------------
UTILITIES--0.1%
-----------------------------------------------------------------------------
75,000 California Energy Co., Sr. Disc. Note, 0/10.25%, 1/15/2004 78,563
-----------------------------------------------------------------------------
El Paso Electric Co., 542 PIK Pfd. Shares, Series A, 11.40% 59,756
----------------------------------------------------------------------------- --------------
Total 138,319
----------------------------------------------------------------------------- --------------
TOTAL HIGH YIELD BONDS 5,183,186
----------------------------------------------------------------------------- --------------
FOREIGN BONDS--5.4%
-----------------------------------------------------------------------------
AUSTRALIAN DOLLAR--0.3%
-----------------------------------------------------------------------------
134,000 Queensland Treas Global, Local Government Guarantee, 8.00%, 5/14/2003 114,452
-----------------------------------------------------------------------------
175,000 Queensland Treas Global, Local Government Guarantee, 8.00%, 8/14/2001 148,082
-----------------------------------------------------------------------------
150,000 State Bank Of New South Wales, 12.25%, 2/26/2001 144,600
----------------------------------------------------------------------------- --------------
Total 407,134
----------------------------------------------------------------------------- --------------
BELGIAN FRANC--0.1%
-----------------------------------------------------------------------------
2,112,000 Belgian Government, Bond, 6.50%, 3/31/2005 70,291
-----------------------------------------------------------------------------
6,000,000 Belgium Kingdom, 7.75%, 10/15/2004 215,500
----------------------------------------------------------------------------- --------------
Total 285,791
----------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN VALUE
CURRENCY IN U.S.
PAR AMOUNT DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN BONDS--CONTINUED
-----------------------------------------------------------------------------
CANADIAN DOLLAR--0.3%
-----------------------------------------------------------------------------
290,000 Canada Government, Deb., 6.50%, 6/1/2004 $ 224,809
-----------------------------------------------------------------------------
375,000 Ontario Hydro, 9.00%, 6/24/2002 324,816
----------------------------------------------------------------------------- --------------
Total 549,625
----------------------------------------------------------------------------- --------------
DENMARK KRONE--0.3%
-----------------------------------------------------------------------------
1,844,000 Denmark-Bullet, Bond, 8.00%, 3/15/2006 341,528
-----------------------------------------------------------------------------
1,200,000 Denmark, 8.00%, 5/15/2003 224,757
----------------------------------------------------------------------------- --------------
Total 566,285
----------------------------------------------------------------------------- --------------
FRENCH FRANC--0.2%
-----------------------------------------------------------------------------
1,044,000 France O.A.T., Bond, 7.25%, 4/25/2006 224,037
-----------------------------------------------------------------------------
150,500 France O.A.T., Bond, 7.50%, 4/25/2005 208,383
----------------------------------------------------------------------------- --------------
Total 432,420
----------------------------------------------------------------------------- --------------
DEUTSCHE MARK--1.3%
-----------------------------------------------------------------------------
300,000 Bundesobligationen, Deb., 7.25%, 10/20/1997 201,697
-----------------------------------------------------------------------------
188,000 Deutschland Republic, Deb., 6.25%, 1/4/2024 116,973
-----------------------------------------------------------------------------
33,000,000 KFW International Finance, 6.00%, 11/29/1999 331,738
-----------------------------------------------------------------------------
350,000 KFW International Finance, Bank Guarantee, 6.75%, 6/20/2005 243,116
-----------------------------------------------------------------------------
1,400,000 KFW International Finance, 7.00%, 5/12/2000 289,947
-----------------------------------------------------------------------------
1,100,000 Treuhandanstalt, 7.75%, 10/1/2002 809,928
-----------------------------------------------------------------------------
744,000 Treuhandanstalt, Foreign Government Guarantee, 6.875%,
6/11/2003 525,410
----------------------------------------------------------------------------- --------------
Total 2,518,809
----------------------------------------------------------------------------- --------------
IRISH POUND--0.2%
-----------------------------------------------------------------------------
108,000 Irish Government, Bond, 6.5%, 10/18/2001 186,385
-----------------------------------------------------------------------------
108,000 Treasury, Deb., 6.25%, 4/1/1999 183,571
----------------------------------------------------------------------------- --------------
Total 369,956
----------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN VALUE
CURRENCY IN U.S.
PAR AMOUNT DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN BONDS--CONTINUED
-----------------------------------------------------------------------------
ITALIAN LIRA--0.4%
-----------------------------------------------------------------------------
110,000,000 Btps, Bond, 10.50%, 11/1/2000 $ 81,711
-----------------------------------------------------------------------------
1,040,000,000 Buoni Poliennali Del Tes, 9.50%, 1/1/2005 770,141
----------------------------------------------------------------------------- --------------
Total 851,852
----------------------------------------------------------------------------- --------------
JAPANESE YEN--0.5%
-----------------------------------------------------------------------------
65,000,000 Export-Import Bank Japan, 4.375%, 10/1/2003 649,857
-----------------------------------------------------------------------------
42,000,000 Interamerican Development, Deb., 7.25%, 5/15/2000 442,954
----------------------------------------------------------------------------- --------------
Total 1,092,811
----------------------------------------------------------------------------- --------------
NETHERLAND GUILDERS --0.3%
-----------------------------------------------------------------------------
70,000 Bank Ned Gemeenten, Bond, 6.375%, 1/4/2006 42,366
-----------------------------------------------------------------------------
90,000 Lkb-global Bond, Bank Guarantee, 6.00%, 1/25/2006 58,982
-----------------------------------------------------------------------------
700,000 Netherlands Government, 5.75%, 1/15/2004 416,111
-----------------------------------------------------------------------------
210,000 Netherlands Government, 6.00%, 1/15/2006 125,199
----------------------------------------------------------------------------- --------------
Total 642,658
----------------------------------------------------------------------------- --------------
NEW ZEALAND DOLLAR--0.1%
-----------------------------------------------------------------------------
143,000 New Zealand Government, 8.00%, 2/15/2001 105,770
-----------------------------------------------------------------------------
105,000 New Zealand Government, Bond, 8.00%, 7/15/1998 75,947
----------------------------------------------------------------------------- --------------
Total 181,717
----------------------------------------------------------------------------- --------------
NORWEGIAN KRONE--0.2%
-----------------------------------------------------------------------------
800,000 NGB, Bond, 9.00%, 1/31/1999 135,619
-----------------------------------------------------------------------------
630,000 Norwegian Government, Bond, 7.00%, 5/31/2001 104,611
-----------------------------------------------------------------------------
473,000 Norwegian Government, Foreign Government Guarantee, 5.75%, 11/30/2004 72,394
----------------------------------------------------------------------------- --------------
Total 312,624
----------------------------------------------------------------------------- --------------
PORTUGGUESE ESCUDO--0.0%
-----------------------------------------------------------------------------
8,250,000 Portuguese Ot's, Bond, 11.875%, 2/23/2000 61,649
----------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN VALUE
CURRENCY IN U.S.
PAR AMOUNT DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN BONDS--CONTINUED
-----------------------------------------------------------------------------
SPANISH PESETA--0.3%
-----------------------------------------------------------------------------
40,000,000 Spanish Government, 10.00%, 2/28/2005 $ 366,898
-----------------------------------------------------------------------------
29,000,000 Spanish Government, Bond, 8.80%, 4/30/2006 246,368
-----------------------------------------------------------------------------
6,510,000 Spanish Government, Bond, 9.40%, 4/30/1999 54,034
-----------------------------------------------------------------------------
6,480,000 Spanish Government, Deb., 10.10%, 2/28/2001 57,126
----------------------------------------------------------------------------- --------------
Total 724,426
----------------------------------------------------------------------------- --------------
SWEDISH KRONA--0.3%
-----------------------------------------------------------------------------
1,000,000 Stadshypotekskas, Foreign Government Guarantee, Series 1551, 7.50%, 3/17/1999 155,221
-----------------------------------------------------------------------------
2,300,000 Sweden, 6.00%, 2/9/2005 324,399
----------------------------------------------------------------------------- --------------
Total 479,620
----------------------------------------------------------------------------- --------------
UNITED KINGDOM POUND--0.6%
-----------------------------------------------------------------------------
127,000 British Gas PLC, 8.875%, 7/8/2008 224,326
-----------------------------------------------------------------------------
108,000 UK Treasury, Deb., 8.50%, 12/7/2005 195,475
-----------------------------------------------------------------------------
365,000 UK Conversion, 9.00%, 3/3/2000 650,279
-----------------------------------------------------------------------------
30,000 UK Treasury, Bond, 8.00%, 12/7/2015 52,927
-----------------------------------------------------------------------------
108,000 United Kingdom Treasury, Bond, 7.50%, 12/7/2006 181,346
----------------------------------------------------------------------------- --------------
Total 1,304,353
----------------------------------------------------------------------------- --------------
TOTAL FOREIGN BONDS 10,781,730
----------------------------------------------------------------------------- --------------
TOTAL BONDS (IDENTIFIED COST $125,107,565) 128,146,512
----------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OR
FOREIGN VALUE
CURRENCY IN U.S.
PAR AMOUNT DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
(A)CASH EQUIVALENTS--6.0%
- ----------------------------------------------------------------------------------------------
(D)REPURCHASE AGREEMENTS--6.0%
-----------------------------------------------------------------------------
$ 11,150,000 BT Securities Corporation, 5.720%, dated 11/29/1996, due
12/2/1996 $ 11,150,000
-----------------------------------------------------------------------------
1,000,000 (e)Goldman Sachs Group, LP, 5.320%, dated 11/18/1996, due
12/18/1996 1,000,000
----------------------------------------------------------------------------- --------------
TOTAL REPURCHASE AGREEMENTS (AT AMORTIZED COST) 12,150,000
----------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (IDENTIFIED COST $189,812,893)(F) $ 200,235,951
----------------------------------------------------------------------------- --------------
</TABLE>
(a) This security is subject to dollar roll transactions.
(b) Non-income producing security.
(c) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. At November 30, 1996, these securities
amounted to $2,847,102 which represents 1.42% of net assets.
(d) The repurchase agreements are fully collateralized by U.S. government and/or
agency obligations. The investments in the repurchase agreements are through
participation in joint accounts with other Federated funds.
(e) Although final maturity falls beyond seven days, a liquidity feature is
included in each transaction to permit termination of the repurchase
agreement within seven days if the credit-worthiness of the issuer is
downgraded.
(f) The cost of investments for federal tax purposes amounts to $189,924,376.
The net unrealized appreciation of investments on a federal tax basis
amounts to $10,311,575 which is comprised of $11,494,947 appreciation and
$1,183,372 depreciation at November 30, 1996.
Note: The categories of investments are shown as a percentage of net assets
($200,883,298) at November 30, 1996.
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
The following acronym(s) are used throughout this portfolio:
ACES--Adjustable Convertible Extendable Securities
ADR--American Depositary Receipt
GDR--Global Depositary Receipt
LP--Limited Partnership
PEPS--Participating Equity Preferred Stock
PIK--Payment in Kind
PLC--Public Limited Company
SA--Support Agreement
TBA--To Be Announced
*MOBILEMEDIA COMMUNICATIONS
On November 1, 1996, MobileMedia Communications failed to make its scheduled
interest payment. Subsequent to November 30, 1996 holdings in these securities
have been sold.
**MID-AMERICAN WASTE SYSTEMS, INC.
On February 15, 1996 and August 15, 1996, Mid-American Waste Systems failed to
make its scheduled interest payment. Currently, the company is in negotiations
with its debt holders and has retained an investment bank to evaluate its
options. The unofficial subordinated bondholders group has retained legal
counsel and financial advisors and is monitoring the situation closely.
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED GROWTH AND INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------------------------
Total investments in securities, at value (identified cost: $189,812,893,
and tax cost: $189,924,376) $ 200,235,951
- ---------------------------------------------------------------------------------------------------
Cash denominated in foreign securities (identified cost: $401) 401
- ---------------------------------------------------------------------------------------------------
Income receivable 1,944,223
- ---------------------------------------------------------------------------------------------------
Receivable for investments sold 692,567
- ---------------------------------------------------------------------------------------------------
Receivable for shares sold 179,160
- ---------------------------------------------------------------------------------------------------
Deferred expenses 27,506
- --------------------------------------------------------------------------------------------------- -------------
Total assets 203,079,808
- ---------------------------------------------------------------------------------------------------
LIABILITIES:
- ----------------------------------------------------------------------------------------
Payable for investments purchased $ 977,682
- ----------------------------------------------------------------------------------------
Payable for dollar roll transactions 964,786
- ----------------------------------------------------------------------------------------
Payable to Bank 70,164
- ----------------------------------------------------------------------------------------
Payable for shares redeemed 72,034
- ----------------------------------------------------------------------------------------
Payable for taxes withheld 6,501
- ----------------------------------------------------------------------------------------
Payable for foreign currency exchange contracts 421
- ----------------------------------------------------------------------------------------
Accrued expenses 104,922
- ---------------------------------------------------------------------------------------- ---------
Total liabilities 2,196,510
- --------------------------------------------------------------------------------------------------- -------------
Net Assets for 17,674,924 shares outstanding $ 200,883,298
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------------------------
Paid in capital $ 186,775,845
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and translation of assets and liabilities
in foreign currency 10,422,133
- ---------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments, foreign currency transactions,
and futures contracts 2,038,887
- ---------------------------------------------------------------------------------------------------
Undistributed net investment income 1,646,433
- --------------------------------------------------------------------------------------------------- -------------
Total Net Assets $ 200,883,298
- --------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ---------------------------------------------------------------------------------------------------
Institutional Shares: $156,635,110 / 13,779,534 shares outstanding $11.37
- --------------------------------------------------------------------------------------------------- -------------
Select Shares: $44,248,188 / 3,895,390 shares outstanding $11.36
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED GROWTH AND INCOME FUND
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Dividends (net of foreign taxes withheld of $26,172) $1,288,418
- ----------------------------------------------------------------------------------------------------
Interest (net of dollar roll expense of $50,073) (net of foreign taxes withheld of $9,097) 8,443,514
- ---------------------------------------------------------------------------------------------------- ----------
Total income 9,731,932
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- -----------------------------------------------------------------------------------------
Investment advisory fee $1,264,932
- -----------------------------------------------------------------------------------------
Administrative personnel and services fee 155,001
- -----------------------------------------------------------------------------------------
Custodian fees 112,653
- -----------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 93,029
- -----------------------------------------------------------------------------------------
Directors'/Trustees' fees 4,242
- -----------------------------------------------------------------------------------------
Auditing fees 14,622
- -----------------------------------------------------------------------------------------
Legal fees 4,053
- -----------------------------------------------------------------------------------------
Portfolio accounting fees 90,982
- -----------------------------------------------------------------------------------------
Distribution services fee--Select Shares 262,062
- -----------------------------------------------------------------------------------------
Shareholder services fee--Institutional Shares 334,548
- -----------------------------------------------------------------------------------------
Shareholder services fee--Select Shares 87,354
- -----------------------------------------------------------------------------------------
Share registration costs 58,840
- -----------------------------------------------------------------------------------------
Printing and postage 49,716
- -----------------------------------------------------------------------------------------
Insurance premiums 4,482
- -----------------------------------------------------------------------------------------
Taxes 2,684
- -----------------------------------------------------------------------------------------
Miscellaneous 18,146
- ----------------------------------------------------------------------------------------- ---------
Total expenses 2,557,346
- -----------------------------------------------------------------------------------------
Waivers--
- ------------------------------------------------------------------------------
Waiver of investment advisory fee $(179,385)
- ------------------------------------------------------------------------------
Waiver of distribution services fee--Select Shares (87,354)
- ------------------------------------------------------------------------------
Waiver of shareholder services fee--Institutional Shares (267,638)
- ------------------------------------------------------------------------------ ---------
Total waivers (534,377)
- ----------------------------------------------------------------------------------------- ---------
Net expenses 2,022,969
- ---------------------------------------------------------------------------------------------------- ----------
Net investment income 7,708,963
- ---------------------------------------------------------------------------------------------------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FOREIGN CURRENCY, AND FUTURES CONTRACTS:
- ----------------------------------------------------------------------------------------------------
Net realized gain on investments, foreign currency transactions, and futures contracts 2,283,641
- ----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments, translation of assets and liabilities in
foreign currency, and futures contracts 4,291,960
- ---------------------------------------------------------------------------------------------------- ----------
Net realized and unrealized gain on investments, foreign currency, and futures contracts 6,575,601
- ---------------------------------------------------------------------------------------------------- ----------
Change in net assets resulting from operations $14,284,564
- ---------------------------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED GROWTH AND INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30,
1996 1995
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- --------------------------------------------------------------------------------
OPERATIONS--
- --------------------------------------------------------------------------------
Net investment income $ 7,708,963 $ 4,047,273
- --------------------------------------------------------------------------------
Net realized gain (loss) on investments, foreign currency transactions,
and futures contracts ($2,127,966 and $2,295,469, net gains, respectively,
as computed for federal tax purposes) 2,283,641 2,155,646
- --------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments,
translation of assets and liabilities in foreign currency, and futures con-
tracts 4,291,960 6,986,534
- -------------------------------------------------------------------------------- --------------- ---------------
Change in net assets resulting from operations 14,284,564 13,189,453
- -------------------------------------------------------------------------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS--
- --------------------------------------------------------------------------------
Distributions from net investment income
- --------------------------------------------------------------------------------
Institutional Shares (5,990,819) (2,937,306)
- --------------------------------------------------------------------------------
Select Shares (1,327,197) (373,022)
- --------------------------------------------------------------------------------
Distributions from net realized gains on investments, foreign currency
transactions, and futures contracts
- --------------------------------------------------------------------------------
Institutional Shares (1,517,396) --
- --------------------------------------------------------------------------------
Select Shares (372,550) --
- -------------------------------------------------------------------------------- --------------- ---------------
Change in net assets resulting from distributions to shareholders (9,207,962) (3,310,328)
- -------------------------------------------------------------------------------- --------------- ---------------
SHARE TRANSACTIONS--
- --------------------------------------------------------------------------------
Proceeds from sale of shares 103,412,568 87,791,342
- --------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 5,072,213 1,555,355
- --------------------------------------------------------------------------------
Cost of shares redeemed (41,180,003) (18,214,182)
- -------------------------------------------------------------------------------- --------------- ---------------
Change in net assets resulting from share transactions 67,304,778 71,132,515
- -------------------------------------------------------------------------------- --------------- ---------------
Change in net assets 72,381,380 81,011,640
- --------------------------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------------------------
Beginning of period 128,501,918 47,490,278
- -------------------------------------------------------------------------------- --------------- ---------------
End of period (including undistributed net investment income of
$1,646,433 and $1,288,552, respectively) $ 200,883,298 $ 128,501,918
- -------------------------------------------------------------------------------- --------------- ---------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED GROWTH AND INCOME FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
(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 portfolios. The financial statements
included herein are only those of Federated Managed Growth And Income Fund (the
"Fund"), a diversified portfolio. The financial statements of the other
portfolios are presented separately. The assets of each portfolio are segregated
and a shareholder's interest is limited to the portfolio in which shares are
held. The investment objective of the Fund is to seek current income and capital
appreciation.
The Fund offers two classes of shares: Institutional Shares and Select Shares.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Listed equity securities are valued at the last sale
price reported on a national securities exchange. U.S. government
securities, listed corporate bonds, (other fixed income and asset-backed
securities), and unlisted securities and private placement securities are
generally valued at the mean of the latest bid and asked price as furnished
by an independent pricing service. Short-term securities are valued at the
prices provided by an independent pricing service. However, short-term
securities with remaining maturities of sixty days or less at the time of
purchase may be valued at amortized cost, which approximates fair market
value.
With respect to valuation of foreign securities, trading in foreign
countries may be completed at times which vary from the closing of the New
York Stock Exchange. Therefore, foreign securities are valued at the latest
closing price on the exchange on which they are traded prior to the closing
of the New York Stock Exchange. Foreign securities quoted in foreign
currencies are translated into U.S. dollars at the foreign exchange rate in
effect at noon, eastern time, on the day the value of the foreign security
is determined.
REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral
securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code"). Dividend
income and distributions to shareholders are recorded on the ex-dividend
date.
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 passive foreign investment company
transactions. The following reclassifications have been made to the
financial statements.
<TABLE>
<CAPTION>
INCREASE (DECREASE)
<S> <C>
ACCUMULATED
NET REALIZED UNDISTRIBUTED NET
GAIN/LOSS INVESTMENT INCOME
$33,066 $(33,066)
</TABLE>
Net investment income, net realized gains/losses, and net assets were not
affected by this reclassification.
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
However, federal taxes may be imposed on the Fund upon the disposition of
certain investments in passive foreign investment companies. Withholding
taxes on foreign interest and dividends have been provided for in
accordance with the Fund's understanding of the applicable country's tax
rules and rates.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred are being amortized
over a period not to exceed five years from the Fund's commencement date.
FUTURES CONTRACTS--The Fund purchases stock index futures contracts to
manage cashflows, enhance yield, and to potentially reduce transaction
costs. Upon entering into a stock index futures contract with a broker, the
Fund is required to deposit in a segregated account a specified amount of
cash or U.S. government securities. Futures contracts are valued daily and
unrealized gains or losses are recorded in a "variation margin" account.
Daily, the Fund receives from or pays to the broker a specified amount of
cash based upon changes in the variation margin account. When a contract is
closed, the Fund recognizes a realized gain or loss. 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, 1996, the Fund had realized
gains of $376,628 on future contracts. As of November 30, 1996, the Fund
had no outstanding futures contracts.
FOREIGN EXCHANGE CONTRACTS--The Fund may enter into foreign currency
contracts for the delayed delivery of securities or foreign currency
exchange transactions. These contracts are used to hedge the Fund's
securities against currency fluctuations. Risks may arise upon entering
these transactions from the potential inability of counter-parties 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 purposes as unrealized
until the settlement date. At November 30, 1996, the Fund had outstanding
foreign currency commitments as set forth below:
<TABLE>
<CAPTION>
IN UNREALIZED
SETTLEMENT CONTRACTS TO EXCHANGE CONTRACTS APPRECIATION
CONTRACTS SOLD DATE DELIVER/RECEIVE FOR AT VALUE (DEPRECIATION)
<S> <C> <C> <C> <C> <C>
Brazilian Real 12/02/1996 9,498 $ 9,204 $ 9,195 $ 9
New Zealand Dollar 12/03/1996 59,360 41,790 42,220 (430)
------- ----------- ----------- ------
Total 68,858 50,994 51,415 (421)
------- ----------- ----------- ------
</TABLE>
FOREIGN CURRENCY TRANSLATION--The accounting records of the Fund are
maintained in U.S. dollars. All assets and liabilities denominated in
foreign currencies ("FC") are translated into U.S. dollars based on the
rate of exchange of such currencies against U.S. dollars on the date of
valuation. Purchases and sales of securities, income and expenses are
translated at the rate of exchange quoted on the respective date that such
transactions are recorded. Differences between income and expense amounts
recorded and collected or paid are adjusted when reported by the custodian
bank. The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales
of FCs, currency gains or losses realized between the trade and settlement
dates on securities transactions, the difference between the amounts of
dividends, interest, and foreign withholding taxes recorded on the Fund's
books, and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes
in the value of assets and liabilities other than investments in securities
at fiscal year end, resulting from changes in the exchange rate.
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,
1996 is as follows:
<TABLE>
<CAPTION>
ACQUISITION
SECURITY ACQUISITION DATE COST
<S> <C> <C>
Abraxas Petroleum Corp. 11/05/1996 $ 50,000
Acer, Inc. 07/19/1996 10,100
Allied Waste , Sr. Sub. Note 11/25/1996 50,000
Astor Corp., Sr. Sub. Note 10/02/1996 49,750
Bayer Corp., Deb. 03/21/1996-04/17/1996 444,986
Blue Bird Body Co. 11/13/1996 49,848
Bombay Suburban Electric Supply 02/29/1996 24,480
Brooks Fiber Properties, Sr. Disc. Note 11/01/1996 56,790
Cheung Kong Infrastructure 07/11/1996-08/22/1996 29,944
Chilectra S.A. 02/28/1996 5,428
China Resources Bejing Land 11/05/1996 2,621
Clark Material, Sr. Note 11/22/1996 50,000
Crompton Greaves Ltd. 07/01/1996-07/02/1996 29,758
CS Wireless Systems, Inc. 02/16/1996 62,524
Dade International, Inc., Sr. Sub. Note 04/30/1996-05/17/1996 50,906
Elevadores Atlas 09/25/1996 20,494
Euramax International Plc, Sr. Sub. Note 09/18/1996 50,000
First Nationwide Escrow, Sr. Sub. Note 09/13/1996 50,625
Freeport Terminal (Malta), Gtd. Global Note 06/16/1994 284,100
Grupo Financiero Bancomer, S.A. de C.V., Class B 11/06/1995-01/17/1996 16,067
ICON Fitness Corp., Sr. Disc. Note 11/15/1996 25,573
International Home Foods, Sr. Sub. Note 10/29/1996 50,000
Japan Tobacco, 06/17/1996-08/01/1996 83,299
Larsen & Toubro Ltd., 06/05/1996 39,800
Mahindra and Mahindra 01/22/1996-02/02/1996 19,450
Outsourcing Solutions, Sr. Sub. Note 10/31/1996 50,000
Petersen Publishing, Sr. Sub. Note 11/20/1996 50,000
Prime Succession Acq., Sr. Sub. Note 08/13/1996 50,000
Rayovac Corp., Sr. Sub. Note 10/17/1996 50,000
Ryder TRS, Inc., Sr. Sub. Note 11/20/1996 50,000
Sakura Finance (Bermuda), Conv. Pfd 09/12/1996 54,397
Shanghai Industrial Holdings LTD 05/23/1996 21,867
Statia Terminals, 1st Mtg. Note 11/22/1996 50,000
Steel Authority of India 04/22/1996-04/23/1996 18,769
Sumitomo Bank International, Conv. Bond 06/06/1996 18,360
Tokheim Corporation, Sr. Sub. Note 08/16/1996-09/04/1996 50,813
Westinghouse Electric Corp., PEPS, Series C 09/27/1995-03/14/1996 357,463
World Financial, Pass Thru Cert., Series 96 WFP-B 11/18/1996 250,000
NGC Corp. 11/15/1996 31,545
</TABLE>
DOLLAR ROLL TRANSACTIONS--The Fund enters into dollar roll transactions,
with respect to mortgage securities issued by GNMA, FNMA and FHLMC, in
which the Fund sells mortgage securities to financial institutions and
simultaneously agrees to accept substantially similar (same type, coupon
and maturity) securities at a later date at an agreed upon price. Dollar
roll transactions are short-term financing arrangements which will not
exceed twelve months. The Fund will use the proceeds generated from the
transactions to invest in short-term investments, which may enhance the
Fund's current yield and total return.
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30,
1996 1995
<S> <C> <C> <C> <C>
INSTITUTIONAL SHARES SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------ ----------- -------------- ----------- --------------
Shares sold 7,128,986 $ 78,333,565 6,226,565 $ 65,821,031
- ------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 334,449 3,648,682 122,850 1,277,967
- ------------------------------------------------------
Shares redeemed (2,992,691) (32,944,715) (1,487,709) (15,675,825)
- ------------------------------------------------------ ----------- -------------- ----------- --------------
Net change resulting from Institutional share
transactions 4,470,744 $ 49,037,532 4,861,706 $ 51,423,173
- ------------------------------------------------------ ----------- -------------- ----------- --------------
<CAPTION>
YEAR ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30,
1996 1995
SELECT SHARES SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
- ------------------------------------------------------ ----------- -------------- ----------- --------------
Shares sold 2,283,902 $ 25,079,003 2,065,372 $ 21,970,311
- ------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 130,571 1,423,531 26,322 277,388
- ------------------------------------------------------
Shares redeemed (747,832) (8,235,288) (238,977) (2,538,357)
- ------------------------------------------------------ ----------- -------------- ----------- --------------
Net change resulting from Select share transactions 1,666,641 $ 18,267,246 1,852,717 $ 19,709,342
- ------------------------------------------------------ ----------- -------------- ----------- --------------
Net change resulting from share
transactions 6,137,385 $ 67,304,778 6,714,423 $ 71,132,515
- ------------------------------------------------------ ----------- -------------- ----------- --------------
</TABLE>
(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 0.75% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive any portion of its fee. The Adviser can modify or
terminate this voluntary waiver at any time at its sole discretion.
Under the terms of a sub-advisory agreement between the Adviser and Federated
Global Research Corp., (the "Sub-Adviser"), the Sub-Adiver receives an allocable
portion of the Fund's advisory fee. Such allocation is based on the amount of
foreign securities which the Sub-Adviser manages for the Fund. This fee is paid
by the Adviser out of its resources and is not an incremental Fund expense.
ADMINISTRATIVE FEE--Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ is based on the level of average
aggregate daily net assets of all funds advised by subsidiaries of Federated
Investors for the period. The administrative fee received during the period of
the Administrative Services Agreement shall be at least $125,000 per portfolio
and $30,000 per each additional class of shares.
DISTRIBUTION SERVICES FEE--The Fund has adopted a Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will
compensate Federated Securities Corp. ("FSC"), the principal distributor, from
the net assets of the Fund to finance activities intended to result in the sale
of the Fund's Select Shares. The Plan provides that the Fund may incur
distribution expenses up to 0.75% of average daily net assets of Select Shares
annually, to compensate FSC. The distributor may voluntarily choose to waive any
portion of its fee. The distributor can modify or terminate this voluntary
waiver at any time at its sole discretion.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25%
of average daily net assets of the Fund shares for the period. The fee paid to
FSS is used to finance certain services for shareholders and to maintain
shareholder accounts. FSS may voluntarily choose to waive any portion of its
fee. FSS can modify or terminate this voluntary waiver at any time at its sole
discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--FServ, through its
subsidiary, Federated Shareholder Services Company ("FSSC") serves as transfer
and dividend disbursing agent for the Fund. The fee paid to FSSC is based on the
size, type, and number of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses of $86,568 were borne initially
by Adviser. The Fund has agreed to reimburse Adviser for the organizational
expenses during the five year period following effective date. For the period
ended November 30, 1996, the Fund paid $12,569 pursuant to this agreement.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended November 30, 1996, were as follows:
<TABLE>
<S> <C>
PURCHASES $ 305,392,876
- -------------------------------------------------------------------------------------------------- --------------
SALES $ 241,526,559
- -------------------------------------------------------------------------------------------------- --------------
</TABLE>
(6) CONCENTRATION OF CREDIT RISK
The Fund invests in securities of non-U.S. issuers. Although the Fund maintains
a diversified investment portfolio, the political or economic developments
within a particular country or region may have an adverse effect on the ability
of domiciled issuers to meet their obligations. Additionally, political or
economic developments may have an effect on the liquidity and volatility of
portfolio securities and currency holdings.
At November 30, 1996, the diversification of industries was as follows:
<TABLE>
<CAPTION>
INDUSTRY % OF NET ASSETS
<S> <C>
Aerospace & Military Technology 0.2%
Agency 1.2
Automotive 0.3
Banking 1.5
Basic Industry 1.1
Beverage & Tobacco 0.3
Broadcast Radio & T.V. 0.2
Broadcasting & Publishing 0.3
Building Materials & Construction 0.1
Businesss & Public Services 0.1
Business Equipment & Services 0.1
Cable Television 0.5
Chemicals & Plastics 0.6
Clothing & Textiles 0.0
Construction & Housing 0.2
Consumer Durables 0.7
Consumer Non-Durables 2.0
Consumer Products 0.1
Container & Glass Products 0.1
Cosmetics & Toiletries 0.0
Data Processing & Reproduction 0.0
Ecological Services & Equipment 0.2
Electric Utilities: West 5.8%
Electronics 0.8
Energy Equipment & Services 0.0
Energy Minerals 1.7
Energy Sources 0.1
Financial 8.6
Financial Intermediaries 1.4
Financial Services 0.2
Food & Drug Retailers 0.2
Food & Household Products 0.2
Food Products 0.1
Forest Products 0.1
Forest Products & Paper 0.1
Government Agency 19.8
Health & Personal Care 0.3
Healthcare 2.0
Hotels, Motels, Inns & Casinos 0.0
Industrial Components 0.0
Industrial Products & Equipment 0.3
Insurance 0.8
Leisure & Entertainment 0.1
Leisure & Tourism 0.2
Machinery & Equipment 0.5
Manufacturing 0.1
Merchandising 0.2
Metals & Mining 0.3
Metals--Non-Ferrous 0.1
Metals--Steel 0.0
Mining 0.0
Miscellaneous Materials & Commodities 0.1
Multi-Industry 0.2
Natural Gas Distribution 0.7
Oil/Gas Transmission 1.6
Pharmaceutical 0.1
Printing & Publishing 0.3
Producer Manufacturing 1.0
Real Estate 0.4
Recreation, Other Consumer Goods 0.2
Retail Trade 0.9
Services 1.3%
Sovereign Government 4.5
State/Provincial 0.2
Steel 0.1
Supranational 0.2
Surface Transportation 0.1
Tabacco 0.0
Technology 1.7
Telecommunications 0.2
Telecommunications & Cellular 0.2
Transportation 0.3
Treasury Securities 29.1
Utilities 2.4
Wholesale & International Trade 0.0
</TABLE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
MANAGED SERIES TRUST
(Federated Managed Growth and Income Fund):
We have audited the accompanying statement of assets and liabilities of
Federated Managed Growth and Income Fund (an investment portfolio of Managed
Series Trust, a Massachusetts business trust), including the schedule of
portfolio of investments, as of November 30, 1996, and 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, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Federated Managed Growth and Income Fund, an investment portfolio of Managed
Series Trust, as of November 30, 1996, 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 15, 1997
APPENDIX
- --------------------------------------------------------------------------------
STANDARD AND POOR'S RATINGS GROUP LONG-TERM DEBT RATINGS
AAA--Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.
A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB--Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.
B--Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or
BB- rating.
CCC--Debt rated CCC has currently identifiable vulnerability to default and is
dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating.
CC--The rating CC typically is applied to debt subordinated to senior debt that
is assigned an actual or implied CCC debt rating.
C--The rating C typically is applied to debt subordinated to senior debt which
is assigned an actual or implied CCC- debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.
CI--The rating CI is reserved for income bonds on which no interest is being
paid.
D--Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D
rating also will be used upon the filing of a bankruptcy petition if debt
service payments are jeopardized.
MOODY'S INVESTORS SERVICE, INC., CORPORATE BOND RATINGS
Aaa--Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment some time in the future.
Baa--Bonds which are rated Baa are considered as medium-grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well.
Ba--Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca--Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C--Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
FITCH INVESTORS SERVICE, INC., LONG-TERM DEBT RATINGS
AAA--Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA--Bonds considered to be investment grade and of very high quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F-1+.
A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB--Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds and, therefore, impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.
BB--Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.
B--Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.
CCC--Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.
CC--Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C--Bonds are in imminent default in payment of interest or principal.
DDD, DD, AND D--Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. DDD
represents the highest potential for recovery on these bonds, and D represents
the lowest potential for recovery.
NR--NR indicates that Fitch does not rate the specific issue.
PLUS (+) OR MINUS (-): Plus or minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the AAA category.
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Federated Managed Growth and Income Fund
Institutional Shares Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Sub-Adviser
Federated Global Research 175 Water Street
Corp. New York, New York 10038-4965
- ---------------------------------------------------------------------------------------------------------------------
Custodian
State Street Bank and P.O. Box 8600
Trust Company Boston, Massachusetts 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Shareholder Services Company P.O. Box 8600
Boston, Massachusetts 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
THIS PAGE INTENTIONALLY LEFT BLANK
FEDERATED MANAGED
GROWTH AND INCOME FUND
INSTITUTIONAL SHARES
PROSPECTUS
A Diversified Portfolio
of Managed Series Trust,
an Open-End Management
Investment Company
Prospectus dated January 31, 1997
[LOGO OF FEDERATED INVESTORS]
Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.
[RECYCLED PAPER LOGO]
Cusip 56166K305
3122007A-IS (1/97)
FEDERATED MANAGED GROWTH AND INCOME FUND
(A PORTFOLIO OF MANAGED SERIES TRUST)
SELECT SHARES
PROSPECTUS
The Select Shares of Federated Managed Growth and Income Fund (the "Fund")
offered by this prospectus represent interests in the Fund, which is a
diversified investment portfolio of Managed Series Trust (the "Trust"). The
Trust is an open-end management investment company (a mutual fund).
The investment objective of the Fund is to seek current income and capital
appreciation. The Fund invests in both bonds and stocks. Select Shares are sold
at net asset value.
THE SELECT SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF
ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THESE SELECT SHARES INVOLVES INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
This prospectus contains the information you should read and know before you
invest in Select Shares of the Fund. Keep this prospectus for future reference.
The Fund has also filed a Statement of Additional Information for Select Shares
and Institutional Shares of all portfolios of the Trust dated January 31, 1997,
with the Securities and Exchange Commission ("SEC"). The information contained
in the Statement of Additional Information is incorporated by reference into
this prospectus. You may request a copy of the Statement of Additional
Information or a paper copy of this prospectus, if you have received your
prospectus electronically, free of charge by calling 1-800-341-7400. To obtain
other information or to make inquiries about the Fund, contact the Fund at the
address listed in the back of this prospectus. The Statement of Additional
Information, material incorporated by reference into this document, and other
information regarding the Fund are maintained electronically with the SEC at
Internet Web site (http:// www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
Prospectus dated January 31, 1997
TABLE OF CONTENTS
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SUMMARY OF FUND EXPENSES 1
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FINANCIAL HIGHLIGHTS--SELECT SHARES 2
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GENERAL INFORMATION 3
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INVESTMENT INFORMATION 3
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Investment Objective 3
Investment Policies 3
Investment Limitations 15
TRUST INFORMATION 15
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Management of the Trust 15
Distribution of Select Shares 19
Administration of the Fund 20
Brokerage Transactions 20
NET ASSET VALUE 21
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INVESTING IN SELECT SHARES 21
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Share Purchases 21
Minimum Investment Required 22
What Shares Cost 22
Systematic Investment Program 22
Certificates and Confirmations 22
Dividends 22
Capital Gains 23
REDEEMING SELECT SHARES 23
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Through a Financial Institution 23
Telephone Redemption 23
Written Requests 24
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--INSTITUTIONAL SHARES 27
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FINANCIAL STATEMENTS 28
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 83
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APPENDIX 84
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ADDRESSES 87
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SUMMARY OF FUND EXPENSES
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<TABLE>
<S> <C> <C>
SELECT SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price).............................. None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price)...................................................................... None
Contingent Deferred Sales Charge (as a percentage of original purchase price
or redemption proceeds, as applicable)................................................................... None
Redemption Fee (as a percentage of amount redeemed, if applicable)......................................... None
Exchange Fee............................................................................................... None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver) (1).......................................................................... 0.64%
12b-1 Fee (after waiver) (2)............................................................................... 0.50%
Total Other Expenses....................................................................................... 0.61%
Shareholder Services Fee................................................................... 0.25%
Total Operating Expenses (3)..................................................................... 1.75%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.75%.
(2) The 12b-1 fee has been reduced to reflect the voluntary waiver of a portion
of the 12b-1 fee. The distributor can terminate the voluntary waiver at any
time at its sole discretion. The maximum 12b-1 fee is 0.75%.
(3) The total operating expenses would have been 2.11% absent the voluntary
waivers of portions of the management fee and the 12b-1 fee.
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Select Shares of the Fund
will bear, either directly or indirectly. For more complete descriptions of the
various costs and expenses, see "Investing in Select Shares" and "Trust
Information". Wire-transferred redemptions of less than $5,000 may be subject to
additional fees.
LONG-TERM SHAREHOLDERS MAY PAY MORE THAN THE ECONOMIC EQUIVALENT OF THE MAXIMUM
FRONT-END SALES CHARGES PERMITTED UNDER THE RULES OF THE NATIONAL ASSOCIATION OF
SECURITIES DEALERS, INC.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment assuming
(1) 5% annual return and (2) redemption at the end of each time
period................................................................ $18 $55 $95 $206
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
FEDERATED MANAGED GROWTH AND INCOME FUND
FINANCIAL HIGHLIGHTS--SELECT SHARES
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(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 83.
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1996 1995 1994(A)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.12 $ 9.83 $ 10.00
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INCOME FROM INVESTMENT OPERATIONS
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Net investment income 0.43 0.37 0.21
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Net realized and unrealized gain (loss) on investments, foreign currency, and
futures contracts 0.41 1.34 (0.25)
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Total from investment operations 0.84 1.71 (0.04)
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LESS DISTRIBUTIONS
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Distributions from net investment income (0.44) (0.42) (0.13)
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Distributions from net realized gain on investments and foreign currency
transactions (0.16) -- --
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Total distributions (0.60) (0.42) (0.13)
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NET ASSET VALUE, END OF PERIOD $ 11.36 $ 11.12 $ 9.83
- -------------------------------------------------------------------------------- --------- --------- -----------
TOTAL RETURN (B) 7.92% 17.76% (0.40%)
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RATIOS TO AVERAGE NET ASSETS
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Expenses 1.75% 1.75% 1.64%*
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Net investment income 4.02% 4.37% 4.33%*
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Expense waiver/reimbursement (c) 0.36% 0.55% 0.84%*
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SUPPLEMENTAL DATA
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Net assets, end of period (000 omitted) $44,248 $24,787 $3,697
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Average Commission rate paid $0.0043
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Portfolio turnover 154% 157% 132%
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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 (start of business) to May 24, 1994, the Fund had no investment
activity.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
Further information about the Fund's performance is contained in the Fund's
annual report for the fiscal year ended November 30, 1996, which can be obtained
free of charge.
(See Notes which are an integral part of the Financial Statements)
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 interests in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. As of the date of this prospectus, the Board of
Trustees ("Trustees") have established two classes of shares of the Fund, known
as Select Shares and Institutional Shares. This prospectus relates only to
Select Shares.
Select Shares ("Shares") of the Fund are designed primarily for retail and
private banking customers of financial institutions as a convenient means of
accumulating an interest in a professionally managed, diversified portfolio of
bonds and equities. A minimum initial investment of $1,500 is required.
Shares are currently sold and redeemed at net asset value without a sales charge
imposed by the Fund.
INVESTMENT INFORMATION
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INVESTMENT OBJECTIVE
The investment objective of the Fund is to seek current income and capital
appreciation. The Fund will attempt to minimize investment risk by allocating
its assets across various stock and bond categories. There can be, of course, no
assurance that the Fund will achieve its investment objective. The Fund's
investment objective cannot be changed without the approval of shareholders.
Unless otherwise noted, the Fund's investment policies may be changed by the
Trustees without shareholder approval.
INVESTMENT POLICIES
ASSET ALLOCATION. The Fund will primarily invest in two types of assets: bonds
and equities. The Fund's investment approach is based on the conviction that,
over time, the choice of investment asset categories and their relative
long-term weightings within the portfolio will have the primary impact on its
investment performance. Of secondary importance to the Fund's performance are
the shifting of money among asset categories and the selection of securities
within asset categories. Therefore, the Fund will pursue its investment
objective in the following manner: (1) by setting long-term ranges for each
asset category; (2) by moving money among asset categories within those defined
ranges; and (3) by actively selecting securities within each of the asset
categories. The Fund attempts to minimize risk by allocating its assets in such
a fashion.
Within each of these types of investments, the Fund has designated asset
categories. As a matter of investment policy, ranges have been set for each
asset category's portfolio commitment.
The Fund will invest between 50 and 70 percent of its assets in bonds. The bond
asset categories are U.S. Treasury securities, mortgage-backed securities,
investment-grade corporate bonds, high yield corporate bonds and foreign bonds.
The Fund will invest between 30 and 50 percent of its assets in equities. The
equities asset categories are large company stocks, utility stocks, small
company stocks, foreign stocks, and equity reserves.
The following is a summary of the asset categories and the amount of the Fund's
total assets which may be invested in each asset category:
<TABLE>
<CAPTION>
ASSET CATEGORY RANGE
<S> <C>
BONDS 50-70%
U.S. Treasury Securities 0-70%
Mortgage-Backed Securities 0-35%
Investment-Grade Corporate Bonds 0-35%
High Yield Corporate Bonds 0-7.5%
Foreign Bonds 0-7.5%
EQUITIES 30-50%
Large Company Stocks 0-50%
Utility Stocks 0-20%
Small Company Stocks 0-7.5%
Foreign Stocks 0-7.5%
Equity Reserves 0-15%
</TABLE>
The Fund's adviser will regularly review the Fund's allocation among the asset
categories and make any changes, within the ranges established for each asset
category, that it believes will provide the most favorable outlook for achieving
the Fund's investment objective. The Fund's adviser will attempt to exploit
inefficiencies among the various asset categories. If, for example, foreign
stocks are judged to be unusually attractive relative to other asset categories,
the allocation for foreign stocks may be moved to its upper limit. At other
times, when foreign stocks appear to be overvalued, the commitment may be moved
down to a lesser allocation. There is no assurance, however, that the adviser's
attempts to pursue this strategy will result in a benefit to the Fund.
Each asset category within the Fund will be a managed portfolio. The Fund will
seek superior investment performance through security selection in addition to
determining the percentage of its assets to allocate to each of the asset
categories.
BOND ASSET CATEGORIES. The portion of the Fund's assets which is invested in
bonds ("Bond Assets") will be allocated among the following asset categories
within the ranges specified. The prices of fixed income securities fluctuate
inversely to the direction of interest rates. The average duration of the Fund's
Bond Assets will be not less than three nor more than five years. Duration is a
commonly used measure of the potential volatility of the price of a debt
security, or the aggregate market value of a portfolio of debt securities, prior
to maturity. Securities with shorter durations generally have less volatile
prices than securities of comparable quality with longer durations. The Fund
should be expected to maintain a higher average duration during periods of lower
expected market volatility, and a lower average duration during periods of
higher expected market volatility.
U.S. TREASURY SECURITIES. U.S. Treasury securities are direct obligations
of the U.S. Treasury, such as U.S. Treasury bills, notes, and bonds. The
Fund may invest up to 70 percent of its total
assets in U.S. Treasury securities. The Fund may invest in other U.S.
government securities if, in the judgment of the adviser, other U.S.
government securities are more attractive than U.S. Treasury securities.
MORTGAGE-BACKED SECURITIES. Mortgage-backed securities represent an
undivided interest in a pool of residential mortgages or may be
collateralized by a pool of residential mortgages. Mortgage-backed
securities are generally either issued or guaranteed by the Government
National Mortgage Association ("GNMA"), Federal National Mortgage
Association ("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC") or
other U.S. government agencies or instrumentalities. Mortgage-backed
securities may also be issued by single-purpose, stand-alone finance
subsidiaries or trusts of financial institutions, government agencies,
investment bankers, or companies related to the construction industry. The
Fund may invest up to 35 percent of its total assets in mortgage-backed
securities.
INVESTMENT-GRADE CORPORATE BONDS. Investment-grade corporate bonds are
corporate debt obligations having fixed or floating rates of interest and
which are rated BBB or higher by a nationally recognized statistical rating
organization ("NRSRO"). The Fund may invest up to 35 percent of its total
assets in investment-grade corporate bonds. In certain cases, the Fund's
adviser may choose bonds which are unrated if it determines that such bonds
are of comparable quality or have similar characteristics to the
investment-grade bonds described above. Yankee bonds, which are U.S.
dollar-denominated bonds issued and traded in the United States by foreign
issuers, are treated as investment-grade corporate bonds for purposes of
the asset category ranges.
HIGH YIELD CORPORATE BONDS. High yield corporate bonds are corporate debt
obligations having fixed or floating rates of interest and which are rated
BB or lower by NRSROs (commonly known as junk bonds). The Fund may invest
up to 7.5 percent of its total assets in high yield corporate bonds. There
is no minimal acceptable rating for a security to be purchased or held in
the Fund's portfolio, and the Fund may, from time to time, purchase or hold
securities rated in the lowest rating category. (See "Appendix.") In
certain cases the Fund's adviser may choose bonds which are unrated if it
determines that such bonds are of comparable quality or have similar
characteristics to the high yield bonds described above.
INVESTMENT RISKS. Lower-rated securities will usually offer higher
yields than higher-rated securities. However, there is more risk
associated with these investments. This is because of reduced
creditworthiness and increased risk of default. Lower-rated securities
generally tend to reflect short-term corporate and market developments
to a greater extent than higher-rated securities which react primarily
to fluctuations in the general level of interest rates. Short-term
corporate and market developments affecting the price or liquidity of
lower-rated securities could include adverse news affecting major
issuers, underwriters, or dealers of lower-rated corporate debt
obligations. In addition, since there are fewer investors in
lower-rated securities, it may be harder to sell the securities at an
optimum time. As a result of these factors, lower-rated securities tend
to have more price volatility and carry more risk to principal than
higher-rated securities.
Many corporate debt obligations, including many lower-rated bonds,
permit the issuers to call the security and thereby redeem their
obligations earlier than the stated maturity dates. Issuers are more
likely to call bonds during periods of declining interest rates. In
these cases, if the Fund owns a bond which is called, the Fund will
receive its return of principal earlier than expected and would likely
be required to reinvest the proceeds at lower interest rates, thus
reducing income to the Fund.
FOREIGN BONDS. Foreign bonds are high-quality debt securities of countries
other than the United States. The Fund's portfolio of foreign bonds will be
comprised mainly of foreign government, foreign governmental agency or
supranational institution bonds. The Fund will also invest in high-quality
debt securities issued by established corporations located primarily in
economically developed countries other than the United States and subject
to the Fund's credit limitations for foreign bonds. The Fund may invest up
to 7.5 percent of its total assets in foreign bonds.
EQUITY ASSET CATEGORIES. The portion of the Fund's assets which is invested in
equities will be allocated among the following asset categories within the
ranges specified:
LARGE COMPANY STOCKS. Large company stocks are common stocks and
securities convertible into or exchangeable for common stocks, such as
rights and warrants, of high-quality companies selected by the Fund's
adviser. Ordinarily, these companies will be in the top 25 percent of their
industries with regard to revenues and have a market capitalization of
$500,000,000 or more. However, other factors, such as a company's product
position, market share, current earnings and/or dividend and earnings
growth prospects, will be considered by the Fund's adviser and may outweigh
revenues. The Fund may invest up to 50 percent of its total assets in large
company stocks.
UTILITY STOCKS. Utility stocks are common stocks and securities
convertible into or exchangeable for common stocks, such as rights and
warrants, of utility companies. The Fund may invest up to 20 percent of its
total assets in utility stocks. Common stocks of utilities are generally
characterized by higher dividend yields and lower growth rates than common
stocks of industrial companies. Under normal market conditions, the higher
income stream from utility stocks tends to make them less volatile than
stocks of industrial companies.
SMALL COMPANY STOCKS. Small company stocks are common stocks and
securities convertible into or exchangeable for common stocks, such as
rights and warrants, of companies with a market capitalization (market
price x number of shares outstanding) below the top 1,000 stocks that
comprise the large and mid-range capitalization sector of the United States
equity market. These stocks are comparable to, but not limited to, the
stocks comprising the Russell 2000 Index, an index of small capitalization
stocks. The Fund may invest up to 7.5 percent of its total assets in small
company stocks.
INVESTMENT RISKS. Stocks in the small capitalization sector of the
United States equity market have historically been more volatile in
price than larger capitalization stocks, such as those included in the
Standard & Poor's Ratings Group 500 Index. This is because, among other
things, small companies have less certain growth prospects than larger
companies; have a lower degree of liquidity in the equity market; and
tend to have a
greater sensitivity to changing economic conditions. Further, in
addition to exhibiting greater volatility, the stocks of small
companies may, to some degree, fluctuate independently of the stocks of
large companies; that is, small company stocks may decline in price as
large company stocks rise in price or vice versa.
FOREIGN STOCKS. The Fund invests in non-U.S. equity securities. A
substantial portion of these will be equity securities of established
companies in economically developed countries. These securities may be
either dollar-denominated or denominated in foreign currencies. American
Depository Receipts ("ADRs"), including dollar-denominated ADRs which are
issued by domestic banks and traded in the United States on exchanges or
over-the-counter, are treated as foreign stocks for purposes of the asset
category ranges. The Fund may invest up to 7.5 percent of its total assets
in foreign stocks.
EQUITY RESERVES. When the adviser believes that a temporary defensive
position is desirable, the Fund may invest in equity reserves. Equity
reserves will be used to adjust the risk level of the equity portion of the
Fund in response to market conditions. Equity reserves will consist of U.S.
and foreign short-term money market instruments such as commercial paper
rated A-1 by Standard and Poor's Ratings Group ("Standard & Poor's"),
Prime-1 by Moody's Investors Service, Inc. ("Moody's"), or F-1 by Fitch
Investors Service, Inc. ("Fitch"). The Fund may invest up to 15 percent of
its total assets in equity reserves.
ACCEPTABLE INVESTMENTS
U.S. TREASURY AND OTHER U.S. GOVERNMENT SECURITIES. The U.S. Treasury and
other U.S. government securities in which the Fund invests are either
issued or guaranteed by the U.S. government, its agencies or
instrumentalities. The U.S. government securities in which the Fund may
invest are limited to:
direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds;
notes, bonds, and discount notes issued or guaranteed by U.S. government
agencies and instrumentalities supported by the full faith and credit of
the United States;
notes, bonds, and discount notes of U.S. government agencies or
instrumentalities which receive or have access to federal funding; and
notes, bonds, and discount notes of other U.S. government
instrumentalities supported only by the credit of the instrumentalities.
The Fund may also purchase U.S. Treasury securities and the U.S. government
securities noted above pursuant to repurchase agreements.
MORTGAGE-BACKED SECURITIES. Mortgaged-backed securities are securities
collateralized by residential mortgages. The mortgage-backed securities in
which the Fund may invest may be:
issued by an agency of the U.S. government, typically GNMA, FNMA or
FHLMC;
privately issued securities which are collateralized by pools of
mortgages in which each mortgage is guaranteed as to payment of principal
and interest by an agency or instrumentality of the U.S. government;
privately issued securities which are collateralized by pools of
mortgages in which payment of principal and interest are guaranteed by
the issuer and such guarantee is collateralized by U.S. government
securities; and
other privately issued securities in which the proceeds of the issuance
are invested in mortgage-backed securities and payment of the principal
and interest are supported by the credit of an agency or instrumentality
of the U.S. government.
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"). CMOs are bonds issued by
single-purpose, stand-alone finance subsidiaries or trusts of financial
institutions, government agencies, investment bankers, or companies
related to the construction industry. Most of the CMOs in which the
Fund would invest use the same basic structure:
Several classes of securities are issued against a pool of mortgage
collateral. The most common structure contains four classes of
securities. The first three (A, B, and C bonds) pay interest at
their stated rates beginning with the issue date; the final class
(or Z bond) typically receives the residual income from the
underlying investments after payments are made to the other
classes.
The cash flows from the underlying mortgages are applied first to
pay interest and then to retire securities.
The classes of securities are retired sequentially. All principal
payments are directed first to the shortest-maturity class (or A
bonds). When those securities are completely retired, all principal
payments are then directed to the next-shortest maturity security
(or B bond). This process continues until all of the classes have
been paid off.
Because the cash flow is distributed sequentially instead of pro rata
as with pass-through securities, the cash flows and average lives of
CMOs are more predictable, and there is a period of time during which
the investors in the longer-maturity classes receive no principal
paydowns. The interest portion of these payments is distributed by the
Fund as income and the capital portion is reinvested.
The Fund will invest only in CMOs which are rated AAA or Aaa by an
NRSRO.
REAL ESTATE MORTGAGE INVESTMENT CONDUITS ("REMICS"). REMICs are
offerings of multiple class real estate mortgage-backed securities
which qualify and elect treatment as such under provisions of the
Internal Revenue Code. Issuers of REMICs may take several forms, such
as trusts, partnerships, corporations, associations or a segregated
pool of mortgages. Once REMIC status is elected and obtained, the
entity is not subject to federal income taxation. Instead, income is
passed through the entity and is taxed to the person or persons who
hold interests in the REMIC. A REMIC interest must consist of one or
more classes of "regular interests," some of which may offer adjustable
rates, and a single class of "residual interests." To qualify as a
REMIC, substantially all of the assets of the entity must be in assets
directly or indirectly secured principally by real property.
CHARACTERISTICS OF MORTGAGE-BACKED SECURITIES. Mortgage-backed
securities have yield and maturity characteristics corresponding to the
underlying mortgages. Distributions to holders of mortgage-backed
securities include both interest and principal payments. Principal
payments represent the amortization of the principal of the underlying
mortgages and any prepayments of principal due to prepayment,
refinancing, or foreclosure of the underlying mortgages. Although
maturities of the underlying mortgage loans may range up to 30 years,
amortization and prepayments substantially shorten the effective
maturities of mortgage-backed securities. Due to these features,
mortgage-backed securities are less effective as a means of "locking
in" attractive long-term interest rates than fixed-income securities
which pay only a stated amount of interest until maturity, when the
entire principal amount is returned. This is caused by the need to
reinvest at lower interest rates both distributions of principal
generally and significant prepayments which become more likely as
mortgage interest rates decline. Since comparatively high interest
rates cannot be effectively "locked in," mortgage-backed securities may
have less potential for capital appreciation during periods of
declining interest rates than other non-callable, fixed-income
government securities of comparable stated maturities. However,
mortgage-backed securities may experience less pronounced declines in
value during periods of rising interest rates.
In addition, some of the CMOs purchased by the Fund may represent an
interest solely in the principal repayments or solely in the interest
payments on mortgage-backed securities (stripped mortgage-backed
securities or "SMBSs"). Due to the possibility of prepayments on the
underlying mortgages, SMBSs may be more interest-rate sensitive than
other securities purchased by the Fund. If prevailing interest rates
fall below the level at which SMBSs were issued, there may be
substantial prepayments on the underlying mortgages, leading to the
relatively early prepayments of principal-only SMBSs and a reduction in
the amount of payments made to holders of interest-only SMBSs. It is
possible that the Fund might not recover its original investment in
interest-only SMBSs if there are substantial prepayments on the
underlying mortgages. Therefore, interest-only SMBSs generally increase
in value as interest rates rise and decrease in value as interest rates
fall, counter to changes in value experienced by most fixed income
securities. The Fund's adviser intends to use this characteristic of
interest-only SMBSs to reduce the effects of interest rate changes on
the value of the Fund's portfolio, while continuing to pursue the
Fund's investment objective.
CORPORATE BONDS. The investment-grade corporate bonds in which the Fund
invests are:
rated within the four highest ratings for corporate bonds by Moody's
(Aaa, Aa, A, or Baa), Standard & Poor's (AAA, AA, A, or BBB), or Fitch
(AAA, AA, A, or BBB);
unrated if other long-term debt securities of that issuer are rated, at
the time of purchase, Baa or better by Moody's or BBB or better by
Standard & Poor's or Fitch; or
unrated if determined to be of equivalent quality to one of the foregoing
rating categories by the Fund's adviser.
Securities which are rated BBB by Standard & Poor's or Fitch or Baa by
Moody's have speculative characteristics. Changes in economic conditions or
other circumstances are more likely to lead to weakened capacity to make
principal and interest payments than higher rated bonds. If a security's
rating is reduced below the required minimum after the Fund has purchased
it, the Fund is not required to sell the security, but may consider doing
so.
The high yield corporate bonds in which the Fund invests are rated Ba or
lower by Moody's or BB or lower by Standard & Poor's or Fitch (commonly
known as junk bonds). A description of the rating categories is contained
in the Appendix to this prospectus.
EQUITY SECURITIES. Common stocks represent ownership interest in a
corporation. Unlike bonds, which are debt securities, common stocks have
neither fixed maturity dates nor fixed schedules of promised payments.
Utility stocks are common stocks of utility companies, including water
companies, companies that produce, transmit, or distribute gas and electric
energy and those companies that provide communications facilities, such as
telephone and telegraph companies. Foreign stocks are equity securities of
foreign issuers.
FOREIGN SECURITIES. The foreign bonds in which the Fund invests are rated
within the four highest ratings for bonds by Moody's (Aaa, Aa, A or Baa) or
by Standard & Poor's (AAA, AA, A or BBB) or are unrated if determined to be
of equivalent quality by the Fund's adviser.
INVESTMENT RISKS. Investments in foreign securities involve special
risks that differ from those associated with investments in domestic
securities. The risks associated with investments in foreign securities
apply to securities issued by foreign corporations and sovereign
governments. These risks relate to political and economic developments
abroad, as well as those that result from the differences between the
regulation of domestic securities and issuers and foreign securities
and issuers. These risks may include, but are not limited to,
expropriation, confiscatory taxation, currency fluctuations,
withholding taxes on interest, limitations on the use or transfer of
Fund assets, political or social instability and adverse diplomatic
developments. It may also be more difficult to enforce contractual
obligations or obtain court judgments abroad than would be the case in
the United States because of differences in the legal systems. If the
issuer of the debt or the governmental authorities that control the
repayment of the debt would be unable or unwilling to repay principal
or interest when due in accordance with the terms of such debt, the
Fund may have limited legal recourse in the event of default. Moreover,
individual foreign economies may differ favorably or unfavorably from
the domestic economy in such respects as growth of gross national
product, the rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position.
Additional differences exist between investing in foreign and domestic
securities. Examples of such differences include: less publicly
available information about foreign issuers; credit risks associated
with certain foreign governments; the lack of uniform financial
accounting standards applicable to foreign issuers; less readily
available market quotations on foreign issuers; the likelihood that
securities of foreign issuers may be less liquid or more volatile;
generally higher foreign brokerage commissions; and unreliable mail
service between countries.
EQUITY RESERVES. The Fund's equity reserves may be cash received from the
sale of Fund shares, reserves for temporary defensive purposes or to take
advantage of market opportunities.
REPURCHASE AGREEMENTS. Repurchase agreements are arrangements in which
banks, broker/dealers, and other recognized financial institutions sell
securities to the Fund and agree at the time of sale to repurchase them
at a mutually agreed upon time and price. To the extent that the
original seller does not repurchase the securities from the Fund, the
Fund could receive less than the repurchase price on any sale of such
securities.
CONVERTIBLE SECURITIES. Convertible securities are fixed-income securities
which may be exchanged or converted into a predetermined number of the
issuer's underlying common stock at the option of the holder during a
specified time period. Convertible securities may take the form of
convertible preferred stock, convertible bonds or debentures, units
consisting of "usable" bonds and warrants or a combination of the features
of several of these securities. The investment characteristics of each
convertible security vary widely, which allows convertible securities to be
employed for different investment objectives. The adviser may treat
convertible securities as large company stocks, small company stocks, or
high yield bonds for purposes of the asset category ranges, depending upon
current market conditions, including the relationship of the then-current
price to the conversion price. The convertible securities in which the Fund
invests may be rated "high yield" or of comparable quality at the time of
purchase.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Fund may invest in
the securities of other investment companies, but it will not own more than 3
percent of the total outstanding voting stock of any such investment company,
invest more than 5 percent of its total assets in any one such investment
company, or invest more than 10 percent of its total assets in such other
investment companies in general. To the extent that the Fund invests in
securities issued by other investment companies, the Fund will indirectly bear
its proportionate share of any fees and expenses paid by such companies in
addition to the fees and expenses payable directly by the Fund.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies but which are
subject to restrictions on resale under federal securities law. Under criteria
established by the Trustees, certain restricted securities are determined to be
liquid. To the extent that restricted securities are not determined to be
liquid, the Fund will limit their purchase, together with other illiquid
securities including 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.
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.
FOREIGN CURRENCY TRANSACTIONS. The Fund will enter into foreign currency
transactions to obtain the necessary currencies to settle securities
transactions. Currency transactions may be conducted either on a spot or cash
basis at prevailing rates or through forward foreign currency exchange
contracts.
The Fund may also enter into foreign currency transactions to protect Fund
assets against adverse changes in foreign currency exchange rates or exchange
control regulations. Such changes could unfavorably affect the value of Fund
assets which are denominated in foreign currencies, such as foreign securities
or funds deposited in foreign banks, as measured in U.S. dollars. Although
foreign currency exchanges may be used by the Fund to protect against a decline
in the value of one or more currencies, such efforts may also limit any
potential gain that might result from a relative increase in the value of such
currencies and might, in certain cases, result in losses to the Fund.
CURRENCY RISKS. To the extent that debt securities purchased by the Fund
are denominated in currencies other than the U.S. dollar, changes in
foreign currency exchange rates will affect the Fund's net asset value; the
value of interest earned; gains and losses realized on the sale of
securities; and net investment income and capital gain, if any, to be
distributed to shareholders by the Fund. If the value of a foreign currency
rises against the U.S. dollar, the value of the Fund's assets denominated
in that currency will increase; correspondingly, if the value of a foreign
currency declines against the U.S. dollar, the value of the Fund's assets
denominated in that currency will decrease.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward foreign currency
exchange contract ("forward contract") is an obligation to purchase or sell an
amount of a particular currency at a specific price and on a future date agreed
upon by the parties.
Generally, no commission charges or deposits are involved. At the time the Fund
enters into a forward contract, Fund assets with a value equal to the Fund's
obligation under the forward contract are segregated and are maintained until
the contract has been settled. The Fund will not enter into a forward contract
with a term of more than one year.
The Fund will generally enter into a forward contract to provide the proper
currency to settle a securities transaction at the time the transaction occurs
("trade date"). The period between trade date and settlement date will vary
between 24 hours and 30 days, depending upon local custom.
The Fund may also protect against the decline of a particular foreign currency
by entering into a forward contract to sell an amount of that currency
approximating the value of all or a portion of the Fund's assets denominated in
that currency ("hedging"). The success of this type of short-term hedging
strategy is highly uncertain due to the difficulties of predicting short-term
currency market movements and of precisely matching forward contract amounts and
the constantly changing value of the securities involved. Although the adviser
will consider the likelihood of changes in currency values when making
investment decisions, the adviser believes that it is important to be able to
enter into forward contracts when it believes the interests of the Fund will be
served. The Fund will not enter into forward contracts for hedging purposes in a
particular currency in an amount in excess of the Fund's assets denominated in
that currency. The Fund will not invest more than 21% of its total assets in
forward foreign currency exchange contracts.
OPTIONS. The Fund may deal in options on foreign currencies, foreign currency
futures, securities, and securities indices, which options may be listed for
trading on a national securities exchange or traded over-the-counter. The Fund
will use options only to manage interest rate and currency risks. The Fund may
write covered call options to generate income.
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.
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 Fund's Adviser receives an annual investment advisory
fee equal to .75% 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.
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 $76
billion invested across more than 338 funds under management and/or
administration by its subsidiaries, as of December 31, 1996, Federated Investors
is one of the largest mutual fund investment managers in the United States. With
more than 2,000 employees, Federated continues to be led by the management who
founded the company in 1955. Federated funds are presently at work in and
through 4,500 financial institutions nationwide.
The Trust, the Adviser, and the Sub-Adviser have adopted strict codes of ethics
governing the conduct of all employees who manage the Fund and its portfolio
securities. These codes recognize that such persons owe a fiduciary duty to the
Fund's shareholders and must place the interests of shareholders ahead of the
employees' own interest. Among other things, the codes: require preclearance and
periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered for
purchase or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less than sixty
days. Violations of the codes are subject to review by the Board of Trustees and
could result in severe penalties.
PORTFOLIO MANAGERS' BACKGROUNDS. Charles A. Ritter is the portfolio
manager for the Fund and performs the overall allocation of the assets of
the Fund among the various asset categories. He has performed these duties
since the Fund's inception. In allocating the Fund's assets, Mr. Ritter
evaluates the market environment and economic outlook, utilizing the
services of the Adviser's Investment Strategy Committee. 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:
Scott B. Schermerhorn and Peter R. Anderson are the portfolio managers for
the domestic large company stocks asset category.
Scott B. Schermerhorn has been the Fund's portfolio manager since July 1,
1996. Mr. Schermerhorn joined Federated Investors in 1996 as a Vice
President of the Fund's Adviser. From 1990 through 1996, Mr. Schermerhorn
was a Senior Vice President and Senior Investment Officer at J W Seligman &
Co., Inc. Mr. Schermerhorn received his M.B.A. in Finance and International
Business from Seton Hall University.
Peter R. Anderson has been the Fund's portfolio manager since the Fund's
inception. 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.
Aash M. Shah and James E. Grefenstette are the portfolio managers for the
domestic small company stocks asset category.
Aash M. Shah has been the Fund's portfolio manager since December 1995. 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. in Industrial Administration
from Carnegie Mellon University with a concentration in finance and
accounting. Mr. Shah is a Chartered Financial Analyst.
James E. Grefenstette has been the Fund's portfolio manager since August
1994. Mr. Grefenstette joined Federated Investors in 1992 and has been a
Vice President since July 1996. Mr. Grefenstette served as an Assistant
Vice President of the Fund's Adviser from 1994 to 1996, and an investment
analyst from 1992 to 1994. Mr. Grefenstette was a credit analyst at
Westinghouse Credit Corp. from 1990 until 1992. Mr. Grefenstette received
his M.S. in Industrial Administration from Carnegie Mellon University.
Henry A. Frantzen, Drew J. Collins, Mark S. Kopinski, Frank Semack, and
Alexandre de Bethmann are portfolio managers for the foreign stocks asset
category.
Henry A. Frantzen has been the Fund's portfolio manager 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.
Drew J. Collins has been the Fund's portfolio manager 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 the Fund's portfolio manager 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 the Fund's portfolio manager 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 1980 to 1993. Mr. Semack
received his M.Sc. in economics from the London School of Economics.
Alexandre de Bethmann has been the Fund's portfolio manager 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 A. Frantzen, Drew J. Collins, Robert M. Kowit and Micheal W. Casey
are portfolio managers for the foreign bonds asset category. Messrs.
Frantzen, Collins and Kowit 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.
Micheal W. Casey, Ph.D. has been the Fund's portfolio manager since January
1, 1997. Mr. Casey joined Federated Investors in 1996 as an Assistant Vice
President. Mr. Casey served as an International Economist and Portfolio
Strategist for Maria Fiorini Ramirez Inc. from 1990 to 1996. Mr. Casey
earned a Ph.D. concentrating in economics from The New School for Social
Research and a M.Sc. from the London School of Economics.
Susan M. Nason and Joseph M. Balestrino are portfolio managers for the U.S.
Treasury securities asset category.
Susan M. Nason has been the Fund's portfolio manager since the Fund's
inception. 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. in Industrial
Administration from Carnegie Mellon University.
Joseph M. Balestrino has been the Fund's portfolio manager since March
1995. 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. 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. in Industrial Administration from Carnegie Mellon
University.
Kathleen M. Foody-Malus is the portfolio manager for the mortgage-backed
securities asset category. Ms. Foody-Malus has performed this duty since
the Fund's inception. 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.
Joseph M. Balestrino and Susan M. Nason are portfolio managers for the
investment-grade corporate bonds asset category. They have performed these
duties since the Fund's inception.
Mark E. Durbiano is the portfolio manager for the high yield corporate
bonds asset category. He has performed these duties since the Fund's
inception. Mr. Durbiano joined Federated Investors in 1982 and has been a
Senior Vice President of the Fund's Adviser since January 1996. Mr.
Durbiano was a Vice President of the Fund's Adviser from 1988 through 1995.
Mr. Durbiano is a Chartered Financial Analyst and received his M.B.A. in
Finance from the University of Pittsburgh.
DISTRIBUTION OF SELECT SHARES
Federated Securities Corp. is the principal distributor for Shares. It is a
Pennsylvania corporation organized on November 14, 1969, and is the principal
distributor for a number of investment companies. Federated Securities Corp. is
a subsidiary of Federated Investors.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES. Under a distribution plan adopted
in accordance with Investment Company Act Rule 12b-1 (the "Distribution Plan"),
the distributor may be paid a fee in an amount computed at an annual rate of
.75% of the average daily net assets of Select Shares to finance any activity
which is principally intended to result in the sale of Shares subject to the
Distribution Plan. The distributor may select financial institutions such as
banks, fiduciaries, custodians for public funds, investment advisers, and
broker/dealers to provide sales services or distribution-related support
services as agents for their clients or customers.
The Distribution Plan is a compensation-type plan. As such, the Fund makes no
payments to the distributor except as described above. Therefore, the Fund does
not pay for unreimbursed expenses of the distributor, including amounts expended
by the distributor in excess of amounts received by it from the Fund, interest,
carrying or other financing charges in connection with excess amounts expended,
or the distributor's overhead expenses. However, the distributor may be able to
recover
such amount or may earn a profit from future payments made by the Fund under the
Distribution Plan.
In addition, the Fund has entered into a Shareholder Services Agreement with
Federated Shareholder Services, a subsidiary of Federated Investors, under which
the Fund may make payments up to .25% of the average daily net asset value of
the Select Shares to obtain certain personal services for shareholders and for
the maintenance of shareholder accounts. Under the Shareholder Services
Agreement, Federated Shareholder Services will either perform shareholder
services directly or will select financial institutions to perform shareholder
services. Financial institutions will receive fees based upon Shares owned by
their clients or customers. The schedules of such fees and the basis upon which
such fees will be paid will be determined from time to time by the Fund and
Federated Shareholder Services.
SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS. In addition to receiving the
payments under the Distribution Plan and Shareholder Services Agreement,
Federated Securities Corp. and Federated Shareholder Services, from their own
assets, may pay financial institutions supplemental fees for the performance of
substantial sales services, distribution-related support services, or
shareholder services. The support may include sponsoring sales, educational and
training seminars for their employees, providing sales literature, and
engineering computer software programs that emphasize the attributes of the
Fund. Such assistance will be predicated upon the amount of Shares the financial
institution sells or may sell, and/or upon the type and nature of sales or
marketing support furnished by the financial institution. Any payments made by
the distributor may be reimbursed by the Fund's Adviser or its affiliates.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Services Company, a subsidiary of Federated
Investors, provides administrative personnel and services (including certain
legal and financial reporting services) necessary to operate the Fund. Federated
Services Company 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% on the first $250 million
.125% on the next $250 million
.10% on the next $250 million
.075% 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 Services Company may choose voluntarily to waive a portion of its fee.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the Adviser looks for prompt execution of the order at a favorable
price. In working with dealers, the
Adviser will generally use those who are recognized dealers in specific
portfolio instruments, except when a better price and execution of the order can
be obtained elsewhere. In selecting among firms believed to meet these criteria,
the Adviser may give consideration to those firms which have sold or are selling
shares of the Fund and other funds distributed by Federated Securities Corp. The
Adviser makes decisions on portfolio transactions and selects brokers and
dealers subject to review by the Trustees.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund's net asset value per Share fluctuates. The net asset value for Shares
is determined by adding the interest of the Shares in the market value of all
securities and other assets of the Fund, subtracting the interest of the Shares
in the liabilities of the Fund and those attributable to Shares, and dividing
the remainder by the total number of Shares outstanding. The net asset value for
Institutional Shares may exceed that of Select Shares due to the variance in
daily net income realized by each class. Such variance will reflect only accrued
net income to which the shareholders of a particular class are entitled.
INVESTING IN SELECT SHARES
- --------------------------------------------------------------------------------
SHARE PURCHASES
Shares are sold on days on which the New York Stock Exchange is open for
business. Shares may be purchased through a financial institution which has a
sales agreement with the distributor or by wire or mail.
To purchase Shares, open an account by calling Federated Securities Corp.
Information needed to establish an account will be taken over the telephone. The
Fund reserves the right to reject any purchase request.
THROUGH A FINANCIAL INSTITUTION. An investor may call his financial institution
(such as a bank or an investment dealer) to place an order to purchase Shares.
Orders through a financial institution are considered received when the Fund is
notified of the purchase order. Purchase orders through a registered
broker/dealer must be received by the broker before 4:00 p.m. (Eastern time) and
must be transmitted by the broker to the Fund before 5:00 p.m. (Eastern time) in
order for Shares to be purchased at that day's price. Purchase orders through
other financial institutions must be received by the financial institution and
transmitted to the Fund before 4:00 p.m. (Eastern time) in order for Shares to
be purchased at that day's price. It is the financial institution's
responsibility to transmit orders promptly.
BY WIRE. To purchase Shares by Federal Reserve wire, call the Fund before 4:00
p.m. (Eastern time) to place an order. The order is considered received
immediately. Payment by federal funds must be received before 3:00 p.m. (Eastern
time) on the next business day following the order. Federal funds should be
wired as follows: Federated Shareholder Services Company, c/o State Street Bank
and Trust Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit to:
Federated Managed Growth and Income Fund--Select Shares; Fund Number (this
number can be found on the account
statement or by contacting the Fund); Group Number or Wire Order Number; Nominee
or Institution Name; and ABA Number 011000028. Shares cannot be purchased by
wire on holidays when wire transfers are restricted. Questions on wire purchases
should be directed to your shareholder services representative at the telephone
number listed on your account statement.
BY MAIL. To purchase Shares by mail, send a check made payable to Federated
Managed Growth and Income Fund--Select Shares to: Federated Shareholder Services
Company, P.O. Box 8600, Boston, Massachusetts 02266-8600. Orders by mail are
considered received when payment by check is converted by State Street Bank into
federal funds. This is normally the next business day after State Street Bank
receives the check.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in Shares is $1,500. Accounts established through
a financial intermediary 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 financial intermediary may be charged an additional service fee
by that financial intermediary.
The net asset value is determined as of the close of trading (normally 4:00 p.m.
Eastern time) on the New York Stock Exchange, Monday through Friday, except on:
(i) days on which there are not sufficient changes in the value of the Fund's
portfolio securities 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.
SYSTEMATIC INVESTMENT PROGRAM
Once a Fund account has been opened, shareholders may add to their investment on
a regular basis. Under this program, funds may be automatically withdrawn
periodically from the shareholder's checking account and invested in Shares at
the net asset value next determined after an order is received by the Fund. A
shareholder may apply for participation in this program through Federated
Securities Corp.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Shareholder Services Company maintains
a share account for each shareholder. Share certificates are not issued unless
requested by contacting the Fund.
Detailed confirmations of each purchase or redemption are sent to each
shareholder. Quarterly confirmations are sent to report dividends paid during
the quarter.
DIVIDENDS
Dividends are declared and paid quarterly to all shareholders invested in the
Fund on the record date. Unless shareholders request cash payments by writing
the Fund, dividends are automatically
reinvested in additional Shares of the Fund on payment dates at the ex-dividend
date net asset value without a sales charge.
CAPITAL GAINS
Capital gains realized by the Fund, if any, will be distributed at least once
every 12 months.
REDEEMING SELECT SHARES
- --------------------------------------------------------------------------------
The Fund redeems Shares at their net asset value next determined after the Fund
receives the redemption request. Investors who redeem Shares through a financial
intermediary may be charged a service fee by that financial intermediary.
Redemptions will be made on days on which the Fund computes its net asset value.
Redemption requests must be received in proper form and can be made 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
REDEEMING SHARES BY MAIL. Shares may be redeemed in any amount by mailing a
-
written request to: Federated Shareholder Services Company, P.O. Box 8600,
Boston, MA 02266-8600. If Share certificates have been issued, they should be
sent unendorsed with the written request by registered or certified mail to the
address noted above.
The written request should state: the Fund name and the class designation; the
account name as registered with the Fund; the account number; and the number of
shares to be redeemed or the dollar amount requested. All owners of the account
must sign the request exactly as the shares are registered. Normally, a check
for the proceeds is mailed within one business day, but in no event more than
seven days, after the receipt of a proper written redemption request. Dividends
are paid up to and including the day that a redemption request is processed.
Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Fund or a redemption payable other than to
the shareholder of record must have their signatures guaranteed by a commercial
or savings bank, trust company or savings association whose deposits are insured
by an organization which is administered by the Federal Deposit Insurance
Corporation; a member firm of a domestic stock exchange; 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.
SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive payments of a predetermined amount may take
advantage of the Systematic Withdrawal Program. Under this program, Shares are
redeemed to provide for periodic withdrawal payments in an amount directed by
the shareholder. Depending upon the amount of the withdrawal payments, the
amount of dividends paid and capital gains distributions with respect to Shares,
and the fluctuation of the net asset value of Shares redeemed under this
program, redemptions may reduce, and eventually use up, the shareholder's
investment in the Fund. For this reason, payments under this program should not
be considered as yield or income on the shareholder's investment in the Fund. To
be eligible to participate in this program, a shareholder must have an account
value of at least $10,000, other than retirement accounts subject to required
minimum distributions. A shareholder may apply for participation in this program
through Federated Securities Corp.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem Shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $1,500. This requirement
does not apply, however, if the balance falls below $1,500 because of changes in
the Fund's net asset value. Before Shares are redeemed to close an account, the
shareholder is notified in writing and allowed 30 days to purchase additional
Shares to meet the minimum requirement.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights except that, in matters
affecting only a particular fund or class, only shares of that fund or class are
entitled to vote. As a Massachusetts business trust, the Trust is not required
to hold annual shareholder meetings. Shareholder approval will be sought only
for certain changes in the Trust's or the Fund's operation and for the election
of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust entitled to vote.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code applicable to regulated investment companies and to
receive the special tax treatment afforded to such companies.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional Shares.
STATE AND LOCAL TAXES
In the opinion of Houston, Donnelly and Meck, counsel to the Trust, Fund Shares
may be subject to personal property taxes imposed by counties, municipalities,
and school districts in Pennsylvania to the extent that the portfolio securities
in the Fund would be subject to such taxes if owned directly by residents of
those jurisdictions.
Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its total return and yield for Shares.
Total return represents the change, over a specified period of time, in the
value of an investment in Shares after reinvesting all income and capital gain
distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
The yield of Shares is calculated by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by Shares
over a thirty-day period by the maximum
offering price per share of Shares on the last day of the period. This number is
then annualized using semi-annual compounding. The yield does not necessarily
reflect income actually earned by Shares and, therefore, may not correlate to
the dividends or other distributions paid to shareholders.
Shares are sold without any sales charge or other similar non-recurring charges.
Total return and yield will be calculated separately for Select Shares and
Institutional Shares.
From time to time, advertisements for the Fund's Select Shares may refer to
ratings, rankings, and other information in certain financial publications
and/or compare the Fund's Select Shares performance to certain indices.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
The Fund also offers another class of shares called Institutional Shares which
are sold at net asset value primarily to financial institutions acting in a
fiduciary or agency capacity and are subject to a minimum initial investment of
$25,000 over a 90-day period.
Institutional Shares are distributed without a 12b-1 Plan but are subject to
shareholder services fees.
Institutional Shares and Select Shares are subject to certain of the same
expenses. Expense differences, however, between Institutional Shares and Select
Shares may affect the performance of each class.
To obtain more information and a prospectus for Institutional Shares, investors
may call
1-800-341-7400.
FEDERATED MANAGED GROWTH AND INCOME FUND
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 83.
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1996 1995 1994(A)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.14 $ 9.85 $ 10.00
- --------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------
Net investment income 0.50 0.50 0.25
- --------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments,
foreign currency, and futures contracts 0.41 1.28 (0.25)
- -------------------------------------------------------------------------------- --------- --------- -----------
Total from investment operations 0.91 1.78 0.00
- -------------------------------------------------------------------------------- --------- --------- -----------
LESS DISTRIBUTIONS
- --------------------------------------------------------------------------------
Distributions from net investment income (0.52) (0.49) (0.15)
- --------------------------------------------------------------------------------
Distributions from net realized gain on investments, foreign currency
transactions, and future contracts (0.16) -- --
- -------------------------------------------------------------------------------- --------- --------- -----------
Total distributions (0.68) (0.49) (0.15)
- -------------------------------------------------------------------------------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 11.37 $ 11.14 $ 9.85
- -------------------------------------------------------------------------------- --------- --------- -----------
TOTAL RETURN (B) 8.54% 18.51% 0.02%
- --------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------------------------------------------
Expenses 1.05% 1.00% 0.88%*
- --------------------------------------------------------------------------------
Net investment income 4.72% 5.10% 5.07%*
- --------------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.31% 0.55% 0.59%*
- --------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $156,635 $103,715 $43,793
- --------------------------------------------------------------------------------
Average commission rate paid $0.0043
- --------------------------------------------------------------------------------
Portfolio turnover 154% 157% 132%
- --------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 25, 1994 (date of initial
public investment) to November 30, 1994. For the period from January 27,
1994 (start of business) to May 24, 1994, the Fund had no investment
activity.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
Further information about the Fund's performance is contained in the Fund's
annual report for the fiscal year ended November 30, 1996, which can be obtained
free of charge.
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED GROWTH AND INCOME FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--29.8%
- ----------------------------------------------------------------------------------------------
LARGE COMPANY--13.3%
-----------------------------------------------------------------------------
BASIC INDUSTRY--0.9%
-----------------------------------------------------------------------------
16,800 Allegheny Teledyne, Inc. $ 392,700
-----------------------------------------------------------------------------
5,500 Betz Laboratories, Inc. 318,313
-----------------------------------------------------------------------------
3,000 Du Pont (E.I.) de Nemours & Co. 282,750
-----------------------------------------------------------------------------
5,400 Great Lakes Chemical Corp. 289,575
-----------------------------------------------------------------------------
25,800 LTV Corporation 277,350
-----------------------------------------------------------------------------
7,700 Morton International, Inc. 310,888
----------------------------------------------------------------------------- --------------
Total 1,871,576
----------------------------------------------------------------------------- --------------
CONSUMER DURABLES--0.5%
-----------------------------------------------------------------------------
7,300 General Motors Corp., Class H 397,850
-----------------------------------------------------------------------------
4,000 General Motors Corp. 230,500
-----------------------------------------------------------------------------
5,200 Martin Marietta Materials 122,200
-----------------------------------------------------------------------------
12,000 Rubbermaid, Inc. 288,000
----------------------------------------------------------------------------- --------------
Total 1,038,550
----------------------------------------------------------------------------- --------------
CONSUMER NON-DURABLES--1.8%
-----------------------------------------------------------------------------
4,900 Avon Products, Inc. 273,175
-----------------------------------------------------------------------------
3,300 CPC International, Inc. 274,725
-----------------------------------------------------------------------------
5,500 Dole Food, Inc., ACES, $2.7475 219,313
-----------------------------------------------------------------------------
4,800 Heinz (H.J.) Co. 181,800
-----------------------------------------------------------------------------
18,000 IBP, Inc. 445,500
-----------------------------------------------------------------------------
3,300 Kimberly-Clark Corp. 322,575
-----------------------------------------------------------------------------
7,100 Philip Morris Cos., Inc. 732,188
-----------------------------------------------------------------------------
5,900 Tambrands, Inc. 252,225
-----------------------------------------------------------------------------
4,000 Unilever N.V. 692,500
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
LARGE COMPANY--CONTINUED
-----------------------------------------------------------------------------
CONSUMER NON-DURABLES--CONTINUED
-----------------------------------------------------------------------------
4,100 V.F. Corp. $ 278,288
----------------------------------------------------------------------------- --------------
Total 3,672,289
----------------------------------------------------------------------------- --------------
ENERGY MINERALS--1.6%
-----------------------------------------------------------------------------
8,200 Baker Hughes, Inc. 300,325
-----------------------------------------------------------------------------
6,700 Chevron Corp. 448,900
-----------------------------------------------------------------------------
4,200 Exxon Corp. 397,425
-----------------------------------------------------------------------------
12,200 Occidental Petroleum Corp. 292,800
-----------------------------------------------------------------------------
1,500 Royal Dutch Petroleum Co. 254,813
-----------------------------------------------------------------------------
4,700 Texaco, Inc. 465,888
-----------------------------------------------------------------------------
16,900 USX-Marathon Group 386,588
-----------------------------------------------------------------------------
12,194 Union Pacific Resources Group, Inc. 364,296
-----------------------------------------------------------------------------
4,100 (b)Western Atlas, Inc. 289,050
----------------------------------------------------------------------------- --------------
Total 3,200,085
----------------------------------------------------------------------------- --------------
FINANCE--2.0%
-----------------------------------------------------------------------------
7,530 Allstate Corp. 453,683
-----------------------------------------------------------------------------
4,500 CIGNA Corp. 636,188
-----------------------------------------------------------------------------
4,600 Chase Manhattan Corp. 434,700
-----------------------------------------------------------------------------
3,000 Citicorp 327,750
-----------------------------------------------------------------------------
3,900 Dean Witter, Discover & Co. 266,663
-----------------------------------------------------------------------------
11,600 Federal National Mortgage Association 478,500
-----------------------------------------------------------------------------
5,200 Marsh & McLennan Cos., Inc. 589,550
-----------------------------------------------------------------------------
6,300 National City Corp. 292,163
-----------------------------------------------------------------------------
5,500 Providian Corp. 294,250
-----------------------------------------------------------------------------
6,666 Travelers Group, Inc. 299,970
----------------------------------------------------------------------------- --------------
Total 4,073,417
----------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
LARGE COMPANY--CONTINUED
-----------------------------------------------------------------------------
HEALTH CARE--1.6%
-----------------------------------------------------------------------------
7,300 Abbott Laboratories $ 406,975
-----------------------------------------------------------------------------
6,500 (b)American Home Products Corp. 417,625
-----------------------------------------------------------------------------
9,700 Bard (C.R.), Inc. 271,600
-----------------------------------------------------------------------------
13,600 (b)Biomet, Inc. 224,400
-----------------------------------------------------------------------------
4,500 Bristol-Myers Squibb Co. 511,875
-----------------------------------------------------------------------------
6,450 Columbia/HCA Healthcare Corp. 258,000
-----------------------------------------------------------------------------
16,800 (b)Healthsource, Inc. 189,000
-----------------------------------------------------------------------------
3,800 Merck & Co., Inc. 315,400
-----------------------------------------------------------------------------
3,900 Smithkline Beecham, ADR 268,613
-----------------------------------------------------------------------------
7,200 United Healthcare Corp. 310,500
----------------------------------------------------------------------------- --------------
Total 3,173,988
----------------------------------------------------------------------------- --------------
PRODUCER MANUFACTURING--0.9%
-----------------------------------------------------------------------------
3,500 (b)FMC Corp. 270,375
-----------------------------------------------------------------------------
3,600 General Electric Co. 374,400
-----------------------------------------------------------------------------
2,800 Loews Corp. 259,700
-----------------------------------------------------------------------------
5,300 Textron, Inc. 505,488
-----------------------------------------------------------------------------
21,900 (c)Westinghouse Electric Corp., PEPS, Series C, $1.30 374,359
----------------------------------------------------------------------------- --------------
Total 1,784,322
----------------------------------------------------------------------------- --------------
RETAIL TRADE--0.7%
-----------------------------------------------------------------------------
9,500 Dayton-Hudson Corp. 369,313
-----------------------------------------------------------------------------
9,300 Sears, Roebuck & Co. 462,675
-----------------------------------------------------------------------------
19,300 Wal-Mart Stores, Inc. 492,150
----------------------------------------------------------------------------- --------------
Total 1,324,138
----------------------------------------------------------------------------- --------------
SERVICES--0.5%
-----------------------------------------------------------------------------
10,000 Block (H&R), Inc. 292,500
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
LARGE COMPANY--CONTINUED
-----------------------------------------------------------------------------
SERVICES--CONTINUED
-----------------------------------------------------------------------------
15,300 Browning-Ferris Industries, Inc. $ 411,188
-----------------------------------------------------------------------------
4,400 Gannett Co., Inc. 345,400
----------------------------------------------------------------------------- --------------
Total 1,049,088
----------------------------------------------------------------------------- --------------
TECHNOLOGY--1.1%
-----------------------------------------------------------------------------
7,000 (b)Analog Devices, Inc. 224,875
-----------------------------------------------------------------------------
8,500 Electronic Data Systems Corp. 411,188
-----------------------------------------------------------------------------
3,000 Intel Corp. 380,625
-----------------------------------------------------------------------------
1,000 International Business Machines Corp. 159,375
-----------------------------------------------------------------------------
2,379 Lockheed Martin Corp. 215,597
-----------------------------------------------------------------------------
2,500 Lucent Technologies, Inc. 128,125
-----------------------------------------------------------------------------
4,600 Raytheon Co. 235,175
-----------------------------------------------------------------------------
6,100 (b)Rockwell International Corp. 391,925
----------------------------------------------------------------------------- --------------
Total 2,146,885
----------------------------------------------------------------------------- --------------
TRANSPORTATION--0.1%
-----------------------------------------------------------------------------
7,500 (b)KLM Royal Dutch Airlines 195,938
----------------------------------------------------------------------------- --------------
UTILITIES--1.6%
-----------------------------------------------------------------------------
7,800 AT&T Corp. 306,150
-----------------------------------------------------------------------------
7,900 CMS Energy Corp. 256,750
-----------------------------------------------------------------------------
5,400 (b)Columbia Gas System, Inc. 348,975
-----------------------------------------------------------------------------
8,200 Enron Corp. 375,150
-----------------------------------------------------------------------------
5,500 FPL Group, Inc. 253,688
-----------------------------------------------------------------------------
7,800 GTE Corp. 350,025
-----------------------------------------------------------------------------
20,500 MCI Communications Corp. 625,250
-----------------------------------------------------------------------------
10,800 Pacific Gas & Electric Co. 260,550
-----------------------------------------------------------------------------
10,400 Southern Co. 231,400
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
LARGE COMPANY--CONTINUED
-----------------------------------------------------------------------------
UTILITIES--CONTINUED
-----------------------------------------------------------------------------
9,300 TECO Energy, Inc. $ 226,688
----------------------------------------------------------------------------- --------------
Total 3,234,626
----------------------------------------------------------------------------- --------------
TOTAL LARGE COMPANY 26,764,902
----------------------------------------------------------------------------- --------------
SMALL COMPANY--3.1%
-----------------------------------------------------------------------------
BASIC INDUSTRY--0.2%
-----------------------------------------------------------------------------
4,200 (b)Chirex, Inc. 45,150
-----------------------------------------------------------------------------
1,400 Donaldson Company, Inc. 42,700
-----------------------------------------------------------------------------
1,500 (b)Fibreboard Corp. 51,938
-----------------------------------------------------------------------------
3,300 (b)Royal Plastics Group Ltd. 59,400
-----------------------------------------------------------------------------
4,900 Spartech Corp. 52,063
-----------------------------------------------------------------------------
4,700 (b)Synthetech, Inc. 38,775
-----------------------------------------------------------------------------
800 Texas Industries, Inc. 45,500
-----------------------------------------------------------------------------
1,700 (b)Titanium Metals Corp. 56,950
----------------------------------------------------------------------------- --------------
Total 392,476
----------------------------------------------------------------------------- --------------
CONSUMER DURABLES--0.2%
-----------------------------------------------------------------------------
3,100 Action Performance Companies, Inc. 53,088
-----------------------------------------------------------------------------
900 Carlisle Cos., Inc. 51,750
-----------------------------------------------------------------------------
2,500 Cavalier Homes, Inc. 28,125
-----------------------------------------------------------------------------
2,400 (b)Champion Enterprises, Inc. 50,100
-----------------------------------------------------------------------------
2,000 Coachmen Industries, Inc. 51,000
-----------------------------------------------------------------------------
2,700 (b)Equity Marketing, Inc. 62,100
-----------------------------------------------------------------------------
1,000 (b)K2, Inc. 26,000
-----------------------------------------------------------------------------
1,800 Lewis Galoob Toys, Inc. 52,425
-----------------------------------------------------------------------------
2,400 Norwood Promotional Products 38,700
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
SMALL COMPANY--CONTINUED
-----------------------------------------------------------------------------
CONSUMER DURABLES--CONTINUED
-----------------------------------------------------------------------------
1,000 Wynns International, Inc. $ 29,125
----------------------------------------------------------------------------- --------------
Total 442,413
----------------------------------------------------------------------------- --------------
CONSUMER NON-DURABLES--0.1%
-----------------------------------------------------------------------------
2,700 (b)Helen of Troy Ltd. 58,050
-----------------------------------------------------------------------------
5,000 (b)Morningstar Group, Inc. 86,250
-----------------------------------------------------------------------------
1,100 (b)Mossimo, Inc. 16,638
-----------------------------------------------------------------------------
1,100 Natures Sunshine Products, Inc. 22,275
-----------------------------------------------------------------------------
3,200 (b)Sport-Haley Inc. 47,200
-----------------------------------------------------------------------------
1,700 Worthington Foods, Inc. 43,350
----------------------------------------------------------------------------- --------------
Total 273,763
----------------------------------------------------------------------------- --------------
ENERGY MINERALS--0.1%
-----------------------------------------------------------------------------
1,700 (b)Belden & Blake Corp. 42,925
-----------------------------------------------------------------------------
900 (b)Cliffs Drilling Co. 46,800
-----------------------------------------------------------------------------
900 (b)Energy Ventures, Inc. 44,213
-----------------------------------------------------------------------------
3,100 (b)Key Production Co. 39,138
-----------------------------------------------------------------------------
2,700 Lomak Petroleum, Inc. 44,213
-----------------------------------------------------------------------------
2,300 (b)Pool Energy Services Co. 33,925
----------------------------------------------------------------------------- --------------
Total 251,214
----------------------------------------------------------------------------- --------------
FINANCE--0.5%
-----------------------------------------------------------------------------
2,200 (b)ACC Consumer Finance Corp. 20,075
-----------------------------------------------------------------------------
1,400 Aames Financial Corp 60,025
-----------------------------------------------------------------------------
800 CMAC Investment Corp. 61,000
-----------------------------------------------------------------------------
1,200 Capital Re Corp. 46,050
-----------------------------------------------------------------------------
4,100 Commonwealth Bancorp 59,450
-----------------------------------------------------------------------------
4,000 (b)Consumer Portfolio Services 51,500
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
SMALL COMPANY--CONTINUED
-----------------------------------------------------------------------------
FINANCE--CONTINUED
-----------------------------------------------------------------------------
1,800 (b)Delphi Financial Group, Inc., Class A $ 50,850
-----------------------------------------------------------------------------
1,300 (b)Delta Financial Corp. 29,738
-----------------------------------------------------------------------------
1,500 Donegal Group, Inc. 29,063
-----------------------------------------------------------------------------
2,000 (b)Electro Rent Corp. 48,000
-----------------------------------------------------------------------------
2,500 (b)Everen Capital Corp. 56,250
-----------------------------------------------------------------------------
1,700 Executive Risk, Inc. 68,000
-----------------------------------------------------------------------------
1,700 (b)First Merchants Acceptance Corp. 35,700
-----------------------------------------------------------------------------
1,300 Frontier Insurance Group, Inc. 49,725
-----------------------------------------------------------------------------
1,000 (b)Insignia Financial Group, Inc., Class A 22,750
-----------------------------------------------------------------------------
200 (b)Markel Corp. 17,000
-----------------------------------------------------------------------------
1,700 Penn-America Group, Inc. 26,988
-----------------------------------------------------------------------------
3,200 (b)Southern Pacific Funding 101,600
-----------------------------------------------------------------------------
2,000 (b)UICI 56,000
-----------------------------------------------------------------------------
1,800 Vesta Insurance Group, Inc. 58,050
----------------------------------------------------------------------------- --------------
Total 947,814
----------------------------------------------------------------------------- --------------
HEALTH CARE--0.3%
-----------------------------------------------------------------------------
2,100 (b)American HomePatient, Inc. 48,563
-----------------------------------------------------------------------------
1,770 (b)Bio Rad Laboratories, Inc., Class A 52,879
-----------------------------------------------------------------------------
3,500 (b)Biosource International, Inc. 24,719
-----------------------------------------------------------------------------
1,700 Chad Therapeutics Inc. 26,775
-----------------------------------------------------------------------------
2,300 (b)Curative Technologies, Inc. 59,800
-----------------------------------------------------------------------------
5,700 (b)Diagnostic Health Services, Inc. 39,900
-----------------------------------------------------------------------------
1,500 (b)Geltex Pharmaceuticals, Inc. 26,813
-----------------------------------------------------------------------------
1,800 (b)Genesis Health Ventures, Inc. 50,175
-----------------------------------------------------------------------------
700 (b)Medicis Pharmaceutical Corp., Class A 30,713
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
SMALL COMPANY--CONTINUED
-----------------------------------------------------------------------------
HEALTH CARE--CONTINUED
-----------------------------------------------------------------------------
3,300 (b)OrthoLogic Corp. $ 20,213
-----------------------------------------------------------------------------
4,100 (b)Physician Computer Network, Inc. 33,825
-----------------------------------------------------------------------------
3,700 (b)Prime Medical Services 43,013
-----------------------------------------------------------------------------
3,200 (b)Rotech Medical Corp. 54,400
-----------------------------------------------------------------------------
900 (b)Safeskin Corp. 46,575
-----------------------------------------------------------------------------
1,400 (b)Sierra Health Services, Inc. 34,475
-----------------------------------------------------------------------------
1,700 (b)Universal Health Services, Inc., Class B 48,025
-----------------------------------------------------------------------------
2,000 (b)UroCor, Inc. 19,250
-----------------------------------------------------------------------------
2,600 (b)Veterinary Centers of America 27,625
----------------------------------------------------------------------------- --------------
Total 687,738
----------------------------------------------------------------------------- --------------
PRODUCER MANUFACTURING--0.1%
-----------------------------------------------------------------------------
1,200 (b)Cable Design Technologies, Class A 35,100
-----------------------------------------------------------------------------
2,200 (b)Maverick Tube Corp. 34,925
-----------------------------------------------------------------------------
1,580 (b)NCI Building System, Inc. 45,425
-----------------------------------------------------------------------------
1,300 (b)Reliance Steel & Aluminum Co. 48,750
-----------------------------------------------------------------------------
1,400 (b)Sinter Metals, Inc. 35,000
-----------------------------------------------------------------------------
1,800 (b)US Office Products Co. 55,800
----------------------------------------------------------------------------- --------------
Total 255,000
----------------------------------------------------------------------------- --------------
RETAIL TRADE--0.3%
-----------------------------------------------------------------------------
2,500 (b)Amrion, Inc. 57,188
-----------------------------------------------------------------------------
1,580 (b)MSC Industrial Direct Co. 59,053
-----------------------------------------------------------------------------
2,600 (b)Microage, Inc. 58,825
-----------------------------------------------------------------------------
2,100 (b)Pacific Sunwear of California 56,700
-----------------------------------------------------------------------------
3,500 (b)Paul Harris Stores, Inc. 63,875
-----------------------------------------------------------------------------
2,000 (b)Pomeroy Computer Resources 54,750
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
SMALL COMPANY--CONTINUED
-----------------------------------------------------------------------------
RETAIL TRADE--CONTINUED
-----------------------------------------------------------------------------
1,400 (b)Regis Corp. Minnesota $ 35,000
-----------------------------------------------------------------------------
1,700 Riser Foods, Inc. 51,850
-----------------------------------------------------------------------------
1,600 (b)Stein Mart, Inc. 30,600
----------------------------------------------------------------------------- --------------
Total 467,841
----------------------------------------------------------------------------- --------------
SERVICES--0.4%
-----------------------------------------------------------------------------
2,900 (b)ATC Communications, Inc. 44,588
-----------------------------------------------------------------------------
1,000 American List Corp. 29,500
-----------------------------------------------------------------------------
1,700 (b)BARRA, Inc. 44,200
-----------------------------------------------------------------------------
1,700 (b)CDI Corp. 49,513
-----------------------------------------------------------------------------
700 (b)Caribiner International, Inc. 30,888
-----------------------------------------------------------------------------
800 (b)Catalina Marketing Corp. 40,800
-----------------------------------------------------------------------------
2,000 (b)Consolidated Graphics, Inc. 91,000
-----------------------------------------------------------------------------
3,000 Employee Solutions, Inc. 55,500
-----------------------------------------------------------------------------
2,900 FactSet Research Systems 68,150
-----------------------------------------------------------------------------
2,500 HA-LO Industries, Inc. 96,250
-----------------------------------------------------------------------------
2,800 (b)National Education Corp. 39,550
-----------------------------------------------------------------------------
1,400 (b)Newpark Resources, Inc. 49,000
-----------------------------------------------------------------------------
1,800 (b)Personnel Group of America, Inc. 40,725
-----------------------------------------------------------------------------
1,200 (b)Premier Parks, Inc. 38,550
-----------------------------------------------------------------------------
2,600 (b)Prepaid Legal Services, Inc. 36,075
-----------------------------------------------------------------------------
2,400 (b)Right Management Consultants 46,500
-----------------------------------------------------------------------------
500 (b)Univision Communications, Inc., Class A 19,875
-----------------------------------------------------------------------------
600 (b)Volt Information Science, Inc. 21,000
----------------------------------------------------------------------------- --------------
Total 841,664
----------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
SMALL COMPANY--CONTINUED
-----------------------------------------------------------------------------
TECHNOLOGY--0.7%
-----------------------------------------------------------------------------
3,700 (b)Alphanet Solutions, Inc. $ 45,325
-----------------------------------------------------------------------------
5,100 (b)Award Software International, Inc. 45,900
-----------------------------------------------------------------------------
1,400 (b)Burr Brown Corp. 36,400
-----------------------------------------------------------------------------
800 (b)Claremont Technology Group 19,600
-----------------------------------------------------------------------------
3,000 (b)Cognex Corp. 59,250
-----------------------------------------------------------------------------
1,500 Computer Task Group, Inc. 62,813
-----------------------------------------------------------------------------
3,400 (b)Digital Systems Int., Inc. 52,275
-----------------------------------------------------------------------------
1,600 (b)Ducommun, Inc. 35,400
-----------------------------------------------------------------------------
1,000 (b)Dupont Photomasks, Inc. 41,500
-----------------------------------------------------------------------------
3,200 (b)EIS International, Inc. 28,000
-----------------------------------------------------------------------------
3,000 (b)ESS Technology, Inc. 59,250
-----------------------------------------------------------------------------
2,000 (b)Elexsys International, Inc. 33,250
-----------------------------------------------------------------------------
1,100 (b)IA Corporation I 6,188
-----------------------------------------------------------------------------
3,200 (b)II-VI, Inc. 84,400
-----------------------------------------------------------------------------
2,300 Innovex, Inc. 93,438
-----------------------------------------------------------------------------
1,800 (b)Integrated Measurement Systems, Inc. 31,950
-----------------------------------------------------------------------------
2,300 (b)Intervoice, Inc. 29,038
-----------------------------------------------------------------------------
1,400 (b)Perceptron, Inc. 48,475
-----------------------------------------------------------------------------
2,000 (b)Photronic Labs, Inc. 63,000
-----------------------------------------------------------------------------
3,900 (b)Raster Graphics Inc. 40,950
-----------------------------------------------------------------------------
2,300 (b)Sandisk Corp. 31,625
-----------------------------------------------------------------------------
4,000 (b)StorMedia, Inc. 51,000
-----------------------------------------------------------------------------
2,300 (b)Stratasys, Inc. 38,238
-----------------------------------------------------------------------------
1,000 (b)Supertex, Inc. 19,000
-----------------------------------------------------------------------------
2,000 (b)Tollgrade Communications, Inc. 48,500
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
SMALL COMPANY--CONTINUED
-----------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
-----------------------------------------------------------------------------
1,700 (b)Tracor, Inc. $ 37,400
-----------------------------------------------------------------------------
2,000 (b)Trident International, Inc. 39,500
-----------------------------------------------------------------------------
3,900 (b)Trusted Information Systems 46,800
-----------------------------------------------------------------------------
1,400 (b)USCS International, Inc. 23,450
-----------------------------------------------------------------------------
2,500 (b)Voxware, Inc. 19,375
-----------------------------------------------------------------------------
1,000 Wyle Labs 36,000
----------------------------------------------------------------------------- --------------
Total 1,307,290
----------------------------------------------------------------------------- --------------
TRANSPORTATION--0.1%
-----------------------------------------------------------------------------
1,300 Airlines Express International Corp. 42,494
-----------------------------------------------------------------------------
900 (b)Alaska Air Group, Inc. 21,713
-----------------------------------------------------------------------------
800 Expeditors International Washington, Inc. 35,600
-----------------------------------------------------------------------------
1,800 USFreightways Corp. 46,688
----------------------------------------------------------------------------- --------------
Total 146,495
----------------------------------------------------------------------------- --------------
UTILITIES--0.1%
-----------------------------------------------------------------------------
1,200 (b)Atlantic Telephone Network, Inc. 22,650
-----------------------------------------------------------------------------
500 (b)Columbia Gas System, Inc. 32,313
-----------------------------------------------------------------------------
1,100 Leviathan Gas Pipe Line, Inc. 50,050
-----------------------------------------------------------------------------
1,700 (c)NGC Corp. 36,975
-----------------------------------------------------------------------------
1,200 TNP Enterprises, Inc. 30,600
-----------------------------------------------------------------------------
1,100 Trescomm International, Inc. 11,413
----------------------------------------------------------------------------- --------------
Total 184,001
----------------------------------------------------------------------------- --------------
TOTAL SMALL COMPANY 6,197,709
----------------------------------------------------------------------------- --------------
UTILITY STOCKS--7.6%
-----------------------------------------------------------------------------
ELECTRIC UTILITIES: CENTRAL--1.9%
-----------------------------------------------------------------------------
24,300 CMS Energy Corp. 789,750
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
UTILITY STOCKS--CONTINUED
-----------------------------------------------------------------------------
ELECTRIC UTILITIES: CENTRAL--CONTINUED
-----------------------------------------------------------------------------
23,821 Cinergy Corp. $ 798,004
-----------------------------------------------------------------------------
31,900 DPL, Inc. 777,563
-----------------------------------------------------------------------------
28,000 Illinova Corp. 742,000
-----------------------------------------------------------------------------
20,600 NIPSCO Industries, Inc. 798,250
----------------------------------------------------------------------------- --------------
Total 3,905,567
----------------------------------------------------------------------------- --------------
ELECTRIC UTILITIES: EAST--1.1%
-----------------------------------------------------------------------------
26,100 DQE, Inc. 769,950
-----------------------------------------------------------------------------
23,900 GPU, Inc. 803,638
-----------------------------------------------------------------------------
30,400 Peco Energy Co. 775,200
----------------------------------------------------------------------------- --------------
Total 2,348,788
----------------------------------------------------------------------------- --------------
ELECTRIC UTILITIES: SOUTH--1.9%
-----------------------------------------------------------------------------
15,900 Duke Power Co. 737,363
-----------------------------------------------------------------------------
17,200 FPL Group, Inc. 793,350
-----------------------------------------------------------------------------
33,300 Southern Co. 740,925
-----------------------------------------------------------------------------
31,200 TECO Energy, Inc. 760,500
-----------------------------------------------------------------------------
18,500 Texas Utilities Co. 730,750
----------------------------------------------------------------------------- --------------
Total 3,762,888
----------------------------------------------------------------------------- --------------
ELECTRIC UTILITIES: WEST--0.8%
-----------------------------------------------------------------------------
36,200 Pacificorp 760,200
-----------------------------------------------------------------------------
24,900 Pinnacle West Capital Corp. 775,013
----------------------------------------------------------------------------- --------------
Total 1,535,213
----------------------------------------------------------------------------- --------------
NATURAL GAS DISTRIBUTION--0.7%
-----------------------------------------------------------------------------
25,300 MCN Corp. 727,375
-----------------------------------------------------------------------------
22,600 Pacific Enterprises 692,125
----------------------------------------------------------------------------- --------------
Total 1,419,500
----------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
UTILITY STOCKS--CONTINUED
-----------------------------------------------------------------------------
OIL/GAS TRANSMISSION--1.2%
-----------------------------------------------------------------------------
16,600 Enron Corp. $ 759,450
-----------------------------------------------------------------------------
19,600 Panenergy Corp. 862,400
-----------------------------------------------------------------------------
13,700 Williams Companies, Inc. 768,913
----------------------------------------------------------------------------- --------------
Total 2,390,763
----------------------------------------------------------------------------- --------------
TOTAL UTILITY 15,362,719
----------------------------------------------------------------------------- --------------
FOREIGN EQUITY--5.8%
-----------------------------------------------------------------------------
ARGENTINA--0.1%
-----------------------------------------------------------------------------
770 Banco Frances del Rio de la Plata S.A., ADR 23,293
-----------------------------------------------------------------------------
3,785 Compania Naviera Perez Companc S.A., Class B 25,900
-----------------------------------------------------------------------------
702 (b)IRSA Inversiones y Representaciones S.A., GDR 21,762
-----------------------------------------------------------------------------
900 YPF Sociedad Anonima, ADR 20,925
----------------------------------------------------------------------------- --------------
Total 91,880
----------------------------------------------------------------------------- --------------
AUSTRALIA--0.2%
-----------------------------------------------------------------------------
11,000 (b)Aristocrat Leisure Ltd. 31,157
-----------------------------------------------------------------------------
5,250 (b)Commonwealth Installment 33,160
-----------------------------------------------------------------------------
6,080 Lend Lease Corp., Ltd. 112,831
-----------------------------------------------------------------------------
14,000 News Corp., Ltd. 74,524
-----------------------------------------------------------------------------
7,150 Woodside Petroleum Ltd. 50,223
----------------------------------------------------------------------------- --------------
Total 301,895
----------------------------------------------------------------------------- --------------
AUSTRIA--0.0%
-----------------------------------------------------------------------------
160 Vae Eisenbahnsysteme AG 14,785
----------------------------------------------------------------------------- --------------
BELGIUM--0.0%
-----------------------------------------------------------------------------
1,400 Delhaize-Le Lion 82,171
----------------------------------------------------------------------------- --------------
BRAZIL--0.1%
-----------------------------------------------------------------------------
2,929,500 Banco Bradesco S.A., Preference 21,411
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-----------------------------------------------------------------------------
BRAZIL--CONTINUED
-----------------------------------------------------------------------------
60,000 Banco Itau S.A., Preference $ 23,524
-----------------------------------------------------------------------------
100,000 Centrais Eletricas Brasileiras, Preference, Series B 32,817
-----------------------------------------------------------------------------
1,900 (b)Cofap-Cia Fab Peca, Preference 15,542
-----------------------------------------------------------------------------
817,000 Companhia Energetica de Minas Gerais, Preference 26,337
-----------------------------------------------------------------------------
9,000 (b)Cosipa Pnb 8,190
-----------------------------------------------------------------------------
1,900 (b)(c)Elevadores Atlas 20,416
-----------------------------------------------------------------------------
71,000 (b)Light Participacoes S.A. 13,341
-----------------------------------------------------------------------------
628,000 Lojas Renner S.A., Preference 31,005
-----------------------------------------------------------------------------
160,000 (b)Petroleo Brasileiro S.A., Preference 21,994
-----------------------------------------------------------------------------
325 Telecomunicacoes Brasileras, ADR 24,619
-----------------------------------------------------------------------------
126,000 (b)Telecomunicacoes de Sao Paulo S.A., Preference 22,321
-----------------------------------------------------------------------------
10,203,000 (b)Usinas Siderurgicas de Minas Gerais, Pfd. 10,173
----------------------------------------------------------------------------- --------------
Total 271,690
----------------------------------------------------------------------------- --------------
CHILE--0.0%
-----------------------------------------------------------------------------
400 (b)Banco BHIF, ADR 6,750
-----------------------------------------------------------------------------
300 (b)Banco de A. Edwards, ADR 5,550
-----------------------------------------------------------------------------
100 (b)(c)Chilectra S.A., ADR 5,500
-----------------------------------------------------------------------------
100 Compania Telecomunicacion Chile, ADR 9,513
-----------------------------------------------------------------------------
300 (b)Santa Isabel S.A., ADR 7,538
-----------------------------------------------------------------------------
100 Sociedad Quimica Y Minera De Chile, ADR 5,200
----------------------------------------------------------------------------- --------------
Total 40,051
----------------------------------------------------------------------------- --------------
COLOMBIA--0.0%
-----------------------------------------------------------------------------
700 Banco Ganadero S.A., ADR 17,325
-----------------------------------------------------------------------------
800 Banco Industrial Colombiano, ADR 12,900
----------------------------------------------------------------------------- --------------
Total 30,225
----------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-----------------------------------------------------------------------------
FRANCE--0.4%
-----------------------------------------------------------------------------
816 AXA $ 49,034
-----------------------------------------------------------------------------
451 Accor SA 57,845
-----------------------------------------------------------------------------
850 Casino Ord 38,482
-----------------------------------------------------------------------------
882 Compagnie Financiere de Paribas, Class A 60,598
-----------------------------------------------------------------------------
400 Compagnie de Saint Gobain 57,506
-----------------------------------------------------------------------------
1,223 Credit Commerical De France 59,233
-----------------------------------------------------------------------------
590 Credit Local de France 53,412
-----------------------------------------------------------------------------
350 Groupe Danon BSN SA 51,524
-----------------------------------------------------------------------------
380 Havas S.A. 26,915
-----------------------------------------------------------------------------
300 LVMH (Moet-Hennessy) 76,037
-----------------------------------------------------------------------------
860 Lafarge-Coppee 54,328
-----------------------------------------------------------------------------
470 Peugeot S.A. 57,763
-----------------------------------------------------------------------------
560 Rhone-Poulenc Rorer, Inc. 41,650
-----------------------------------------------------------------------------
1,527 Schneider SA 72,641
-----------------------------------------------------------------------------
460 Total SA-B 36,782
----------------------------------------------------------------------------- --------------
Total 793,750
----------------------------------------------------------------------------- --------------
GERMANY--0.4%
-----------------------------------------------------------------------------
1,910 BASF AG 70,645
-----------------------------------------------------------------------------
1,400 Bayer AG 56,333
-----------------------------------------------------------------------------
2,100 (b)Commerzbank AG, Frankfurt 51,609
-----------------------------------------------------------------------------
900 (b)Daimler Benz AG 58,777
-----------------------------------------------------------------------------
1,035 Deutsche Bank, AG 49,324
-----------------------------------------------------------------------------
2,000 Dresdner Bank AG, Frankfurt 59,359
-----------------------------------------------------------------------------
155 Gea AG, Vorzugsaktien 46,457
-----------------------------------------------------------------------------
150 (b)Henkel KGAA 7,314
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-----------------------------------------------------------------------------
GERMANY--CONTINUED
-----------------------------------------------------------------------------
850 Henkel KGAA, Pfd. $ 42,331
-----------------------------------------------------------------------------
65 Linde AG 39,471
-----------------------------------------------------------------------------
120 Mannesmann AG 50,049
-----------------------------------------------------------------------------
700 RWE AG 30,947
-----------------------------------------------------------------------------
3,100 (b)Rofin-Sinar Technologies, Inc. 39,913
-----------------------------------------------------------------------------
375 Schering AG 30,793
-----------------------------------------------------------------------------
785 Schwarz Pharma 58,437
-----------------------------------------------------------------------------
1,000 Siemens AG 48,176
-----------------------------------------------------------------------------
930 Veba AG 54,387
----------------------------------------------------------------------------- --------------
Total 794,322
----------------------------------------------------------------------------- --------------
HONG KONG--0.4%
-----------------------------------------------------------------------------
102,000 Aeon Credit Service 34,299
-----------------------------------------------------------------------------
54,000 Amoy Properties Ltd. 75,427
-----------------------------------------------------------------------------
7,000 Cheung Kong 61,562
-----------------------------------------------------------------------------
18,000 (b)(c)Cheung Kong Infrastructure 43,766
-----------------------------------------------------------------------------
8,500 (b)(c)China Resources Bejing Land 5,277
-----------------------------------------------------------------------------
1,839 HSBC Holdings PLC 38,293
-----------------------------------------------------------------------------
54,000 Henderson Investment Ltd. 65,649
-----------------------------------------------------------------------------
22,000 Hong Kong Telecom 38,127
-----------------------------------------------------------------------------
8,000 Hutchison Whampoa 61,821
-----------------------------------------------------------------------------
6,000 New World Development Co. Ltd. 40,546
-----------------------------------------------------------------------------
80,000 Oriental Press Group 45,008
-----------------------------------------------------------------------------
30,000 Peregrine Investments 55,484
-----------------------------------------------------------------------------
23,000 (b)(c)Shanghai Industrial Holdings LTD 74,812
-----------------------------------------------------------------------------
4,000 Sun Hung Kai Properties 49,664
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-----------------------------------------------------------------------------
HONG KONG--CONTINUED
-----------------------------------------------------------------------------
29,000 (b)Winsor Property Holdings Ltd. $ 43,695
----------------------------------------------------------------------------- --------------
Total 733,430
----------------------------------------------------------------------------- --------------
INDIA--0.1%
-----------------------------------------------------------------------------
1,700 (b)(c)Bombay Suburban Electric Supply, GDR 33,575
-----------------------------------------------------------------------------
3,600 (b)(c)Crompton Greaves Ltd., GDR 11,700
-----------------------------------------------------------------------------
1,050 (b)Hindalco Industries, GDR 21,420
-----------------------------------------------------------------------------
2,000 (b)(c)Larsen & Toubro Ltd., GDR 29,000
-----------------------------------------------------------------------------
2,600 (b)(c)Mahindra and Mahindra, GDR 27,300
-----------------------------------------------------------------------------
1,200 (b)(c)Steel Authority of India, GDR 10,200
----------------------------------------------------------------------------- --------------
Total 133,195
----------------------------------------------------------------------------- --------------
INDONESIA--0.1%
-----------------------------------------------------------------------------
29,000 (b)Bank Negara Indonesia 14,531
-----------------------------------------------------------------------------
18,000 Citra Marga Nusaphala Persada 15,160
-----------------------------------------------------------------------------
4,000 Gudang Garam 17,015
-----------------------------------------------------------------------------
10,500 Modern Photo Film Co. 26,306
-----------------------------------------------------------------------------
8,000 Semen Gresik 24,392
-----------------------------------------------------------------------------
24,933 Steady Safe 29,239
-----------------------------------------------------------------------------
32,670 Pab K Tjiwi Kimia 31,346
-----------------------------------------------------------------------------
9,000 Tambang Timah 14,200
----------------------------------------------------------------------------- --------------
Total 172,189
----------------------------------------------------------------------------- --------------
ITALY--0.1%
-----------------------------------------------------------------------------
7,000 Banca Popolare Milano 35,786
-----------------------------------------------------------------------------
8,000 Eni 42,112
-----------------------------------------------------------------------------
4,300 Imi Istituto Mobiliare 36,123
-----------------------------------------------------------------------------
520 (b)La Rinascente S.P.A. Warrants, 12/31/1999 244
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-----------------------------------------------------------------------------
ITALY--CONTINUED
-----------------------------------------------------------------------------
35,000 Telecom Italia Mobile $ 82,308
-----------------------------------------------------------------------------
5,100 (b)Unicem S.P.A. 34,416
----------------------------------------------------------------------------- --------------
Total 230,989
----------------------------------------------------------------------------- --------------
JAPAN--1.5%
-----------------------------------------------------------------------------
10,000 Amada Co. 83,582
-----------------------------------------------------------------------------
200 Asahi Broadcasting Corp. 21,949
-----------------------------------------------------------------------------
3,000 Canare Electric Co. Ltd. 63,213
-----------------------------------------------------------------------------
12,000 Casio Computer Co. 97,349
-----------------------------------------------------------------------------
14 DDI Corp. 100,176
-----------------------------------------------------------------------------
7,000 Dai Nippon Printing Co. Ltd. 127,831
-----------------------------------------------------------------------------
9,000 Daito Trust Construction 117,735
-----------------------------------------------------------------------------
4,000 Fuji Photo Film Co. 125,022
-----------------------------------------------------------------------------
2,000 Hirose Electric Co. 121,159
-----------------------------------------------------------------------------
4,000 Hitachi Maxell 82,529
-----------------------------------------------------------------------------
4,000 Ikegami Tsushinki 26,690
-----------------------------------------------------------------------------
8,000 JGC Corp. 73,749
-----------------------------------------------------------------------------
1,000 Japan Cash Machine Co. Ltd. 17,823
-----------------------------------------------------------------------------
4,000 Japan Radio Co. 48,815
-----------------------------------------------------------------------------
11 (b)(c)Japan Tobacco 78,323
-----------------------------------------------------------------------------
4,000 Konami Co. 136,611
-----------------------------------------------------------------------------
4,000 Matsushita Kotobuk Electric 102,546
-----------------------------------------------------------------------------
3,000 (b)Meiwa Estate 87,445
-----------------------------------------------------------------------------
16,000 Minolta Co. 100,720
-----------------------------------------------------------------------------
12,000 Mitsubishi Heavy Industries Ltd. 97,981
-----------------------------------------------------------------------------
6,000 Mycal Corp. 89,552
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-----------------------------------------------------------------------------
JAPAN--CONTINUED
-----------------------------------------------------------------------------
2,000 Nintendo Corp. Ltd. $ 141,352
-----------------------------------------------------------------------------
4,000 Nippon Comsys Corp. 49,868
-----------------------------------------------------------------------------
1,000 Nissei ASB Machine Co. 13,960
-----------------------------------------------------------------------------
2,000 Pioneer Electronic Corp. 43,020
-----------------------------------------------------------------------------
2,000 Promise Co. Ltd. 100,088
-----------------------------------------------------------------------------
1 (c)Sakura Finance (Bermuda), Conv. Pfd. 56,832
-----------------------------------------------------------------------------
4,000 Sankyo Co. 107,112
-----------------------------------------------------------------------------
8,000 Shiseido Co. 96,225
-----------------------------------------------------------------------------
9,000 Shochiku Co. 83,758
-----------------------------------------------------------------------------
2,000 Sony Corp. 128,007
-----------------------------------------------------------------------------
2,000,000 (c)Sumitomo Bank International Conv. Bond, .75%, 5/31/2001 19,074
-----------------------------------------------------------------------------
6,000 Sumitomo Trust & Banking 66,374
-----------------------------------------------------------------------------
4,000 Taisho Pharmaceutical Co. 89,201
-----------------------------------------------------------------------------
3,000 Takashimaya Co. 40,035
-----------------------------------------------------------------------------
8,000 Tokio Marine and Fire Insurance Co. 88,499
-----------------------------------------------------------------------------
18,000 (b)Tokyo Tatemono Co., Ltd. 82,493
-----------------------------------------------------------------------------
7,000 Tsubakimoto Chain Co. 41,238
----------------------------------------------------------------------------- --------------
Total 3,047,936
----------------------------------------------------------------------------- --------------
KOREA--0.1%
-----------------------------------------------------------------------------
1,300 Chonggu Housing & Construction 29,797
-----------------------------------------------------------------------------
800 Dongkuk Steel Mill Co. 15,538
-----------------------------------------------------------------------------
600 Hankuk Paper Manufacturing Co. 13,608
-----------------------------------------------------------------------------
2,600 Korea Exchange Bank 24,465
-----------------------------------------------------------------------------
2,100 (b)Korea Mobile Telecomm Corp., ADR 27,300
-----------------------------------------------------------------------------
1,240 Pacific Corporation 23,186
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-----------------------------------------------------------------------------
KOREA--CONTINUED
-----------------------------------------------------------------------------
540 Shinhan Bank $ 9,537
----------------------------------------------------------------------------- --------------
Total 143,431
----------------------------------------------------------------------------- --------------
MALAYSIA--0.2%
-----------------------------------------------------------------------------
22,000 Eastern and Oriental 47,883
-----------------------------------------------------------------------------
2,000 (b)Kentucky Fried Chicken 2,438
-----------------------------------------------------------------------------
10,000 Kentucky Fried Chicken 44,321
-----------------------------------------------------------------------------
3,000 Malayan Banking 29,679
-----------------------------------------------------------------------------
27,000 Malaysian Industrial Development 55,560
-----------------------------------------------------------------------------
10,000 Malaysian Pacific Industries 40,760
-----------------------------------------------------------------------------
10,000 Metacorp 30,867
-----------------------------------------------------------------------------
13,000 UMW Holdings 61,733
----------------------------------------------------------------------------- --------------
Total 313,241
----------------------------------------------------------------------------- --------------
MEXICO--0.1%
-----------------------------------------------------------------------------
700 (b)(c)Acer, Inc., ADR 12,775
-----------------------------------------------------------------------------
3,000 (b)Cemex S.A., Class B, ADR 21,656
-----------------------------------------------------------------------------
12,000 (b)Cifra S.A. de C.V., Class B 16,554
-----------------------------------------------------------------------------
1,900 (b)Empresas ICA Sociedad Controladora S.A., ADR 27,313
-----------------------------------------------------------------------------
5,000 Fomento Economico Mexicano, S.A. de C.V., Class B 17,085
-----------------------------------------------------------------------------
12,000 (b)Grupo Corvi S.A., Class UBL 10,042
-----------------------------------------------------------------------------
2,800 (b)(c)Grupo Financiero Bancomer, S.A. de C.V., Class B, ADR 22,557
-----------------------------------------------------------------------------
700 Pan American Beverage, Class A 32,725
-----------------------------------------------------------------------------
600 Telefonos de Mexico, Class L, ADR 18,225
-----------------------------------------------------------------------------
1,400 (b)Tubos de Acero de Mexico S.A., ADR 19,075
----------------------------------------------------------------------------- --------------
Total 198,007
----------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-----------------------------------------------------------------------------
NETHERLANDS--0.2%
-----------------------------------------------------------------------------
1,600 ABN Amro Holding $ 103,648
-----------------------------------------------------------------------------
2,750 Boskalis Westminster N.V. 54,544
-----------------------------------------------------------------------------
730 Hunter Douglas N.V. 47,755
-----------------------------------------------------------------------------
1,525 ING Groep, N.V. 53,419
-----------------------------------------------------------------------------
1,360 Vendex International A 59,076
-----------------------------------------------------------------------------
430 Wolters Kluwer N.V. 56,234
----------------------------------------------------------------------------- --------------
Total 374,676
----------------------------------------------------------------------------- --------------
NEW ZEALAND--0.1%
-----------------------------------------------------------------------------
16,000 Air New Zealand Ltd., Class B 42,105
-----------------------------------------------------------------------------
14,000 Fletcher Challenge Building 39,331
-----------------------------------------------------------------------------
40,000 Wrightson Ltd. 35,562
----------------------------------------------------------------------------- --------------
Total 116,998
----------------------------------------------------------------------------- --------------
NORWAY--0.0%
-----------------------------------------------------------------------------
2,600 Elkem A/S, Class A 40,511
-----------------------------------------------------------------------------
7,100 (b)Storebrand ASA 42,370
----------------------------------------------------------------------------- --------------
Total 82,881
----------------------------------------------------------------------------- --------------
PAKISTAN--0.0%
-----------------------------------------------------------------------------
350 (b)Hub Power Co., GDR 7,525
----------------------------------------------------------------------------- --------------
PHILIPPINES--0.0%
-----------------------------------------------------------------------------
84,000 (b)Belle Corp. 22,369
-----------------------------------------------------------------------------
42,740 (b)Davao Union Cement Corp., Class B 13,983
-----------------------------------------------------------------------------
58,050 (b)Filinvest Land, Inc. 20,538
-----------------------------------------------------------------------------
1,400 Philippine Commercial International Bank 18,641
----------------------------------------------------------------------------- --------------
Total 75,531
----------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-----------------------------------------------------------------------------
SINGAPORE--0.2%
-----------------------------------------------------------------------------
5,000 City Developments $ 44,207
-----------------------------------------------------------------------------
8,000 Hong Leong Finance Ltd. 27,722
-----------------------------------------------------------------------------
61,000 Roly International Holdings 40,260
-----------------------------------------------------------------------------
8,000 Sembawang Corp. Ltd. 43,750
-----------------------------------------------------------------------------
2,000 Singapore Press Holdings Ltd. 37,790
-----------------------------------------------------------------------------
9,000 Straits Steamship Land Ltd. 28,749
-----------------------------------------------------------------------------
2,250 (b)Straits Steamship Land Ltd. Warrants, 12/12/2000 2,519
-----------------------------------------------------------------------------
5,000 United Overseas Bank Ltd. 53,119
-----------------------------------------------------------------------------
12,000 Wing Tai Holdings, Ltd. 32,856
----------------------------------------------------------------------------- --------------
Total 310,972
----------------------------------------------------------------------------- --------------
SPAIN--0.2%
-----------------------------------------------------------------------------
860 Empresa Nac De Electridad 58,090
-----------------------------------------------------------------------------
630 Fomento de Construcciones y Contratas SA 53,254
-----------------------------------------------------------------------------
5,800 Iberdrola SA 66,937
-----------------------------------------------------------------------------
1,050 Mapfre (Corporacion) 55,523
-----------------------------------------------------------------------------
1,500 Repsol SA 55,523
-----------------------------------------------------------------------------
2,720 Telefonica de Espana 59,632
-----------------------------------------------------------------------------
638 Zardoya-Otis SA 67,967
----------------------------------------------------------------------------- --------------
Total 416,926
----------------------------------------------------------------------------- --------------
SWEDEN--0.0%
-----------------------------------------------------------------------------
4,400 Stora Kopparbergs, Class A 60,278
----------------------------------------------------------------------------- --------------
SWITZERLAND--0.2%
-----------------------------------------------------------------------------
35 ABB AG 43,794
-----------------------------------------------------------------------------
600 CS Holding AG-Registered 63,867
-----------------------------------------------------------------------------
50 Ciba-Giegy AG-Registered 61,872
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-----------------------------------------------------------------------------
SWITZERLAND--CONTINUED
-----------------------------------------------------------------------------
50 Nestle SA $ 54,277
-----------------------------------------------------------------------------
400 (b)Oerlikon-Buhrle Holding AG 41,273
-----------------------------------------------------------------------------
23 Reiseburo Kuoni AG, Class B 51,170
-----------------------------------------------------------------------------
5 Roche Holding AG 38,435
-----------------------------------------------------------------------------
45 Sandoz AG-R 52,336
-----------------------------------------------------------------------------
75 Sulzer AG-Reg 43,153
-----------------------------------------------------------------------------
48 (b)Swissair AG 36,456
-----------------------------------------------------------------------------
142 Zurich Versicherungsgesellschaft 40,307
----------------------------------------------------------------------------- --------------
Total 526,940
----------------------------------------------------------------------------- --------------
THAILAND--0.0%
-----------------------------------------------------------------------------
1,200 Bangkok Bank Public Co., Ltd. 13,719
-----------------------------------------------------------------------------
9,800 Industrial Finance Corporation of Thailand 30,888
-----------------------------------------------------------------------------
2,900 Krung Thai Bank PLC 8,289
-----------------------------------------------------------------------------
1,300 PTT Exploration and Production Public Co. 19,138
-----------------------------------------------------------------------------
21,000 Siam City Bank 24,667
----------------------------------------------------------------------------- --------------
Total 96,701
----------------------------------------------------------------------------- --------------
UNITED KINGDOM--1.1%
-----------------------------------------------------------------------------
15,000 Asda Group 29,884
-----------------------------------------------------------------------------
6,430 BAA PLC 52,971
-----------------------------------------------------------------------------
10,000 BTR PLC 40,182
-----------------------------------------------------------------------------
3,337 Barclays PLC 57,393
-----------------------------------------------------------------------------
2,231 Boc Group PLC 33,232
-----------------------------------------------------------------------------
3,400 Boots Co. PLC 36,241
-----------------------------------------------------------------------------
2,514 British Aerospace PLC 48,902
-----------------------------------------------------------------------------
4,974 British Petroleum Co. PLC 57,513
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-----------------------------------------------------------------------------
UNITED KINGDOM--CONTINUED
-----------------------------------------------------------------------------
6,300 British Telecommunication PLC $ 39,878
-----------------------------------------------------------------------------
13,492 Bunzl PLC 50,357
-----------------------------------------------------------------------------
3,882 Cadbury Schweppes PLC 33,383
-----------------------------------------------------------------------------
13,000 Caradon PLC 52,127
-----------------------------------------------------------------------------
5,750 Carlton Communications PLC 48,626
-----------------------------------------------------------------------------
5,800 Chubb Security 33,447
-----------------------------------------------------------------------------
5,860 Compass Group 59,753
-----------------------------------------------------------------------------
12,240 Cookson Group 46,507
-----------------------------------------------------------------------------
8,500 Cowie Group PLC 56,590
-----------------------------------------------------------------------------
7,560 David S. Smith (Holdings) PLC 40,101
-----------------------------------------------------------------------------
8,450 Delta PLC 51,640
-----------------------------------------------------------------------------
1,740 EMI Group PLC 40,194
-----------------------------------------------------------------------------
15,100 FKI PLC 54,708
-----------------------------------------------------------------------------
4,850 General Accident 59,728
-----------------------------------------------------------------------------
8,200 General Electric Co. PLC 51,353
-----------------------------------------------------------------------------
2,600 Glaxo Wellcome PLC 42,761
-----------------------------------------------------------------------------
5,211 Grand Metropolitan PLC 40,695
-----------------------------------------------------------------------------
12,897 Guardian Royal Exchange 58,110
-----------------------------------------------------------------------------
2,200 Imperial Chemical Industries PLC 28,536
-----------------------------------------------------------------------------
7,900 Inchcape PLC 35,794
-----------------------------------------------------------------------------
11,330 Ladbroke Group PLC 39,049
-----------------------------------------------------------------------------
4,000 Marks & Spencer PLC 34,028
-----------------------------------------------------------------------------
15,000 Mirror Group PLC 58,003
-----------------------------------------------------------------------------
8,060 National Power Co. PLC 62,469
-----------------------------------------------------------------------------
4,950 Pearson 61,168
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES
OR UNITS VALUE
OR PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN EQUITY--CONTINUED
-----------------------------------------------------------------------------
UNITED KINGDOM--CONTINUED
-----------------------------------------------------------------------------
4,500 Peninsular & Oriental Steam Navigation Co. $ 44,750
-----------------------------------------------------------------------------
4,800 Premier Farnell PLC 57,458
-----------------------------------------------------------------------------
3,427 RTZ Corp. PLC 57,616
-----------------------------------------------------------------------------
4,200 Rank Group PLC 30,716
-----------------------------------------------------------------------------
3,990 Reckitt & Colman PLC 47,024
-----------------------------------------------------------------------------
4,600 Reed International PLC 89,131
-----------------------------------------------------------------------------
27,300 Rugby Group PLC 44,062
-----------------------------------------------------------------------------
4,600 Safeway PLC 30,161
-----------------------------------------------------------------------------
15,700 Sedgwick Group PLC 33,126
-----------------------------------------------------------------------------
2,524 Siebe PLC 40,291
-----------------------------------------------------------------------------
2,976 Smithkline Beecham PLC 41,028
-----------------------------------------------------------------------------
10,600 Tomkins PLC 44,285
-----------------------------------------------------------------------------
2,050 Zeneca Group 56,523
----------------------------------------------------------------------------- --------------
Total 2,151,494
----------------------------------------------------------------------------- --------------
TOTAL FOREIGN EQUITY 11,614,109
----------------------------------------------------------------------------- --------------
TOTAL STOCKS (IDENTIFIED COST $52,555,328) 59,939,439
----------------------------------------------------------------------------- --------------
BONDS--63.8%
- ----------------------------------------------------------------------------------------------
TREASURY--29.1%
-----------------------------------------------------------------------------
$ 57,325,000 U.S. Treasury Notes, 5.50%-7.75%, 11/15/1998-3/31/2000 58,541,658
----------------------------------------------------------------------------- --------------
MORTGAGE-BACKED SECURITIES--19.5%
-----------------------------------------------------------------------------
GOVERNMENT AGENCY--19.5%
-----------------------------------------------------------------------------
384,260 Federal Home Loan Mortgage Corp., 9.50%, 6/1/2021 415,078
-----------------------------------------------------------------------------
116,849 Federal Home Loan Mortgage Corp., 8.00%, 11/1/2021 121,010
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES--CONTINUED
-----------------------------------------------------------------------------
GOVERNMENT AGENCY--CONTINUED
-----------------------------------------------------------------------------
$ 354,997 Federal Home Loan Mortgage Corp., 7.50%, 5/1/2024 $ 360,653
-----------------------------------------------------------------------------
943,408 Federal Home Loan Mortgage Corp., 7.00%, 8/1/2025 939,446
-----------------------------------------------------------------------------
794,104 Federal Home Loan Mortgage Corp., 8.00%, 11/1/2022 824,868
-----------------------------------------------------------------------------
239,440 Federal Home Loan Mortgage Corp., 7.00%, 7/1/2024 238,689
-----------------------------------------------------------------------------
502,925 Federal Home Loan Mortgage Corp., 8.00%, 4/1/2025 518,007
-----------------------------------------------------------------------------
970,311 Federal Home Loan Mortgage Corp., 6.50%, 9/1/2025 945,937
-----------------------------------------------------------------------------
1,030,455 Federal Home Loan Mortgage Corp., 7.00%, 1/1/2026 1,025,292
-----------------------------------------------------------------------------
972,347 Federal Home Loan Mortgage Corp., 7.00%, 2/1/2026 972,940
-----------------------------------------------------------------------------
1,804,600 Federal Home Loan Mortgage Corp., 7.50%, 6/1/2026 1,829,377
-----------------------------------------------------------------------------
355,365 Federal Home Loan Mortgage Corp., 8.00%, 11/1/2009 367,245
-----------------------------------------------------------------------------
1,871,521 Federal Home Loan Mortgage Corp., 6.50%, 3/1/2011 1,859,207
-----------------------------------------------------------------------------
306,398 Federal Home Loan Mortgage Corp., 7.00%, 4/1/2009 310,896
-----------------------------------------------------------------------------
592,961 Federal Home Loan Mortgage Corp., 7.00%, 4/1/2009 598,511
-----------------------------------------------------------------------------
997,960 Federal Home Loan Mortgage Corp., 6.00%, 6/1/2011 973,620
-----------------------------------------------------------------------------
993,181 Federal Home Loan Mortgage Corp., 7.50%, 8/1/2003 1,015,200
-----------------------------------------------------------------------------
775,836 Federal National Mortgage Association, 7.50%, 9/1/2009 794,735
-----------------------------------------------------------------------------
463,671 Federal National Mortgage Association, 7.00%, 7/1/2024 460,332
-----------------------------------------------------------------------------
873,677 Federal National Mortgage Association, 9.50%, 10/1/2024 947,564
-----------------------------------------------------------------------------
979,244 Federal National Mortgage Association, 7.50%, 5/1/2026 992,396
-----------------------------------------------------------------------------
198,732 Federal National Mortgage Association, 7.50%, 6/1/2009 203,015
-----------------------------------------------------------------------------
1,088,436 Federal National Mortgage Association, 8.00%, 11/1/2024 1,119,370
-----------------------------------------------------------------------------
1,400,106 Federal National Mortgage Association, 9.00%, 2/1/2025 1,481,033
-----------------------------------------------------------------------------
136,311 Federal National Mortgage Association, 8.50%, 2/1/2025 142,231
-----------------------------------------------------------------------------
740,049 Federal National Mortgage Association, 8.00%, 7/1/2025 761,688
-----------------------------------------------------------------------------
523,009 Federal National Mortgage Association, 7.50%, 7/1/2025 530,033
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES--CONTINUED
-----------------------------------------------------------------------------
GOVERNMENT AGENCY--CONTINUED
-----------------------------------------------------------------------------
$ 471,470 Federal National Mortgage Association, 7.00%, 7/1/2025 $ 468,458
-----------------------------------------------------------------------------
961,968 Federal National Mortgage Association, 6.50%, 9/1/2025 936,303
-----------------------------------------------------------------------------
1,116,217 Federal National Mortgage Association, 6.50%, 10/1/2025 1,084,103
-----------------------------------------------------------------------------
958,601 Federal National Mortgage Association, 6.50%, 1/1/2003 958,294
-----------------------------------------------------------------------------
980,787 Federal National Mortgage Association, 6.00%, 3/1/2011 955,640
-----------------------------------------------------------------------------
82,821 Federal National Mortgage Association, 6.50%, 4/1/2011 82,172
-----------------------------------------------------------------------------
967,083 Federal National Mortgage Association, 6.00%, 4/1/2011 942,287
-----------------------------------------------------------------------------
454,840 Federal National Mortgage Association, 6.50%, 4/1/2011 451,278
-----------------------------------------------------------------------------
1,025,116 Federal National Mortgage Association, 7.00%, 7/1/2026 1,017,735
-----------------------------------------------------------------------------
525,681 Federal National Mortgage Association, 10.50%, 1/1/2021 583,664
-----------------------------------------------------------------------------
834,659 Government National Mortgage Association, 10.00%, 10/15/2018 919,151
-----------------------------------------------------------------------------
883,793 Government National Mortgage Association, 8.50%, 10/15/2022 928,248
-----------------------------------------------------------------------------
926,007 Government National Mortgage Association, 6.50%, 1/15/2024 907,190
-----------------------------------------------------------------------------
965,438 Government National Mortgage Association, 8.00%, 1/15/2024 995,589
-----------------------------------------------------------------------------
455,746 Government National Mortgage Association, 9.50%, 12/15/2025 494,622
-----------------------------------------------------------------------------
236,231 Government National Mortgage Association, 7.00%, 8/15/2024 235,047
-----------------------------------------------------------------------------
1,885,214 Government National Mortgage Association, 7.50%, 4/15/2024 1,912,870
-----------------------------------------------------------------------------
854,584 Government National Mortgage Association, 8.00%, 9/15/2025 882,349
-----------------------------------------------------------------------------
1,714,124 Government National Mortgage Association, 7.00%, 3/15/2026 1,705,536
-----------------------------------------------------------------------------
1,004,272 Government National Mortgage Association, 7.00%, 4/15/2026 999,241
-----------------------------------------------------------------------------
910,000 (a)Government National Mortgage Association, 9.00%, 2/15/2026, TBA 965,155
----------------------------------------------------------------------------- --------------
TOTAL MORTGAGE-BACKED SECURITIES 39,173,305
----------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
INVESTMENT GRADE BONDS--7.2%
-----------------------------------------------------------------------------
AEROSPACE & DEFENSE--0.1%
-----------------------------------------------------------------------------
$ 250,000 McDonnell Douglas Finance, Note, 9.40%, 10/15/2001 $ 270,558
----------------------------------------------------------------------------- --------------
AUTOMOTIVE--0.1%
-----------------------------------------------------------------------------
200,000 Chrysler Corp., Deb., 10.95%, 8/1/2017 217,602
----------------------------------------------------------------------------- --------------
BANKING--1.0%
-----------------------------------------------------------------------------
525,000 Bank Of Montreal, Sub. Note, 7.80%, 4/1/2007 568,360
-----------------------------------------------------------------------------
330,000 Chase Manhattan, Sub. Note, 8.00%, 5/1/2005 337,887
-----------------------------------------------------------------------------
250,000 Crestar Financial Corp, Sub. Note, 8.75%, 11/15/2004 281,153
-----------------------------------------------------------------------------
300,000 National Bank of Canada, Sub. Note, 8.125%, 8/15/2004 326,631
-----------------------------------------------------------------------------
400,000 Santander Finance Issuances, Bank Guarantee, 7.875%, 4/15/2005 429,304
----------------------------------------------------------------------------- --------------
Total 1,943,335
----------------------------------------------------------------------------- --------------
BEVERAGE & TOBACCO--0.2%
-----------------------------------------------------------------------------
150,000 Philip Morris Cos., Inc., Deb., 6.00%, 7/15/2001 146,813
-----------------------------------------------------------------------------
250,000 RJR Nabisco, Inc., Note, 9.25%, 8/15/2013 257,910
----------------------------------------------------------------------------- --------------
Total 404,723
----------------------------------------------------------------------------- --------------
CABLE TELEVISION--0.2%
-----------------------------------------------------------------------------
400,000 TKR Cable, Inc., Sr. Note, 10.50%, 10/30/2007 443,128
----------------------------------------------------------------------------- --------------
CHEMICALS & PLASTICS--0.2%
-----------------------------------------------------------------------------
450,000 (c)Bayer Corp., Deb., 6.5%, 10/1/2002 457,074
----------------------------------------------------------------------------- --------------
ECOLOGICAL SERVICES & EQUIPMENT--0.2%
-----------------------------------------------------------------------------
275,000 Waste Management, Deb., 8.75%, 5/1/2018 312,331
----------------------------------------------------------------------------- --------------
ELECTRONICS--0.2%
-----------------------------------------------------------------------------
300,000 Harris Corp, Deb., 10.375%, 12/1/2018 336,948
----------------------------------------------------------------------------- --------------
FINANCE-RETAIL--0.1%
-----------------------------------------------------------------------------
150,000 Household Finance, Deb., 6.45%, 2/1/2009 146,396
----------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
INVESTMENT GRADE BONDS--CONTINUED
-----------------------------------------------------------------------------
FINANCIAL INTERMEDIARIES--1.4%
-----------------------------------------------------------------------------
$ 450,000 American General Corp., S.F. Deb., 9.625%, 2/1/2018 $ 486,896
-----------------------------------------------------------------------------
400,000 DLJ, Note, 6.875%, 11/1/2005 401,064
-----------------------------------------------------------------------------
400,000 Green Tree Financial Corp, Sr. Sub. Note, 10.25%, 6/1/2002 471,040
-----------------------------------------------------------------------------
500,000 Lehman Bros Inc, Sr. Sub. Note, 6.125%, 2/1/2001 493,640
-----------------------------------------------------------------------------
300,000 Merrill Lynch, Medium Term Note, 7.25%, 6/14/2004 302,598
-----------------------------------------------------------------------------
225,000 Salomon Inc, Sr. Note, 9.00%, 2/15/1999 237,467
-----------------------------------------------------------------------------
225,000 Salomon Inc., Sr. Note, 7.02%, 9/25/1998 228,355
-----------------------------------------------------------------------------
250,000 (c)World Financial, Pass Thru Cert., Series 96 WFP-B, 6.91%,
9/1/2013 251,445
----------------------------------------------------------------------------- --------------
Total 2,872,505
----------------------------------------------------------------------------- --------------
FOOD & DRUG RETAILERS--0.2%
-----------------------------------------------------------------------------
300,000 Hook-Superx, Inc., Sr. Note, 10.125%, 6/1/2002 319,773
----------------------------------------------------------------------------- --------------
GOVERNMENT AGENCY--0.3%
-----------------------------------------------------------------------------
250,000 Federal National Mortgage Association, 7.430%, 8/4/2005 253,965
-----------------------------------------------------------------------------
250,000 Federal National Mortgage Association, 8.590%, 2/3/2005 257,453
----------------------------------------------------------------------------- --------------
Total 511,418
----------------------------------------------------------------------------- --------------
INDUSTRIAL PRODUCTS & EQUIPMENT--0.2%
-----------------------------------------------------------------------------
350,000 Joy Technologies Inc, Sr. Note, 10.25%, 9/1/2003 387,590
----------------------------------------------------------------------------- --------------
INSURANCE--0.6%
-----------------------------------------------------------------------------
350,000 Conseco, Inc., Sr. Note, 10.5%, 12/15/2004 425,338
-----------------------------------------------------------------------------
515,000 Continental Corp, Note, 8.25%, 4/15/1999 538,644
-----------------------------------------------------------------------------
250,000 Sunamerica Inc, Medium Term Note, 7.34%, 8/30/2005 260,716
----------------------------------------------------------------------------- --------------
Total 1,224,698
----------------------------------------------------------------------------- --------------
METALS & MINING--0.2%
-----------------------------------------------------------------------------
450,000 Santa Fe Pacific Gold Co, Note, 8.375%, 7/1/2005 473,031
----------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
INVESTMENT GRADE BONDS--CONTINUED
-----------------------------------------------------------------------------
OIL & GAS--0.3%
-----------------------------------------------------------------------------
$ 275,000 Tosco Corp, Sr. Note, 7.625%, 5/15/2006 $ 290,664
-----------------------------------------------------------------------------
350,000 USX Corp., Note, 6.375%, 7/15/1998 351,792
----------------------------------------------------------------------------- --------------
Total 642,456
----------------------------------------------------------------------------- --------------
PRINTING & PUBLISHING--0.2%
-----------------------------------------------------------------------------
400,000 News America Holdings, Sr. Note, 7.50%, 3/1/2000 413,252
----------------------------------------------------------------------------- --------------
RETAILERS--0.2%
-----------------------------------------------------------------------------
400,000 May Department Stores, Deb., 8.125%, 8/15/2035 433,076
----------------------------------------------------------------------------- --------------
SERVICES--0.1%
-----------------------------------------------------------------------------
250,000 Loewen Group International, Sr. Note, 8.25%, 4/15/2003 257,828
----------------------------------------------------------------------------- --------------
SOVEREIGN--0.2%
-----------------------------------------------------------------------------
375,000 Swedish Exp Cred, Deb., 9.875%, 3/15/2038 408,694
----------------------------------------------------------------------------- --------------
SOVEREIGN GOVERNMENT--0.7%
-----------------------------------------------------------------------------
300,000 (c)Freeport Terminal (Malta), Gtd. Global Note, 7.5%, 3/29/2009 315,453
-----------------------------------------------------------------------------
250,000 Quebec Province, Deb., 7.5%, 7/15/2023 257,623
-----------------------------------------------------------------------------
300,000 Republic Of South Africa, Global Bond Deb., 9.625%, 12/15/1999 321,375
-----------------------------------------------------------------------------
400,000 Republic of Colombia, Note, 7.25%, 2/15/2003 397,868
----------------------------------------------------------------------------- --------------
Total 1,292,319
----------------------------------------------------------------------------- --------------
UTILITIES--0.3%
-----------------------------------------------------------------------------
200,000 Duke Power Co., 1st Mtg. Note, 7.00%, 9/1/2005 203,188
-----------------------------------------------------------------------------
200,000 Gulf States Util, FMB, 6.75%, 10/1/1998 200,934
-----------------------------------------------------------------------------
125,000 Pedernales Electric Coop, 10.875%, 9/01/2017 136,294
-----------------------------------------------------------------------------
150,000 Quebec Hydro, Deb., 7.375%, 2/1/2003 157,482
----------------------------------------------------------------------------- --------------
Total 697,898
----------------------------------------------------------------------------- --------------
TOTAL INVESTMENT GRADE BONDS 14,466,633
----------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
HIGH YIELD BONDS--2.6%
-----------------------------------------------------------------------------
AEROSPACE & DEFENSE--0.0%
-----------------------------------------------------------------------------
$ 50,000 Tracor, Inc., Sr. Sub. Note, 10.875%, 8/15/2001 $ 53,625
----------------------------------------------------------------------------- --------------
AUTOMOTIVE--0.1%
-----------------------------------------------------------------------------
50,000 Aftermarket Technology Co., Sr. Sub. Note, 12.00%, 8/1/2004 55,750
-----------------------------------------------------------------------------
50,000 (c)Blue Bird Body Co., Sr. Sub. Note, 10.75%, 11/15/2006 51,875
-----------------------------------------------------------------------------
50,000 Collins & Aikman Products, Sr. Sub. Note, 11.50%, 4/15/2006 53,625
-----------------------------------------------------------------------------
50,000 Exide Corp., Sr. Note, 10.00%, 4/15/2005 52,375
----------------------------------------------------------------------------- --------------
Total 213,625
----------------------------------------------------------------------------- --------------
BANKING--0.0%
-----------------------------------------------------------------------------
50,000 (c)First Nationwide Escrow, Sr. Sub. Note, 10.625%, 10/1/2003 53,500
-----------------------------------------------------------------------------
25,000 First Nationwide Holdings, Sr. Note, 12.25%, 5/15/2001 28,188
----------------------------------------------------------------------------- --------------
Total 81,688
----------------------------------------------------------------------------- --------------
BEVERAGE & TOBACCO--0.0%
-----------------------------------------------------------------------------
25,000 Dr. Pepper Bottling Co., Sr. Disc. Note, 0/11.125%, 2/15/2003 23,250
----------------------------------------------------------------------------- --------------
BROADCAST RADIO & TV--0.2%
-----------------------------------------------------------------------------
38,000 Chancellor Broadcasting Co., Sr. Sub. Note, 12.50%, 10/1/2004 42,370
-----------------------------------------------------------------------------
25,000 Granite Broadcasting Corp, Sr. Sub. Note, 9.375%, 12/1/2005 23,938
-----------------------------------------------------------------------------
50,000 Heritage Media Corp., Sr. Sub. Note, 8.75%, 2/15/2006 48,500
-----------------------------------------------------------------------------
25,000 Pegasus Media, Note, 12.50%, 7/1/2005 27,125
-----------------------------------------------------------------------------
125,000 SCI Television, Sr. Secd. Note, 11.00%, 6/30/2005 134,688
-----------------------------------------------------------------------------
50,000 SFX Broadcasting, Inc., Sr. Sub. Note, 10.75%, 5/15/2006 52,625
-----------------------------------------------------------------------------
50,000 Sinclair Broadcast Group, Sr. Sub. Note, 10.00%, 9/30/2005 50,375
-----------------------------------------------------------------------------
50,000 Young Broadcasting Corp., Sr. Sub. Note, 10.125%, 2/15/2005 50,500
----------------------------------------------------------------------------- --------------
Total 430,121
----------------------------------------------------------------------------- --------------
BUSINESS EQUIPMENT & SERVICES--0.1%
-----------------------------------------------------------------------------
50,000 Knoll, Inc., Sr. Sub. Note, 10.875%, 3/15/2006 54,750
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
-----------------------------------------------------------------------------
BUSINESS EQUIPMENT & SERVICES--CONTINUED
-----------------------------------------------------------------------------
$ 25,000 Monarch Acquisition Corp., Sr. Note, 12.50%, 7/1/2003 $ 27,875
-----------------------------------------------------------------------------
50,000 (c)Outsourcing Solutions, Sr. Sub. Note, 11.00%, 11/1/2006 52,250
-----------------------------------------------------------------------------
25,000 United Stationers Supply, Sr. Sub. Note, 12.75%, 5/1/2005 27,719
----------------------------------------------------------------------------- --------------
Total 162,594
----------------------------------------------------------------------------- --------------
CABLE TELEVISION--0.3%
-----------------------------------------------------------------------------
50,000 Cablevision Systems Corp., Sr. Sub. Note, 9.875%, 5/15/2006 50,625
-----------------------------------------------------------------------------
50,000 Charter Communication Southeast, Sr. Note, 11.25%, 3/15/2006 51,750
-----------------------------------------------------------------------------
100,000 (c)CS Wireless Systems, Inc., Unit, 0/11.375%, 3/1/2006 38,500
-----------------------------------------------------------------------------
50,000 Diamond Cable Comm. Plc, Sr. Disc. Note, 0/11.75%, 12/15/2005 35,000
-----------------------------------------------------------------------------
50,000 Echostar Satellite Broadcasting Corp. Sr. Disc. Note, 0/13.125%,
3/15/2004 38,250
-----------------------------------------------------------------------------
100,000 International Cabletel, Sr. Disc. Note, 0/12.75%, 4/15/2005 72,000
-----------------------------------------------------------------------------
25,000 International Cabletel, Sr. Note, 0/11.50%, 2/1/2006 16,156
-----------------------------------------------------------------------------
50,000 Lenfest Communications, Sr. Sub. Note, 10.50%, 6/15/2006 52,625
-----------------------------------------------------------------------------
50,000 Rogers Cablesystems Ltd., Sr. Secd. 2nd Priority Note, 10.00%,
3/15/2005 53,750
-----------------------------------------------------------------------------
150,000 Telewest Plc, Sr. Disc. Deb., 0/11.00%, 10/1/2007 102,750
-----------------------------------------------------------------------------
50,000 Uih Australia/pacific, Sr. Disc. Note, 0/14.00%, 5/15/2006 26,750
----------------------------------------------------------------------------- --------------
Total 538,156
----------------------------------------------------------------------------- --------------
CHEMICALS & PLASTICS--0.2%
-----------------------------------------------------------------------------
75,000 Arcadian Partners LP, Sr. Note, Series B, 10.75%, 5/1/2005 83,063
-----------------------------------------------------------------------------
50,000 (c)Astor Corp., Sr. Sub. Note, 10.50%, 10/15/2006 51,000
-----------------------------------------------------------------------------
50,000 Crain Industries Inc., Sr. Sub. Note, 13.50%, 8/15/2005 56,375
-----------------------------------------------------------------------------
50,000 Harris Chemical, Sr. Note, 10.25%, 7/15/2001 51,625
-----------------------------------------------------------------------------
33,000 Polymer Group, Sr. Note, 12.25%, 7/15/2002 35,805
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
-----------------------------------------------------------------------------
CHEMICALS & PLASTICS--CONTINUED
-----------------------------------------------------------------------------
$ 25,000 RBX Corp., Sr. Sub. Note, Series B, 11.25%, 10/15/2005 $ 21,625
-----------------------------------------------------------------------------
50,000 Sterling Chemicals, Inc., Sr. Sub. Note, 11.75%, 8/15/2006 51,875
-----------------------------------------------------------------------------
75,000 Viridian Inc., Note, 9.75%, 4/1/2003 82,115
----------------------------------------------------------------------------- --------------
Total 433,483
----------------------------------------------------------------------------- --------------
CLOTHING & TEXTILES--0.0%
-----------------------------------------------------------------------------
75,000 Westpoint Stevens, Inc., Sr. Sub. Deb., 9.375%, 12/15/2005 77,438
----------------------------------------------------------------------------- --------------
CONSUMER PRODUCTS--0.1%
-----------------------------------------------------------------------------
50,000 Herff Jones, Inc., Sr. Sub. Note, 11.00%, 8/15/2005 53,750
-----------------------------------------------------------------------------
50,000 (c)ICON Fitness Corp., Sr. Disc. Note, 0/14.00%, 11/15/2006 26,125
-----------------------------------------------------------------------------
50,000 Playtex Family Products Corp., Sr. Sub. Note, 9.00%, 12/15/2003 49,750
-----------------------------------------------------------------------------
50,000 (c)Rayovac Corp., Sr. Sub. Note, 10.25%, 11/1/2006 51,875
-----------------------------------------------------------------------------
50,000 Simmons Co., Sr. Sub. Note, 10.75%, 4/15/2006 52,250
----------------------------------------------------------------------------- --------------
Total 233,750
----------------------------------------------------------------------------- --------------
CONTAINER & GLASS PRODUCTS--0.1%
-----------------------------------------------------------------------------
50,000 Owens Illinois, Inc., Sr. Sub. Note, 9.75%, 8/15/2004 52,250
-----------------------------------------------------------------------------
50,000 Packaging Resources Inc., Sr. Note, 11.625%, 5/1/2003 52,750
----------------------------------------------------------------------------- --------------
Total 105,000
----------------------------------------------------------------------------- --------------
COSMETICS & TOILETRIES--0.0%
-----------------------------------------------------------------------------
50,000 Revlon Consumer Products, Sr. Sub. Note, 10.50%, 2/15/2003 52,625
----------------------------------------------------------------------------- --------------
ECOLOGICAL SERVICES & EQUIPMENT--0.0%
-----------------------------------------------------------------------------
50,000 (c)Allied Waste, Sr. Sub. Note, 10.25%, 12/1/2006 51,313
-----------------------------------------------------------------------------
50,000** (b)Mid-American Waste System, Sr. Sub. Note, 12.25%, 2/15/2003 20,500
----------------------------------------------------------------------------- --------------
Total 71,813
----------------------------------------------------------------------------- --------------
ELECTRONICS--0.0%
-----------------------------------------------------------------------------
50,000 Advanced Micro Devices, Sr. Secd. Note, 11.00%, 8/1/2003 54,438
----------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
-----------------------------------------------------------------------------
FOOD & DRUG RETAILERS--0.1%
-----------------------------------------------------------------------------
$ 25,000 Carr Gottstein Foods Co., Sr. Sub. Note, 12.00%, 11/15/2005 $ 26,750
-----------------------------------------------------------------------------
50,000 Ralph's Grocery Co., Sr. Note, 10.45%, 6/15/2004 51,938
-----------------------------------------------------------------------------
50,000 Smith's Food & Drug , Sr. Sub. Note, 11.25%, 5/15/2007 55,000
----------------------------------------------------------------------------- --------------
Total 133,688
----------------------------------------------------------------------------- --------------
FOOD PRODUCTS--0.1%
-----------------------------------------------------------------------------
50,000 (c)International Home Foods, Sr. Sub. Note, 10.375%, 11/1/2006 51,375
-----------------------------------------------------------------------------
50,000 Specialty Foods Corp., Sr. Note, 11.125%, 10/1/2002 48,750
-----------------------------------------------------------------------------
25,000 Van De Kamp's, Inc., Sr. Sub. Note, 12.00%, 9/15/2005 27,500
----------------------------------------------------------------------------- --------------
Total 127,625
----------------------------------------------------------------------------- --------------
FOREST PRODUCTS--0.1%
-----------------------------------------------------------------------------
25,000 Four M Corp, Sr. Note, 12.00%, 6/1/2006 25,813
-----------------------------------------------------------------------------
50,000 Repap New Brunswick, 2nd Priority Sr. Secd. Note, 10.625%,
4/15/2005 48,750
-----------------------------------------------------------------------------
50,000 Riverwood International, Sr. Sub. Note, 10.875%, 4/1/2008 45,500
-----------------------------------------------------------------------------
50,000 Stone Container, Sr. Note, 11.50%, 10/1/2004 52,750
----------------------------------------------------------------------------- --------------
Total 172,813
----------------------------------------------------------------------------- --------------
HEALTHCARE--0.1%
-----------------------------------------------------------------------------
50,000 (c)Dade International, Inc., Sr. Sub. Note, 11.125%, 5/1/2006 54,250
-----------------------------------------------------------------------------
50,000 (c)Prime Succession Acq., Sr. Sub. Note, 10.75%, 8/15/2004 54,250
-----------------------------------------------------------------------------
50,000 Tenet Healthcare, Sr. Sub. Note, 10.125%, 3/1/2005 55,500
----------------------------------------------------------------------------- --------------
Total 164,000
----------------------------------------------------------------------------- --------------
HOTELS, MOTELS, INNS & CASINOS--0.0%
-----------------------------------------------------------------------------
50,000 Courtyard By Marriott, Sr. Note, 10.75%, 2/1/2008 53,000
----------------------------------------------------------------------------- --------------
INDUSTRIAL PRODUCTS & EQUIPMENT--0.1%
-----------------------------------------------------------------------------
25,000 Cabot Safety Corp., Sr. Sub. Note, 12.50%, 7/15/2005 28,063
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
-----------------------------------------------------------------------------
INDUSTRIAL PRODUCTS & EQUIPMENT--CONTINUED
-----------------------------------------------------------------------------
$ 50,000 (c)Euramax International PLC, Sr. Sub. Note, 11.25%, 10/1/2006 $ 51,500
-----------------------------------------------------------------------------
50,000 Mettler-Toledo, Inc., Sr. Sub. Note, 9.75%, 10/1/2006 52,625
-----------------------------------------------------------------------------
50,000 Unifrax Investment Corp., Sr. Note, 10.50%, 11/1/2003 51,500
----------------------------------------------------------------------------- --------------
Total 183,688
----------------------------------------------------------------------------- --------------
LEISURE & ENTERTAINMENT--0.1%
-----------------------------------------------------------------------------
100,000 Amf Group, Inc., Sr. Sub. Disc. Note, 0/12.25%, 3/15/2006 63,750
-----------------------------------------------------------------------------
25,000 Cobblestone Golf, Sr. Note, 11.5%, 6/1/2003 26,188
-----------------------------------------------------------------------------
100,000 Six Flags Theme Parks, Sr. Sub. Disc. Note, 0/12.25%, 6/15/2005 92,500
----------------------------------------------------------------------------- --------------
Total 182,438
----------------------------------------------------------------------------- --------------
MACHINERY & EQUIPMENT--0.1%
-----------------------------------------------------------------------------
50,000 Alvey Systems, Sr. Sub. Note, 11.375%, 1/31/2003 52,500
-----------------------------------------------------------------------------
50,000 (c)Clark Material, Sr. Note, 10.75%, 11/15/2006 51,375
-----------------------------------------------------------------------------
33,000 Primeco Inc., Sr. Sub. Note, 12.75%, 3/1/2005 37,620
-----------------------------------------------------------------------------
50,000 (c)Tokheim Corporation, Sr. Sub. Note, 11.50%, 8/1/2006 52,875
----------------------------------------------------------------------------- --------------
Total 194,370
----------------------------------------------------------------------------- --------------
METALS & MINING--0.0%
-----------------------------------------------------------------------------
50,000 Royal Oak Mines, Sr. Sub. Note, 11.00%, 8/15/2006 51,125
----------------------------------------------------------------------------- --------------
OIL & GAS--0.1%
-----------------------------------------------------------------------------
50,000 (c)Abraxas Petroleum Corp., Sr. Note, 11.50%, 11/1/2004 51,875
-----------------------------------------------------------------------------
50,000 Falcon Drilling Company, Sr. Note, 9.75%, 1/15/2001 52,500
-----------------------------------------------------------------------------
50,000 Mesa Operating Company, Sr. Sub. Note, 10.625%, 7/1/2006 54,125
-----------------------------------------------------------------------------
50,000 United Meridian Corp., Sr. Sub. Note, 10.375%, 10/15/2005 54,625
----------------------------------------------------------------------------- --------------
Total 213,125
----------------------------------------------------------------------------- --------------
PRINTING & PUBLISHING--0.1%
-----------------------------------------------------------------------------
50,000 Garden State Newspapers, Inc., Sr. Sub. Note, 12.00%, 7/1/2004 53,625
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
-----------------------------------------------------------------------------
PRINTING & PUBLISHING--CONTINUED
-----------------------------------------------------------------------------
K-III Communications Corp., 500 Pfd. Shares, Series D, $10.00 $ 47,000
-----------------------------------------------------------------------------
$ 50,000 (c)Petersen Publishing, Sr. Sub. Note, 11.125%, 11/15/2006 51,313
----------------------------------------------------------------------------- --------------
Total 151,938
----------------------------------------------------------------------------- --------------
SERVICES--0.0%
-----------------------------------------------------------------------------
25,000 Coinmach Corp., Sr. Note, 11.75%, 11/15/2005 27,125
-----------------------------------------------------------------------------
50,000 (c)Ryder TRS, Inc., Sr. Sub. Note, 10%, 12/1/2006 51,188
----------------------------------------------------------------------------- --------------
Total 78,313
----------------------------------------------------------------------------- --------------
STEEL--0.1%
-----------------------------------------------------------------------------
25,000 Bayou Steel Corp., 1st Mtg. Note, 10.25%, 3/1/2001 23,375
-----------------------------------------------------------------------------
25,000 EnviroSource, Inc., Sr. Note, 9.75%, 6/15/2003 23,355
-----------------------------------------------------------------------------
50,000 GS Technologies Operating Co., Inc., Sr. Note, 12.00%, 9/1/2004 51,750
-----------------------------------------------------------------------------
25,000 Republic Engineered Steel, 1st Mtg. Note, 9.875%, 12/15/2001 22,844
----------------------------------------------------------------------------- --------------
Total 121,324
----------------------------------------------------------------------------- --------------
SURFACE TRANSPORTATION--0.1%
-----------------------------------------------------------------------------
25,000 Ameritruck Distribution, Sr. Sub. Note, 12.25%, 11/15/2005 24,875
-----------------------------------------------------------------------------
50,000 Gearbulk Holding Limited, Sr. Note, 11.25%, 12/1/2004 54,500
-----------------------------------------------------------------------------
25,000 Great Dane Holdings, Sr. Sub. Deb., 12.75%, 8/1/2001 25,125
-----------------------------------------------------------------------------
50,000 (c)Statia Terminals, 1st Mtg. Note, 11.75%, 11/15/2003 50,750
-----------------------------------------------------------------------------
50,000 Stena AB, Sr. Note, 10.50%, 12/15/2005 53,563
----------------------------------------------------------------------------- --------------
Total 208,813
----------------------------------------------------------------------------- --------------
TELECOMMUNICATIONS & CELLULAR--0.3%
-----------------------------------------------------------------------------
50,000 American Communications , Sr. Disc. Note, 0/12.75%, 4/1/2006 27,375
-----------------------------------------------------------------------------
100,000 (c)Brooks Fiber Properties, Sr. Disc. Note, 0/10.875%, 11/1/2006 63,500
-----------------------------------------------------------------------------
100,000 Intermedia Communications, Sr. Disc. Note, 0/12.50%, 5/15/2006 66,250
-----------------------------------------------------------------------------
50,000 Millicom International , Sr. Disc. Note, 13.50%, 6/1/2006 29,625
-----------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OR FOREIGN VALUE
CURRENCY IN U.S.
PAR AMOUNT DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
STOCKS--CONTINUED
- ----------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
-----------------------------------------------------------------------------
TELECOMMUNICATIONS & CELLULAR--CONTINUED
-----------------------------------------------------------------------------
$ 25,000* (b)Mobilemedia Communication, Sr. Sub. Note, 9.375%, 11/1/2007 $ 13,750
-----------------------------------------------------------------------------
75,000 Nextel Communications, Inc., Sr. Disc. Note, 0/11.50%, 9/1/2003 56,813
-----------------------------------------------------------------------------
50,000 Paging Network, Sr. Sub. Note, 10.125%, 8/1/2007 50,313
-----------------------------------------------------------------------------
50,000 Sygnet Wireless, Inc., Sr. Note, 11.50%, 10/1/2006 50,500
-----------------------------------------------------------------------------
100,000 Teleport Communications, Sr. Disc. Note, 0/11.125%, 7/1/2007 68,500
-----------------------------------------------------------------------------
50,000 Vanguard Cellular Systems, Deb., 9.375%, 4/15/2006 50,375
----------------------------------------------------------------------------- --------------
Total 477,001
----------------------------------------------------------------------------- --------------
UTILITIES--0.1%
-----------------------------------------------------------------------------
75,000 California Energy Co., Sr. Disc. Note, 0/10.25%, 1/15/2004 78,563
-----------------------------------------------------------------------------
El Paso Electric Co., 542 PIK Pfd. Shares, Series A, 11.40% 59,756
----------------------------------------------------------------------------- --------------
Total 138,319
----------------------------------------------------------------------------- --------------
TOTAL HIGH YIELD BONDS 5,183,186
----------------------------------------------------------------------------- --------------
FOREIGN BONDS--5.4%
-----------------------------------------------------------------------------
AUSTRALIAN DOLLAR--0.3%
-----------------------------------------------------------------------------
134,000 Queensland Treas Global, Local Government Guarantee, 8.00%, 5/14/2003 114,452
-----------------------------------------------------------------------------
175,000 Queensland Treas Global, Local Government Guarantee, 8.00%, 8/14/2001 148,082
-----------------------------------------------------------------------------
150,000 State Bank Of New South Wales, 12.25%, 2/26/2001 144,600
----------------------------------------------------------------------------- --------------
Total 407,134
----------------------------------------------------------------------------- --------------
BELGIAN FRANC--0.1%
-----------------------------------------------------------------------------
2,112,000 Belgian Government, Bond, 6.50%, 3/31/2005 70,291
-----------------------------------------------------------------------------
6,000,000 Belgium Kingdom, 7.75%, 10/15/2004 215,500
----------------------------------------------------------------------------- --------------
Total 285,791
----------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN VALUE
CURRENCY IN U.S.
PAR AMOUNT DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN BONDS--CONTINUED
-----------------------------------------------------------------------------
CANADIAN DOLLAR--0.3%
-----------------------------------------------------------------------------
290,000 Canada Government, Deb., 6.50%, 6/1/2004 $ 224,809
-----------------------------------------------------------------------------
375,000 Ontario Hydro, 9.00%, 6/24/2002 324,816
----------------------------------------------------------------------------- --------------
Total 549,625
----------------------------------------------------------------------------- --------------
DENMARK KRONE--0.3%
-----------------------------------------------------------------------------
1,844,000 Denmark-Bullet, Bond, 8.00%, 3/15/2006 341,528
-----------------------------------------------------------------------------
1,200,000 Denmark, 8.00%, 5/15/2003 224,757
----------------------------------------------------------------------------- --------------
Total 566,285
----------------------------------------------------------------------------- --------------
FRENCH FRANC--0.2%
-----------------------------------------------------------------------------
1,044,000 France O.A.T., Bond, 7.25%, 4/25/2006 224,037
-----------------------------------------------------------------------------
150,500 France O.A.T., Bond, 7.50%, 4/25/2005 208,383
----------------------------------------------------------------------------- --------------
Total 432,420
----------------------------------------------------------------------------- --------------
DEUTSCHE MARK--1.3%
-----------------------------------------------------------------------------
300,000 Bundesobligationen, Deb., 7.25%, 10/20/1997 201,697
-----------------------------------------------------------------------------
188,000 Deutschland Republic, Deb., 6.25%, 1/4/2024 116,973
-----------------------------------------------------------------------------
33,000,000 KFW International Finance, 6.00%, 11/29/1999 331,738
-----------------------------------------------------------------------------
350,000 KFW International Finance, Bank Guarantee, 6.75%, 6/20/2005 243,116
-----------------------------------------------------------------------------
1,400,000 KFW International Finance, 7.00%, 5/12/2000 289,947
-----------------------------------------------------------------------------
1,100,000 Treuhandanstalt, 7.75%, 10/1/2002 809,928
-----------------------------------------------------------------------------
744,000 Treuhandanstalt, Foreign Government Guarantee, 6.875%,
6/11/2003 525,410
----------------------------------------------------------------------------- --------------
Total 2,518,809
----------------------------------------------------------------------------- --------------
IRISH POUND--0.2%
-----------------------------------------------------------------------------
108,000 Irish Government, Bond, 6.5%, 10/18/2001 186,385
-----------------------------------------------------------------------------
108,000 Treasury, Deb., 6.25%, 4/1/1999 183,571
----------------------------------------------------------------------------- --------------
Total 369,956
----------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN VALUE
CURRENCY IN U.S.
PAR AMOUNT DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN BONDS--CONTINUED
-----------------------------------------------------------------------------
ITALIAN LIRA--0.4%
-----------------------------------------------------------------------------
110,000,000 Btps, Bond, 10.50%, 11/1/2000 $ 81,711
-----------------------------------------------------------------------------
1,040,000,000 Buoni Poliennali Del Tes, 9.50%, 1/1/2005 770,141
----------------------------------------------------------------------------- --------------
Total 851,852
----------------------------------------------------------------------------- --------------
JAPANESE YEN--0.5%
-----------------------------------------------------------------------------
65,000,000 Export-Import Bank Japan, 4.375%, 10/1/2003 649,857
-----------------------------------------------------------------------------
42,000,000 Interamerican Development, Deb., 7.25%, 5/15/2000 442,954
----------------------------------------------------------------------------- --------------
Total 1,092,811
----------------------------------------------------------------------------- --------------
NETHERLAND GUILDERS --0.3%
-----------------------------------------------------------------------------
70,000 Bank Ned Gemeenten, Bond, 6.375%, 1/4/2006 42,366
-----------------------------------------------------------------------------
90,000 Lkb-global Bond, Bank Guarantee, 6.00%, 1/25/2006 58,982
-----------------------------------------------------------------------------
700,000 Netherlands Government, 5.75%, 1/15/2004 416,111
-----------------------------------------------------------------------------
210,000 Netherlands Government, 6.00%, 1/15/2006 125,199
----------------------------------------------------------------------------- --------------
Total 642,658
----------------------------------------------------------------------------- --------------
NEW ZEALAND DOLLAR--0.1%
-----------------------------------------------------------------------------
143,000 New Zealand Government, 8.00%, 2/15/2001 105,770
-----------------------------------------------------------------------------
105,000 New Zealand Government, Bond, 8.00%, 7/15/1998 75,947
----------------------------------------------------------------------------- --------------
Total 181,717
----------------------------------------------------------------------------- --------------
NORWEGIAN KRONE--0.2%
-----------------------------------------------------------------------------
800,000 NGB, Bond, 9.00%, 1/31/1999 135,619
-----------------------------------------------------------------------------
630,000 Norwegian Government, Bond, 7.00%, 5/31/2001 104,611
-----------------------------------------------------------------------------
473,000 Norwegian Government, Foreign Government Guarantee, 5.75%, 11/30/2004 $ 72,394
----------------------------------------------------------------------------- --------------
Total 312,624
----------------------------------------------------------------------------- --------------
PORTUGUESE ESCUDO--0.0%
-----------------------------------------------------------------------------
8,250,000 Portuguese Ot's, Bond, 11.875%, 2/23/2000 $ 61,649
----------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN VALUE
CURRENCY IN U.S.
PAR AMOUNT DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
BONDS--CONTINUED
- ----------------------------------------------------------------------------------------------
FOREIGN BONDS--CONTINUED
-----------------------------------------------------------------------------
SPANISH PESETA--0.3%
-----------------------------------------------------------------------------
40,000,000 Spanish Government, 10.00%, 2/28/2005 $ 366,898
-----------------------------------------------------------------------------
29,000,000 Spanish Government, Bond, 8.80%, 4/30/2006 246,368
-----------------------------------------------------------------------------
6,510,000 Spanish Government, Bond, 9.40%, 4/30/1999 54,034
-----------------------------------------------------------------------------
6,480,000 Spanish Government., Deb., 10.10%, 2/28/2001 57,126
----------------------------------------------------------------------------- --------------
Total 724,426
----------------------------------------------------------------------------- --------------
SWEDISH KRONA--0.3%
-----------------------------------------------------------------------------
1,000,000 Stadshypotekskas, Foreign Government Guarantee, Series 1551, 7.50%, 3/17/1999 155,221
-----------------------------------------------------------------------------
2,300,000 Sweden, 6.00%, 2/9/2005 324,399
----------------------------------------------------------------------------- --------------
Total 479,620
----------------------------------------------------------------------------- --------------
UNITED KINGDOM POUND--0.6%
-----------------------------------------------------------------------------
127,000 British Gas PLC, 8.875%, 7/8/2008 224,326
-----------------------------------------------------------------------------
108,000 UK Treasury, Deb., 8.50%, 12/7/2005 195,475
-----------------------------------------------------------------------------
365,000 UK Conversion, 9.00%, 3/3/2000 650,279
-----------------------------------------------------------------------------
30,000 UK Treasury, Bond, 8.00%, 12/7/2015 52,927
-----------------------------------------------------------------------------
108,000 United Kingdom Treasury, Bond, 7.50%, 12/7/2006 181,346
----------------------------------------------------------------------------- --------------
Total 1,304,353
----------------------------------------------------------------------------- --------------
TOTAL FOREIGN BONDS 10,781,730
----------------------------------------------------------------------------- --------------
TOTAL BONDS (IDENTIFIED COST $125,107,565) 128,146,512
----------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- --------------
(A)CASH EQUIVALENTS--6.0%
- ----------------------------------------------------------------------------------------------
(D)REPURCHASE AGREEMENTS--6.0%
-----------------------------------------------------------------------------
$ 11,150,000 BT Securities Corporation, 5.720%, dated 11/29/1996, due
12/2/1996 $ 11,150,000
-----------------------------------------------------------------------------
1,000,000 (e)Goldman Sachs Group, LP, 5.320%, dated 11/18/1996, due
12/18/1996 1,000,000
----------------------------------------------------------------------------- --------------
TOTAL REPURCHASE AGREEMENTS (AT AMORTIZED COST) 12,150,000
----------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (IDENTIFIED COST $189,812,893)(F) $ 200,235,951
----------------------------------------------------------------------------- --------------
</TABLE>
(a) This security is subject to dollar roll transactions.
(b) Non-income producing security.
(c) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. At November 30, 1996, these securities
amounted to $2,847,102 which represents 1.42% of net assets.
(d) The repurchase agreements are fully collateralized by U.S. government and/or
agency obligations. The investments in the repurchase agreements are through
participation in joint accounts with other Federated funds.
(e) Although final maturity falls beyond seven days, a liquidity feature is
included in each transaction to permit termination of the repurchase
agreement within seven days if the credit worthiness of the issuer is
downgraded.
(f) The cost of investments for federal tax purposes amounts to $189,924,376.
The net unrealized appreciation of investments on a federal tax basis
amounts to $10,311,575 which is comprised of $11,494,947 appreciation and
$1,183,372 depreciation at November 30, 1996.
Note: The categories of investments are shown as a percentage of net assets
($200,883,298) at November 30, 1996.
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
The following acronym(s) are used throughout this portfolio:
ACES--Adjustable Convertible Extendable Securities
ADR--American Depository Receipt
GDR--Global Depository Receipt
LP--Limited Partnership
PEPS--Participating Equity Preferred Stock
PIK--Payment in Kind
PLC--Public Limited Company
SA--Support Agreement
TBA--To Be Announced
*MOBILEMEDIA COMMUNICATIONS.
On November 1, 1996, MobileMedia Communications failed to make its scheduled
interest payment. Subsequent to November 30, 1996 holdings in these securities
have been sold.
**MID-AMERICAN WASTE SYSTEMS, INC.
On February 15, 1996 and August 15, 1996, Mid-American Waste Systems failed to
make its scheduled interest payment. Currently, the company is in negotiations
with its debt holders and has retained an investment bank to evaluate its
options. The unofficial subordinated bondholders group has retained legal
counsel and financial advisors and is monitoring the situation closely.
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED GROWTH AND INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------------------------
Total investments in securities, at value (identified cost: $189,812,893,
and tax cost: $189,924,376) $ 200,235,951
- ---------------------------------------------------------------------------------------------------
Cash denominated in foreign securities (identified cost: $401) 401
- ---------------------------------------------------------------------------------------------------
Income receivable 1,944,223
- ---------------------------------------------------------------------------------------------------
Receivable for investments sold 692,567
- ---------------------------------------------------------------------------------------------------
Receivable for shares sold 179,160
- ---------------------------------------------------------------------------------------------------
Deferred expenses 27,506
- --------------------------------------------------------------------------------------------------- -------------
Total assets 203,079,808
- ---------------------------------------------------------------------------------------------------
LIABILITIES:
- ----------------------------------------------------------------------------------------
Payable for investments purchased $ 977,682
- ----------------------------------------------------------------------------------------
Payable for dollar roll transactions 964,786
- ----------------------------------------------------------------------------------------
Payable to Bank 70,164
- ----------------------------------------------------------------------------------------
Payable for shares redeemed 72,034
- ----------------------------------------------------------------------------------------
Payable for taxes withheld 6,501
- ----------------------------------------------------------------------------------------
Payable for foreign currency exchange contracts 421
- ----------------------------------------------------------------------------------------
Accrued expenses 104,922
- ---------------------------------------------------------------------------------------- ---------
Total liabilities 2,196,510
- --------------------------------------------------------------------------------------------------- -------------
Net Assets for 17,674,924 shares outstanding $ 200,883,298
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------------------------
Paid in capital $ 186,775,845
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and translation of assets and liabilities
in foreign currency 10,422,133
- ---------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments, foreign currency transactions,
and futures contracts 2,038,887
- ---------------------------------------------------------------------------------------------------
Undistributed net investment income 1,646,433
- --------------------------------------------------------------------------------------------------- -------------
Total Net Assets $ 200,883,298
- --------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ---------------------------------------------------------------------------------------------------
Institutional Shares: $156,635,110 / 13,779,534 shares outstanding $11.37
- --------------------------------------------------------------------------------------------------- -------------
Select Shares: $44,248,188 / 3,895,390 shares outstanding $11.36
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED GROWTH AND INCOME FUND
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Dividends (net of foreign taxes withheld of $26,172) $1,288,418
- ----------------------------------------------------------------------------------------------------
Interest (net of dollar roll expense of $50,073) (net of foreign taxes withheld of $9,097) 8,443,514
- ---------------------------------------------------------------------------------------------------- ----------
Total income 9,731,932
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- -----------------------------------------------------------------------------------------
Investment advisory fee $1,264,932
- -----------------------------------------------------------------------------------------
Administrative personnel and services fee 155,001
- -----------------------------------------------------------------------------------------
Custodian fees 112,653
- -----------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 93,029
- -----------------------------------------------------------------------------------------
Directors'/Trustees' fees 4,242
- -----------------------------------------------------------------------------------------
Auditing fees 14,622
- -----------------------------------------------------------------------------------------
Legal fees 4,053
- -----------------------------------------------------------------------------------------
Portfolio accounting fees 90,982
- -----------------------------------------------------------------------------------------
Distribution services fee--Select Shares 262,062
- -----------------------------------------------------------------------------------------
Shareholder services fee--Institutional Shares 334,548
- -----------------------------------------------------------------------------------------
Shareholder services fee--Select Shares 87,354
- -----------------------------------------------------------------------------------------
Share registration costs 58,840
- -----------------------------------------------------------------------------------------
Printing and postage 49,716
- -----------------------------------------------------------------------------------------
Insurance premiums 4,482
- -----------------------------------------------------------------------------------------
Taxes 2,684
- -----------------------------------------------------------------------------------------
Miscellaneous 18,146
- ----------------------------------------------------------------------------------------- ---------
Total expenses 2,557,346
- -----------------------------------------------------------------------------------------
Waivers--
- ------------------------------------------------------------------------------
Waiver of investment advisory fee $(179,385)
- ------------------------------------------------------------------------------
Waiver of distribution services fee--Select Shares (87,354)
- ------------------------------------------------------------------------------
Waiver of shareholder services fee--Institutional Shares (267,638)
- ------------------------------------------------------------------------------ ---------
Total waivers (534,377)
- ----------------------------------------------------------------------------------------- ---------
Net expenses 2,022,969
- ---------------------------------------------------------------------------------------------------- ----------
Net investment income 7,708,963
- ---------------------------------------------------------------------------------------------------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FOREIGN CURRENCY, AND FUTURES CONTRACTS:
- ----------------------------------------------------------------------------------------------------
Net realized gain on investments, foreign currency transactions, and futures contracts 2,283,641
- ----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments, translation of assets and liabilities in
foreign currency, and futures contracts 4,291,960
- ---------------------------------------------------------------------------------------------------- ----------
Net realized and unrealized gain on investments, foreign currency, and futures contracts 6,575,601
- ---------------------------------------------------------------------------------------------------- ----------
Change in net assets resulting from operations $14,284,564
- ---------------------------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED GROWTH AND INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30,
1996 1995
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- --------------------------------------------------------------------------------
OPERATIONS--
- --------------------------------------------------------------------------------
Net investment income $ 7,708,963 $ 4,047,273
- --------------------------------------------------------------------------------
Net realized gain (loss) on investments, foreign currency transactions,
and futures contracts ($2,127,966 and $2,295,469, net gains, respectively,
as computed for federal tax purposes) 2,283,641 2,155,646
- --------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments, trans-
lation of assets and liabilities in foreign currency, and futures contracts 4,291,960 6,986,534
- -------------------------------------------------------------------------------- --------------- ---------------
Change in net assets resulting from operations 14,284,564 13,189,453
- -------------------------------------------------------------------------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS--
- --------------------------------------------------------------------------------
Distributions from net investment income
- --------------------------------------------------------------------------------
Institutional Shares (5,990,819) (2,937,306)
- --------------------------------------------------------------------------------
Select Shares (1,327,197) (373,022)
- --------------------------------------------------------------------------------
Distributions from net realized gains on investments, foreign currency
transactions, and futures contracts
- --------------------------------------------------------------------------------
Institutional Shares (1,517,396) --
- --------------------------------------------------------------------------------
Select Shares (372,550) --
- -------------------------------------------------------------------------------- --------------- ---------------
Change in net assets resulting from distributions to shareholders (9,207,962) (3,310,328)
- -------------------------------------------------------------------------------- --------------- ---------------
SHARE TRANSACTIONS--
- --------------------------------------------------------------------------------
Proceeds from sale of shares 103,412,568 87,791,342
- --------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 5,072,213 1,555,355
- --------------------------------------------------------------------------------
Cost of shares redeemed (41,180,003) (18,214,182)
- -------------------------------------------------------------------------------- --------------- ---------------
Change in net assets resulting from share transactions 67,304,778 71,132,515
- -------------------------------------------------------------------------------- --------------- ---------------
Change in net assets 72,381,380 81,011,640
- --------------------------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------------------------
Beginning of period 128,501,918 47,490,278
- -------------------------------------------------------------------------------- --------------- ---------------
End of period (including undistributed net investment income of
$1,646,433 and $1,288,552, respectively) $ 200,883,298 $ 128,501,918
- -------------------------------------------------------------------------------- --------------- ---------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED GROWTH AND INCOME FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
(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 portfolios. The financial statements
included herein are only those of Federated Managed Growth And Income Fund (the
"Fund"), a diversified portfolio. The financial statements of the other
portfolios are presented separately. The assets of each portfolio are segregated
and a shareholder's interest is limited to the portfolio in which shares are
held. The investment objective of the Fund is to seek current income and capital
appreciation.
The Fund offers two classes of shares: Institutional Shares and Select Shares.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Listed equity securities are valued at the last sale
price reported on a national securities exchange. U.S. government
securities, listed corporate bonds, (other fixed income and asset-backed
securities), and unlisted securities and private placement securities are
generally valued at the mean of the latest bid and asked price as furnished
by an independent pricing service. Short-term securities are valued at the
prices provided by an independent pricing service. However, short-term
securities with remaining maturities of sixty days or less at the time of
purchase may be valued at amortization cost, which approximates fair market
value.
With respect to valuation of foreign securities, trading in foreign
countries may be completed at times which vary from the closing of the New
York Stock Exchange. Therefore, foreign securities are valued at the latest
closing price on the exchange on which they are traded prior to the closing
of the New York Stock Exchange. Foreign securities quoted in foreign
currencies are translated into U.S. dollars at the foreign exchange rate in
effect at noon, eastern time, on the day the value of the foreign security
is determined.
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.
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral
securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code"). Dividend
income and distributions to shareholders are recorded on the ex-dividend
date.
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 passive foreign investment company
transactions. The following reclassifications have been made to the
financial statements.
<TABLE>
<CAPTION>
INCREASE (DECREASE)
ACCUMULATED UNDISTRIBUTED NET
NET REALIZED INVESTMENT
GAIN/LOSS INCOME
<S> <C>
$33,066 ($33,066)
</TABLE>
Net investment income, net realized gains/losses, and net assets were not
affected by this reclassification.
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
However, federal taxes may be imposed on the Fund upon the disposition of
certain investments in passive foreign investment companies. Withholding
taxes on foreign interest and dividends have been provided for in
accordance with the Fund's understanding of the applicable country's tax
rules and rates.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
and are being amortized over a period not to exceed five years from the
Fund's commencement date.
FUTURES CONTRACTS--The Fund purchases stock index futures contracts to
manage cashflows, enhance yield, and to potentially reduce transaction
costs. Upon entering into a stock index futures contract with a broker, the
Fund is required to deposit in a segregated account a specified amount of
cash or U.S. government securities. Futures contracts are valued daily and
unrealized gains or losses are recorded in a "variation margin" account.
Daily, the Fund receives from or pays to the broker a specified amount of
cash based upon changes in the variation margin account. When a contract is
closed, the Fund recognizes a realized gain or loss. 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, 1996, the Fund had realized
gains of $376,628 on future contracts. As of November 30, 1996, the Fund
had no outstanding futures contracts.
FOREIGN EXCHANGE CONTRACTS--The Fund may enter into foreign currency
contracts or the delayed delivery of securities or foreign currency
exchange transactions. These contracts to sell are used to hedge the Fund's
securities against currency fluctuations. Risks may arise upon entering
these transactions from the potential inability of counter-parties 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 purposes as unrealized
until the settlement date. At November 30, 1996, the Fund had outstanding
foreign currency commitments as set forth below:
<TABLE>
<CAPTION>
IN UNREALIZED
SETTLEMENT CONTRACTS TO EXCHANGE CONTRACTS APPRECIATION
CONTRACTS SOLD DATE DELIVER/RECEIVE FOR AT VALUE (DEPRECIATION)
<S> <C> <C> <C> <C> <C>
Brazilian Real 12/02/1996 9,498 $ 9,204 $ 9,195 $ 9
New Zealand Dollar 12/03/1996 59,360 41,790 42,220 (430)
------- ----------- ----------- ------
Total 68,858 50,994 51,415 (421)
------- ----------- ----------- ------
</TABLE>
FOREIGN CURRENCY TRANSLATION--The accounting records of the Fund are
maintained in U.S. dollars. All assets and liabilities denominated in
foreign currencies ("FC") are translated into U.S. dollars based on the
rate of exchange of such currencies against U.S. dollars on the date of
valuation. Purchases and sales of securities, income and expenses are
translated at the rate of exchange quoted on the respective date that such
transactions are recorded. Differences between income and expense amounts
recorded and collected or paid are adjusted when reported by the custodian
bank. The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
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,
1996 is as follows:
<TABLE>
<CAPTION>
ACQUISITION
SECURITY ACQUISITION DATE COST
<S> <C> <C>
Abraxas Petroleum Corp. 11/05/1996 $ 50,000
Acer, Inc. 07/19/1996 10,100
Allied Waste , Sr. Sub. Note 11/25/1996 50,000
Astor Corp., Sr. Sub. Note 10/02/1996 49,750
Bayer Corp., Deb. 03/21/1996-04/17/1996 444,986
Blue Bird Body Co. 11/13/1996 49,848
Bombay Suburban Electric Supply 02/29/1996 24,480
Brooks Fiber Properties, Sr. Disc. Note 11/01/1996 56,790
Cheung Kong Infrastructure 07/11/1996-08/22/1996 29,944
Chilectra S.A. 02/28/1996 5,428
China Resources Bejing Land 11/05/1996 2,621
Clark Material, Sr. Note 11/22/1996 50,000
Crompton Greaves Ltd. 07/01/1996-07/02/1996 29,758
CS Wireless Systems, Inc. 02/16/1996 62,524
Dade International, Inc., Sr. Sub. Note 04/30/1996-05/17/1996 50,906
Elevadores Atlas 09/25/1996 20,494
Euramax International Plc, Sr. Sub. Note 09/18/1996 50,000
First Nationwide Escrow, Sr. Sub. Note 09/13/1996 50,625
Freeport Terminal (Malta), Gtd. Global Note 06/16/1994 284,100
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ACQUISITION
SECURITY ACQUISITION DATE COST
<S> <C> <C>
Grupo Financiero Bancomer, S.A. de C.V., Class B 11/06/1995-01/17/1996 $ 16,067
ICON Fitness Corp., Sr. Disc. Note 11/15/1996 25,573
International Home Foods, Sr. Sub. Note 10/29/1996 50,000
Japan Tobacco, 06/17/1996-08/01/1996 83,299
Larsen & Toubro Ltd., 06/05/1996 39,800
Mahindra and Mahindra 01/22/1996-02/02/1996 19,450
Outsourcing Solutions, Sr. Sub. Note 10/31/1996 50,000
Petersen Publishing, Sr. Sub. Note 11/20/1996 50,000
Prime Succession Acq., Sr. Sub. Note 08/13/1996 50,000
Rayovac Corp., Sr. Sub. Note 10/17/1996 50,000
Ryder TRS, Inc., Sr. Sub. Note 11/20/1996 50,000
Sakura Finance (Bermuda), Conv. Pfd 09/12/1996 54,397
Shanghai Industrial Holdings LTD 05/23/1996 21,867
Statia Terminals, 1st Mtg. Note 11/22/1996 50,000
Steel Authority of India 04/22/1996-04/23/1996 18,769
Sumitomo Bank International, Conv. Bond 06/06/1996 18,360
Tokheim Corporation, Sr. Sub. Note 08/16/1996-09/04/1996 50,813
Westinghouse Electric Corp., PEPS, Series C 09/27/1995-03/14/1996 357,463
World Financial, Pass Thru Cert., Series 96 WFP-B 11/18/1996 250,000
NGC Corp. 11/15/1996 31,545
</TABLE>
DOLLAR ROLL TRANSACTIONS--The Fund enters into dollar roll transactions,
with respect to mortgage securities issued by GNMA, FNMA and FHLMC, in
which the Fund sells mortgage securities to financial institutions and
simultaneously agrees to accept substantially similar (same type, coupon
and maturity) securities at a later date at an agreed upon price. Dollar
roll transactions are short-term financing arrangements which will not
exceed twelve months. The Fund will use the proceeds generated from the
transactions to invest in short-term investments, which may enhance the
Fund's current yield and total return.
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30,
1996 1995
<S> <C> <C> <C> <C>
INSTITUTIONAL SHARES SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------ ----------- -------------- ----------- --------------
Shares sold 7,128,986 $ 78,333,565 6,226,565 $ 65,821,031
- ------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 334,449 3,648,682 122,850 1,277,967
- ------------------------------------------------------
Shares redeemed (2,992,691) (32,944,715) (1,487,709) (15,675,825)
- ------------------------------------------------------ ----------- -------------- ----------- --------------
Net change resulting from Institutional share
transactions 4,470,744 $ 49,037,532 4,861,706 $ 51,423,173
- ------------------------------------------------------ ----------- -------------- ----------- --------------
<CAPTION>
YEAR ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30,
1996 1995
SELECT SHARES SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
- ------------------------------------------------------ ----------- -------------- ----------- --------------
Shares sold 2,283,902 $ 25,079,003 2,065,372 $ 21,970,311
- ------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 130,571 1,423,531 26,322 277,388
- ------------------------------------------------------
Shares redeemed (747,832) (8,235,288) (238,977) (2,538,357)
- ------------------------------------------------------ ----------- -------------- ----------- --------------
Net change resulting from Select share transactions 1,666,641 $ 18,267,246 1,852,717 $ 19,709,342
- ------------------------------------------------------ ----------- -------------- ----------- --------------
Net change resulting from share
transactions 6,137,385 $ 67,304,778 6,714,423 $ 71,132,515
- ------------------------------------------------------ ----------- -------------- ----------- --------------
</TABLE>
(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 0.75% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive any portion of its fee. The Adviser can modify or
terminate this voluntary waiver at any time at its sole discretion.
Under the terms of a sub-advisory agreement between the Adviser and Federated
Global Research Corp., (the "Sub-Adviser"), the Sub-Adviser receives an
allocable portion of the Fund's advisory
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
fee. Such allocation is based on the amount of foreign securities which the
Sub-Adviser manages for the Fund. This fee is paid by the Adviser out of its
resources and is not an incremental Fund expense.
ADMINISTRATIVE FEE--Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ is based on the level of average
aggregate daily net assets of all funds advised by subsidiaries of Federated
Investors for the period. The administrative fee received during the period of
the Administrative Services Agreement shall be at least $125,000 per portfolio
and $30,000 per each additional class of shares.
DISTRIBUTION SERVICES FEE--The Fund has adopted a Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will
compensate Federated Securities Corp. ("FSC"), the principal distributor, from
the net assets of the Fund to finance activities intended to result in the sale
of the Fund's Select Shares. The Plan provides that the Fund may incur
distribution expenses up to 0.75% of average daily net assets of Select Shares
annually, to compensate FSC. The distributor may voluntarily choose to waive any
portion of its fee. The distributor can modify or terminate this voluntary
waiver at any time at its sole discretion.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25%
of average daily net assets of the Fund shares for the period. The fee paid to
FSS is used to finance certain services for shareholders and to maintain
shareholder accounts. FSS may voluntarily choose to waive any portion of its
fee. FSS can modify or terminate this voluntary waiver at any time at its sole
discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--FServ, through its
subsidiary, Federated Shareholder Services Company ("FSSC") serves as transfer
and dividend disbursing agent for the Fund. The fee paid to FSSC is based on the
size, type, and number of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses of $86,568 were borne initially
by Adviser. The Fund has agreed to reimburse Adviser for the organizational
expenses during the five year period following effective date. For the period
ended November 30, 1996, the Fund paid $12,569 pursuant to this agreement.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended
November 30, 1996, were as follows:
<TABLE>
<S> <C>
PURCHASES $ 305,392,876
- -------------------------------------------------------------------------------------------------- --------------
SALES $ 241,526,559
- -------------------------------------------------------------------------------------------------- --------------
</TABLE>
(6) CONCENTRATION OF CREDIT RISK
The Fund invests in securities of non-U.S. issuers. Although the Fund maintains
a diversified investment portfolio, the political or economic developments
within a particular country or region may have an adverse effect on the ability
of domiciled issuers to meet their obligations. Additionally, political or
economic developments may have an effect on the liquidity and volatility of
portfolio securities and currency holdings.
At November 30, 1996, the diversification of industries was as follows:
<TABLE>
<CAPTION>
INDUSTRY % OF NET ASSETS
<S> <C>
Aerospace & Military Technology 0.2%
Agency 1.2
Automotive 0.3
Banking 1.5
Basic Industry 1.1
Beverage & Tobacco 0.3
Broadcast Radio & TV 0.2
Broadcasting & Publishing 0.3
Building Materials & Construction 0.1
Business & Public Services 0.1
Business Equipment & Services 0.1
Cable Television 0.5
Chemicals & Plastics 0.6
Clothing & Textiles 0.0
Construction & Housing 0.2
Consumer Durables 0.7
Consumer Non-Durables 2.0
Consumer Products 0.1
Container & Glass Products 0.1
Cosmetics & Toiletries 0.0
Data Processing & Reproduction 0.0
Ecological Services & Equipment 0.2
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY % OF NET ASSETS
<S> <C>
Electric Utilities: West 5.8%
Electronics 0.8
Energy Equipment & Services 0.0
Energy Minerals 1.7
Energy Sources 0.1
Financial 8.6
Financial Intermediaries 1.4
Financial Services 0.2
Food & Drug Retailers 0.2
Food & Household Products 0.2
Food Products 0.1
Forest Products 0.1
Forest Products & Paper 0.1
Government Agency 19.8
Health & Personal Care 0.3
Healthcare 2.0
Hotels, Motels, Inns & Casinos 0.0
Industrial Components 0.0
Industrial Products & Equipment 0.3
Insurance 0.8
Leisure & Entertainment 0.1
Leisure & Tourism 0.2
Machinery & Equipment 0.5
Manufacturing 0.1
Merchandising 0.2
Metals & Mining 0.3
Metals--Non-Ferrous 0.1
Metals--Steel 0.0
Mining 0.0
Miscellaneous Materials & Commodities 0.1
Multi-Industry 0.2
Natural Gas Distribution 0.7
Oil/Gas Transmission 1.6
Pharmaceutical 0.1
Printing & Publishing 0.3
Producer Manufacturing 1.0
Real Estate 0.4
Recreation, Other Consumer Goods 0.2
Retail Trade 0.9
</TABLE>
FEDERATED MANAGED GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY % OF NET ASSETS
<S> <C>
Services 1.3%
Sovereign Government 4.5
State/Provincial 0.2
Steel 0.1
Supranational 0.2
Surface Transportation 0.1
Tobacco 0.0
Technology 1.7
Telecommunications 0.2
Telecommunications & Cellular 0.2
Transportation 0.3
Treasury Securities 29.1
Utilities 2.4
Wholesale & International Trade 0.0
</TABLE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
MANAGED SERIES TRUST
(Federated Managed Growth and Income Fund):
We have audited the accompanying statement of assets and liabilities of
Federated Managed Growth and Income Fund (an investment portfolio of Managed
Series Trust, a Massachusetts business trust), including the schedule of
portfolio of investments, as of November 30, 1996, and 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, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Federated Managed Growth and Income Fund, an investment portfolio of Managed
Series Trust, as of November 30, 1996, 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 15, 1997
APPENDIX
- --------------------------------------------------------------------------------
STANDARD AND POOR'S RATINGS GROUP LONG-TERM DEBT RATINGS
AAA--Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.
A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB--Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.
B--Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or
BB- rating.
CCC--Debt rated CCC has currently identifiable vulnerability to default and is
dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating.
CC--The rating CC typically is applied to debt subordinated to senior debt that
is assigned an actual or implied CCC debt rating.
C--The rating C typically is applied to debt subordinated to senior debt which
is assigned an actual or implied CCC- debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.
CI--The rating CI is reserved for income bonds on which no interest is being
paid.
D--Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D
rating also will be used upon the filing of a bankruptcy petition if debt
service payments are jeopardized.
MOODY'S INVESTORS SERVICE, INC., CORPORATE BOND RATINGS
Aaa--Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment some time in the future.
Baa--Bonds which are rated Baa are considered as medium-grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well.
Ba--Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca--Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C--Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
FITCH INVESTORS SERVICE, INC., LONG-TERM DEBT RATINGS
AAA--Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA--Bonds considered to be investment grade and of very high quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F-1+.
A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB--Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds and, therefore, impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.
BB--Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.
B--Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.
CCC--Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.
CC--Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C--Bonds are in imminent default in payment of interest or principal.
DDD, DD, AND D--Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. DDD
represents the highest potential for recovery on these bonds, and D represents
the lowest potential for recovery.
NR--NR indicates that Fitch does not rate the specific issue.
PLUS (+) OR MINUS (-): Plus or minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the AAA category.
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Federated Managed Growth and Income Fund
Select Shares Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Sub-Adviser
Federated Global Research Corp. 175 Water Street
New York, New York 10038-4965
- ---------------------------------------------------------------------------------------------------------------------
Custodian
State Street Bank and Trust Company P.O. Box 8600
Boston, Massachusetts 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Shareholder Services Company P.O. Box 8600
Boston, Massachusetts 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
FEDERATED MANAGED
GROWTH AND INCOME FUND
SELECT SHARES
PROSPECTUS
A Diversified Portfolio
of Managed Series Trust,
an Open-End Management
Investment Company
Prospectus dated January 31, 1997
[LOGO OF FEDERATED INVESTORS]
Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.
Cusip 56166K404
3122006A-SEL (1/97)
[RECYCLED PAPER LOGO]
FEDERATED MANAGED INCOME FUND
(A PORTFOLIO OF MANAGED SERIES TRUST)
SELECT SHARES
PROSPECTUS
The Select Shares of Federated Managed Income Fund (the "Fund") offered by this
prospectus represent interests in the Fund, which is a diversified investment
portfolio of Managed Series Trust (the "Trust"). The Trust is an open-end
management investment company (a mutual fund).
The investment objective of the Fund is to seek current income. The Fund invests
in both bonds and stocks. Select Shares are sold at net asset value.
THE SELECT SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF
ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THESE SELECT SHARES INVOLVES INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
This prospectus contains the information you should read and know before you
invest in Select Shares of the Fund. Keep this prospectus for future reference.
The Fund has also filed a Statement of Additional Information for Select Shares
and Institutional Shares of all portfolios of the Trust dated January 31, 1997,
with the Securities and Exchange Commission ("SEC"). The information contained
in the Statement of Additional Information is incorporated by reference into
this prospectus. You may request a copy of the Statement of Additional
Information or a paper copy of this prospectus, if you have received your
prospectus electronically, free of charge by calling 1-800-341-7400. To obtain
other information or to make inquiries about the Fund, contact the Fund at the
address listed in the back of this prospectus. The Statement of Additional
Information, material incorporated by reference into this document, and other
information regarding the Fund are maintained electronically with the SEC at
Internet Web site (http:// www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
Prospectus dated January 31, 1997
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--SELECT SHARES 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Investment Limitations 14
TRUST INFORMATION 15
- ------------------------------------------------------
Management of the Trust 15
Distribution of Select Shares 19
Administration of the Fund 20
Brokerage Transactions 20
NET ASSET VALUE 20
- ------------------------------------------------------
INVESTING IN SELECT SHARES 21
- ------------------------------------------------------
Share Purchases 21
Minimum Investment Required 21
What Shares Cost 22
Systematic Investment Program 22
Certificates and Confirmations 22
Dividends 22
Capital Gains 22
REDEEMING SELECT SHARES 22
- ------------------------------------------------------
Through a Financial Institution 23
Telephone Redemption 23
Written Requests 23
Systematic Withdrawal Program 24
Accounts with Low Balances 24
SHAREHOLDER INFORMATION 24
- ------------------------------------------------------
Voting Rights 24
TAX INFORMATION 25
- ------------------------------------------------------
Federal Income Tax 25
State and Local Taxes 25
PERFORMANCE INFORMATION 25
- ------------------------------------------------------
OTHER CLASSES OF SHARES 26
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES 27
- ------------------------------------------------------
FINANCIAL STATEMENTS 28
- ------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 58
- ------------------------------------------------------
APPENDIX 59
- ------------------------------------------------------
ADDRESSES 62
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SELECT SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price)............................ None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price).................................................................... None
Contingent Deferred Sales Charge (as a percentage of original purchase
price or redemption proceeds, as applicable)........................................................... None
Redemption Fee (as a percentage of amount redeemed, if applicable)....................................... None
Exchange Fee............................................................................................. None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver) (1)........................................................................ 0.15%
12b-1 Fee (after waiver) (2)............................................................................. 0.50%
Total Other Expenses..................................................................................... 0.85%
Shareholder Services Fee................................................................. 0.25%
Total Operating Expenses (3)................................................................... 1.50%
</TABLE>
- ------------
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.75%.
(2) The 12b-1 fee has been reduced to reflect the voluntary waiver of a portion
of the 12b-1 fee. The distributor can terminate the voluntary waiver at any
time at its sole discretion. The maximum 12b-1 fee is 0.75%.
(3) The total operating expenses would have been 2.35% absent the voluntary
waivers of portions of the management fee and the 12b-1 fee.
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of Select Shares of the Fund will
bear, either directly or indirectly. For more complete descriptions of the
various costs and expenses, see "Investing in Select Shares" and "Trust
Information." Wire-transferred redemptions of less than $5,000 may be subject to
additional fees.
LONG-TERM SHAREHOLDERS MAY PAY MORE THAN THE ECONOMIC EQUIVALENT OF THE
MAXIMUM FRONT-END SALES CHARGES PERMITTED UNDER THE RULES OF THE NATIONAL
ASSOCIATION OF SECURITIES DEALERS, INC.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment assuming
(1) 5% annual return and (2) redemption at the end of each time
period................................................................ $15 $47 $82 $179
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
FEDERATED MANAGED INCOME FUND
FINANCIAL HIGHLIGHTS--SELECT SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 58.
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1996 1995 1994(A)
- -------------------------------------------------------------------------------- --------- --------- -----------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.54 $ 9.77 $ 10.00
- --------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------
Net investment income 0.53 0.48 0.28
- --------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments,
foreign currency, and futures contracts 0.10 0.83 (0.25)
- -------------------------------------------------------------------------------- --------- --------- -----------
Total from investment operations 0.63 1.31 0.03
- -------------------------------------------------------------------------------- --------- --------- -----------
LESS DISTRIBUTIONS
- --------------------------------------------------------------------------------
Distributions from net investment income (0.54) (0.54) (0.26)
- --------------------------------------------------------------------------------
Distributions from net realized gain on investments,
foreign currency transactions, and futures contracts (0.07) -- --
- -------------------------------------------------------------------------------- --------- --------- -----------
Total distributions (0.61) (0.54) (0.26)
- -------------------------------------------------------------------------------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 10.56 $ 10.54 $ 9.77
- -------------------------------------------------------------------------------- --------- --------- -----------
TOTAL RETURN (B) 6.23% 13.76% 0.26%
- --------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------------------------------------------
Expenses 1.50% 1.50% 1.42%*
- --------------------------------------------------------------------------------
Net investment income 5.02% 5.56% 5.24%*
- --------------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.85% 1.06% 1.26%*
- --------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $25,459 $13,927 $3,198
- --------------------------------------------------------------------------------
Average commission rate paid $0.0003
- --------------------------------------------------------------------------------
Portfolio turnover 164% 165% 153 %
- --------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 25, 1994 (date of initial
public investment) to November 30, 1994. For the period from the start of
business, January 27, 1994 to May 24, 1994, the net investment income was
distributed to the Trust's adviser.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
Further information about the Fund's performance is contained in the Fund's
annual report for the fiscal year ended November 30, 1996, which can be obtained
free of charge.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated November 15, 1993. The Declaration of Trust permits the Trust to
offer separate series of shares of beneficial interest representing interests in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. As of the date of this prospectus, the Board of
Trustees ("Trustees") have established two classes of shares of the Fund, known
as Select Shares and Institutional Shares. This prospectus relates only to
Select Shares.
Select Shares ("Shares") of the Fund are designed primarily for retail and
private banking customers of financial institutions as a convenient means of
accumulating an interest in a professionally managed, diversified portfolio of
bonds and equities. A minimum initial investment of $1,500 is required.
Shares are currently sold and redeemed at net asset value without a sales charge
imposed by the Fund.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is to seek current income. There can be, of
course, no assurance that the Fund will achieve its investment objective. The
Fund's investment objective cannot be changed without the approval of
shareholders. Unless otherwise noted, the Fund's investment policies may be
changed by the Trustees without shareholder approval.
INVESTMENT POLICIES
ASSET ALLOCATION. The Fund will primarily invest in two types of assets: bonds
and equities. The Fund's investment approach is based on the conviction that,
over time, the choice of investment asset categories and their relative
long-term weightings within the portfolio will have the primary impact on its
investment performance. Of secondary importance to the Fund's performance are
the shifting of money among asset categories and the selection of securities
within asset categories. Therefore, the Fund will pursue its investment
objective in the following manner: (1) by setting long-term ranges for each
asset category; (2) by moving money among asset categories within those defined
ranges; and (3) by actively selecting securities within each of the asset
categories. The Fund attempts to minimize risk by allocating its assets in such
a fashion.
Within each of these types of investments, the Fund has designated asset
categories. As a matter of investment policy, ranges have been set for each
asset category's portfolio commitment.
The Fund will invest between 70 and 90 percent of its assets in bonds. The bond
asset categories are U.S. Treasury securities, mortgage-backed securities,
investment-grade corporate bonds, high yield corporate bonds and foreign bonds.
The Fund will invest between 10 and 30 percent of its assets in equities. The
Fund's ability to invest a portion of its assets in equities offers the
opportunity for higher return than other income-
oriented funds. The equities asset categories are large company stocks, utility
stocks, small company stocks, foreign stocks, and equity reserves.
The following is a summary of the asset categories and the amount of the Fund's
total assets which may be invested in each asset category:
<TABLE>
<S> <C>
ASSET CATEGORY RANGE
BONDS 70-90%
U.S. Treasury Securities 0-90%
Mortgage-Backed Securities 0-45%
Investment-Grade Corporate Bonds 0-45%
High Yield Corporate Bonds 0-10%
Foreign Bonds 0-10%
EQUITIES 10-30%
Large Company Stocks 0-30%
Utility Stocks 0-15%
Small Company Stocks 0-3%
Foreign Stocks 0-3%
Equity Reserves 0-12.5%
</TABLE>
The Fund's adviser will regularly review the Fund's allocation among the asset
categories and make any changes, within the ranges established for each asset
category, that it believes will provide the most favorable outlook for achieving
the Fund's investment objective. The Fund's adviser will attempt to exploit
inefficiencies among the various asset categories. If, for example, U.S.
Treasury securities are judged to be unusually attractive relative to other
asset categories, the allocation for U.S. Treasury securities may be moved to
its upper limit. At other times, when U.S. Treasury securities appear to be
overvalued, the commitment may be moved down to a lesser allocation. There is no
assurance, however, that the adviser's attempts to pursue this strategy will
result in a benefit to the Fund.
Each asset category within the Fund will be a managed portfolio. The Fund will
seek superior investment performance through security selection in addition to
determining the percentage of its assets to allocate to each of the asset
categories.
BOND ASSET CATEGORIES. The portion of the Fund's assets which is invested in
bonds ("Bond Assets") will be allocated among the following asset categories
within the ranges specified. The prices of fixed income securities fluctuate
inversely to the direction of interest rates. The average duration of the Fund's
Bond Assets will be not less than two nor more than four years. Duration is a
commonly used measure of the potential volatility of the price of a debt
security, or the aggregate market value of a portfolio of debt securities, prior
to maturity. Securities with shorter durations generally have less volatile
prices than securities of comparable quality with longer durations. The Fund
should be expected to maintain a higher average duration during periods of lower
expected market volatility, and a lower average duration during periods of
higher expected market volatility.
U.S. TREASURY SECURITIES. U.S. Treasury securities are direct obligations
of the U.S. Treasury, such as U.S. Treasury bills, notes, and bonds. The
Fund may invest up to 90 percent of its total
assets in U.S. Treasury securities. The Fund may invest in other U.S.
government securities if, in the judgment of the adviser, other U.S.
government securities are more attractive than U.S. Treasury securities.
MORTGAGE-BACKED SECURITIES. Mortgage-backed securities represent an
undivided interest in a pool of residential mortgages or may be
collateralized by a pool of residential mortgages. Mortgage-backed
securities are generally either issued or guaranteed by the Government
National Mortgage Association ("GNMA"), Federal National Mortgage
Association ("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC") or
other U.S. government agencies or instrumentalities. Mortgage-backed
securities may also be issued by single-purpose, stand-alone finance
subsidiaries or trusts of financial institutions, government agencies,
investment bankers, or companies related to the construction industry. The
Fund may invest up to 45 percent of its total assets in mortgage-backed
securities.
INVESTMENT-GRADE CORPORATE BONDS. Investment-grade corporate bonds are
corporate debt obligations having fixed or floating rates of interest and
which are rated BBB or higher by a nationally recognized statistical rating
organization ("NRSRO"). The Fund may invest up to 45 percent of its total
assets in investment-grade corporate bonds. In certain cases, the Fund's
adviser may choose bonds which are unrated if it determines that such bonds
are of comparable quality or have similar characteristics to the
investment-grade bonds described above. Yankee bonds, which are U.S.
dollar-denominated bonds issued and traded in the United States by foreign
issuers, are treated as investment-grade corporate bonds for purposes of
the asset category ranges.
HIGH YIELD CORPORATE BONDS. High yield corporate bonds are corporate debt
obligations having fixed or floating rates of interest and which are rated
BB or lower by NRSROs (commonly known as junk bonds). The Fund may invest
up to ten percent of its total assets in high yield corporate bonds. There
is no minimal acceptable rating for a security to be purchased or held in
the Fund's portfolio, and the Fund may, from time to time, purchase or hold
securities rated in the lowest rating category. (See "Appendix.") In
certain cases the Fund's adviser may choose bonds which are unrated if it
determines that such bonds are of comparable quality or have similar
characteristics to the high yield bonds described above.
INVESTMENT RISKS. Lower-rated securities will usually offer higher
yields than higher-rated securities. However, there is more risk
associated with these investments. This is because of reduced
creditworthiness and increased risk of default. Lower-rated securities
generally tend to reflect short-term corporate and market developments
to a greater extent than higher-rated securities which react primarily
to fluctuations in the general level of interest rates. Short-term
corporate and market developments affecting the price or liquidity of
lower-rated securities could include adverse news affecting major
issuers, underwriters, or dealers of lower-rated corporate debt
obligations. In addition, since there are fewer investors in
lower-rated securities, it may be harder to sell the securities at an
optimum time. As a result of these factors, lower-rated securities tend
to have more price volatility and carry more risk to principal than
higher-rated securities.
Many corporate debt obligations, including many lower-rated bonds,
permit the issuers to call the security and thereby redeem their
obligations earlier than the stated maturity dates. Issuers are more
likely to call bonds during periods of declining interest rates. In
these cases, if the Fund owns a bond which is called, the Fund will
receive its return of principal earlier than expected and would likely
be required to reinvest the proceeds at lower interest rates, thus
reducing income to the Fund.
FOREIGN BONDS. Foreign bonds are high-quality debt securities of countries
other than the United States. The Fund's portfolio of foreign bonds will be
comprised mainly of foreign government, foreign governmental agency or
supranational institution bonds. The Fund will also invest in high-quality
debt securities issued by established corporations located primarily in
economically developed countries other than the United States and subject
to the Fund's credit limitations for foreign bonds. The Fund may invest up
to ten percent of its total assets in foreign bonds.
EQUITY ASSET CATEGORIES. The portion of the Fund's assets which is invested in
equities will be allocated among the following asset categories within the
ranges specified:
LARGE COMPANY STOCKS. Large company stocks are common stocks and
securities convertible into or exchangeable for common stocks, such as
rights and warrants, of high-quality companies selected by the Fund's
adviser. Ordinarily, these companies will be in the top 25 percent of their
industries with regard to revenues and have a market capitalization of
$500,000,000 or more. However, other factors, such as a company's product
position, market share, current earnings and/or dividend and earnings
growth prospects, will be considered by the Fund's adviser and may outweigh
revenues. The Fund may invest up to 30 percent of its total assets in large
company stocks.
UTILITY STOCKS. Utility stocks are common stocks and securities
convertible into or exchangeable for common stocks, such as rights and
warrants, of utility companies. The Fund may invest up to 15 percent of its
total assets in utility stocks. Common stocks of utilities are generally
characterized by higher dividend yields and lower growth rates than common
stocks of industrial companies. Under normal market conditions, the higher
income stream from utility stocks tends to make them less volatile than
stocks of industrial companies.
SMALL COMPANY STOCKS. Small company stocks are common stocks and
securities convertible into or exchangeable for common stocks, such as
rights and warrants, of companies with a market capitalization (market
price x number of shares outstanding) below the top 1,000 stocks that
comprise the large and mid-range capitalization sector of the United States
equity market. These stocks are comparable to, but not limited to, the
stocks comprising the Russell 2000 Index, an index of small capitalization
stocks. The Fund may invest up to three percent of its total assets in
small company stocks.
FOREIGN STOCKS. The Fund invests in non-U.S. equity securities. A
substantial portion of these will be equity securities of established
companies in economically developed countries. These securities may be
either dollar-denominated or denominated in foreign currencies. American
Depository Receipts ("ADRs"), including dollar denominated ADRs which are
issued by domestic banks and traded in the United States on exchanges or
over-the-counter, are treated
as foreign stocks for purposes of the asset category ranges. The Fund may
invest up to three percent of its total assets in foreign stocks.
EQUITY RESERVES. When the adviser believes that a temporary defensive
position is available, the Fund may invest in equity reserves. Equity
reserves will be used to adjust the risk level of the equity portion of the
Fund in response to market conditions. Equity reserves will consist of U.S.
and foreign short-term money market instruments such as commercial paper
rated A-1 by Standard and Poor's Ratings Group ("Standard & Poor's"),
Prime-1 by Moody's Investors Service, Inc. ("Moody's"), or F-1 by Fitch
Investors Service, Inc. ("Fitch"). The Fund may invest up to 12.5 percent
of its total assets in equity reserves.
ACCEPTABLE INVESTMENTS
U.S. TREASURY AND OTHER U.S. GOVERNMENT SECURITIES. The U.S. Treasury and
other U.S. government securities in which the Fund invests are either
issued or guaranteed by the U.S. government, its agencies or
instrumentalities. The U.S. government securities in which the Fund may
invest are limited to:
direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds;
notes, bonds, and discount notes issued or guaranteed by U.S. government
agencies and instrumentalities supported by the full faith and credit of
the United States;
notes, bonds, and discount notes of U.S. government agencies or
instrumentalities which receive or have access to federal funding; and
notes, bonds, and discount notes of other U.S. government
instrumentalities supported only by the credit of the instrumentalities.
The Fund may also purchase U.S. Treasury securities and the U.S. government
securities noted above pursuant to repurchase agreements.
MORTGAGE-BACKED SECURITIES. Mortgage-backed securities are securities
collateralized by residential mortgages. The mortgage-backed securities in
which the Fund may invest may be:
issued by an agency of the U.S. government, typically GNMA, FNMA or
FHLMC;
privately issued securities which are collateralized by pools of
mortgages in which each mortgage is guaranteed as to payment of principal
and interest by an agency or instrumentality of the U.S. government;
privately issued securities which are collateralized by pools of
mortgages in which payment of principal and interest are guaranteed by
the issuer and such guarantee is collateralized by U.S. government
securities; and
other privately issued securities in which the proceeds of the issuance
are invested in mortgage-backed securities and payment of the principal
and interest are supported by the credit of an agency or instrumentality
of the U.S. government.
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"). CMOs are bonds issued by
single-purpose, stand-alone finance subsidiaries or trusts of financial
institutions, government agencies, investment bankers, or companies
related to the construction industry. Most of the CMOs in which the
Fund would invest use the same basic structure:
Several classes of securities are issued against a pool of mortgage
collateral. The most common structure contains four classes of
securities. The first three (A, B, and C bonds) pay interest at
their stated rates beginning with the issue date; the final class
(or Z bond) typically receives the residual income from the
underlying investments after payments are made to the other
classes.
The cash flows from the underlying mortgages are applied first to
pay interest and then to retire securities.
The classes of securities are retired sequentially. All principal
payments are directed first to the shortest-maturity class (or A
bonds). When those securities are completely retired, all principal
payments are then directed to the next-shortest maturity security
(or B bond). This process continues until all of the classes have
been paid off.
Because the cash flow is distributed sequentially instead of pro rata
as with pass-through securities, the cash flows and average lives of
CMOs are more predictable, and there is a period of time during which
the investors in the longer-maturity classes receive no principal
paydowns. The interest portion of these payments is distributed by the
Fund as income and the capital portion is reinvested.
The Fund will invest only in CMOs which are rated AAA or Aaa by an
NRSRO.
REAL ESTATE MORTGAGE INVESTMENT CONDUITS ("REMICS"). REMICs are
offerings of multiple class real estate mortgage-backed securities
which qualify and elect treatment as such under provisions of the
Internal Revenue Code. Issuers of REMICs may take several forms, such
as trusts, partnerships, corporations, associations or a segregated
pool of mortgages. Once REMIC status is elected and obtained, the
entity is not subject to federal income taxation. Instead, income is
passed through the entity and is taxed to the person or persons who
hold interests in the REMIC. A REMIC interest must consist of one or
more classes of "regular interests," some of which may offer adjustable
rates, and a single class of "residual interests." To qualify as a
REMIC, substantially all of the assets of the entity must be in assets
directly or indirectly secured principally by real property.
CHARACTERISTICS OF MORTGAGE-BACKED SECURITIES. Mortgage-backed
securities have yield and maturity characteristics corresponding to the
underlying mortgages. Distributions to holders of mortgage-backed
securities include both interest and principal payments. Principal
payments represent the amortization of the principal of the underlying
mortgages and any prepayments of principal due to prepayment,
refinancing, or foreclosure of the underlying mortgages. Although
maturities of the underlying mortgage loans may range up to 30 years,
amortization and prepayments substantially shorten the effective
maturities of mortgage-backed securities. Due to these features,
mortgage-backed securities are less effective as a means of "locking
in" attractive long-term interest rates than fixed-income securities
which pay only a stated amount of interest until maturity, when the
entire principal amount is returned. This is caused by the need to
reinvest at lower interest rates both distributions of principal
generally and significant prepayments which become more likely as
mortgage interest rates decline. Since comparatively high interest
rates cannot be effectively "locked in," mortgage-backed securities may
have less
potential for capital appreciation during periods of declining interest
rates than other non-callable, fixed-income government securities of
comparable stated maturities. However, mortgage-backed securities may
experience less pronounced declines in value during periods of rising
interest rates.
In addition, some of the CMOs purchased by the Fund may represent an
interest solely in the principal repayments or solely in the interest
payments on mortgage-backed securities (stripped mortgage-backed
securities or "SMBSs"). Due to the possibility of prepayments on the
underlying mortgages, SMBSs may be more interest-rate sensitive than
other securities purchased by the Fund. If prevailing interest rates
fall below the level at which SMBSs were issued, there may be
substantial prepayments on the underlying mortgages, leading to the
relatively early prepayments of principal-only SMBSs and a reduction in
the amount of payments made to holders of interest-only SMBSs. It is
possible that the Fund might not recover its original investment in
interest-only SMBSs if there are substantial prepayments on the
underlying mortgages. Therefore, interest-only SMBSs generally increase
in value as interest rates rise and decrease in value as interest rates
fall, counter to changes in value experienced by most fixed-income
securities. The Fund's adviser intends to use this characteristic of
interest-only SMBSs to reduce the effects of interest rate changes on
the value of the Fund's portfolio, while continuing to pursue the
Fund's investment objective.
CORPORATE BONDS. The investment-grade corporate bonds in which the Fund
invests are:
rated within the four highest ratings for corporate bonds by Moody's
(Aaa, Aa, A, or Baa), Standard & Poor's (AAA, AA, A, or BBB), or Fitch
(AAA, AA, A, or BBB);
unrated if other long-term debt securities of that issuer are rated, at
the time of purchase, Baa or better by Moody's or BBB or better by
Standard & Poor's or Fitch; or
unrated if determined to be of equivalent quality to one of the foregoing
rating categories by the Fund's adviser.
Securities which are rated BBB by Standard & Poor's or Fitch or Baa by
Moody's have speculative characteristics. Changes in economic conditions or
other circumstances are more likely to lead to weakened capacity to make
principal and interest payments than higher rated bonds. If a security's
rating is reduced below the required minimum after the Fund has purchased
it, the Fund is not required to sell the security, but may consider doing
so.
The high yield corporate bonds in which the Fund invests are rated Ba or
lower by Moody's or BB or lower by Standard & Poor's or Fitch (commonly
known as junk bonds). A description of the rating categories is contained
in the Appendix to this prospectus.
EQUITY SECURITIES. Common stocks represent ownership interest in a
corporation. Unlike bonds, which are debt securities, common stocks have
neither fixed maturity dates nor fixed schedules of promised payments.
Utility stocks are common stocks of utility companies, including water
companies, companies that produce, transmit, or distribute gas and electric
energy and those companies that provide communications facilities, such as
telephone and telegraph companies. Foreign stocks are equity securities of
foreign issuers.
FOREIGN SECURITIES. The foreign bonds in which the Fund invests are rated
within the four highest ratings for bonds by Moody's (Aaa, Aa, A or Baa) or
by Standard & Poor's (AAA, AA, A or BBB) or are unrated if determined to be
of equivalent quality by the Fund's adviser.
INVESTMENT RISKS. Investments in foreign securities involve special
risks that differ from those associated with investments in domestic
securities. The risks associated with investments in foreign securities
apply to securities issued by foreign corporations and sovereign
governments. These risks relate to political and economic developments
abroad, as well as those that result from the differences between the
regulation of domestic securities and issuers and foreign securities
and issuers. These risks may include, but are not limited to,
expropriation, confiscatory taxation, currency fluctuations,
withholding taxes on interest, limitations on the use or transfer of
Fund assets, political or social instability and adverse diplomatic
developments. It may also be more difficult to enforce contractual
obligations or obtain court judgments abroad than would be the case in
the United States because of differences in the legal systems. If the
issuer of the debt or the governmental authorities that control the
repayment of the debt would be unable or unwilling to repay principal
or interest when due in accordance with the terms of such debt, the
Fund may have limited legal recourse in the event of default. Moreover,
individual foreign economies may differ favorably or unfavorably from
the domestic economy in such respects as growth of gross national
product, the rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position.
Additional differences exist between investing in foreign and domestic
securities. Examples of such differences include: less publicly
available information about foreign issuers; credit risks associated
with certain foreign governments; the lack of uniform financial
accounting standards applicable to foreign issuers; less readily
available market quotations on foreign issuers; the likelihood that
securities of foreign issuers may be less liquid or more volatile;
generally higher foreign brokerage commissions; and unreliable mail
service between countries.
EQUITY RESERVES. The Fund's equity reserves may be cash received from the
sale of Fund shares, reserves for temporary defensive purposes or to take
advantage of market opportunities.
REPURCHASE AGREEMENTS. Repurchase agreements are arrangements in which
banks, broker/dealers, and other recognized financial institutions sell
securities to the Fund and agree at the time of sale to repurchase them
at a mutually agreed upon time and price. To the extent that the
original seller does not repurchase the securities from the Fund, the
Fund could receive less than the repurchase price on any sale of such
securities.
CONVERTIBLE SECURITIES. Convertible securities are fixed-income securities
which may be exchanged or converted into a predetermined number of the
issuer's underlying common stock at the option of the holder during a
specified time period. Convertible securities may take the form of
convertible preferred stock, convertible bonds or debentures, units
consisting of "usable" bonds and warrants or a combination of the features
of several of these securities.
The investment characteristics of each convertible security vary widely,
which allows convertible securities to be employed for different investment
objectives. The adviser may treat convertible securities as large company
stocks, small company stocks, or high yield bonds for purposes of the asset
category ranges, depending upon current market conditions, including the
relationship of the then-current price to the conversion price. The
convertible securities in which the Fund invests may be rated "high yield"
or of comparable quality at the time of purchase.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Fund may invest in
the securities of other investment companies, but it will not own more than 3
percent of the total outstanding voting stock of any such investment company,
invest more than 5 percent of its total assets in any one such investment
company, or invest more than 10 percent of its total assets in such other
investment companies in general. To the extent that the Fund invests in
securities issued by other investment companies, the Fund will indirectly bear
its proportionate share of any fees and expenses paid by such companies in
addition to the fees and expenses payable directly by the Fund.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies but which are
subject to restrictions on resale under federal securities law. Under criteria
established by the Trustees, certain restricted securities are determined to be
liquid. To the extent that restricted securities are not determined to be
liquid, the Fund will limit their purchase, together with other illiquid
securities including 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.
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.
FOREIGN CURRENCY TRANSACTIONS. The Fund will enter into foreign currency
transactions to obtain the necessary currencies to settle securities
transactions. Currency transactions may be conducted
either on a spot or cash basis at prevailing rates or through forward foreign
currency exchange contracts.
The Fund may also enter into foreign currency transactions to protect Fund
assets against adverse changes in foreign currency exchange rates or exchange
control regulations. Such changes could unfavorably affect the value of Fund
assets which are denominated in foreign currencies, such as foreign securities
or funds deposited in foreign banks, as measured in U.S. dollars. Although
foreign currency exchanges may be used by the Fund to protect against a decline
in the value of one or more currencies, such efforts may also limit any
potential gain that might result from a relative increase in the value of such
currencies and might, in certain cases, result in losses to the Fund.
CURRENCY RISKS. To the extent that debt securities purchased by the Fund
are denominated in currencies other than the U.S. dollar, changes in
foreign currency exchange rates will affect the Fund's net asset value; the
value of interest earned; gains and losses realized on the sale of
securities; and net investment income and capital gain, if any, to be
distributed to shareholders by the Fund. If the value of a foreign currency
rises against the U.S. dollar, the value of the Fund's assets denominated
in that currency will increase; correspondingly, if the value of a foreign
currency declines against the U.S. dollar, the value of the Fund's assets
denominated in that currency will decrease.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward foreign currency
exchange contract ("forward contract") is an obligation to purchase or sell an
amount of a particular currency at a specific price and on a future date agreed
upon by the parties.
Generally, no commission charges or deposits are involved. At the time the Fund
enters into a forward contract, Fund assets with a value equal to the Fund's
obligation under the forward contract are segregated and are maintained until
the contract has been settled. The Fund will not enter into a forward contract
with a term of more than one year.
The Fund will generally enter into a forward contract to provide the proper
currency to settle a securities transaction at the time the transaction occurs
("trade date"). The period between trade date and settlement date will vary
between 24 hours and 30 days, depending upon local custom.
The Fund may also protect against the decline of a particular foreign currency
by entering into a forward contract to sell an amount of that currency
approximating the value of all or a portion of the Fund's assets denominated in
that currency ("hedging"). The success of this type of short-term hedging
strategy is highly uncertain due to the difficulties of predicting short-term
currency market movements and of precisely matching forward contract amounts and
the constantly changing value of the securities involved. Although the adviser
will consider the likelihood of changes in currency values when making
investment decisions, the adviser believes that it is important to be able to
enter into forward contracts when it believes the interests of the Fund will be
served. The Fund will not enter into forward contracts for hedging purposes in a
particular currency in an amount in excess of the Fund's assets denominated in
that currency. The Fund will not invest more than 3% of its total assets in
forward foreign currency exchange contracts.
OPTIONS. The Fund may deal in options on foreign currencies, foreign currency
futures, securities, and securities indices, which options may be listed for
trading on a national securities exchange or
traded over-the-counter. The Fund will use options only to manage interest rate
and currency risks. The Fund may write covered call options to generate income.
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.
When the Fund purchases futures contracts, an amount of cash and cash
equivalents, equal to the underlying commodity value of the futures contracts
(less any related margin deposits), will be deposited in a segregated account
with the custodian (or the broker, if legally permitted) to collateralize the
position and thereby insure that the use of such futures contracts are
unleveraged. When
the Fund sells futures contracts, it will either own or have the right to
receive the underlying future or security or will make deposits to collateralize
the position as discussed above.
RISKS. When the Fund uses futures and options on futures as hedging
devices, there is a risk that the prices of the securities subject to the
futures contracts may not correlate perfectly with the prices of the
securities in the Fund's portfolio. This may cause the futures contract and
any related options to react differently than the portfolio securities to
market changes. In addition, the investment adviser could be incorrect in
its expectations about the direction or extent of market factors such as
stock price movements. In these events, the Fund may lose money on the
futures contract or option.
It is not certain that a secondary market for positions in futures
contracts or for options will exist at all times. Although the investment
adviser will consider liquidity before entering into these transactions,
there is no assurance that a liquid secondary market on an exchange or
otherwise will exist for any particular futures contract or option at any
particular time. The Fund's ability to establish and close out futures and
options positions depends on this secondary market.
PORTFOLIO TURNOVER. Although the Fund does not intend to invest for the purpose
of seeking short-term profits, securities in its portfolio will be sold whenever
the Fund's adviser believes it is appropriate to do so in light of the Fund's
investment objective, without regard to the length of time a particular security
may have been held. The Fund's rate of portfolio turnover may exceed that of
certain other mutual funds with the same investment objective. A higher rate of
portfolio turnover involves correspondingly greater transaction expenses which
must be borne directly by the Fund and, thus, indirectly by its shareholders. In
addition, a high rate of portfolio turnover may result in the realization of
larger amounts of capital gains which, when distributed to the Fund's
shareholders, are taxable to them. (Further information is contained in the
Fund's Statement of Additional Information within the sections "Brokerage
Transactions" and "Tax Status"). Nevertheless, transactions for the Fund's
portfolio will be based only upon investment considerations and will not be
limited by any other considerations when the Fund's adviser deems it appropriate
to make changes in the Fund's portfolio.
INVESTMENT LIMITATIONS
The Fund will not:
borrow money directly or through reverse repurchase agreements or pledge
securities except, under certain circumstances, the Fund may borrow up to
one-third of the value of its total assets and pledge up to 15 percent of
the value of those assets to secure such borrowings;
lend any securities except for portfolio securities; or
underwrite any issue of securities, except as it may be deemed to be an
underwriter under the Securities Act of 1933 in connection with the sale
of restricted securities which the Fund may purchase pursuant to its
investment objective, policies and limitations.
The above investment limitations cannot be changed without shareholder approval.
TRUST INFORMATION
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MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Trust's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. The Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Except as noted below with regard to the sub-adviser,
investment decisions for the Fund are made by Federated Management, the Fund's
investment adviser (the "Adviser"), subject to direction by the Trustees. The
Adviser continually conducts investment research and supervision for the Fund
and is responsible for the purchase or sale of portfolio instruments, for which
it receives an annual fee from the Fund.
ADVISORY FEES. The Fund's Adviser receives an annual investment advisory
fee equal to .75% of 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.
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 $76
billion invested across more than 338 funds under management and/or
administration by its subsidiaries, as of December 31, 1996, Federated Investors
is one of the largest mutual fund investment managers in the United States. With
more than 2,000 employees, Federated continues to be led by the management who
founded the company in 1955. Federated funds are presently at work in and
through 4,500 financial institutions nationwide.
The Trust, the Adviser, and the Sub-Adviser have adopted strict codes of ethics
governing the conduct of all employees who manage the Fund and its portfolio
securities. These codes recognize that such persons owe a fiduciary duty to the
Fund's shareholders and must place the interests of shareholders ahead of the
employees' own interest. Among other things, the codes: require preclearance and
periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered for
purchase or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less than sixty
days. Violations of the codes are subject to review by the Board of Trustees and
could result in severe penalties.
PORTFOLIO MANAGERS' BACKGROUNDS. Charles A. Ritter is the portfolio
manager for the Fund and performs the overall allocation of the assets of
the Fund among the various asset categories. He has performed these duties
since the Fund's inception. In allocating the Fund's assets, Mr. Ritter
evaluates the market environment and economic outlook, utilizing the
services of the Adviser's Investment Strategy Committee. 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:
Scott B. Schermerhorn and Peter R. Anderson are the portfolio managers for
the domestic large company stocks asset category.
Scott B. Schermerhorn has been the Fund's portfolio manager since July 1,
1996. Mr. Schermerhorn joined Federated Investors in 1996 as a Vice
President of the Fund's Adviser. From 1990 through 1996, Mr. Schermerhorn
was a Senior Vice President and Senior Investment Officer at J W Seligman &
Co., Inc. Mr. Schermerhorn received his M.B.A. in Finance and International
Business from Seton Hall University.
Peter R. Anderson has been the Fund's portfolio manager since the Fund's
inception. 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.
Aash M. Shah and James E. Grefenstette are the portfolio managers for the
domestic small company stocks asset category.
Aash M. Shah has been the Fund's portfolio manager since December 1995. 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. in Industrial Administration
from Carnegie Mellon University with a concentration in finance and
accounting. Mr. Shah is a Chartered Financial Analyst.
James E. Grefenstette has been the Fund's portfolio manager since August
1994. Mr. Grefenstette joined Federated Investors in 1992 and has been a
Vice President since July 1996. Mr. Grefenstette served as an Assistant
Vice President of the Fund's Adviser from 1994 to 1996, and an investment
analyst from 1992 to 1994. Mr. Grefenstette was a credit analyst at
Westinghouse Credit Corp. from 1990 until 1992. Mr. Grefenstette received
his M.S. in Industrial Administration from Carnegie Mellon University.
Henry A. Frantzen, Drew J. Collins, Mark S. Kopinski, Frank Semack, and
Alexandre de Bethmann are portfolio managers for the foreign stocks asset
category.
Henry A. Frantzen has been the Fund's portfolio manager 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.
Drew J. Collins has been the Fund's portfolio manager 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 the Fund's portfolio manager 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 the Fund's portfolio manager 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 1980 to 1993. Mr. Semack
received his M.Sc. in economics from the London School of Economics.
Alexandre de Bethmann has been the Fund's portfolio manager 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 A. Frantzen, Drew J. Collins, Robert M. Kowit and Micheal W. Casey
are portfolio managers for the foreign bonds asset category. Messrs.
Frantzen, Collins and Kowit 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.
Micheal W. Casey, Ph.D. has been the Fund's portfolio manager since January
1, 1997. Mr. Casey joined Federated Investors in 1996 as an Assistant Vice
President. Mr. Casey served as an International Economist and Portfolio
Strategist for Maria Fiorini Ramirez Inc. from 1990 to 1996. Mr. Casey
earned a Ph.D. concentrating in economics from The New School for Social
Research and a M.Sc. from the London School of Economics.
Susan M. Nason and Joseph M. Balestrino are portfolio managers for the U.S.
Treasury securities asset category.
Susan M. Nason has been the Fund's portfolio manager since the Fund's
inception. 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. in Industrial
Administration from Carnegie Mellon University.
Joseph M. Balestrino has been the Fund's portfolio manager since March
1995. 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. 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. in Industrial Administration from Carnegie Mellon
University.
Kathleen M. Foody-Malus is the portfolio manager for the mortgage-backed
securities asset category. Ms. Foody-Malus has performed this duty since
the Fund's inception. 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.
Joseph M. Balestrino and Susan M. Nason are portfolio managers for the
investment-grade corporate bonds asset category. They have performed these
duties since the Fund's inception.
Mark E. Durbiano is the portfolio manager for the high yield corporate
bonds asset category. He has performed these duties since the Fund's
inception. Mr. Durbiano joined Federated Investors in 1982 and has been a
Senior Vice President of the Fund's Adviser since January 1996. Mr.
Durbiano was a Vice President of the Fund's Adviser from 1988 through 1995.
Mr. Durbiano is a Chartered Financial Analyst and received his M.B.A. in
Finance from the University of Pittsburgh.
DISTRIBUTION OF SELECT SHARES
Federated Securities Corp. is the principal distributor for Shares. It is a
Pennsylvania corporation organized on November 14, 1969, and is the principal
distributor for a number of investment companies. Federated Securities Corp. is
a subsidiary of Federated Investors.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES. Under a distribution plan adopted
in accordance with Investment Company Act Rule 12b-1 (the "Distribution Plan"),
the distributor may be paid a fee in an amount computed at an annual rate of
.75% of the average daily net assets of Select Shares to finance any activity
which is principally intended to result in the sale of Shares subject to the
Distribution Plan. The distributor may select financial institutions such as
banks, fiduciaries, custodians for public funds, investment advisers, and
broker/dealers to provide sales services or distribution-related support
services as agents for their clients or customers.
The Distribution Plan is a compensation-type plan. As such, the Fund makes no
payments to the distributor except as described above. Therefore, the Fund does
not pay for unreimbursed expenses of the distributor, including amounts expended
by the distributor in excess of amounts received by it from the Fund, interest,
carrying or other financing charges in connection with excess amounts expended,
or the distributor's overhead expenses. However, the distributor may be able to
recover such amount or may earn a profit from future payments made by the Fund
under the Distribution Plan.
In addition, the Fund has entered into a Shareholder Services Agreement with
Federated Shareholder Services, a subsidiary of Federated Investors, under which
the Fund may make payments up to .25% of the average daily net asset value of
the Select Shares to obtain certain personal services for shareholders and for
the maintenance of shareholder accounts. Under the Shareholder Services
Agreement, Federated Shareholder Services will either perform shareholder
services directly or will select financial institutions to perform shareholder
services. Financial institutions will receive fees based upon Shares owned by
their clients or customers. The schedules of such fees and the basis upon which
such fees will be paid will be determined from time to time by the Fund and
Federated Shareholder Services.
SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS. In addition to receiving the
payments under the Distribution Plan and Shareholder Services Agreement,
Federated Securities Corp. and Federated Shareholder Services, from their own
assets, may pay financial institutions supplemental fees for the performance of
substantial sales services, distribution-related support services, or
shareholder services. The support may include sponsoring sales, educational and
training seminars for
their employees, providing sales literature, and engineering computer software
programs that emphasize the attributes of the Fund. Such assistance will be
predicated upon the amount of Shares the financial institution sells or may
sell, and/or upon the type and nature of sales or marketing support furnished by
the financial institution. Any payments made by the distributor may be
reimbursed by the Fund's Adviser or its affiliates.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Services Company, a subsidiary of Federated
Investors, provides administrative personnel and services (including certain
legal and financial reporting services) necessary to operate the Fund. Federated
Services Company 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% on the first $250 million
.125% on the next $250 million
.10% on the next $250 million
.075% 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 Services Company may choose voluntarily to waive a portion of its fee.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the Adviser looks for prompt execution of the order at a favorable
price. In working with dealers, the Adviser will generally use those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. In selecting among firms
believed to meet these criteria, the Adviser may give consideration to those
firms which have sold or are selling shares of the Fund and other funds
distributed by Federated Securities Corp. The Adviser makes decisions on
portfolio transactions and selects brokers and dealers subject to review by the
Trustees.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund's net asset value per Share fluctuates. The net asset value for Shares
is determined by adding the interest of the Shares in the market value of all
securities and other assets of the Fund, subtracting the interest of the Shares
in the liabilities of the Fund and those attributable to Shares, and dividing
the remainder by the total number of Shares outstanding. The net asset value for
Institutional Shares may exceed that of Select Shares due to the variance in
daily net income realized by each class. Such variance will reflect only accrued
net income to which the shareholders of a particular class are entitled.
INVESTING IN SELECT SHARES
- --------------------------------------------------------------------------------
SHARE PURCHASES
Shares are sold on days on which the New York Stock Exchange is open for
business. Shares may be purchased through a financial institution which has a
sales agreement with the distributor or by wire or mail.
To purchase Shares, open an account by calling Federated Securities Corp.
Information needed to establish an account will be taken over the telephone. The
Fund reserves the right to reject any purchase request.
THROUGH A FINANCIAL INSTITUTION. An investor may call his financial institution
(such as a bank or an investment dealer) to place an order to purchase Shares.
Orders through a financial institution are considered received when the Fund is
notified of the purchase order. Purchase orders through a registered
broker/dealer must be received by the broker before 4:00 p.m. (Eastern time) and
must be transmitted by the broker to the Fund before 5:00 p.m. (Eastern time) in
order for Shares to be purchased at that day's price. Purchase orders through
other financial institutions must be received by the financial institution and
transmitted to the Fund before 4:00 p.m. (Eastern time) in order for Shares to
be purchased at that day's price. It is the financial institution's
responsibility to transmit orders promptly.
BY WIRE. To purchase Shares by Federal Reserve wire, call the Fund before 4:00
p.m. (Eastern time) to place an order. The order is considered received
immediately. Payment by federal funds must be received before 3:00 p.m. (Eastern
time) on the next business day following the order. Federal funds should be
wired as follows: Federated Shareholder Services Company, c/o State Street Bank
and Trust Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit to:
Federated Managed Income Fund--Select Shares; Fund Number (this number can be
found on the account statement or by contacting the Fund); Group Number or Wire
Order Number; Nominee or Institution Name; and ABA Number 011000028. Shares
cannot be purchased by wire on holidays when wire transfers are restricted.
Questions on wire purchases should be directed to your shareholder services
representative at the telephone number listed on your account statement.
BY MAIL. To purchase Shares by mail, send a check made payable to Federated
Managed Income Fund--Select Shares to: Federated Shareholder Services Company,
P.O. Box 8600, Boston, Massachusetts 02266-8600. Orders by mail are considered
received when payment by check is converted by State Street Bank into federal
funds. This is normally the next business day after State Street Bank receives
the check.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in Shares is $1,500. Accounts established through
a financial intermediary 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 financial intermediary may be charged an additional service fee
by that financial intermediary.
The net asset value is determined as of the close of trading (normally 4:00 p.m.
Eastern time) on the New York Stock Exchange, Monday through Friday, except on:
(i) days on which there are not sufficient changes in the value of the Fund's
portfolio securities 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.
SYSTEMATIC INVESTMENT PROGRAM
Once a Fund account has been opened, shareholders may add to their investment on
a regular basis. Under this program, funds may be automatically withdrawn
periodically from the shareholder's checking account and invested in Shares at
the net asset value next determined after an order is received by the Fund. A
shareholder may apply for participation in this program through Federated
Securities Corp.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Shareholder Services Company maintains
a share account for each shareholder. Share certificates are not issued unless
requested by contacting the Fund.
Detailed confirmations of each purchase or redemption are sent to each
shareholder. Quarterly confirmations are sent to report dividends paid during
the quarter.
DIVIDENDS
Dividends are declared and paid monthly to all shareholders invested in the Fund
on the record date. Unless shareholders request cash payments by writing the
Fund, dividends are automatically reinvested in additional Shares of the Fund on
payment dates at the ex-dividend date net asset value without a sales charge.
CAPITAL GAINS
Capital gains realized by the Fund, if any, will be distributed at least once
every 12 months.
REDEEMING SELECT SHARES
- --------------------------------------------------------------------------------
The Fund redeems Shares at their net asset value next determined after the Fund
receives the redemption request. Investors who redeem Shares through a financial
intermediary may be charged a service fee by that financial intermediary.
Redemptions will be made on days on which the Fund computes its net asset value.
Redemption requests must be received in proper form and can be made 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
REDEEMING SHARES BY MAIL. Shares may be redeemed in any amount by mailing a
-
written request to: Federated Shareholder Services Company, P.O. Box 8600,
Boston, MA 02266-8600. If Share certificates have been issued, they should be
sent unendorsed with the written request by registered or certified mail to the
address noted above.
The written request should state: the Fund name and the class designation; the
account name as registered with the Fund; the account number; and the number of
shares to be redeemed or the dollar amount requested. All owners of the account
must sign the request exactly as the shares are registered. Normally, a check
for the proceeds is mailed within one business day, but in no event more than
seven days, after the receipt of a proper written redemption request. Dividends
are paid up to and including the day that a redemption request is processed.
Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Fund or a redemption payable other than to
the shareholder of record must have their signatures guaranteed by a commercial
or savings bank, trust company or savings association whose deposits are insured
by an organization which is administered by the Federal Deposit Insurance
Corporation; a member firm of a domestic stock exchange; 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.
SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive payments of a predetermined amount may take
advantage of the Systematic Withdrawal Program. Under this program, Shares are
redeemed to provide for periodic withdrawal payments in an amount directed by
the shareholder. Depending upon the amount of the withdrawal payments, the
amount of dividends paid and capital gains distributions with respect to Shares,
and the fluctuation of the net asset value of Shares redeemed under this
program, redemptions may reduce, and eventually use up, the shareholder's
investment in the Fund. For this reason, payments under this program should not
be considered as yield or income on the shareholder's investment in the Fund. To
be eligible to participate in this program, a shareholder must have an account
value of at least $10,000, other than retirement accounts subject to required
minimum distributions. A shareholder may apply for participation in this program
through Federated Securities Corp.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem Shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $1,500. This requirement
does not apply, however, if the balance falls below $1,500 because of changes in
the Fund's net asset value. Before Shares are redeemed to close an account, the
shareholder is notified in writing and allowed 30 days to purchase additional
Shares to meet the minimum requirement.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights except that, in matters
affecting only a particular fund or class, only shares of that fund or class are
entitled to vote. As a Massachusetts business trust, the Trust is not required
to hold annual shareholder meetings. Shareholder approval will be sought only
for certain changes in the Trust's or the Fund's operation and for the election
of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust entitled to vote.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code applicable to regulated investment companies and to
receive the special tax treatment afforded to such companies.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional Shares.
STATE AND LOCAL TAXES
In the opinion of Houston, Donnelly and Meck, counsel to the Trust, Fund Shares
may be subject to personal property taxes imposed by counties, municipalities,
and school districts in Pennsylvania to the extent that the portfolio securities
in the Fund would be subject to such taxes if owned directly by residents of
those jurisdictions.
Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its total return and yield for Shares.
Total return represents the change, over a specified period of time, in the
value of an investment in Shares after reinvesting all income and capital gain
distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
The yield of Shares is calculated by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by Shares
over a thirty-day period by the maximum offering price per share of Shares on
the last day of the period. This number is then annualized using semi-annual
compounding. The yield does not necessarily reflect income actually earned by
Shares and, therefore, may not correlate to the dividends or other distributions
paid to shareholders.
Shares are sold without a sales charge or other similar non-recurring charges.
Total return and yield will be calculated separately for Select Shares and
Institutional Shares.
From time to time, advertisements for the Fund's Select Shares may refer to
ratings, rankings, and other information in certain financial publications
and/or compare the Fund's Select Shares performance to certain indices.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
The Fund also offers another class of shares called Institutional Shares that
are sold at net asset value primarily to financial institutions acting in a
fiduciary or agency capacity and are subject to a minimum initial investment of
$25,000 over a 90-day period.
Institutional Shares are distributed with no 12b-1 Plan but are subject to
shareholder services fees.
Institutional Shares and Select Shares are subject to certain of the same
expenses. Expense differences, however, between Institutional Shares and Select
Shares may affect the performance of each class.
To obtain more information and a prospectus for Institutional Shares,
investors may call 1-800-341-7400.
FEDERATED MANAGED INCOME FUND
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 58.
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1996 1995 1994(A)
<S> <C> <C> <C>
- -------------------------------------------------------------------------------- --------- --------- ---------
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.54 $ 9.76 $ 10.00
- --------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------
Net investment income 0.59 0.62 0.31
- --------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments,
foreign currency, and futures contracts 0.12 0.78 (0.25)
- -------------------------------------------------------------------------------- --------- --------- ---------
Total from investment operations 0.71 1.40 0.06
- -------------------------------------------------------------------------------- --------- --------- ---------
LESS DISTRIBUTIONS
- --------------------------------------------------------------------------------
Distributions from net investment income (0.62) (0.62) (0.30)
- --------------------------------------------------------------------------------
Distributions from net realized gain on investments, foreign currency
transactions, and futures contracts (0.07) -- --
- -------------------------------------------------------------------------------- --------- --------- ---------
Total distributions (0.69) (0.62) (0.30)
- -------------------------------------------------------------------------------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 10.56 $ 10.54 $ 9.76
- -------------------------------------------------------------------------------- --------- --------- ---------
TOTAL RETURN (B) 6.98% 14.74% 0.55%
- --------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------------------------------------------
Expenses 0.80% 0.75% 0.67%*
- --------------------------------------------------------------------------------
Net investment income 5.72% 6.26% 6.02%*
- --------------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.80% 1.06% 1.01%*
- --------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $67,122 $50,852 $34,692
- --------------------------------------------------------------------------------
Average commission rate paid $0.0003
- --------------------------------------------------------------------------------
Portfolio turnover 164% 165% 153%
- --------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 25, 1994 (date of initial
public investment) to November 30, 1994. For the period from the start of
business, January 18, 1994 to May 24, 1994, the net investment income was
distributed to the Trust's adviser.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
Further information about the Fund's performance is contained in the Fund's
annual report for the fiscal year ended November 30, 1996, which can be obtained
free of charge.
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED INCOME FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR VALUE IN U.S.
UNITS DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- -------------
STOCKS--11.2%
- -------------------------------------------------------------------------------------------------
LARGE COMPANY--5.8%
--------------------------------------------------------------------------------
BASIC INDUSTRY--0.4%
--------------------------------------------------------------------------------
3,400 Allegheny Teledyne, Inc. $ 79,474
--------------------------------------------------------------------------------
700 Betz Laboratories, Inc. 40,512
--------------------------------------------------------------------------------
600 Du Pont (E.I.) de Nemours & Co. 56,550
--------------------------------------------------------------------------------
1,100 Great Lakes Chemical Corp. 58,987
--------------------------------------------------------------------------------
5,000 LTV Corporation 53,750
--------------------------------------------------------------------------------
1,900 Morton International, Inc. 76,712
-------------------------------------------------------------------------------- -------------
Total 365,985
-------------------------------------------------------------------------------- -------------
CONSUMER DURABLES--0.2%
--------------------------------------------------------------------------------
1,500 General Motors Corp., Class H 81,750
--------------------------------------------------------------------------------
800 General Motors Corp. 46,100
--------------------------------------------------------------------------------
1,018 Martin Marietta Materials 23,922
--------------------------------------------------------------------------------
2,400 Rubbermaid, Inc. 57,600
-------------------------------------------------------------------------------- -------------
Total 209,372
-------------------------------------------------------------------------------- -------------
CONSUMER NON-DURABLES--0.8%
--------------------------------------------------------------------------------
1,000 Avon Products, Inc. 55,750
--------------------------------------------------------------------------------
700 CPC International, Inc. 58,274
--------------------------------------------------------------------------------
1,100 Dole Food, Inc., ACES, $2.7475 43,862
--------------------------------------------------------------------------------
1,000 Heinz (H.J.) Co. 37,874
--------------------------------------------------------------------------------
3,600 IBP, Inc. 89,100
--------------------------------------------------------------------------------
700 Kimberly-Clark Corp. 68,424
--------------------------------------------------------------------------------
1,400 Philip Morris Cos., Inc. 144,374
--------------------------------------------------------------------------------
1,300 Tambrands, Inc. 55,574
--------------------------------------------------------------------------------
700 Unilever N.V. 121,187
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES OR IN U.S.
UNITS DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
LARGE COMPANY--CONTINUED
--------------------------------------------------------------------------------
CONSUMER NON-DURABLES--CONTINUED
--------------------------------------------------------------------------------
800 V.F. Corp. $ 54,300
-------------------------------------------------------------------------------- -------------
Total 728,719
-------------------------------------------------------------------------------- -------------
ENERGY MINERALS--0.7%
--------------------------------------------------------------------------------
1,600 Baker Hughes, Inc. 58,600
--------------------------------------------------------------------------------
1,400 Chevron Corp. 93,800
--------------------------------------------------------------------------------
800 Exxon Corp. 75,700
--------------------------------------------------------------------------------
2,500 Occidental Petroleum Corp. 60,000
--------------------------------------------------------------------------------
300 Royal Dutch Petroleum Co. 50,962
--------------------------------------------------------------------------------
900 Texaco, Inc. 89,212
--------------------------------------------------------------------------------
3,400 USX-Marathon Group 77,774
--------------------------------------------------------------------------------
2,492 Union Pacific Resources Group, Inc. 74,448
--------------------------------------------------------------------------------
800 (a)Western Atlas, Inc. 56,400
-------------------------------------------------------------------------------- -------------
Total 636,896
-------------------------------------------------------------------------------- -------------
FINANCE--0.9%
--------------------------------------------------------------------------------
1,448 Allstate Corp. 87,241
--------------------------------------------------------------------------------
900 CIGNA Corp. 127,237
--------------------------------------------------------------------------------
1,000 Chase Manhattan Corp. 94,500
--------------------------------------------------------------------------------
500 Citicorp 54,624
--------------------------------------------------------------------------------
900 Dean Witter, Discover & Co. 61,537
--------------------------------------------------------------------------------
2,300 Federal National Mortgage Association 94,874
--------------------------------------------------------------------------------
1,000 Marsh & McLennan Cos., Inc. 113,374
--------------------------------------------------------------------------------
1,300 National City Corp. 60,287
--------------------------------------------------------------------------------
1,100 Providian Corp. 58,850
--------------------------------------------------------------------------------
1,200 Travelers Group, Inc. 54,000
-------------------------------------------------------------------------------- -------------
Total 806,524
-------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES OR IN U.S.
UNITS DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
LARGE COMPANY--CONTINUED
--------------------------------------------------------------------------------
HEALTH CARE--0.7%
--------------------------------------------------------------------------------
1,500 Abbott Laboratories $ 83,625
--------------------------------------------------------------------------------
1,500 (a)American Home Products Corp. 96,375
--------------------------------------------------------------------------------
1,900 Bard (C.R.), Inc. 53,200
--------------------------------------------------------------------------------
2,700 (a)Biomet, Inc. 44,550
--------------------------------------------------------------------------------
900 Bristol-Myers Squibb Co. 102,375
--------------------------------------------------------------------------------
1,350 Columbia/HCA Healthcare Corp. 54,000
--------------------------------------------------------------------------------
2,600 (a)Healthsource, Inc. 29,250
--------------------------------------------------------------------------------
900 Merck & Co., Inc. 74,700
--------------------------------------------------------------------------------
1,000 Smithkline Beecham, ADR 68,875
--------------------------------------------------------------------------------
1,400 United Healthcare Corp. 60,375
-------------------------------------------------------------------------------- -------------
Total 667,325
-------------------------------------------------------------------------------- -------------
PRODUCER MANUFACTURING--0.4%
--------------------------------------------------------------------------------
580 (a)FMC Corp. 44,805
--------------------------------------------------------------------------------
700 General Electric Co. 72,800
--------------------------------------------------------------------------------
900 Loews Corp. 83,475
--------------------------------------------------------------------------------
1,100 Textron, Inc. 104,913
--------------------------------------------------------------------------------
5,700 (b)Westinghouse Electric Corp., PEPS, Series C, $1.30 97,436
-------------------------------------------------------------------------------- -------------
Total 403,429
-------------------------------------------------------------------------------- -------------
RETAIL TRADE--0.3%
--------------------------------------------------------------------------------
1,900 Dayton-Hudson Corp. 73,863
--------------------------------------------------------------------------------
1,900 Sears, Roebuck & Co. 94,525
--------------------------------------------------------------------------------
3,900 Wal-Mart Stores, Inc. 99,450
-------------------------------------------------------------------------------- -------------
Total 267,838
-------------------------------------------------------------------------------- -------------
SERVICES--0.2%
--------------------------------------------------------------------------------
2,000 Block (H&R), Inc. 58,500
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES OR IN U.S.
UNITS DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
LARGE COMPANY--CONTINUED
--------------------------------------------------------------------------------
SERVICES--CONTINUED
--------------------------------------------------------------------------------
2,900 Browning-Ferris Industries, Inc. $ 77,938
--------------------------------------------------------------------------------
900 Gannett Co., Inc. 70,650
-------------------------------------------------------------------------------- -------------
Total 207,088
-------------------------------------------------------------------------------- -------------
TECHNOLOGY--0.4%
--------------------------------------------------------------------------------
1,300 (a)Analog Devices, Inc. 41,763
--------------------------------------------------------------------------------
1,900 Electronic Data Systems Corp. 91,913
--------------------------------------------------------------------------------
600 Intel Corp. 76,125
--------------------------------------------------------------------------------
200 International Business Machines Corp. 31,875
--------------------------------------------------------------------------------
518 Lucent Technologies, Inc. 26,548
--------------------------------------------------------------------------------
900 Raytheon Co. 46,013
--------------------------------------------------------------------------------
1,200 (a)Rockwell International Corp. 77,100
-------------------------------------------------------------------------------- -------------
Total 391,337
-------------------------------------------------------------------------------- -------------
TRANSPORTATION--0.1%
--------------------------------------------------------------------------------
2,200 (a)KLM Royal Dutch Airlines 57,475
-------------------------------------------------------------------------------- -------------
UTILITIES--0.7%
--------------------------------------------------------------------------------
1,600 AT&T Corp. 62,800
--------------------------------------------------------------------------------
1,600 CMS Energy Corp. 52,000
--------------------------------------------------------------------------------
1,100 (a)Columbia Gas System, Inc. 71,088
--------------------------------------------------------------------------------
900 Enron Corp. 41,175
--------------------------------------------------------------------------------
1,100 FPL Group, Inc. 50,738
--------------------------------------------------------------------------------
1,900 GTE Corp. 85,263
--------------------------------------------------------------------------------
4,100 MCI Communications Corp. 125,050
--------------------------------------------------------------------------------
2,200 Pacific Gas & Electric Co. 53,075
--------------------------------------------------------------------------------
2,100 Southern Co. 46,725
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES OR IN U.S.
UNITS DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
LARGE COMPANY--CONTINUED
--------------------------------------------------------------------------------
UTILITIES--CONTINUED
--------------------------------------------------------------------------------
1,900 TECO Energy, Inc. $ 46,313
-------------------------------------------------------------------------------- -------------
Total 634,227
-------------------------------------------------------------------------------- -------------
TOTAL LARGE COMPANY 5,376,215
-------------------------------------------------------------------------------- -------------
UTILITY STOCKS--5.4%
--------------------------------------------------------------------------------
ELECTRIC UTILITIES: CENTRAL--1.5%
--------------------------------------------------------------------------------
7,900 CMS Energy Corp. 256,750
--------------------------------------------------------------------------------
7,764 Cinergy Corp. 260,094
--------------------------------------------------------------------------------
10,400 DPL, Inc. 253,500
--------------------------------------------------------------------------------
9,100 Illinova Corp. 241,150
--------------------------------------------------------------------------------
6,700 NIPSCO Industries, Inc. 259,625
-------------------------------------------------------------------------------- -------------
Total 1,271,119
-------------------------------------------------------------------------------- -------------
ELECTRIC UTILITIES: EAST--0.8%
--------------------------------------------------------------------------------
8,500 DQE, Inc. 250,750
--------------------------------------------------------------------------------
7,800 GPU, Inc. 262,275
--------------------------------------------------------------------------------
9,900 Peco Energy Co. 252,450
-------------------------------------------------------------------------------- -------------
Total 765,475
-------------------------------------------------------------------------------- -------------
ELECTRIC UTILITIES: SOUTH--1.3%
--------------------------------------------------------------------------------
5,200 Duke Power Co. 241,150
--------------------------------------------------------------------------------
5,600 FPL Group, Inc. 258,300
--------------------------------------------------------------------------------
10,800 Southern Co. 240,300
--------------------------------------------------------------------------------
10,200 TECO Energy, Inc. 248,625
--------------------------------------------------------------------------------
6,000 Texas Utilities Co. 237,000
-------------------------------------------------------------------------------- -------------
Total 1,225,375
-------------------------------------------------------------------------------- -------------
ELECTRIC UTILITIES: WEST--0.5%
--------------------------------------------------------------------------------
11,800 Pacificorp 247,800
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
UNITS OR VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- -------------
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
UTILITY STOCKS--CONTINUED
--------------------------------------------------------------------------------
ELECTRIC UTILITIES: WEST--CONTINUED
--------------------------------------------------------------------------------
8,100 Pinnacle West Capital Corp. $ 252,113
-------------------------------------------------------------------------------- -------------
Total 499,913
-------------------------------------------------------------------------------- -------------
NATURAL GAS DISTRIBUTION--0.5%
--------------------------------------------------------------------------------
8,200 MCN Corp. 235,750
--------------------------------------------------------------------------------
7,400 Pacific Enterprises 226,625
-------------------------------------------------------------------------------- -------------
Total 462,375
-------------------------------------------------------------------------------- -------------
OIL/GAS TRANSMISSION--0.8%
--------------------------------------------------------------------------------
5,400 Enron Corp. 247,050
--------------------------------------------------------------------------------
6,400 Panenergy Corp. 281,600
--------------------------------------------------------------------------------
4,500 Williams Companies, Inc. 252,563
-------------------------------------------------------------------------------- -------------
Total 781,213
-------------------------------------------------------------------------------- -------------
TOTAL UTILITY STOCKS 5,005,470
-------------------------------------------------------------------------------- -------------
TOTAL STOCKS (IDENTIFIED COST $9,087,072) 10,381,685
-------------------------------------------------------------------------------- -------------
BONDS--83.6%
- -------------------------------------------------------------------------------------------------
TREASURY--38.7%
--------------------------------------------------------------------------------
$ 10,390,000 United States Treasury Note, 6.00%, 8/31/1997 10,435,093
--------------------------------------------------------------------------------
10,000,000 United States Treasury Note, 6.50%, 5/15/1997 10,058,400
--------------------------------------------------------------------------------
14,900,000 United States Treasury Note, 8.125%, 2/15/1998 15,353,407
-------------------------------------------------------------------------------- -------------
TOTAL TREASURY 35,846,900
-------------------------------------------------------------------------------- -------------
MORTGAGE-BACKED SECURITIES--26.8%
--------------------------------------------------------------------------------
GOVERNMENT AGENCY--26.8%
--------------------------------------------------------------------------------
56,689 Federal Home Loan Mortgage Corp., 9.50%, 6/1/2021 61,235
--------------------------------------------------------------------------------
129,768 Federal Home Loan Mortgage Corp., 9.50%, 4/1/2021 140,175
--------------------------------------------------------------------------------
447,034 Federal Home Loan Mortgage Corp., 7.50%, 5/1/2024 454,155
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES--CONTINUED
--------------------------------------------------------------------------------
GOVERNMENT AGENCY--CONTINUED
--------------------------------------------------------------------------------
$ 239,440 Federal Home Loan Mortgage Corp., 7.00%, 7/1/2024 $ 238,689
--------------------------------------------------------------------------------
1,015,695 Federal Home Loan Mortgage Corp., 6.50%, 9/1/2025 990,181
--------------------------------------------------------------------------------
1,467,141 Federal Home Loan Mortgage Corp., 8.00%, 4/1/2024 1,511,141
--------------------------------------------------------------------------------
1,023,585 Federal Home Loan Mortgage Corp., 7.00%, 2/1/2026 1,018,457
--------------------------------------------------------------------------------
888,471 Federal Home Loan Mortgage Corp., 6.50%, 4/1/2026 864,305
--------------------------------------------------------------------------------
937,519 Federal Home Loan Mortgage Corp., 7.50%, 7/1/2026 950,391
--------------------------------------------------------------------------------
1,223,687 Federal Home Loan Mortgage Corp., 6.50%, 3/1/2011 1,215,635
--------------------------------------------------------------------------------
348,502 Federal Home Loan Mortgage Corp., 8.00%, 9/1/2010 360,153
--------------------------------------------------------------------------------
744,964 Federal Home Loan Mortgage Corp., 7.00%, 4/1/2009 751,937
--------------------------------------------------------------------------------
593,158 Federal Home Loan Mortgage Corp., 6.00%, 5/1/2003 584,990
--------------------------------------------------------------------------------
491,960 Federal National Mortgage Association, 7.00%, 5/1/2001 501,331
--------------------------------------------------------------------------------
464,534 Federal National Mortgage Association, 7.00%, 7/1/2024 461,189
--------------------------------------------------------------------------------
817,159 Federal National Mortgage Association, 8.50%, 7/1/2024 852,648
--------------------------------------------------------------------------------
679,527 Federal National Mortgage Association, 9.50%, 10/1/2024 736,994
--------------------------------------------------------------------------------
590,658 Federal National Mortgage Association, 7.50%, 10/1/2011 603,387
--------------------------------------------------------------------------------
419,960 Federal National Mortgage Association, 8.00%, 11/1/2024 431,895
--------------------------------------------------------------------------------
466,702 Federal National Mortgage Association, 9.00%, 2/1/2025 493,678
--------------------------------------------------------------------------------
136,311 Federal National Mortgage Association, 8.50%, 2/1/2024 142,231
--------------------------------------------------------------------------------
884,757 Federal National Mortgage Association, 7.50%, 7/1/2025 896,639
--------------------------------------------------------------------------------
924,807 Federal National Mortgage Association, 7.00%, 7/1/2025 918,898
--------------------------------------------------------------------------------
1,014,503 Federal National Mortgage Association, 6.00%, 3/1/2011 990,794
--------------------------------------------------------------------------------
958,321 Federal National Mortgage Association, 6.50%, 2/1/2026 932,753
--------------------------------------------------------------------------------
1,007,163 Federal National Mortgage Association, 7.50%, 10/1/2026 1,020,689
--------------------------------------------------------------------------------
465,285 Federal National Mortgage Association, 7.00%, 8/1/2011 469,058
--------------------------------------------------------------------------------
246,620 Federal National Mortgage Association, 6.50%, 7/1/2011 244,689
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT IN U.S.
OR SHARES DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES--CONTINUED
--------------------------------------------------------------------------------
GOVERNMENT AGENCY--CONTINUED
--------------------------------------------------------------------------------
$ 350,014 Federal National Mortgage Association, 10.50%, 1/1/2021 $ 388,620
--------------------------------------------------------------------------------
1,010,007 Government National Mortgage Association, 8.00%, 6/15/2022 1,047,559
--------------------------------------------------------------------------------
907,871 Government National Mortgage Association, 7.00%, 10/15/2023 908,424
--------------------------------------------------------------------------------
527,480 Government National Mortgage Association, 8.50%, 10/15/2024 551,043
--------------------------------------------------------------------------------
1,500,362 Government National Mortgage Association, 7.50%, 3/15/2026 1,522,372
--------------------------------------------------------------------------------
673,201 Government National Mortgage Association, 7.00%, 7/15/2024 669,828
--------------------------------------------------------------------------------
850,000 (c)Government National Mortgage Association TBA, 9.00% 901,519
-------------------------------------------------------------------------------- -------------
TOTAL MORTGAGE-BACKED SECURITIES 24,827,682
-------------------------------------------------------------------------------- -------------
HIGH YIELD BONDS--2.9%
--------------------------------------------------------------------------------
AUTOMOTIVE--0.1%
--------------------------------------------------------------------------------
50,000 Aftermarket Technology Co., Sr. Sub. Note, 12.00%, 8/1/2004 55,750
--------------------------------------------------------------------------------
50,000 Collins & Aikman Products, Sr. Sub. Note, 11.50%, 4/15/2006 53,625
-------------------------------------------------------------------------------- -------------
Total 109,375
-------------------------------------------------------------------------------- -------------
BANKING--0.1%
--------------------------------------------------------------------------------
50,000 (b)First Nationwide Escrow, Sr. Sub. Note, 10.625%, 10/1/2003 53,500
-------------------------------------------------------------------------------- -------------
BEVERAGE & TOBACCO--0.0%
--------------------------------------------------------------------------------
25,000 Dr Pep Btlg Hldgs, Sr. Disc. Note, 0/11.625%, 2/15/2003 23,250
-------------------------------------------------------------------------------- -------------
BROADCAST RADIO & TV--0.3%
--------------------------------------------------------------------------------
Chancellor Radio Broadcasting Co., 500 PIK Pfd. Shares, 12.25% 55,500
--------------------------------------------------------------------------------
25,000 Granite Broadcasting Corp, Sr. Sub. Note, 9.375%, 12/1/2005 23,938
--------------------------------------------------------------------------------
50,000 Heritage Media Corp., Sr. Sub. Note, 8.75%, 2/15/2006 48,500
--------------------------------------------------------------------------------
25,000 Pegasus Media, Note, 12.50%, 7/1/2005 27,125
--------------------------------------------------------------------------------
25,000 SFX Broadcasting, Inc., Sr. Sub. Note, 10.75%, 5/15/2006 26,313
--------------------------------------------------------------------------------
50,000 Sinclair Broadcast Group, Sr. Sub. Note, 10.00%, 9/30/2005 50,375
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
--------------------------------------------------------------------------------
BROADCAST RADIO & TV--CONTINUED
--------------------------------------------------------------------------------
$ 25,000 Sullivan Broadcasting, Sr. Sub. Note, 10.25%, 12/15/2005 $ 25,063
-------------------------------------------------------------------------------- -------------
Total 256,814
-------------------------------------------------------------------------------- -------------
BUSINESS EQUIPMENT & SERVICES--0.1%
--------------------------------------------------------------------------------
50,000 Knoll, Inc., Sr. Sub. Note, 10.875%, 3/15/2006 54,750
--------------------------------------------------------------------------------
25,000 Monarch Acquisition Corp., Sr. Note, 12.50%, 7/1/2003 27,875
--------------------------------------------------------------------------------
25,000 United Stationers Supply, Sr. Sub. Note, 12.75%, 5/1/2005 27,719
-------------------------------------------------------------------------------- -------------
Total 110,344
-------------------------------------------------------------------------------- -------------
CABLE TELEVISION--0.3%
--------------------------------------------------------------------------------
50,000 Cablevision Systems Corp., Sr. Sub. Note, 9.875%, 5/15/2006 50,625
--------------------------------------------------------------------------------
50,000 Charter Communication Southeast, Sr. Note, 11.25%, 3/15/2006 51,750
--------------------------------------------------------------------------------
50,000 Comcast UK Cable, Deb., 0/11.20%, 11/15/2007 34,875
--------------------------------------------------------------------------------
25,000 Echostar Satellite Broadcasting Corp., Sr. Disc. Note,
0/13.125%, 3/15/2004 19,125
--------------------------------------------------------------------------------
50,000 International Cabletel, Sr. Note, 0/11.50%, 2/1/2006 32,313
--------------------------------------------------------------------------------
25,000 People's Choice--TV, Unit, 0/13.125%, 6/1/2004 9,875
--------------------------------------------------------------------------------
25,000 Rogers Cablesystems Inc., Sr. Secd. 2nd Priority Note,
10.00%, 12/1/2007 26,500
--------------------------------------------------------------------------------
50,000 Telewest PLC, Sr. Disc. Deb., 0/11.00%, 10/1/2007 34,250
--------------------------------------------------------------------------------
50,000 UIH Australia/Pacific, Sr. Disc. Note, 0/14.00%, 5/15/2006 26,750
-------------------------------------------------------------------------------- -------------
Total 286,063
-------------------------------------------------------------------------------- -------------
CHEMICALS & PLASTICS--0.2%
--------------------------------------------------------------------------------
50,000 (b)Astor Corp., Sr. Sub. Note, 10.50%, 10/15/2006 51,000
--------------------------------------------------------------------------------
25,000 Crain Industries Inc., Sr. Sub. Note, 13.50%, 8/15/2005 28,188
--------------------------------------------------------------------------------
50,000 Harris Chemical, Sr. Note, 10.25%, 7/15/2001 51,625
--------------------------------------------------------------------------------
33,000 Polymer Group, Sr. Note, 12.25%, 7/15/2002 35,805
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT IN U.S.
OR SHARES DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
--------------------------------------------------------------------------------
CHEMICALS & PLASTICS--CONTINUED
--------------------------------------------------------------------------------
$ 25,000 RBX Corp., Sr. Sub. Note, Series B, 11.25%, 10/15/2005 $ 21,625
-------------------------------------------------------------------------------- -------------
Total 188,243
-------------------------------------------------------------------------------- -------------
CLOTHING & TEXTILES--0.1%
--------------------------------------------------------------------------------
50,000 Westpoint Stevens, Inc., Sr. Sub. Deb., 9.375%, 12/15/2005 51,625
-------------------------------------------------------------------------------- -------------
CONSUMER PRODUCTS--0.1%
--------------------------------------------------------------------------------
25,000 Hosiery Corp. of America, Sr. Sub. Note, 13.75%, 8/1/2002 27,625
--------------------------------------------------------------------------------
Hosiery Corp. of America, 25 Common Shares 138
--------------------------------------------------------------------------------
25,000 Playtex Family Products Corp., Sr. Sub. Note, 9.00%, 12/15/2003 24,875
--------------------------------------------------------------------------------
25,000 Simmons Co., Sr. Sub. Note, 10.75%, 4/15/2006 26,125
-------------------------------------------------------------------------------- -------------
Total 78,763
-------------------------------------------------------------------------------- -------------
CONTAINER & GLASS PRODUCTS--0.1%
--------------------------------------------------------------------------------
50,000 Owens Illinois, Inc., Sr. Sub. Note, 9.75%, 8/15/2004 52,250
--------------------------------------------------------------------------------
25,000 Packaging Resources, Inc., Sr. Note, 11.625%, 5/1/2003 26,375
-------------------------------------------------------------------------------- -------------
Total 78,625
-------------------------------------------------------------------------------- -------------
COSMETICS & TOILETRIES--0.0%
--------------------------------------------------------------------------------
25,000 Revlon Consumer Products, Sr. Sub. Note, 10.50%, 2/15/2003 26,313
-------------------------------------------------------------------------------- -------------
ECOLOGICAL SERVICES & EQUIPMENT--0.1%
--------------------------------------------------------------------------------
50,000 (b)Allied Waste, Sr. Sub. Note, 10.25%, 12/1/2006 51,313
--------------------------------------------------------------------------------
50,000 (a)*Mid-American Waste System, Sr. Sub. Note, 12.25%, 2/15/2003 20,500
-------------------------------------------------------------------------------- -------------
Total 71,813
-------------------------------------------------------------------------------- -------------
FOOD & DRUG RETAILERS--0.1%
--------------------------------------------------------------------------------
25,000 Carr Gottstein Foods Co., Sr. Sub. Note, 12.00%, 11/15/2005 26,750
--------------------------------------------------------------------------------
50,000 Ralph's Grocery Co., Sr. Note, 10.45%, 6/15/2004 51,938
-------------------------------------------------------------------------------- -------------
Total 78,688
-------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
--------------------------------------------------------------------------------
FOOD PRODUCTS--0.0%
--------------------------------------------------------------------------------
$ 25,000 Van de Kamp's, Inc., Sr. Sub. Note, 12.00%, 9/15/2005 $ 27,500
-------------------------------------------------------------------------------- -------------
FOREST PRODUCTS--0.1%
--------------------------------------------------------------------------------
25,000 Four M Corp, Sr. Note, 12.00%, 6/1/2006 25,813
--------------------------------------------------------------------------------
25,000 Repap New Brunswick, 2nd Priority Sr. Secd. Note,
10.625%, 4/15/2005 24,375
--------------------------------------------------------------------------------
25,000 Riverwood International, Sr. Sub. Note, 10.875%, 4/1/2008 22,750
--------------------------------------------------------------------------------
25,000 Stone Container, Sr. Note, 11.50%, 10/1/2004 26,375
-------------------------------------------------------------------------------- -------------
Total 99,313
-------------------------------------------------------------------------------- -------------
HEALTHCARE--0.1%
--------------------------------------------------------------------------------
50,000 (b)Dade International, Inc., Sr. Sub. Note, 11.125%, 5/1/2006 54,250
-------------------------------------------------------------------------------- -------------
HOTELS, MOTELS, INNS & CASINOS--0.0%
--------------------------------------------------------------------------------
25,000 Courtyard by Marriott, Sr. Note, 10.75%, 2/1/2008 26,500
-------------------------------------------------------------------------------- -------------
INDUSTRIAL PRODUCTS & EQUIPMENT--0.1%
--------------------------------------------------------------------------------
25,000 Cabot Safety Corp., Sr. Sub. Note, 12.50%, 7/15/2005 28,063
--------------------------------------------------------------------------------
25,000 Fairfield Manufacturing Co., Inc., Sr. Sub. Note, 11.375%, 7/1/2001 25,625
--------------------------------------------------------------------------------
50,000 Mettler-Toledo, Inc., Sr. Sub. Note, 9.75%, 10/1/2006 52,625
-------------------------------------------------------------------------------- -------------
Total 106,313
-------------------------------------------------------------------------------- -------------
LEISURE & ENTERTAINMENT--0.2%
--------------------------------------------------------------------------------
50,000 AMF Group, Inc., Sr. Sub. Disc. Note, 0/12.25%, 3/15/2006 31,875
--------------------------------------------------------------------------------
25,000 Cobblestone Golf, Sr. Note, 11.50%, 6/1/2003 26,188
--------------------------------------------------------------------------------
50,000 Premier Parks, Sr. Note, 12.00%, 8/15/2003 54,750
--------------------------------------------------------------------------------
75,000 Six Flags Theme Parks, Sr. Sub. Disc. Note, 0/12.25%, 6/15/2005 69,375
-------------------------------------------------------------------------------- -------------
Total 182,188
-------------------------------------------------------------------------------- -------------
MACHINERY & EQUIPMENT--0.1%
--------------------------------------------------------------------------------
50,000 Alvey Systems, Sr. Sub. Note, 11.375%, 1/31/2003 52,500
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
--------------------------------------------------------------------------------
MACHINERY & EQUIPMENT--CONTINUED
--------------------------------------------------------------------------------
$ 33,000 Primeco, Inc., Sr. Sub. Note, 12.75%, 3/1/2005 $ 37,620
-------------------------------------------------------------------------------- -------------
Total 90,120
-------------------------------------------------------------------------------- -------------
OIL & GAS--0.0%
--------------------------------------------------------------------------------
25,000 Mesa Operating Company, Sr. Sub. Note, 10.625%, 7/1/2006 27,063
-------------------------------------------------------------------------------- -------------
PRINTING & PUBLISHING--0.1%
--------------------------------------------------------------------------------
50,000 Garden State Newspapers, Inc., Sr. Sub. Note, 12.00%, 7/1/2004 53,625
-------------------------------------------------------------------------------- -------------
REAL ESTATE--0.0%
--------------------------------------------------------------------------------
25,000 Trizec Finance, Sr. Note, 10.875%, 10/15/2005 27,688
-------------------------------------------------------------------------------- -------------
STEEL--0.1%
--------------------------------------------------------------------------------
25,000 Bayou Steel Corp., 1st Mtg. Note, 10.25%, 3/1/2001 23,375
--------------------------------------------------------------------------------
25,000 GS Technologies Operating Co., Inc., Sr. Note, 12.00%, 9/1/2004 25,875
--------------------------------------------------------------------------------
25,000 Republic Engineered Steel, 1st Mtg. Note, 9.875%, 12/15/2001 22,844
-------------------------------------------------------------------------------- -------------
Total 72,094
-------------------------------------------------------------------------------- -------------
SURFACE TRANSPORTATION--0.1%
--------------------------------------------------------------------------------
25,000 Ameritruck Distribution, Sr. Sub. Note, 12.25%, 11/15/2005 24,875
--------------------------------------------------------------------------------
25,000 Gearbulk Holding Limited, Sr. Note, 11.25%, 12/1/2004 27,250
--------------------------------------------------------------------------------
25,000 Great Dane Holdings, Sr. Sub. Deb., 12.75%, 8/1/2001 25,125
--------------------------------------------------------------------------------
50,000 Stena AB, Sr. Note, 10.50%, 12/15/2005 53,563
-------------------------------------------------------------------------------- -------------
Total 130,813
-------------------------------------------------------------------------------- -------------
TELECOMMUNICATIONS & CELLULAR--0.3%
--------------------------------------------------------------------------------
50,000 American Communications, Sr. Disc. Note, 0/12.75%, 4/1/2006 27,375
--------------------------------------------------------------------------------
50,000 Arch Communications, Sr. Disc. Note, 0/10.875%, 3/15/2008 29,125
--------------------------------------------------------------------------------
50,000 Intermedia Communications, Sr. Disc. Note, 0/12.50%, 5/15/2006 33,125
--------------------------------------------------------------------------------
50,000 Millicom International, Sr. Disc. Note, 13.50%, 6/1/2006 29,625
--------------------------------------------------------------------------------
25,000 Nextel Communications, Inc., Sr. Disc. Note, 0/11.50%, 9/1/2003 18,938
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT IN U.S.
OR SHARES DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
--------------------------------------------------------------------------------
TELECOMMUNICATIONS & CELLULAR--CONTINUED
--------------------------------------------------------------------------------
$ 25,000 Paging Network, Sr. Sub. Note, 10.125%, 8/1/2007 $ 25,156
--------------------------------------------------------------------------------
50,000 Teleport Communications, Sr. Disc. Note, 0/11.125%, 7/1/2007 34,250
--------------------------------------------------------------------------------
50,000 Vanguard Cellular Systems, Deb., 9.375%, 4/15/2006 50,375
-------------------------------------------------------------------------------- -------------
Total 247,969
-------------------------------------------------------------------------------- -------------
UTILITIES--0.1%
--------------------------------------------------------------------------------
50,000 California Energy Co., Sr. Disc. Note, 0/10.25%, 1/15/2004 52,375
--------------------------------------------------------------------------------
El Paso Electric Co., 542 PIK Pfd. Shares, Series A, 11.40% 59,771
-------------------------------------------------------------------------------- -------------
Total 112,146
-------------------------------------------------------------------------------- -------------
TOTAL HIGH YIELD BONDS 2,670,998
-------------------------------------------------------------------------------- -------------
INVESTMENT GRADE BONDS--9.7%
--------------------------------------------------------------------------------
AEROSPACE & DEFENSE--0.3%
--------------------------------------------------------------------------------
250,000 McDonnell Douglas Finance, Note, 9.40%, 10/15/2001 270,558
-------------------------------------------------------------------------------- -------------
BANKING--1.2%
--------------------------------------------------------------------------------
250,000 Bank of Montreal, Sub. Note, 7.80%, 4/1/2007 270,648
--------------------------------------------------------------------------------
250,000 Chase Manhattan, Sub. Note, 8.00%, 5/1/2005 255,975
--------------------------------------------------------------------------------
200,000 National Bank of Canada, Sub. Note, 8.125%, 8/15/2004 217,754
--------------------------------------------------------------------------------
350,000 Santander Finance Issuances, Bank Guarantee, 7.875%, 4/15/2005 375,641
-------------------------------------------------------------------------------- -------------
Total 1,120,018
-------------------------------------------------------------------------------- -------------
BEVERAGE & TOBACCO--0.4%
--------------------------------------------------------------------------------
100,000 Philip Morris Cos., Inc., Deb., 6.00%, 7/15/2001 97,875
--------------------------------------------------------------------------------
250,000 RJR Nabisco, Inc., Note, 9.25%, 8/15/2013 257,910
-------------------------------------------------------------------------------- -------------
Total 355,785
-------------------------------------------------------------------------------- -------------
CABLE TELEVISION--0.5%
--------------------------------------------------------------------------------
400,000 TKR Cable, Inc., Sr. Note, 10.50%, 10/30/2007 443,128
-------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
INVESTMENT GRADE BONDS--CONTINUED
--------------------------------------------------------------------------------
CHEMICALS & PLASTICS--0.4%
--------------------------------------------------------------------------------
$ 350,000 (b)Bayer Corp., Deb., 6.50%, 10/1/2002 $ 355,502
-------------------------------------------------------------------------------- -------------
ELECTRONICS--0.2%
--------------------------------------------------------------------------------
200,000 Harris Corp, Deb., 10.375%, 12/1/2018 224,632
-------------------------------------------------------------------------------- -------------
FINANCE--RETAIL--0.3%
--------------------------------------------------------------------------------
250,000 Household Finance, Deb., 6.45%, 2/1/2009 243,993
-------------------------------------------------------------------------------- -------------
FINANCIAL INTERMEDIARIES--1.4%
--------------------------------------------------------------------------------
85,000 American General Corp., S.F. Deb., 9.625%, 2/1/2018 91,969
--------------------------------------------------------------------------------
250,000 Green Tree Financial Corp, Sr. Sub. Note, 10.25%, 6/1/2002 294,400
--------------------------------------------------------------------------------
325,000 Lehman Bros., Inc., Sr. Sub. Note, 6.125%, 2/1/2001 320,866
--------------------------------------------------------------------------------
200,000 Merrill Lynch, Medium Term Note, 7.25%, 6/14/2004 201,732
--------------------------------------------------------------------------------
100,000 Salomon, Inc., Sr. Note, 9.00%, 2/15/1999 105,541
--------------------------------------------------------------------------------
300,000 Salomon, Inc., Sr. Note, 7.02%, 9/25/1998 304,473
-------------------------------------------------------------------------------- -------------
Total 1,318,981
-------------------------------------------------------------------------------- -------------
FOOD & DRUG RETAILERS--0.3%
--------------------------------------------------------------------------------
225,000 Hook-Superx, Inc., Sr. Note, 10.125%, 6/1/2002 239,830
-------------------------------------------------------------------------------- -------------
GOVERNMENT AGENCY--0.3%
--------------------------------------------------------------------------------
250,000 Federal National Mortgage Association, 8.59%, 2/3/2005 257,453
-------------------------------------------------------------------------------- -------------
INDUSTRIAL PRODUCTS & EQUIPMENT--0.3%
--------------------------------------------------------------------------------
250,000 Joy Technologies, Inc, Sr. Note, 10.25%, 9/1/2003 276,850
-------------------------------------------------------------------------------- -------------
INSURANCE--1.0%
--------------------------------------------------------------------------------
350,000 Conseco, Inc., Sr. Note, 10.50%, 12/15/2004 425,338
--------------------------------------------------------------------------------
265,000 Continental Corp, Note, 8.25%, 4/15/1999 277,166
--------------------------------------------------------------------------------
250,000 Sunamerica, Inc., Medium Term Note, 7.34%, 8/30/2005 260,716
-------------------------------------------------------------------------------- -------------
Total 963,220
-------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OR FOREIGN VALUE
CURRENCY IN U.S.
PAR AMOUNT DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
INVESTMENT GRADE BONDS--CONTINUED
--------------------------------------------------------------------------------
OIL & GAS--0.6%
--------------------------------------------------------------------------------
$ 275,000 Tosco Corp, Sr. Note, 7.625%, 5/15/2006 $ 290,664
--------------------------------------------------------------------------------
250,000 USX Corp., Note, 6.375%, 7/15/1998 251,280
-------------------------------------------------------------------------------- -------------
Total 541,944
-------------------------------------------------------------------------------- -------------
PRINTING & PUBLISHING--0.4%
--------------------------------------------------------------------------------
400,000 News America Holdings, Sr. Note, 7.50%, 3/1/2000 413,252
-------------------------------------------------------------------------------- -------------
SERVICES--0.3%
--------------------------------------------------------------------------------
250,000 Loewen Group Int'l, Sr. Note, 8.25%, 4/15/2003 257,828
-------------------------------------------------------------------------------- -------------
SOVEREIGN GOVERNMENT--1.0%
--------------------------------------------------------------------------------
300,000 (b)Freeport Terminal (Malta), GTD. Global Note, 7.50%, 3/29/2009 315,453
--------------------------------------------------------------------------------
250,000 Quebec Province, Deb., 7.50%, 7/15/2023 257,623
--------------------------------------------------------------------------------
100,000 Republic of South Africa, Global Bond Deb., 9.625%, 12/15/1999 107,125
--------------------------------------------------------------------------------
250,000 Republic of Colombia, Note, 7.25%, 2/15/2003 248,668
-------------------------------------------------------------------------------- -------------
Total 928,869
-------------------------------------------------------------------------------- -------------
UTILITIES--0.8%
--------------------------------------------------------------------------------
300,000 Duke Power Co., 1st Mtg. Note, 7.00%, 9/1/2005 304,782
--------------------------------------------------------------------------------
300,000 Gulf States Util, FMB, 6.75%, 10/1/1998 301,401
--------------------------------------------------------------------------------
125,000 Pedernales Electric Co-op, 10.875%, 9/1/2017 136,294
-------------------------------------------------------------------------------- -------------
Total 742,477
-------------------------------------------------------------------------------- -------------
TOTAL INVESTMENT GRADE BONDS 8,954,320
-------------------------------------------------------------------------------- -------------
FOREIGN BONDS--5.5%
--------------------------------------------------------------------------------
AUSTRALIAN DOLLAR--0.2%
--------------------------------------------------------------------------------
78,000 Queensland Treas Global, Local Gov't. Guarantee, 8.00%, 5/14/2003 66,622
--------------------------------------------------------------------------------
65,000 Queensland Treas Global, Local Gov't. Guarantee, 8.00%, 8/14/2001 55,002
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN VALUE
CURRENCY IN U.S.
PAR AMOUNT DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN BONDS--CONTINUED
--------------------------------------------------------------------------------
AUSTRALIAN DOLLAR--CONTINUED
--------------------------------------------------------------------------------
100,000 State Bank of New South Wales, 12.25%, 2/26/2001 $ 96,400
-------------------------------------------------------------------------------- -------------
Total 218,024
-------------------------------------------------------------------------------- -------------
BELGIUM FRANC--0.1%
--------------------------------------------------------------------------------
514,000 Belgian Govt., Bond, 6.50%, 3/31/2005 17,107
--------------------------------------------------------------------------------
2,000,000 Belgium Kingdom, 7.75%, 10/15/2004 71,833
-------------------------------------------------------------------------------- -------------
Total 88,940
-------------------------------------------------------------------------------- -------------
CANADIAN DOLLAR--0.3%
--------------------------------------------------------------------------------
167,000 Canada Government, Deb., 6.50%, 6/1/2004 129,459
--------------------------------------------------------------------------------
200,000 Ontario Hydro, 9.00%, 6/24/2002 173,235
-------------------------------------------------------------------------------- -------------
Total 302,694
-------------------------------------------------------------------------------- -------------
DANISH KRONE--0.3%
--------------------------------------------------------------------------------
898,000 Denmark--Bullet, Bond, 8.00%, 3/15/2006 166,319
--------------------------------------------------------------------------------
600,000 Denmark, 8.00%, 5/15/2003 112,378
-------------------------------------------------------------------------------- -------------
Total 278,697
-------------------------------------------------------------------------------- -------------
FRENCH FRANC--0.2%
--------------------------------------------------------------------------------
270,000 France O.A.T., Bond, 7.25%, 4/25/2006 57,941
--------------------------------------------------------------------------------
73,000 France O.A.T., Bond, 7.50%, 4/25/2005 101,076
-------------------------------------------------------------------------------- -------------
Total 159,017
-------------------------------------------------------------------------------- -------------
DEUTSCHE MARK--1.5%
--------------------------------------------------------------------------------
79,000 Deutschland Republic, Deb., 6.25%, 1/4/2024 49,154
--------------------------------------------------------------------------------
38,000,000 KFW International Finance, 6.00%, 11/29/1999 382,001
--------------------------------------------------------------------------------
100,000 KFW International Finance, Bank Guarantee, 6.75%, 6/20/2005 69,462
--------------------------------------------------------------------------------
600,000 KFW International Finance, 7.00%, 5/12/2000 124,263
--------------------------------------------------------------------------------
700,000 Treuhandanstalt, 7.75%, 10/1/2002 515,409
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN VALUE
CURRENCY IN U.S.
PAR AMOUNT DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN BONDS--CONTINUED
--------------------------------------------------------------------------------
DEUTSCHE MARK--CONTINUED
--------------------------------------------------------------------------------
408,000 Treuhandanstalt, Foreign Gov't. Guarantee, 6.875%, 6/11/2003 $ 288,128
-------------------------------------------------------------------------------- -------------
Total 1,428,417
-------------------------------------------------------------------------------- -------------
IRISH POUND--0.1%
--------------------------------------------------------------------------------
20,000 Irish Govt, Bond, 6.50%, 10/18/2001 34,516
--------------------------------------------------------------------------------
20,000 Treasury, Deb., 6.25%, 4/1/1999 33,995
-------------------------------------------------------------------------------- -------------
Total 68,511
-------------------------------------------------------------------------------- -------------
ITALIAN LIRA--0.5%
--------------------------------------------------------------------------------
80,000,000 BTPS, Bond, 10.50%, 11/1/2000 59,426
--------------------------------------------------------------------------------
480,000,000 Buoni Poliennali Del Tes, 9.50%, 1/1/2005 355,450
-------------------------------------------------------------------------------- -------------
Total 414,876
-------------------------------------------------------------------------------- -------------
JAPANESE YEN--0.4%
--------------------------------------------------------------------------------
24,000,000 Export-Import Bank Japan, 4.375%, 10/1/2003 239,947
--------------------------------------------------------------------------------
10,000,000 Interamerican Development, Deb., 7.25%, 5/15/2000 105,465
-------------------------------------------------------------------------------- -------------
Total 345,412
-------------------------------------------------------------------------------- -------------
NETHERLANDS GUILDER--0.3%
--------------------------------------------------------------------------------
40,000 Bank Ned Gemeenten, Bond, 6.375%, 1/4/2006 24,209
--------------------------------------------------------------------------------
60,000 LKB-global Bd, Bank Guarantee, 6.00%, 1/25/2006 39,321
--------------------------------------------------------------------------------
350,000 Netherlands Government, 5.75%, 1/15/2004 208,055
--------------------------------------------------------------------------------
60,000 Netherlands Government, 6.00%, 1/15/2006 35,771
-------------------------------------------------------------------------------- -------------
Total 307,356
-------------------------------------------------------------------------------- -------------
NEW ZEALAND DOLLAR--0.1%
--------------------------------------------------------------------------------
41,000 New Zealand Government, 8.00%, 2/15/2001 30,326
--------------------------------------------------------------------------------
70,000 New Zealand Government, Bond, 8.00%, 7/15/1998 50,632
-------------------------------------------------------------------------------- -------------
Total 80,958
-------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN VALUE
CURRENCY IN U.S.
PAR AMOUNT DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- -------------
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN BONDS--CONTINUED
--------------------------------------------------------------------------------
NORWEGIAN KRONE--0.2%
--------------------------------------------------------------------------------
330,000 NGB, Bond, 9.00%, 1/31/1999 $ 55,943
--------------------------------------------------------------------------------
420,000 Norwegian Government, Bond, 7.00%, 5/31/2001 69,740
--------------------------------------------------------------------------------
315,000 Norwegian Govt., Foreign Gov't. Guarantee, 5.75%, 11/30/2004 48,212
-------------------------------------------------------------------------------- -------------
Total 173,895
-------------------------------------------------------------------------------- -------------
PORTUGUESE ESCUDO--0.0%
--------------------------------------------------------------------------------
4,500,000 Portuguese Ot's, Bond, 11.875%, 2/23/2000 33,627
-------------------------------------------------------------------------------- -------------
SPANISH PESETA--0.4%
--------------------------------------------------------------------------------
20,000,000 Spanish Government, 10.00%, 2/28/2005 183,449
--------------------------------------------------------------------------------
12,000,000 Spanish Government, Bond, 8.80%, 4/30/2006 101,945
--------------------------------------------------------------------------------
4,340,000 Spanish Government, Bond, 9.40%, 4/30/1999 36,023
--------------------------------------------------------------------------------
4,950,000 Spanish Government., Deb., 10.10%, 2/28/2001 43,638
-------------------------------------------------------------------------------- -------------
Total 365,055
-------------------------------------------------------------------------------- -------------
SWEDISH KRONA--0.3%
--------------------------------------------------------------------------------
1,000,000 Stadshypotekskas, Foreign Gov't. Guarantee, Series 1551,
7.50%, 3/17/1999 155,221
--------------------------------------------------------------------------------
900,000 Sweden, 6.00%, 2/9/2005 126,939
-------------------------------------------------------------------------------- -------------
Total 282,160
-------------------------------------------------------------------------------- -------------
UNITED KINGDOM POUND--0.6%
--------------------------------------------------------------------------------
80,000 British Gas PLC, 8.875%, 7/8/2008 141,308
--------------------------------------------------------------------------------
29,000 UK Treasury, Deb., 8.50%, 12/7/2005 52,489
--------------------------------------------------------------------------------
175,000 UK Conversion, 9.00%, 3/3/2000 311,777
--------------------------------------------------------------------------------
30,000 UK Treasury, Bond, 8.00%, 12/7/2015 52,927
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN
CURRENCY
PAR AMOUNT VALUE
OR PRINCIPAL IN U.S.
AMOUNT DOLLARS
<C> <S> <C>
- --------------- -------------------------------------------------------------------------------- -------------
FOREIGN BONDS--CONTINUED
--------------------------------------------------------------------------------
UNITED KINGDOM POUND--CONTINUED
--------------------------------------------------------------------------------
20,000 UK Treasury, Bond, 7.50%, 12/7/2006 $ 33,582
-------------------------------------------------------------------------------- -------------
Total 592,083
-------------------------------------------------------------------------------- -------------
TOTAL FOREIGN BONDS 5,139,722
-------------------------------------------------------------------------------- -------------
TOTAL BONDS (IDENTIFIED COST $76,450,642) 77,439,622
-------------------------------------------------------------------------------- -------------
(D) REPURCHASE AGREEMENTS--5.1%
- -------------------------------------------------------------------------------------------------
$ 3,765,000 BT Securities Corporation, 5.720%, dated 11/29/1996, due 12/2/1996 3,765,000
--------------------------------------------------------------------------------
1,000,000 (e)Goldman Sachs Group, LP, 5.320%, dated 11/19/1996, due 12/18/ 1996 1,000,000
-------------------------------------------------------------------------------- -------------
TOTAL REPURCHASE AGREEMENTS (AT AMORTIZED COST) 4,765,000
-------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST $90,302,714)(F) $ 92,586,307
-------------------------------------------------------------------------------- -------------
</TABLE>
(a) Non-income producing security.
(b) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. At November 30, 1996, these securities
amounted to $978,454 which represents 1.1% of net assets.
(c) These securities are subject to dollar roll transactions.
(d) The repurchase agreements are fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investments in the repurchase agreements are through participation in joint
accounts with other Federated Funds.
(e) Although final maturity falls beyond seven days, a liquidity feature is
included in each transaction to permit termination of the repurchase
agreement within seven days if the creditworthiness of the issuer is
downgraded.
(f) The cost of investments for federal tax purposes amounts to $90,316,595.
The net unrealized appreciation of investments on a federal tax basis
amounts to $2,269,712 which is comprised of $2,496,822 appreciation and
$227,110 depreciation at November 30, 1996.
Note: The categories of investments are shown as a percentage of net assets
($92,581,568) at November 30, 1996.
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
The following acronyms are used throughout this portfolio:
ACES--Adjustable Convertible Extendable Securities
ADR--American Depository Receipt
GTD--Guaranty
LP--Limited Partnership
PEPS--Participating Equity Preferred Stock
PIK--Payment in Kind
PLC--Public Limited Company
TBA--To Be Announced
MID-AMERICAN WASTE SYSTEMS, INC.
On February 15, 1996 and August 15, 1996, Mid-American Waste Systems failed to
make its scheduled interest payment. Currently, the company is in negotiations
with its debt holders and has retained an investment bank to evaluate its
options. The unofficial subordinated bondholders group has retained legal
counsel and financial advisors and is monitoring the situation closely.
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ----------------------------------------------------------------------------------------------------
Total investments in securities, at value (identified cost $90,302,714, and tax cost $90,316,595) $ 92,586,307
- ----------------------------------------------------------------------------------------------------
Income receivable 1,177,002
- ----------------------------------------------------------------------------------------------------
Receivable for investments sold 500,676
- ----------------------------------------------------------------------------------------------------
Receivable for shares sold 84,423
- ----------------------------------------------------------------------------------------------------
Deferred expenses 25,943
- ---------------------------------------------------------------------------------------------------- ------------
Total assets 94,374,351
- ----------------------------------------------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------------------------------
Payable for investments purchased $ 536,429
- -----------------------------------------------------------------------------------------
Payable for shares redeemed 25,918
- -----------------------------------------------------------------------------------------
Income distribution payable 204,775
- -----------------------------------------------------------------------------------------
Payable to Bank 51,824
- -----------------------------------------------------------------------------------------
Payable for dollar roll transactions 903,087
- -----------------------------------------------------------------------------------------
Payable for taxes withheld 1,632
- -----------------------------------------------------------------------------------------
Accrued expenses 69,118
- ----------------------------------------------------------------------------------------- ---------
Total liabilities 1,792,783
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSETS for 8,769,181 shares outstanding $ 92,581,568
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSETS CONSIST OF:
- ----------------------------------------------------------------------------------------------------
Paid in capital $ 89,433,734
- ----------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and translation of assets
and liabilities in foreign currency 2,282,499
- ----------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments, foreign currency
transactions, and futures contracts 618,374
- ----------------------------------------------------------------------------------------------------
Undistributed net investment income 246,961
- ---------------------------------------------------------------------------------------------------- ------------
Total Net Assets $ 92,581,568
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ----------------------------------------------------------------------------------------------------
Institutional Shares: $67,122,076 / 6,357,713 shares outstanding $10.56
- ---------------------------------------------------------------------------------------------------- ------------
Select Shares: $25,459,492 / 2,411,468 shares outstanding $10.56
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED INCOME FUND
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -----------------------------------------------------------------------------------------------------
Dividends (net of foreign taxes withheld of $313) $ 273,343
- -----------------------------------------------------------------------------------------------------
Interest (net of dollar roll expense of $50,792) (net of foreign taxes withheld of $5,090) 4,939,855
- ----------------------------------------------------------------------------------------------------- ---------
Total income 5,213,198
- -----------------------------------------------------------------------------------------------------
EXPENSES:
- ------------------------------------------------------------------------------------------
Investment advisory fee $ 599,171
- ------------------------------------------------------------------------------------------
Administrative personnel and services fee 155,001
- ------------------------------------------------------------------------------------------
Custodian fees 43,093
- ------------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 64,943
- ------------------------------------------------------------------------------------------
Directors'/Trustees' fees 4,026
- ------------------------------------------------------------------------------------------
Auditing fees 14,622
- ------------------------------------------------------------------------------------------
Legal fees 4,349
- ------------------------------------------------------------------------------------------
Portfolio accounting fees 80,011
- ------------------------------------------------------------------------------------------
Distribution services fee--Select Shares 155,333
- ------------------------------------------------------------------------------------------
Shareholder services fee--Institutional Shares 147,946
- ------------------------------------------------------------------------------------------
Shareholder services fee--Select Shares 51,778
- ------------------------------------------------------------------------------------------
Share registration costs 57,812
- ------------------------------------------------------------------------------------------
Printing and postage 28,243
- ------------------------------------------------------------------------------------------
Insurance premiums 8,722
- ------------------------------------------------------------------------------------------
Taxes 1,534
- ------------------------------------------------------------------------------------------
Miscellaneous 20,974
- ------------------------------------------------------------------------------------------ ---------
Total expenses 1,437,558
- ------------------------------------------------------------------------------------------
Waivers--
- -------------------------------------------------------------------------------
Waiver of investment advisory fee $(479,814)
- -------------------------------------------------------------------------------
Waiver of distribution services fee--Select Shares (51,778)
- -------------------------------------------------------------------------------
Waiver of shareholder services fee--Institutional Shares (118,357)
- ------------------------------------------------------------------------------- ---------
Total waivers (649,949)
- ------------------------------------------------------------------------------------------ ---------
Net expenses 787,609
- ----------------------------------------------------------------------------------------------------- ---------
Net investment income 4,425,589
- ----------------------------------------------------------------------------------------------------- ---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FOREIGN CURRENCY AND FUTURES CONTRACTS:
- -----------------------------------------------------------------------------------------------------
Net realized gain on investments, foreign currency transactions, and futures contracts 649,318
- -----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments, translation of assets
and liabilities in foreign currency, and futures contracts 410,861
- ----------------------------------------------------------------------------------------------------- ---------
Net realized and unrealized gain on investments, foreign currency and futures contracts 1,060,179
- ----------------------------------------------------------------------------------------------------- ---------
Change in net assets resulting from operations $5,485,768
- ----------------------------------------------------------------------------------------------------- ---------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
NOVEMBER 30,
<S> <C> <C>
1996 1995
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------------------------------------
Net investment income $ 4,425,589 $ 2,908,367
- -------------------------------------------------------------------------------------
Net realized gain (loss) on investments, foreign currency transactions and futures
contracts ($629,064 and $729,136, net gains respectively, as computed for federal tax
purposes) 649,318 911,082
- -------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments, translation of
assets and liabilities in foreign currency and futures contracts 410,861 2,481,101
- ------------------------------------------------------------------------------------- ------------ ------------
Change in net assets resulting from operations 5,485,768 6,300,550
- ------------------------------------------------------------------------------------- ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -------------------------------------------------------------------------------------
Distributions from net investment income
- -------------------------------------------------------------------------------------
Institutional Shares (3,457,532) (2,431,427)
- -------------------------------------------------------------------------------------
Select Shares (1,037,906) (394,936)
- -------------------------------------------------------------------------------------
Distributions from net realized gains on investments, foreign currency transactions
and futures contracts
- -------------------------------------------------------------------------------------
Institutional Shares (332,234) --
- -------------------------------------------------------------------------------------
Select Shares (91,563) --
- ------------------------------------------------------------------------------------- ------------ ------------
Change in net assets resulting from distributions to shareholders (4,919,235) (2,826,363)
- ------------------------------------------------------------------------------------- ------------ ------------
SHARE TRANSACTIONS--
- -------------------------------------------------------------------------------------
Proceeds from sale of shares 48,463,331 36,889,780
- -------------------------------------------------------------------------------------
Net asset value of shares issued to shareholders
in payment of distributions declared 2,121,547 900,372
- -------------------------------------------------------------------------------------
Cost of shares redeemed (23,349,415) (14,374,680)
- ------------------------------------------------------------------------------------- ------------ ------------
Change in net assets resulting from share transactions 27,235,463 23,415,472
- ------------------------------------------------------------------------------------- ------------ ------------
Change in net assets 27,801,996 26,889,659
- -------------------------------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------------------------------
Beginning of period 64,779,572 37,889,913
- ------------------------------------------------------------------------------------- ------------ ------------
End of period (including undistributed net investment income of $246,961 and
$305,359, respectively) $ 92,581,568 $ 64,779,572
- ------------------------------------------------------------------------------------- ------------ ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED INCOME FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
(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 portfolios. The financial statements
included herein are only those of Federated Managed Income Fund (the "Fund"), a
diversified portfolio. The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held. The
investment objective of the Fund is to seek current income.
The Fund offers two classes of shares: Institutional Shares and Select Shares.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Listed equity securities are valued at the last sale
price reported on a national securities exchange. U.S. government
securities, listed corporate bonds, other fixed income and asset-backed
securities, and unlisted securities and private placement securities are
generally valued at the mean of the latest bid and asked price as furnished
by an independent pricing service. Short-term securities are valued at the
prices provided by an independent pricing service. However, short-term
securities with remaining maturities of sixty days or less at the time of
purchase may be valued at amortized cost, which approximates fair market
value.
With respect to valuation of foreign securities, trading in foreign
countries may be completed at times which vary from the closing of the New
York Stock Exchange. Therefore, foreign securities are valued at the latest
closing price on the exchange on which they are traded prior to the closing
of the New York Stock Exchange. Foreign securities quoted in foreign
currencies are translated into U.S. dollars at the foreign exchange rate in
effect at noon, eastern time, on the day the value of the foreign security
is determined.
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.
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral
securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code"). Dividend
income and distributions to shareholders are recorded on the ex-dividend
date.
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. The following reclassifications have been
made to the financial statements.
<TABLE>
<CAPTION>
INCREASE (DECREASE)
ACCUMULATED UNDISTRIBUTED NET
NET REALIZED GAIN INVESTMENT INCOME
<S> <C>
$(11,451) $11,451
</TABLE>
Net investment income, net realized gains/losses, and net assets were not
affected by this reclassification.
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
However, federal taxes may be imposed on the Fund upon the disposition of
certain investments in passive foreign investment companies. Withholding
taxes on foreign interest and dividends have been provided for in
accordance with the Fund's understanding of the applicable country's tax
rules and rates.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized over a period not to exceed five years from the Fund's
commencement date.
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
FUTURES CONTRACTS--The Fund purchases stock index futures contracts to
manage cashflows, enhance yield, and to potentially reduce transaction
costs. Upon entering into a stock index futures contract with a broker, the
Fund is required to deposit in a segregated account a specified amount of
cash or U.S. government securities. Futures contracts are valued daily and
unrealized gains or losses are recorded in a "variation margin" account.
Daily, the Fund receives from or pays to the broker a specified amount of
cash based upon changes in the variation margin account. When a contract is
closed, the Fund recognizes a realized gain or loss. Future contracts have
market risks, including the risk that the change in value of the contract
may not correlate with changes in value of the underlying securities. For
the year ended November 30, 1996, the Fund had realized gains of $56,192 on
futures contracts. As of November 30, 1996, the Fund had no outstanding
futures contracts.
FOREIGN EXCHANGE CONTRACTS--The Fund may enter into foreign currency
contracts for the delayed delivery of securities or foreign currency
exchange transactions. These contracts are used to hedge the Fund against
currency fluctuations. Risks may arise upon entering these transactions
from the potential inability of counter-parts 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 purposes as unrealized until the
settlement date. At November 30, 1996, the Fund had no outstanding foreign
currency commitments.
FOREIGN CURRENCY TRANSLATION--The accounting records of the Fund are
maintained in U.S. dollars. All assets and liabilities denominated in
foreign currencies ("FC") are translated into U.S. dollars based on the
rate of exchange of such currencies against U.S. dollars on the date of
valuation. Purchases and sales of securities, income and expenses are
translated at the rate of exchange quoted on the respective date that such
transactions are recorded. Differences between income and expense amounts
recorded and collected or paid are adjusted when reported by the custodian
bank. The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales
of FCs, currency gains or losses realized 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
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
cases, the issuer of restricted securities has agreed to register such
securities for resale, at the issuer's expense either upon demand by the
Fund or in connection with another registered offering of the securities.
Many restricted securities may be resold in the secondary market in
transactions exempt from registration. Such restricted securities may be
determined to be liquid under criteria established by the Trustees. The
Fund will not incur any registration costs upon such resales. The Fund's
restricted securities are valued at the price provided by dealers in the
secondary market or, if no market prices are available, at the fair value
as determined by the Fund's pricing committee.
Additional information on each restricted security held at November 30,
1996 is as follows:
<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE ACQUISITION COST
<S> <C> <C>
Allied Waste 11/25/1996 $ 50,000
Astor Corp. 10/2/1996 49,750
Bayer Corp. 3/21/1996-4/17/1996 345,302
Dade International, Inc. 4/30/1996-5/17/1996 50,906
First Nationwide Escrow 9/13/1996 50,625
Freeport Terminal (Malta) 7/19/1994 284,196
Westinghouse Electric Corp. 9/27/1995-3/14/1996 97,725
</TABLE>
DOLLAR ROLL TRANSACTIONS--The Fund enters into dollar roll transactions,
with respect to mortgage securities issued by GNMA, FNMA and FHLMC, in
which the Fund sells mortgage securities to financial institutions and
simultaneously agrees to accept substantially similar (same type, coupon
and maturity) securities at a later date at an agreed upon price. Dollar
roll transactions are short-term financing arrangements which will not
exceed twelve months. The Fund will use the proceeds generated from the
transactions to invest in short-term investments, which may enhance the
Fund's current yield and total return.
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. Transactions in shares were as follows:
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1996 1995
INSTITUTIONAL SHARES SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
- -------------------------------------------------------- ----------- ------------- ----------- -------------
Shares sold 2,995,976 $ 31,129,010 2,449,773 $ 25,139,690
- --------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 135,176 1,403,094 68,764 702,502
- --------------------------------------------------------
Shares redeemed (1,600,230) (16,630,503) (1,244,562) (12,651,519)
- -------------------------------------------------------- ----------- ------------- ----------- -------------
Net change resulting from Institutional Shares
transactions 1,530,922 $ 15,901,601 1,273,975 $ 13,190,673
- -------------------------------------------------------- ----------- ------------- ----------- -------------
<CAPTION>
YEAR ENDED NOVEMBER 30,
1996 1995
SELECT SHARES SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
- -------------------------------------------------------- ----------- ------------- ----------- -------------
Shares sold 1,668,304 $ 17,334,321 1,144,376 $ 11,750,090
- --------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 69,234 718,453 19,145 197,870
- --------------------------------------------------------
Shares redeemed (648,056) (6,718,912) (168,971) (1,723,161)
- -------------------------------------------------------- ----------- ------------- ----------- -------------
Net change resulting from Select Shares
transactions 1,089,482 $ 11,333,862 994,550 $ 10,224,799
- -------------------------------------------------------- ----------- ------------- ----------- -------------
Net change resulting from share transactions 2,620,404 $ 27,235,463 2,268,525 $ 23,415,472
- -------------------------------------------------------- ----------- ------------- ----------- -------------
</TABLE>
(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 0.75% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive any portion of its fee. The Adviser can modify or
terminate this voluntary waiver at any time at its sole discretion.
Under the terms of a sub-advisory agreement between the Adviser and Federated
Global Research Corp. (the "Sub-Adviser"), 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.
ADMINISTRATIVE FEE--Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ is
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
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 0.75% of average net assets, annually, to
compensate FSC. The distributor may voluntarily choose to waive any portion of
its fee. The distributor can modify or terminate this voluntary waiver at any
time at its sole discretion.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25%
of average daily net assets of the Fund shares for the period. The fee paid to
FSS is used to finance certain services for shareholders and to maintain
shareholder accounts. FSS may voluntarily choose to waive any portion of its
fee. FSS can modify or terminate this voluntary waiver at any time at its sole
discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--FServ, through its
subsidiary, Federated Shareholder Services Company ("FSSC") serves as transfer
and dividend disbursing agent for the Fund. The fee paid to FSSC is based on the
size, type, and number of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Trust's accounting records for
which it receives a fee. The fee is based on the level of the Trust's average
daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses of $91,334 were borne initially
by Adviser. The Fund has agreed to reimburse Adviser for the organizational
expenses during the five year period following effective date. For the period
ended November 30, 1996, the Fund paid $13,406 pursuant to this agreement.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended November 30, 1996, were as follows:
<TABLE>
<S> <C>
PURCHASES $ 128,713,847
- -------------------------------------------------------------------------------------------------- --------------
SALES $ 99,461,101
- -------------------------------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
(6) CONCENTRATION OF CREDIT RISK
The Fund invests in securities of non-U.S. issuers. Although the Fund maintains
a diversified investment portfolio, the political or economic developments
within a particular country or region may have an adverse effect on the ability
of domiciled issuers to meet their obligations. Additionally, political or
economic developments may have an effect on the liquidity and volatility of
portfolio securities and currency holdings.
At November 30, 1996, the diversification of industries was as follows:
<TABLE>
<CAPTION>
INDUSTRY % OF NET ASSETS INDUSTRY % OF NET ASSETS
<S> <C> <C> <C>
Aerospace & Military Technology 0.3 Finance Intermediaries 1.3
Agency 1.4 Food & Drug Retailers 0.4
Automotive 0.2 Government Agency 27.2
Banking 1.3 Healthcare 0.9
Basic Industry 0.5 Industrial Products & Equipment 0.4
Beverage & Tobacco 0.4 Insurance 1.1
Broadcast Radio & T.V. 0.3 Leisure & Entertainment 0.2
Business Equipment & Services 0.1 Oil & Gas 2.0
Cable Television 0.7 Printing and Publishing 0.5
Cash Equivalents 5.2 Producer Manufacturing 0.4
Chemicals & Plastics 0.6 Retail Trade 0.3
Clothing & Textiles 0.1 Services 0.6
Consumer Durables 0.2 Sovereign 4.6
Consumer Non-Durables 0.9 State & Provincial 0.3
Container & Glass Products 0.1 Supranational 0.1
Ecological Services & Equipment 1.5 Surface Transportation 0.1
Electrical Utilities 4.5 Technology 0.3
Electronics 0.5 Telecommunications & Cellular 0.1
Energy Minerals 0.9 Transportation 0.1
Finance 1.0 Treasury Securities 38.8
Finance--Retail 0.3 Utilities 2.0
</TABLE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
MANAGED SERIES TRUST
(Federated Managed Income Fund):
We have audited the accompanying statement of assets and liabilities of
Federated Managed Income Fund (an investment portfolio of Managed Series Trust,
a Massachusetts business trust), including the schedule of portfolio
investments, as of November 30, 1996, and 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, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Federated Managed Income Fund, an investment portfolio of Managed Series Trust,
as of November 30, 1996, 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 15, 1997
APPENDIX
- --------------------------------------------------------------------------------
STANDARD AND POOR'S RATINGS GROUP LONG-TERM DEBT RATINGS
AAA--Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.
A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB--Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.
B--Debt rated B has greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or
BB- rating.
CCC--Debt rated CCC has currently identifiable vulnerability to default and is
dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating.
CC--The rating CC typically is applied to debt subordinated to senior debt that
is assigned an actual or implied CCC debt rating.
C--The rating C typically is applied to debt subordinated to senior debt which
is assigned an actual or implied CCC- debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.
CI--The rating CI is reserved for income bonds on which no interest is being
paid.
D--Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D
rating also will be used upon the filing of a bankruptcy petition if debt
service payments are jeopardized.
MOODY'S INVESTORS SERVICE, INC., CORPORATE BOND RATINGS
Aaa--Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment some time in the future.
Baa--Bonds which are rated Baa are considered as medium-grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well.
Ba--Bonds which are Ba are judged to have speculative elements; their future
cannot be considered as well-assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca--Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C--Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
FITCH INVESTORS SERVICE, INC., LONG-TERM DEBT RATINGS
AAA--Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA--Bonds considered to be investment grade and of very high quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F-1+.
A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB--Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds and, therefore, impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.
BB--Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.
B--Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.
CCC--Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.
CC--Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C--Bonds are in imminent default in payment of interest or principal.
DDD, DD, AND D--Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. DDD
represents the highest potential for recovery on these bonds, and D represents
the lowest potential for recovery.
NR--NR indicates that Fitch does not rate the specific issue.
PLUS (+) OR MINUS (-): Plus or minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the AAA category.
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Federated Managed Income Fund
Select Shares Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Sub-Adviser
Federated Global Research Corp. 175 Water Street
New York, New York 10038-4965
- ---------------------------------------------------------------------------------------------------------------------
Custodian
State Street Bank and P.O. Box 8600
Trust Company Boston, Massachusetts 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Shareholder Services Company P.O. Box 8600
Boston, Massachusetts 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
[THIS PAGE INTENTIONALLY LEFT BLANK]
FEDERATED MANAGED
INCOME FUND
SELECT SHARES
PROSPECTUS
A Diversified Portfolio of
Managed Series Trust,
an Open-End Management
Investment Company
Prospectus dated January 31, 1997
[LOGO OF FEDERATED INVESTORS]
Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.
Cusip 56166K206
3122012A-SEL (1/97)
[RECYCLED PAPER LOGO]
FEDERATED MANAGED INCOME FUND
(A PORTFOLIO OF MANAGED SERIES TRUST)
INSTITUTIONAL SHARES
PROSPECTUS
The Institutional Shares of Federated Managed Income Fund (the "Fund") offered
by this prospectus represent interests in the Fund, which is a diversified
investment portfolio of Managed Series Trust (the "Trust"). The Trust is an
open-end management investment company (a mutual fund).
The investment objective of the Fund is to seek current income. The Fund invests
in both bonds and stocks. Institutional Shares are sold at net asset value.
THE INSTITUTIONAL SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR
OBLIGATIONS OF ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD,
OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE INSTITUTIONAL SHARES
INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
This prospectus contains the information you should read and know before you
invest in Institutional Shares of the Fund. Keep this prospectus for future
reference.
The Fund has also filed a Statement of Additional Information for Institutional
Shares and Select Shares of all portfolios of the Trust dated January 31, 1997,
with the Securities and Exchange Commission ("SEC"). The information contained
in the Statement of Additional Information is incorporated by reference into
this prospectus. You may request a copy of the Statement of Additional
Information or a paper copy of this prospectus, if you have received your
prospectus electronically, free of charge by calling 1-800-341-7400. To obtain
other information or to make inquiries about the Fund, contact the Fund at the
address listed in the back of this prospectus. The Statement of Additional
Information, material incorporated by reference into this document, and other
information regarding the Fund are maintained electronically with the SEC at
Internet Web site (http:// www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
Prospectus dated January 31, 1997
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Investment Limitations 14
TRUST INFORMATION 15
- ------------------------------------------------------
Management of the Trust 15
Distribution of Institutional Shares 19
Administration of the Fund 19
Brokerage Transactions 20
NET ASSET VALUE 20
- ------------------------------------------------------
INVESTING IN INSTITUTIONAL SHARES 20
- ------------------------------------------------------
Share Purchases 20
Minimum Investment Required 21
What Shares Cost 21
Systematic Investment Program 23
Certificates and Confirmations 22
Dividends 22
Capital Gains 22
REDEEMING INSTITUTIONAL SHARES 22
- ------------------------------------------------------
Through a Financial Institution 22
Telephone Redemption 23
Written Requests 23
Systematic Withdrawal Program 23
Accounts with Low Balances 24
SHAREHOLDER INFORMATION 24
- ------------------------------------------------------
Voting Rights 24
TAX INFORMATION 24
- ------------------------------------------------------
Federal Income Tax 24
State and Local Taxes 25
PERFORMANCE INFORMATION 25
- ------------------------------------------------------
OTHER CLASSES OF SHARES 25
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--SELECT SHARES 26
- ------------------------------------------------------
FINANCIAL STATEMENTS 27
- ------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 57
- ------------------------------------------------------
APPENDIX 58
- ------------------------------------------------------
ADDRESSES 61
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price)........................... None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price)................................................................... None
Contingent Deferred Sales Charge (as a percentage of original purchase price or
redemption proceeds, as applicable)................................................................... None
Redemption Fee (as a percentage of amount redeemed, if applicable)...................................... None
Exchange Fee............................................................................................ None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver) (1)....................................................................... 0.15%
12b-1 Fee............................................................................................... None
Total Other Expenses.................................................................................... 0.60%
Shareholder Services Fee (after waiver) (2)............................................. 0.05%
Total Operating Expenses (3).................................................................. 0.75%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.75%.
(2) The shareholder services fee has been reduced to reflect the voluntary
waiver of a portion of the shareholder services fee. The shareholder service
provider can terminate this voluntary waiver at any time at its sole
discretion. The maximum shareholder services fee is 0.25%.
(3) The total operating expenses in the table above are based on expenses
expected during the fiscal year ending November 30, 1997. The total
operating expenses were 0.80% for the fiscal year ended November 30, 1996
and would have been 1.60% absent the voluntary waivers of portions of the
managemnet fee and shareholder services fee.
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of Institutional Shares of the
Fund will bear, either directly or indirectly. For more complete descriptions of
the various costs and expenses, see "Investing in Institutional Shares" and
"Trust Information". Wire-transferred redemptions of less than $5,000 may be
subject to additional fees.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment assuming
(1) 5% annual return and (2) redemption at the end of each time
period................................................................ $8 $24 $42 $93
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
FEDERATED MANAGED INCOME FUND
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 57.
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
<S> <C> <C> <C>
1996 1995 1994(A)
- -------------------------------------------------------------------------------- --------- --------- ---------
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.54 $ 9.76 $ 10.00
- --------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------
Net investment income 0.59 0.62 0.31
- --------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments,
foreign currency, and futures contracts 0.12 0.78 (0.25)
- -------------------------------------------------------------------------------- --------- --------- ---------
Total from investment operations 0.71 1.40 0.06
- -------------------------------------------------------------------------------- --------- --------- ---------
LESS DISTRIBUTIONS
- --------------------------------------------------------------------------------
Distributions from net investment income (0.62) (0.62) (0.30)
- --------------------------------------------------------------------------------
Distributions from net realized gain on investments, foreign currency
transactions, and futures contracts (0.07) -- --
- -------------------------------------------------------------------------------- --------- --------- ---------
Total distributions (0.69) (0.62) (0.30)
- -------------------------------------------------------------------------------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 10.56 $ 10.54 $ 9.76
- -------------------------------------------------------------------------------- --------- --------- ---------
TOTAL RETURN (B) 6.98% 14.74% 0.55%
- --------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------------------------------------------
Expenses 0.80% 0.75% 0.67%*
- --------------------------------------------------------------------------------
Net investment income 5.72% 6.26% 6.02%*
- --------------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.80% 1.06% 1.01%*
- --------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $67,122 $50,852 $34,692
- --------------------------------------------------------------------------------
Average commission rate paid $0.0003
- --------------------------------------------------------------------------------
Portfolio turnover 164% 165% 153%
- --------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 25, 1994 (date of initial
public investment) to November 30, 1994. For the period from the start of
business, January 18, 1994 to May 24, 1994, the net investment income was
distributed to the Trust's adviser.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
Further information about the Fund's performance is contained in the Fund's
annual report for the fiscal year ended November 30, 1996, which can be obtained
free of charge.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated November 15, 1993. The Declaration of Trust permits the Trust to
offer separate series of shares of beneficial interest representing interests in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. As of the date of this prospectus, the Board of
Trustees ("Trustees") have established two classes of shares of the Fund, known
as Institutional Shares and Select Shares. This prospectus relates only to
Institutional Shares.
Institutional Shares ("Shares") of the Fund are designed to give institutions,
individuals, and financial institutions acting in a fiduciary or agency capacity
a convenient means of accumulating an interest in a professionally managed,
diversified investment portfolio. A minimum initial investment of $25,000 over a
90-day period is required.
Shares are currently sold and redeemed at net asset value without a sales charge
imposed by the Fund.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is to seek current income. There can be, of
course, no assurance that the Fund will achieve its investment objective. The
Fund's investment objective cannot be changed without the approval of
shareholders. Unless otherwise noted, the Fund's investment policies may be
changed by the Trustees without shareholder approval.
INVESTMENT POLICIES
ASSET ALLOCATION. The Fund will primarily invest in two types of assets: bonds
and equities. The Fund's investment approach is based on the conviction that,
over time, the choice of investment asset categories and their relative
long-term weightings within the portfolio will have the primary impact on its
investment performance. Of secondary importance to the Fund's performance are
the shifting of money among asset categories and the selection of securities
within asset categories. Therefore, the Fund will pursue its investment
objective in the following manner: (1) by setting long-term ranges for each
asset category; (2) by moving money among asset categories within those defined
ranges; and (3) by actively selecting securities within each of the asset
categories. The Fund attempts to minimize risk by allocating its assets in such
a fashion.
Within each of these types of investments, the Fund has designated asset
categories. As a matter of investment policy, ranges have been set for each
asset category's portfolio commitment.
The Fund will invest between 70 and 90 percent of its assets in bonds. The bond
asset categories are U.S. Treasury securities, mortgage-backed securities,
investment-grade corporate bonds, high yield corporate bonds and foreign bonds.
The Fund will invest between 10 and 30 percent of its assets in equities. The
Fund's ability to invest a portion of its assets in equities offers the
opportunity for higher return than other income- oriented funds. The equities
asset categories are large company stocks, utility stocks, small company
stocks, foreign stocks, and equity reserves.
The following is a summary of the asset categories and the amount of the Fund's
total assets which may be invested in each asset category:
<TABLE>
<S> <C>
ASSET CATEGORY RANGE
BONDS 70-90 %
U.S. Treasury Securities 0-90 %
Mortgage-Backed Securities 0-45 %
Investment-Grade Corporate Bonds 0-45 %
High Yield Corporate Bonds 0-10 %
Foreign Bonds 0-10 %
EQUITIES 10-30 %
Large Company Stocks 0-30 %
Utility Stocks 0-15 %
Small Company Stocks 0-3 %
Foreign Stocks 0-3 %
Equity Reserves 0-12.5 %
</TABLE>
The Fund's adviser will regularly review the Fund's allocation among the asset
categories and make any changes, within the ranges established for each asset
category, that it believes will provide the most favorable outlook for achieving
the Fund's investment objective. The Fund's adviser will attempt to exploit
inefficiencies among the various asset categories. If, for example, U.S.
Treasury securities are judged to be unusually attractive relative to other
asset categories, the allocation for U.S. Treasury securities may be moved to
its upper limit. At other times, when U.S. Treasury securities appear to be
overvalued, the commitment may be moved down to a lesser allocation. There is no
assurance, however, that the adviser's attempts to pursue this strategy will
result in a benefit to the Fund.
Each asset category within the Fund will be a managed portfolio. The Fund will
seek superior investment performance through security selection in addition to
determining the percentage of its assets to allocate to each of the asset
categories.
BOND ASSET CATEGORIES. The portion of the Fund's assets which is invested in
bonds ("Bond Assets") will be allocated among the following asset categories
within the ranges specified. The prices of fixed income securities fluctuate
inversely to the direction of interest rates. The average duration of the Fund's
Bond Assets will be not less than two nor more than four years. Duration is a
commonly used measure of the potential volatility of the price of a debt
security, or the aggregate market value of a portfolio of debt securities, prior
to maturity. Securities with shorter durations generally have less volatile
prices than securities of comparable quality with longer durations. The Fund
should be expected to maintain a higher average duration during periods of lower
expected market volatility, and a lower average duration during periods of
higher expected market volatility.
U.S. TREASURY SECURITIES. U.S. Treasury securities are direct
obligations of the U.S. Treasury, such as U.S. Treasury bills, notes, and
bonds. The Fund may invest up to 90 percent of its total assets in U.S.
Treasury securities. The Fund may invest in other U.S. government
securities if, in the judgment of the adviser, other U.S. government
securities are more attractive than U.S. Treasury securities.
MORTGAGE-BACKED SECURITIES. Mortgage-backed securities represent an
undivided interest in a pool of residential mortgages or may be
collateralized by a pool of residential mortgages. Mortgage-backed
securities are generally either issued or guaranteed by the Government
National Mortgage Association ("GNMA"), Federal National Mortgage
Association ("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC") or
other U.S. government agencies or instrumentalities. Mortgage-backed
securities may also be issued by single-purpose, stand-alone finance
subsidiaries or trusts of financial institutions, government agencies,
investment bankers, or companies related to the construction industry. The
Fund may invest up to 45 percent of its total assets in mortgage-backed
securities.
INVESTMENT-GRADE CORPORATE BONDS. Investment-grade corporate bonds are
corporate debt obligations having fixed or floating rates of interest and
which are rated BBB or higher by a nationally recognized statistical rating
organization ("NRSRO"). The Fund may invest up to 45 percent of its total
assets in investment-grade corporate bonds. In certain cases, the Fund's
adviser may choose bonds which are unrated if it determines that such bonds
are of comparable quality or have similar characteristics to the
investment-grade bonds described above. Yankee bonds, which are U.S.
dollar-denominated bonds issued and traded in the United States by foreign
issuers, are treated as investment-grade corporate bonds for purposes of
the asset category ranges.
HIGH YIELD CORPORATE BONDS. High yield corporate bonds are corporate debt
obligations having fixed or floating rates of interest and which are rated
BB or lower by NRSROs (commonly known as junk bonds). The Fund may invest
up to ten percent of its total assets in high yield corporate bonds. There
is no minimal acceptable rating for a security to be purchased or held in
the Fund's portfolio, and the Fund may, from time to time, purchase or hold
securities rated in the lowest rating category. (See "Appendix.") In
certain cases the Fund's adviser may choose bonds which are unrated if it
determines that such bonds are of comparable quality or have similar
characteristics to the high yield bonds described above.
INVESTMENT RISKS. Lower-rated securities will usually offer higher
yields than higher-rated securities. However, there is more risk
associated with these investments. This is because of reduced
creditworthiness and increased risk of default. Lower-rated securities
generally tend to reflect short-term corporate and market developments
to a greater extent than higher-rated securities which react primarily
to fluctuations in the general level of interest rates. Short-term
corporate and market developments affecting the price or liquidity of
lower-rated securities could include adverse news affecting major
issuers, underwriters, or dealers of lower-rated corporate debt
obligations. In addition, since there are fewer investors in
lower-rated securities, it may be harder to sell the securities at an
optimum time. As a result of these factors, lower-rated securities tend
to have more price volatility and carry more risk to principal than
higher-rated securities.
Many corporate debt obligations, including many lower-rated bonds,
permit the issuers to call the security and thereby redeem their
obligations earlier than the stated maturity dates. Issuers are more
likely to call bonds during periods of declining interest rates. In
these cases, if the Fund owns a bond which is called, the Fund will
receive its return of principal earlier than expected and would likely
be required to reinvest the proceeds at lower interest rates, thus
reducing income to the Fund.
FOREIGN BONDS. Foreign bonds are high-quality debt securities of countries
other than the United States. The Fund's portfolio of foreign bonds will be
comprised mainly of foreign government, foreign governmental agency or
supranational institution bonds. The Fund will also invest in high-quality
debt securities issued by established corporations located primarily in
economically developed countries other than the United States and subject
to the Fund's credit limitations for foreign bonds. The Fund may invest up
to ten percent of its total assets in foreign bonds.
EQUITY ASSET CATEGORIES. The portion of the Fund's assets which is invested in
equities will be allocated among the following asset categories within the
ranges specified:
LARGE COMPANY STOCKS. Large company stocks are common stocks and
securities convertible into or exchangeable for common stocks, such as
rights and warrants, of high-quality companies selected by the Fund's
adviser. Ordinarily, these companies will be in the top 25 percent of their
industries with regard to revenues and have a market capitalization of
$500,000,000 or more. However, other factors, such as a company's product
position, market share, current earnings and/or dividend and earnings
growth prospects, will be considered by the Fund's adviser and may outweigh
revenues. The Fund may invest up to 30 percent of its total assets in large
company stocks.
UTILITY STOCKS. Utility stocks are common stocks and securities
convertible into or exchangeable for common stocks, such as rights and
warrants, of utility companies. The Fund may invest up to 15 percent of its
total assets in utility stocks. Common stocks of utilities are generally
characterized by higher dividend yields and lower growth rates than common
stocks of industrial companies. Under normal market conditions, the higher
income stream from utility stocks tends to make them less volatile than
stocks of industrial companies.
SMALL COMPANY STOCKS. Small company stocks are common stocks and
securities convertible into or exchangeable for common stocks, such as
rights and warrants, of companies with a market capitalization (market
price x number of shares outstanding) below the top 1,000 stocks that
comprise the large and mid-range capitalization sector of the United States
equity market. These stocks are comparable to, but not limited to, the
stocks comprising the Russell 2000 Index, an index of small capitalization
stocks. The Fund may invest up to three percent of its total assets in
small company stocks.
FOREIGN STOCKS. The Fund invests in non-U.S. equity securities. A
substantial portion of these will be equity securities of established
companies in economically developed countries. These securities may be
either dollar-denominated or denominated in foreign currencies. American
Depository Receipts ("ADRs"), including dollar denominated ADRs which are
issued by domestic banks and traded in the United States on exchanges or
over-the-counter, are treated as foreign stocks for purposes of the asset
category ranges. The Fund may invest up to three percent of its total
assets in foreign stocks.
EQUITY RESERVES. When the adviser believes that a temporary defensive
position is available, the Fund may invest in equity reserves. Equity
reserves will be used to adjust the risk level of the equity portion of the
Fund in response to market conditions. Equity reserves will consist of U.S.
and foreign short-term money market instruments such as commercial paper
rated A-1 by Standard and Poor's Ratings Group ("Standard & Poor's"),
Prime-1 by Moody's Investors Service, Inc. ("Moody's"), or F-1 by Fitch
Investors Service, Inc. ("Fitch"). The Fund may invest up to 12.5 percent
of its total assets in equity reserves.
ACCEPTABLE INVESTMENTS
U.S. TREASURY AND OTHER U.S. GOVERNMENT SECURITIES. The U.S. Treasury and
other U.S. government securities in which the Fund invests are either
issued or guaranteed by the U.S. government, its agencies or
instrumentalities. The U.S. government securities in which the Fund may
invest are limited to:
direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds;
notes, bonds, and discount notes issued or guaranteed by U.S. government
agencies and instrumentalities supported by the full faith and credit of
the United States;
notes, bonds, and discount notes of U.S. government agencies or
instrumentalities which receive or have access to federal funding; and
notes, bonds, and discount notes of other U.S. government
instrumentalities supported only by the credit of the instrumentalities.
The Fund may also purchase U.S. Treasury securities and the U.S.
government securities noted above pursuant to repurchase agreements.
MORTGAGE-BACKED SECURITIES. Mortgaged-backed securities are securities
collateralized by residential mortgages. The mortgage-backed securities in
which the Fund may invest may be:
issued by an agency of the U.S. government, typically GNMA, FNMA or
FHLMC;
privately issued securities which are collateralized by pools of
mortgages in which each mortgage is guaranteed as to payment of principal
and interest by an agency or instrumentality of the U.S. government;
privately issued securities which are collateralized by pools of
mortgages in which payment of principal and interest are guaranteed by
the issuer and such guarantee is collateralized by U.S. government
securities; and
other privately issued securities in which the proceeds of the issuance
are invested in mortgage-backed securities and payment of the principal
and interest are supported by the credit of an agency or instrumentality
of the U.S. government.
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"). CMOs are bonds issued by
single-purpose, stand-alone finance subsidiaries or trusts of financial
institutions, government agencies, investment bankers, or companies
related to the construction industry. Most of the CMOs in which the
Fund would invest use the same basic structure:
Several classes of securities are issued against a pool of mortgage
collateral. The most common structure contains four classes of
securities. The first three (A, B, and C bonds) pay interest at
their stated rates beginning with the issue date; the final class
(or Z bond) typically receives the residual income from the
underlying investments after payments are made to the other
classes.
The cash flows from the underlying mortgages are applied first to
pay interest and then to retire securities.
The classes of securities are retired sequentially. All principal
payments are directed first to the shortest-maturity class (or A
bonds). When those securities are completely retired, all principal
payments are then directed to the next-shortest maturity security
(or B bond). This process continues until all of the classes have
been paid off.
Because the cash flow is distributed sequentially instead of pro rata
as with pass-through securities, the cash flows and average lives of
CMOs are more predictable, and there is a period of time during which
the investors in the longer-maturity classes receive no principal
paydowns. The interest portion of these payments is distributed by the
Fund as income and the capital portion is reinvested.
The Fund will invest only in CMOs which are rated AAA or Aaa by an
NRSRO.
REAL ESTATE MORTGAGE INVESTMENT CONDUITS ("REMICS"). REMICs are
offerings of multiple class real estate mortgage-backed securities
which qualify and elect treatment as such under provisions of the
Internal Revenue Code. Issuers of REMICs may take several forms, such
as trusts, partnerships, corporations, associations or a segregated
pool of mortgages. Once REMIC status is elected and obtained, the
entity is not subject to federal income taxation. Instead, income is
passed through the entity and is taxed to the person or persons who
hold interests in the REMIC. A REMIC interest must consist of one or
more classes of "regular interests," some of which may offer adjustable
rates, and a single class of "residual interests." To qualify as a
REMIC, substantially all of the assets of the entity must be in assets
directly or indirectly secured principally by real property.
CHARACTERISTICS OF MORTGAGE-BACKED SECURITIES. Mortgage-backed
securities have yield and maturity characteristics corresponding to the
underlying mortgages. Distributions to holders of mortgage-backed
securities include both interest and principal payments. Principal
payments represent the amortization of the principal of the underlying
mortgages and any prepayments of principal due to prepayment,
refinancing, or foreclosure of the underlying mortgages. Although
maturities of the underlying mortgage loans may range up to 30 years,
amortization and prepayments substantially shorten the effective
maturities of mortgage-backed securities. Due to these features,
mortgage-backed securities are less effective as a means of "locking
in" attractive long-term interest rates than fixed-income securities
which pay only a stated amount of interest until maturity, when the
entire principal amount is returned. This is caused by the need to
reinvest at lower interest rates both distributions of principal
generally and significant prepayments which become more likely as
mortgage interest rates decline. Since comparatively high interest
rates cannot be effectively "locked in," mortgage-backed securities
may have less potential for capital appreciation during periods of
declining interest rates than other non-callable, fixed-income
government securities of comparable stated maturities. However,
mortgage-backed securities may experience less pronounced declines in
value during periods of rising interest rates.
In addition, some of the CMOs purchased by the Fund may represent an
interest solely in the principal repayments or solely in the interest
payments on mortgage-backed securities (stripped mortgage-backed
securities or "SMBSs"). Due to the possibility of prepayments on the
underlying mortgages, SMBSs may be more interest-rate sensitive than
other securities purchased by the Fund. If prevailing interest rates
fall below the level at which SMBSs were issued, there may be
substantial prepayments on the underlying mortgages, leading to the
relatively early prepayments of principal-only SMBSs and a reduction in
the amount of payments made to holders of interest-only SMBSs. It is
possible that the Fund might not recover its original investment in
interest-only SMBSs if there are substantial prepayments on the
underlying mortgages. Therefore, interest-only SMBSs generally increase
in value as interest rates rise and decrease in value as interest rates
fall, counter to changes in value experienced by most fixed-income
securities. The Fund's adviser intends to use this characteristic of
interest-only SMBSs to reduce the effects of interest rate changes on
the value of the Fund's portfolio, while continuing to pursue the
Fund's investment objective.
CORPORATE BONDS. The investment-grade corporate bonds in which the Fund
invests are:
rated within the four highest ratings for corporate bonds by Moody's
(Aaa, Aa, A, or Baa), Standard & Poor's (AAA, AA, A, or BBB), or Fitch
(AAA, AA, A, or BBB);
unrated if other long-term debt securities of that issuer are rated, at
the time of purchase, Baa or better by Moody's or BBB or better by
Standard & Poor's or Fitch; or
unrated if determined to be of equivalent quality to one of the foregoing
rating categories by the Fund's adviser.
Securities which are rated BBB by Standard & Poor's or Fitch or Baa by
Moody's have speculative characteristics. Changes in economic conditions or
other circumstances are more likely to lead to weakened capacity to make
principal and interest payments than higher rated bonds. If a security's
rating is reduced below the required minimum after the Fund has purchased
it, the Fund is not required to sell the security, but may consider doing
so.
The high yield corporate bonds in which the Fund invests are rated Ba or
lower by Moody's or BB or lower by Standard & Poor's or Fitch (commonly
known as junk bonds). A description of the rating categories is contained
in the Appendix to this prospectus.
EQUITY SECURITIES. Common stocks represent ownership interest in a
corporation. Unlike bonds, which are debt securities, common stocks have
neither fixed maturity dates nor fixed schedules of promised payments.
Utility stocks are common stocks of utility companies, including water
companies, companies that produce, transmit, or distribute gas and
electric energy and those companies that provide communications
facilities, such as telephone and telegraph companies. Foreign stocks are
equity securities of foreign issuers.
FOREIGN SECURITIES. The foreign bonds in which the Fund invests are rated
within the four highest ratings for bonds by Moody's (Aaa, Aa, A or Baa) or
by Standard & Poor's (AAA, AA, A or BBB) or are unrated if determined to be
of equivalent quality by the Fund's adviser.
INVESTMENT RISKS. Investments in foreign securities involve special
risks that differ from those associated with investments in domestic
securities. The risks associated with investments in foreign securities
apply to securities issued by foreign corporations and sovereign
governments. These risks relate to political and economic developments
abroad, as well as those that result from the differences between the
regulation of domestic securities and issuers and foreign securities
and issuers. These risks may include, but are not limited to,
expropriation, confiscatory taxation, currency fluctuations,
withholding taxes on interest, limitations on the use or transfer of
Fund assets, political or social instability and adverse diplomatic
developments. It may also be more difficult to enforce contractual
obligations or obtain court judgments abroad than would be the case in
the United States because of differences in the legal systems. If the
issuer of the debt or the governmental authorities that control the
repayment of the debt would be unable or unwilling to repay principal
or interest when due in accordance with the terms of such debt, the
Fund may have limited legal recourse in the event of default. Moreover,
individual foreign economies may differ favorably or unfavorably from
the domestic economy in such respects as growth of gross national
product, the rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position.
Additional differences exist between investing in foreign and domestic
securities. Examples of such differences include: less publicly
available information about foreign issuers; credit risks associated
with certain foreign governments; the lack of uniform financial
accounting standards applicable to foreign issuers; less readily
available market quotations on foreign issuers; the likelihood that
securities of foreign issuers may be less liquid or more volatile;
generally higher foreign brokerage commissions; and unreliable mail
service between countries.
EQUITY RESERVES. The Fund's equity reserves may be cash received from the
sale of Fund shares, reserves for temporary defensive purposes or to take
advantage of market opportunities.
REPURCHASE AGREEMENTS. Repurchase agreements are arrangements in which
banks, broker/dealers, and other recognized financial institutions sell
securities to the Fund and agree at the time of sale to repurchase them
at a mutually agreed upon time and price. To the extent that the
original seller does not repurchase the securities from the Fund, the
Fund could receive less than the repurchase price on any sale of such
securities.
CONVERTIBLE SECURITIES. Convertible securities are fixed-income securities
which may be exchanged or converted into a predetermined number of the
issuer's underlying common stock at the option of the holder during a
specified time period. Convertible securities may take the form of
convertible preferred stock, convertible bonds or debentures, units
consisting of "usable" bonds and warrants or a combination of the
features of several of these securities.
The investment characteristics of each convertible security vary widely,
which allows convertible securities to be employed for different investment
objectives. The adviser may treat convertible securities as large company
stocks, small company stocks, or high yield bonds for purposes of the asset
category ranges, depending upon current market conditions, including the
relationship of the then-current price to the conversion price. The
convertible securities in which the Fund invests may be rated "high yield"
or of comparable quality at the time of purchase.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Fund may invest in
the securities of other investment companies, but it will not own more than 3
percent of the total outstanding voting stock of any such investment company,
invest more than 5 percent of its total assets in any one such investment
company, or invest more than 10 percent of its total assets in such other
investment companies in general. To the extent that the Fund invests in
securities issued by other investment companies, the Fund will indirectly bear
its proportionate share of any fees and expenses paid by such companies in
addition to the fees and expenses payable directly by the Fund.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies but which are
subject to restrictions on resale under federal securities law. Under criteria
established by the Trustees, certain restricted securities are determined to be
liquid. To the extent that restricted securities are not determined to be
liquid, the Fund will limit their purchase, together with other illiquid
securities including 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.
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.
FOREIGN CURRENCY TRANSACTIONS. The Fund will enter into foreign currency
transactions to obtain the necessary currencies to settle securities
transactions. Currency transactions may be conducted either on a spot or cash
basis at prevailing rates or through forward foreign currency exchange
contracts.
The Fund may also enter into foreign currency transactions to protect Fund
assets against adverse changes in foreign currency exchange rates or exchange
control regulations. Such changes could unfavorably affect the value of Fund
assets which are denominated in foreign currencies, such as foreign securities
or funds deposited in foreign banks, as measured in U.S. dollars. Although
foreign currency exchanges may be used by the Fund to protect against a decline
in the value of one or more currencies, such efforts may also limit any
potential gain that might result from a relative increase in the value of such
currencies and might, in certain cases, result in losses to the Fund.
CURRENCY RISKS. To the extent that debt securities purchased by the Fund
are denominated in currencies other than the U.S. dollar, changes in
foreign currency exchange rates will affect the Fund's net asset value; the
value of interest earned; gains and losses realized on the sale of
securities; and net investment income and capital gain, if any, to be
distributed to shareholders by the Fund. If the value of a foreign currency
rises against the U.S. dollar, the value of the Fund's assets denominated
in that currency will increase; correspondingly, if the value of a foreign
currency declines against the U.S. dollar, the value of the Fund's assets
denominated in that currency will decrease.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward foreign currency
exchange contract ("forward contract") is an obligation to purchase or sell an
amount of a particular currency at a specific price and on a future date agreed
upon by the parties.
Generally, no commission charges or deposits are involved. At the time the Fund
enters into a forward contract, Fund assets with a value equal to the Fund's
obligation under the forward contract are segregated and are maintained until
the contract has been settled. The Fund will not enter into a forward contract
with a term of more than one year.
The Fund will generally enter into a forward contract to provide the proper
currency to settle a securities transaction at the time the transaction occurs
("trade date"). The period between trade date and settlement date will vary
between 24 hours and 30 days, depending upon local custom.
The Fund may also protect against the decline of a particular foreign currency
by entering into a forward contract to sell an amount of that currency
approximating the value of all or a portion of the Fund's assets denominated in
that currency ("hedging"). The success of this type of short-term hedging
strategy is highly uncertain due to the difficulties of predicting short-term
currency market movements and of precisely matching forward contract amounts and
the constantly changing value of the securities involved. Although the adviser
will consider the likelihood of changes in currency values when making
investment decisions, the adviser believes that it is important to be able to
enter into forward contracts when it believes the interests of the Fund will be
served. The Fund will not enter into forward contracts for hedging purposes in a
particular currency in an amount in excess of the Fund's assets denominated in
that currency. The Fund will not invest more than 3% of its total assets in
forward foreign currency exchange contracts.
OPTIONS. The Fund may deal in options on foreign currencies, foreign currency
futures, securities, and securities indices, which options may be listed for
trading on a national securities exchange or traded over-the-counter. The Fund
will use options only to manage interest rate and currency risks. The Fund may
write covered call options to generate income.
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.
When the Fund purchases futures contracts, an amount of cash and cash
equivalents, equal to the underlying commodity value of the futures contracts
(less any related margin deposits), will be deposited in a segregated account
with the custodian (or the broker, if legally permitted) to collateralize the
position and thereby insure that the use of such futures contracts are
unleveraged. When the Fund sells futures contracts, it will either own or have
the right to receive the underlying future or security or will make deposits
to collateralize the position as discussed above.
RISKS. When the Fund uses futures and options on futures as hedging
devices, there is a risk that the prices of the securities subject to the
futures contracts may not correlate perfectly with the prices of the
securities in the Fund's portfolio. This may cause the futures contract and
any related options to react differently than the portfolio securities to
market changes. In addition, the investment adviser could be incorrect in
its expectations about the direction or extent of market factors such as
stock price movements. In these events, the Fund may lose money on the
futures contract or option.
It is not certain that a secondary market for positions in futures
contracts or for options will exist at all times. Although the investment
adviser will consider liquidity before entering into these transactions,
there is no assurance that a liquid secondary market on an exchange or
otherwise will exist for any particular futures contract or option at any
particular time. The Fund's ability to establish and close out futures and
options positions depends on this secondary market.
PORTFOLIO TURNOVER. Although the Fund does not intend to invest for the purpose
of seeking short-term profits, securities in its portfolio will be sold whenever
the Fund's adviser believes it is appropriate to do so in light of the Fund's
investment objective, without regard to the length of time a particular security
may have been held. The Fund's rate of portfolio turnover may exceed that of
certain other mutual funds with the same investment objective. A higher rate of
portfolio turnover involves correspondingly greater transaction expenses which
must be borne directly by the Fund and, thus, indirectly by its shareholders. In
addition, a high rate of portfolio turnover may result in the realization of
larger amounts of capital gains which, when distributed to the Fund's
shareholders, are taxable to them. (Further information is contained in the
Fund's Statement of Additional Information within the sections "Brokerage
Transactions" and "Tax Status"). Nevertheless, transactions for the Fund's
portfolio will be based only upon investment considerations and will not be
limited by any other considerations when the Fund's adviser deems it appropriate
to make changes in the Fund's portfolio.
INVESTMENT LIMITATIONS
The Fund will not:
borrow money directly or through reverse repurchase agreements or pledge
securities except, under certain circumstances, the Fund may borrow up to
one-third of the value of its total assets and pledge up to 15 percent of
the value of those assets to secure such borrowings;
lend any securities except for portfolio securities; or
underwrite any issue of securities, except as it may be deemed to be an
underwriter under the Securities Act of 1933 in connection with the sale
of restricted securities which the Fund may purchase pursuant to its
investment objective, policies and limitations.
The above investment limitations cannot be changed without shareholder approval.
TRUST INFORMATION
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MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Trust's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. The Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Except as noted below with regard to the sub-adviser,
investment decisions for the Fund are made by Federated Management, the Fund's
investment adviser (the "Adviser"), subject to direction by the Trustees. The
Adviser continually conducts investment research and supervision for the Fund
and is responsible for the purchase or sale of portfolio instruments, for which
it receives an annual fee from the Fund.
ADVISORY FEES. The Fund's Adviser receives an annual investment advisory
fee equal to .75% of 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.
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 $76
billion invested across more than 338 funds under management and/or
administration by its subsidiaries, as of December 31, 1996, Federated Investors
is one of the largest mutual fund investment managers in the United States. With
more than 2,000 employees, Federated continues to be led by the management who
founded the company in 1955. Federated funds are presently at work in and
through 4,500 financial institutions nationwide.
The Trust, the Adviser, and the Sub-Adviser have adopted strict codes of ethics
governing the conduct of all employees who manage the Fund and its portfolio
securities. These codes recognize that such persons owe a fiduciary duty to the
Fund's shareholders and must place the interests of shareholders ahead of the
employees' own interest. Among other things, the codes: require preclearance and
periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered for
purchase or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less than sixty
days. Violations of the codes are subject to review by the Board of Trustees and
could result in severe penalties.
PORTFOLIO MANAGERS' BACKGROUNDS. Charles A. Ritter is the portfolio
manager for the Fund and performs the overall allocation of the assets of
the Fund among the various asset categories. He has performed these duties
since the Fund's inception. In allocating the Fund's assets, Mr. Ritter
evaluates the market environment and economic outlook, utilizing the
services of the Adviser's Investment Strategy Committee. 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:
Scott B. Schermerhorn and Peter R. Anderson are the portfolio managers for
the domestic large company stocks asset category.
Scott B. Schermerhorn has been the Fund's portfolio manager since July 1,
1996. Mr. Schermerhorn joined Federated Investors in 1996 as a Vice
President of the Fund's Adviser. From 1990 through 1996, Mr. Schermerhorn
was a Senior Vice President and Senior Investment Officer at J W Seligman &
Co., Inc. Mr. Schermerhorn received his M.B.A. in Finance and International
Business from Seton Hall University.
Peter R. Anderson has been the Fund's portfolio manager since the Fund's
inception. 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.
Aash M. Shah and James E. Grefenstette are the portfolio managers for the
domestic small company stocks asset category.
Aash M. Shah has been the Fund's portfolio manager since December 1995. 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. in Industrial Administration
from Carnegie Mellon University with a concentration in finance and
accounting. Mr. Shah is a Chartered Financial Analyst.
James E. Grefenstette has been the Fund's portfolio manager since August
1994. Mr. Grefenstette joined Federated Investors in 1992 and has been a
Vice President since July 1996. Mr. Grefenstette served as an Assistant
Vice President of the Fund's Adviser from 1994 to 1996, and an investment
analyst from 1992 to 1994. Mr. Grefenstette was a credit analyst at
Westinghouse Credit Corp. from 1990 until 1992. Mr. Grefenstette received
his M.S. in Industrial Administration from Carnegie Mellon University.
Henry A. Frantzen, Drew J. Collins, Mark S. Kopinski, Frank Semack, and
Alexandre de Bethmann are portfolio managers for the foreign stocks asset
category.
Henry A. Frantzen has been the Fund's portfolio manager 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.
Drew J. Collins has been the Fund's portfolio manager 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 the Fund's portfolio manager 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 the Fund's portfolio manager 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 1980 to 1993. Mr. Semack
received his M.Sc. in economics from the London School of Economics.
Alexandre de Bethmann has been the Fund's portfolio manager 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 A. Frantzen, Drew J. Collins, Robert M. Kowit and Micheal W. Casey
are portfolio managers for the foreign bonds asset category. Messrs.
Frantzen, Collins and Kowit 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.
Micheal W. Casey, Ph.D. has been the Fund's portfolio manager since January
1, 1997. Mr. Casey joined Federated Investors in 1996 as an Assistant Vice
President. Mr. Casey served as an International Economist and Portfolio
Strategist for Maria Fiorini Ramirez Inc. from 1990 to 1996. Mr. Casey
earned a Ph.D. concentrating in economics from The New School for Social
Research and a M.Sc. from the London School of Economics.
Susan M. Nason and Joseph M. Balestrino are portfolio managers for the U.S.
Treasury securities asset category.
Susan M. Nason has been the Fund's portfolio manager since the Fund's
inception. 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. in Industrial
Administration from Carnegie Mellon University.
Joseph M. Balestrino has been the Fund's portfolio manager since March
1995. 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. 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. in Industrial Administration from Carnegie Mellon
University.
Kathleen M. Foody-Malus is the portfolio manager for the mortgage-backed
securities asset category. Ms. Foody-Malus has performed this duty since
the Fund's inception. 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.
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 Services Company, a subsidiary of Federated
Investors, provides administrative personnel and services (including certain
legal and financial reporting services) necessary to operate the Fund. Federated
Services Company 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
<C> <S>
.15% on the first $250 million
.125% on the next $250 million
.10% on the next $250 million
.075% 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 Services Company 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 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 Shareholder Services Company, c/o State Street Bank
and Trust Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit to:
Federated Managed Income Fund--Institutional Shares; Fund Number (this number
can be found on the account statement or by contacting the Fund); Group Number
or Wire Order Number; Nominee or Institution Name; and ABA Number 011000028.
Shares cannot be purchased by wire on holidays when wire transfers are
restricted. Questions on wire purchases should be directed to your shareholder
services representative at the telephone number listed on your account
statement.
BY MAIL. To purchase Shares by mail, send a check made payable to Federated
Managed Income Fund--Institutional Shares to: Federated Shareholder Services
Company, P.O. Box 8600, Boston, Massachusetts 02266-8600. Orders by mail are
considered received when payment by check is converted by State Street Bank into
federal funds. This is normally the next business day after State Street Bank
receives the check.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in Shares is $25,000. However, an account may be
opened with a smaller amount as long as the $25,000 minimum is reached within 90
days. An institutional investor's minimum investment will be calculated by
combining all accounts it maintains with the Fund. Accounts established through
a financial intermediary 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 financial intermediary may be charged an additional service fee
by that financial intermediary.
The net asset value is determined as of the close of trading (normally 4:00 p.m.
Eastern time) on the New York Stock Exchange, Monday through Friday, except on:
(i) days on which there are not sufficient changes in the value of the Fund's
portfolio securities 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.
SYSTEMATIC INVESTMENT PROGRAM
Once a Fund account has been opened, shareholders may add to their investment on
a regular basis. Under this program, funds may be automatically withdrawn
periodically from the shareholder's checking account and invested in Shares at
the net asset value next determined after an order is received by the Fund. A
shareholder may apply for participation in this program through Federated
Securities Corp.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Shareholder Services Company maintains
a share account for each shareholder. Share certificates are not issued unless
requested by contacting the Fund.
Detailed confirmations of each purchase or redemption are sent to each
shareholder. Quarterly confirmations are sent to report dividends paid during
that quarter.
DIVIDENDS
Dividends are declared and paid monthly to all shareholders invested in the Fund
on the record date. Unless shareholders request cash payments by writing the
Fund, dividends are automatically reinvested in additional Shares of the Fund on
payment dates at the ex-dividend date net asset value without a sales charge.
CAPITAL GAINS
Capital gains realized by the Fund, if any, will be distributed at least once
every 12 months.
REDEEMING INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
The Fund redeems Shares at their net asset value next determined after the Fund
receives the redemption request. Investors who redeem Shares through a financial
intermediary may be charged a service fee by that financial intermediary.
Redemptions will be made on days on which the Fund computes its net asset value.
Redemption requests must be received in proper form and can be made 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
REDEEMING SHARES BY MAIL. Shares may be redeemed in any amount by mailing a
-
written request to: Federated Shareholder Services Company, P.O. Box 8600,
Boston, MA 02266-8600. If Share certificates have been issued, they should be
sent unendorsed with the written request by registered or certified mail to the
address noted above.
The written request should state: the Fund name and the class designation; the
account name as registered with the Fund; the account number; and the number of
shares to be redeemed or the dollar amount requested. All owners of the account
must sign the request exactly as the shares are registered. Normally, a check
for the proceeds is mailed within one business day, but in no event more than
seven days, after the receipt of a proper written redemption request. Dividends
are paid up to and including the day that a redemption request is processed.
Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Fund or a redemption payable other than to
the shareholder of record must have their signatures guaranteed by a commercial
or savings bank, trust company or savings association whose deposits are insured
by an organization which is administered by the Federal Deposit Insurance
Corporation; a member firm of a domestic stock exchange; 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.
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, other than retirement accounts subject to
required minimum distributions. 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, Donnelly and Meck, counsel to the Trust, Fund Shares
may be subject to personal property taxes imposed by counties, municipalities,
and school districts in Pennsylvania to the extent that the portfolio securities
in the Fund would be subject to such taxes if owned directly by residents of
those jurisdictions.
Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its total return and yield for Shares.
Total return represents the change, over a specified period of time, in the
value of an investment in Shares after reinvesting all income and capital gain
distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
The yield of Shares is calculated by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by Shares
over a thirty-day period by the maximum offering price per share of Shares on
the last day of the period. This number is then annualized using semi-annual
compounding. The yield does not necessarily reflect income actually earned by
Shares and, therefore, may not correlate to the dividends or other distributions
paid to shareholders.
Shares are sold without any sales charge or other similar non-recurring charges.
Total return and yield will be calculated separately for Institutional Shares
and Select Shares.
From time to time, advertisements for the Fund's Institutional Shares may refer
to ratings, rankings, and other information in certain financial publications
and/or compare the Fund's Institutional Shares performance to certain indices.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
The Fund also offers another class of shares called Select Shares which are sold
at net asset value primarily to retail and private banking customers of
financial institutions and are subject to a minimum initial investment of
$1,500.
Select Shares are distributed under a 12b-1 Plan adopted by the Fund and also
are subject to shareholder services fees.
Select Shares and Institutional Shares are subject to certain of the same
expenses. Expense differences, however, between Select Shares and Institutional
Shares may affect the performance of each class.
To obtain more information and a prospectus for Select Shares, investors may
call 1-800-341-7400.
FEDERATED MANAGED INCOME FUND
FINANCIAL HIGHLIGHTS--SELECT SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 57.
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1996 1995 1994(A)
- -------------------------------------------------------------------------------- --------- --------- -----------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.54 $ 9.77 $ 10.00
- --------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------
Net investment income 0.53 0.48 0.28
- --------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments,
foreign currency, and futures contracts 0.10 0.83 (0.25)
- -------------------------------------------------------------------------------- --------- --------- -----------
Total from investment operations 0.63 1.31 0.03
- -------------------------------------------------------------------------------- --------- --------- -----------
LESS DISTRIBUTIONS
- --------------------------------------------------------------------------------
Distributions from net investment income (0.54) (0.54) (0.26)
- --------------------------------------------------------------------------------
Distributions from net realized gain on investments,
foreign currency transactions, and futures contracts (0.07) -- --
- -------------------------------------------------------------------------------- --------- --------- -----------
Total distributions (0.61) (0.54) (0.26)
- -------------------------------------------------------------------------------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 10.56 $ 10.54 $ 9.77
- -------------------------------------------------------------------------------- --------- --------- -----------
TOTAL RETURN (B) 6.23% 13.76% 0.26%
- --------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------------------------------------------
Expenses 1.50% 1.50% 1.42%*
- --------------------------------------------------------------------------------
Net investment income 5.02% 5.56% 5.24%*
- --------------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.85% 1.06% 1.26%*
- --------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $25,459 $13,927 $3,198
- --------------------------------------------------------------------------------
Average commission rate paid $0.0003
- --------------------------------------------------------------------------------
Portfolio turnover 164% 165% 153 %
- --------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 25, 1994 (date of initial
public investment) to November 30, 1994. For the period from the start of
business, January 27, 1994 to May 24, 1994, the net investment income was
distributed to the Trust's adviser.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
Further information about the Fund's performance is contained in the Fund's
annual report for the fiscal year ended November 30, 1996, which can be obtained
free of charge.
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED INCOME FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE IN U.S.
OR UNITS DOLLARS
- --------------- -------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--11.2%
- -------------------------------------------------------------------------------------------------
LARGE COMPANY--5.8%
--------------------------------------------------------------------------------
BASIC INDUSTRY--0.4%
--------------------------------------------------------------------------------
3,400 Allegheny Teledyne, Inc. $ 79,474
--------------------------------------------------------------------------------
700 Betz Laboratories, Inc. 40,512
--------------------------------------------------------------------------------
600 Du Pont (E.I.) de Nemours & Co. 56,550
--------------------------------------------------------------------------------
1,100 Great Lakes Chemical Corp. 58,987
--------------------------------------------------------------------------------
5,000 LTV Corporation 53,750
--------------------------------------------------------------------------------
1,900 Morton International, Inc. 76,712
-------------------------------------------------------------------------------- -------------
Total 365,985
-------------------------------------------------------------------------------- -------------
CONSUMER DURABLES--0.2%
--------------------------------------------------------------------------------
1,500 General Motors Corp., Class H 81,750
--------------------------------------------------------------------------------
800 General Motors Corp. 46,100
--------------------------------------------------------------------------------
1,018 Martin Marietta Materials 23,922
--------------------------------------------------------------------------------
2,400 Rubbermaid, Inc. 57,600
-------------------------------------------------------------------------------- -------------
Total 209,372
-------------------------------------------------------------------------------- -------------
CONSUMER NON-DURABLES--0.8%
--------------------------------------------------------------------------------
1,000 Avon Products, Inc. 55,750
--------------------------------------------------------------------------------
700 CPC International, Inc. 58,274
--------------------------------------------------------------------------------
1,100 Dole Food, Inc., ACES, $2.7475 43,862
--------------------------------------------------------------------------------
1,000 Heinz (H.J.) Co. 37,874
--------------------------------------------------------------------------------
3,600 IBP, Inc. 89,100
--------------------------------------------------------------------------------
700 Kimberly-Clark Corp. 68,424
--------------------------------------------------------------------------------
1,400 Philip Morris Cos., Inc. 144,374
--------------------------------------------------------------------------------
1,300 Tambrands, Inc. 55,574
--------------------------------------------------------------------------------
700 Unilever N.V. 121,187
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- --------------- -------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
LARGE COMPANY--CONTINUED
--------------------------------------------------------------------------------
CONSUMER NON-DURABLES--CONTINUED
--------------------------------------------------------------------------------
800 V.F. Corp. $ 54,300
-------------------------------------------------------------------------------- -------------
Total 728,719
-------------------------------------------------------------------------------- -------------
ENERGY MINERALS--0.7%
--------------------------------------------------------------------------------
1,600 Baker Hughes, Inc. 58,600
--------------------------------------------------------------------------------
1,400 Chevron Corp. 93,800
--------------------------------------------------------------------------------
800 Exxon Corp. 75,700
--------------------------------------------------------------------------------
2,500 Occidental Petroleum Corp. 60,000
--------------------------------------------------------------------------------
300 Royal Dutch Petroleum Co. 50,962
--------------------------------------------------------------------------------
900 Texaco, Inc. 89,212
--------------------------------------------------------------------------------
3,400 USX-Marathon Group 77,774
--------------------------------------------------------------------------------
2,492 Union Pacific Resources Group, Inc. 74,448
--------------------------------------------------------------------------------
800 (a)Western Atlas, Inc. 56,400
-------------------------------------------------------------------------------- -------------
Total 636,896
-------------------------------------------------------------------------------- -------------
FINANCE--0.9%
--------------------------------------------------------------------------------
1,448 Allstate Corp. 87,241
--------------------------------------------------------------------------------
900 CIGNA Corp. 127,237
--------------------------------------------------------------------------------
1,000 Chase Manhattan Corp. 94,500
--------------------------------------------------------------------------------
500 Citicorp 54,624
--------------------------------------------------------------------------------
900 Dean Witter, Discover & Co. 61,537
--------------------------------------------------------------------------------
2,300 Federal National Mortgage Association 94,874
--------------------------------------------------------------------------------
1,000 Marsh & McLennan Cos., Inc. 113,374
--------------------------------------------------------------------------------
1,300 National City Corp. 60,287
--------------------------------------------------------------------------------
1,100 Providian Corp. 58,850
--------------------------------------------------------------------------------
1,200 Travelers Group, Inc. 54,000
-------------------------------------------------------------------------------- -------------
Total 806,524
-------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- --------------- -------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
LARGE COMPANY--CONTINUED
--------------------------------------------------------------------------------
HEALTH CARE--0.7%
--------------------------------------------------------------------------------
1,500 Abbott Laboratories $ 83,625
--------------------------------------------------------------------------------
1,500 (a)American Home Products Corp. 96,375
--------------------------------------------------------------------------------
1,900 Bard (C.R.), Inc. 53,200
--------------------------------------------------------------------------------
2,700 (a)Biomet, Inc. 44,550
--------------------------------------------------------------------------------
900 Bristol-Myers Squibb Co. 102,375
--------------------------------------------------------------------------------
1,350 Columbia/HCA Healthcare Corp. 54,000
--------------------------------------------------------------------------------
2,600 (a)Healthsource, Inc. 29,250
--------------------------------------------------------------------------------
900 Merck & Co., Inc. 74,700
--------------------------------------------------------------------------------
1,000 Smithkline Beecham, ADR 68,875
--------------------------------------------------------------------------------
1,400 United Healthcare Corp. 60,375
-------------------------------------------------------------------------------- -------------
Total 667,325
-------------------------------------------------------------------------------- -------------
PRODUCER MANUFACTURING--0.4%
--------------------------------------------------------------------------------
580 (a)FMC Corp. 44,805
--------------------------------------------------------------------------------
700 General Electric Co. 72,800
--------------------------------------------------------------------------------
900 Loews Corp. 83,475
--------------------------------------------------------------------------------
1,100 Textron, Inc. 104,913
--------------------------------------------------------------------------------
5,700 (b)Westinghouse Electric Corp., PEPS, Series C, $1.30 97,436
-------------------------------------------------------------------------------- -------------
Total 403,429
-------------------------------------------------------------------------------- -------------
RETAIL TRADE--0.3%
--------------------------------------------------------------------------------
1,900 Dayton-Hudson Corp. 73,863
--------------------------------------------------------------------------------
1,900 Sears, Roebuck & Co. 94,525
--------------------------------------------------------------------------------
3,900 Wal-Mart Stores, Inc. 99,450
-------------------------------------------------------------------------------- -------------
Total 267,838
-------------------------------------------------------------------------------- -------------
SERVICES--0.2%
--------------------------------------------------------------------------------
2,000 Block (H&R), Inc. 58,500
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- --------------- -------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
LARGE COMPANY--CONTINUED
--------------------------------------------------------------------------------
SERVICES--CONTINUED
--------------------------------------------------------------------------------
2,900 Browning-Ferris Industries, Inc. $ 77,938
--------------------------------------------------------------------------------
900 Gannett Co., Inc. 70,650
-------------------------------------------------------------------------------- -------------
Total 207,088
-------------------------------------------------------------------------------- -------------
TECHNOLOGY--0.4%
--------------------------------------------------------------------------------
1,300 (a)Analog Devices, Inc. 41,763
--------------------------------------------------------------------------------
1,900 Electronic Data Systems Corp. 91,913
--------------------------------------------------------------------------------
600 Intel Corp. 76,125
--------------------------------------------------------------------------------
200 International Business Machines Corp. 31,875
--------------------------------------------------------------------------------
518 Lucent Technologies, Inc. 26,548
--------------------------------------------------------------------------------
900 Raytheon Co. 46,013
--------------------------------------------------------------------------------
1,200 (a)Rockwell International Corp. 77,100
-------------------------------------------------------------------------------- -------------
Total 391,337
-------------------------------------------------------------------------------- -------------
TRANSPORTATION--0.1%
--------------------------------------------------------------------------------
2,200 (a)KLM Royal Dutch Airlines 57,475
-------------------------------------------------------------------------------- -------------
UTILITIES--0.7%
--------------------------------------------------------------------------------
1,600 AT&T Corp. 62,800
--------------------------------------------------------------------------------
1,600 CMS Energy Corp. 52,000
--------------------------------------------------------------------------------
1,100 (a)Columbia Gas System, Inc. 71,088
--------------------------------------------------------------------------------
900 Enron Corp. 41,175
--------------------------------------------------------------------------------
1,100 FPL Group, Inc. 50,738
--------------------------------------------------------------------------------
1,900 GTE Corp. 85,263
--------------------------------------------------------------------------------
4,100 MCI Communications Corp. 125,050
--------------------------------------------------------------------------------
2,200 Pacific Gas & Electric Co. 53,075
--------------------------------------------------------------------------------
2,100 Southern Co. 46,725
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES IN U.S.
OR UNITS DOLLARS
- --------------- -------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
LARGE COMPANY--CONTINUED
--------------------------------------------------------------------------------
UTILITIES--CONTINUED
--------------------------------------------------------------------------------
1,900 TECO Energy, Inc. $ 46,313
-------------------------------------------------------------------------------- -------------
Total 634,227
-------------------------------------------------------------------------------- -------------
TOTAL LARGE COMPANY 5,376,215
-------------------------------------------------------------------------------- -------------
UTILITY STOCKS--5.4%
--------------------------------------------------------------------------------
ELECTRIC UTILITIES: CENTRAL--1.5%
--------------------------------------------------------------------------------
7,900 CMS Energy Corp. 256,750
--------------------------------------------------------------------------------
7,764 Cinergy Corp. 260,094
--------------------------------------------------------------------------------
10,400 DPL, Inc. 253,500
--------------------------------------------------------------------------------
9,100 Illinova Corp. 241,150
--------------------------------------------------------------------------------
6,700 NIPSCO Industries, Inc. 259,625
-------------------------------------------------------------------------------- -------------
Total 1,271,119
-------------------------------------------------------------------------------- -------------
ELECTRIC UTILITIES: EAST--0.8%
--------------------------------------------------------------------------------
8,500 DQE, Inc. 250,750
--------------------------------------------------------------------------------
7,800 GPU, Inc. 262,275
--------------------------------------------------------------------------------
9,900 Peco Energy Co. 252,450
-------------------------------------------------------------------------------- -------------
Total 765,475
-------------------------------------------------------------------------------- -------------
ELECTRIC UTILITIES: SOUTH--1.3%
--------------------------------------------------------------------------------
5,200 Duke Power Co. 241,150
--------------------------------------------------------------------------------
5,600 FPL Group, Inc. 258,300
--------------------------------------------------------------------------------
10,800 Southern Co. 240,300
--------------------------------------------------------------------------------
10,200 TECO Energy, Inc. 248,625
--------------------------------------------------------------------------------
6,000 Texas Utilities Co. 237,000
-------------------------------------------------------------------------------- -------------
Total 1,225,375
-------------------------------------------------------------------------------- -------------
ELECTRIC UTILITIES: WEST--0.5%
--------------------------------------------------------------------------------
11,800 Pacificorp 247,800
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
UNITS OR VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
- --------------- -------------------------------------------------------------------------------- -------------
<C> <S> <C>
STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
UTILITY STOCKS--CONTINUED
--------------------------------------------------------------------------------
ELECTRIC UTILITIES: WEST--CONTINUED
--------------------------------------------------------------------------------
8,100 Pinnacle West Capital Corp. $ 252,113
-------------------------------------------------------------------------------- -------------
Total 499,913
-------------------------------------------------------------------------------- -------------
NATURAL GAS DISTRIBUTION--0.5%
--------------------------------------------------------------------------------
8,200 MCN Corp. 235,750
--------------------------------------------------------------------------------
7,400 Pacific Enterprises 226,625
-------------------------------------------------------------------------------- -------------
Total 462,375
-------------------------------------------------------------------------------- -------------
OIL/GAS TRANSMISSION--0.8%
--------------------------------------------------------------------------------
5,400 Enron Corp. 247,050
--------------------------------------------------------------------------------
6,400 Panenergy Corp. 281,600
--------------------------------------------------------------------------------
4,500 Williams Companies, Inc. 252,563
-------------------------------------------------------------------------------- -------------
Total 781,213
-------------------------------------------------------------------------------- -------------
TOTAL UTILITY STOCKS 5,005,470
-------------------------------------------------------------------------------- -------------
TOTAL STOCKS (IDENTIFIED COST $9,087,072) 10,381,685
-------------------------------------------------------------------------------- -------------
BONDS--83.6%
- -------------------------------------------------------------------------------------------------
TREASURY--38.7%
--------------------------------------------------------------------------------
$ 10,390,000 United States Treasury Note, 6.00%, 8/31/1997 10,435,093
--------------------------------------------------------------------------------
10,000,000 United States Treasury Note, 6.50%, 5/15/1997 10,058,400
--------------------------------------------------------------------------------
14,900,000 United States Treasury Note, 8.125%, 2/15/1998 15,353,407
-------------------------------------------------------------------------------- -------------
TOTAL TREASURY 35,846,900
-------------------------------------------------------------------------------- -------------
MORTGAGE-BACKED SECURITIES--26.8%
--------------------------------------------------------------------------------
GOVERNMENT AGENCY--26.8%
--------------------------------------------------------------------------------
56,689 Federal Home Loan Mortgage Corp., 9.50%, 6/1/2021 61,235
--------------------------------------------------------------------------------
129,768 Federal Home Loan Mortgage Corp., 9.50%, 4/1/2021 140,175
--------------------------------------------------------------------------------
447,034 Federal Home Loan Mortgage Corp., 7.50%, 5/1/2024 454,155
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
- --------------- -------------------------------------------------------------------------------- -------------
<C> <S> <C>
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES--CONTINUED
--------------------------------------------------------------------------------
GOVERNMENT AGENCY--CONTINUED
--------------------------------------------------------------------------------
$ 239,440 Federal Home Loan Mortgage Corp., 7.00%, 7/1/2024 $ 238,689
--------------------------------------------------------------------------------
1,015,695 Federal Home Loan Mortgage Corp., 6.50%, 9/1/2025 990,181
--------------------------------------------------------------------------------
1,467,141 Federal Home Loan Mortgage Corp., 8.00%, 4/1/2024 1,511,141
--------------------------------------------------------------------------------
1,023,585 Federal Home Loan Mortgage Corp., 7.00%, 2/1/2026 1,018,457
--------------------------------------------------------------------------------
888,471 Federal Home Loan Mortgage Corp., 6.50%, 4/1/2026 864,305
--------------------------------------------------------------------------------
937,519 Federal Home Loan Mortgage Corp., 7.50%, 7/1/2026 950,391
--------------------------------------------------------------------------------
1,223,687 Federal Home Loan Mortgage Corp., 6.50%, 3/1/2011 1,215,635
--------------------------------------------------------------------------------
348,502 Federal Home Loan Mortgage Corp., 8.00%, 9/1/2010 360,153
--------------------------------------------------------------------------------
744,964 Federal Home Loan Mortgage Corp., 7.00%, 4/1/2009 751,937
--------------------------------------------------------------------------------
593,158 Federal Home Loan Mortgage Corp., 6.00%, 5/1/2003 584,990
--------------------------------------------------------------------------------
491,960 Federal National Mortgage Association, 7.00%, 5/1/2001 501,331
--------------------------------------------------------------------------------
464,534 Federal National Mortgage Association, 7.00%, 7/1/2024 461,189
--------------------------------------------------------------------------------
817,159 Federal National Mortgage Association, 8.50%, 7/1/2024 852,648
--------------------------------------------------------------------------------
679,527 Federal National Mortgage Association, 9.50%, 10/1/2024 736,994
--------------------------------------------------------------------------------
590,658 Federal National Mortgage Association, 7.50%, 10/1/2011 603,387
--------------------------------------------------------------------------------
419,960 Federal National Mortgage Association, 8.00%, 2/1/2024 431,895
--------------------------------------------------------------------------------
466,702 Federal National Mortgage Association, 9.00%, 2/1/2025 493,678
--------------------------------------------------------------------------------
136,311 Federal National Mortgage Association, 8.50%, 7/1/2024 142,231
--------------------------------------------------------------------------------
884,757 Federal National Mortgage Association, 7.50%, 7/1/2025 896,639
--------------------------------------------------------------------------------
924,807 Federal National Mortgage Association, 7.00%, 7/1/2025 918,898
--------------------------------------------------------------------------------
1,014,503 Federal National Mortgage Association, 6.00%, 3/1/2011 990,794
--------------------------------------------------------------------------------
958,321 Federal National Mortgage Association, 6.50%, 2/1/2026 932,753
--------------------------------------------------------------------------------
1,007,163 Federal National Mortgage Association, 7.50%, 10/1/2026 1,020,689
--------------------------------------------------------------------------------
465,285 Federal National Mortgage Association, 7.00%, 8/1/2011 469,058
--------------------------------------------------------------------------------
246,620 Federal National Mortgage Association, 6.50%, 7/1/2011 244,689
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT IN U.S.
OR SHARES DOLLARS
- --------------- -------------------------------------------------------------------------------- -------------
<C> <S> <C>
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES--CONTINUED
--------------------------------------------------------------------------------
GOVERNMENT AGENCY--CONTINUED
--------------------------------------------------------------------------------
$ 350,014 Federal National Mortgage Association, 10.50%, 1/1/2021 $ 388,620
--------------------------------------------------------------------------------
1,010,007 Government National Mortgage Association, 8.00%, 6/15/2022 1,047,559
--------------------------------------------------------------------------------
907,871 Government National Mortgage Association, 7.00%, 10/15/2023 908,424
--------------------------------------------------------------------------------
527,480 Government National Mortgage Association, 8.50%, 10/15/2024 551,043
--------------------------------------------------------------------------------
1,500,362 Government National Mortgage Association, 7.50%, 3/15/2026 1,522,372
--------------------------------------------------------------------------------
673,201 Government National Mortgage Association, 7.00%, 7/15/2024 669,828
--------------------------------------------------------------------------------
850,000 (c)Government National Mortgage Association TBA, 9.00% 901,519
-------------------------------------------------------------------------------- -------------
TOTAL MORTGAGE-BACKED SECURITIES 24,827,682
-------------------------------------------------------------------------------- -------------
HIGH YIELD BONDS--2.9%
--------------------------------------------------------------------------------
AUTOMOTIVE--0.1%
--------------------------------------------------------------------------------
50,000 Aftermarket Technology Co., Sr. Sub. Note, 12.00%, 8/1/2004 55,750
--------------------------------------------------------------------------------
50,000 Collins & Aikman Products, Sr. Sub. Note, 11.50%, 4/15/2006 53,625
-------------------------------------------------------------------------------- -------------
Total 109,375
-------------------------------------------------------------------------------- -------------
BANKING--0.1%
--------------------------------------------------------------------------------
50,000 (b)First Nationwide Escrow, Sr. Sub. Note, 10.625%, 10/1/2003 53,500
-------------------------------------------------------------------------------- -------------
BEVERAGE & TOBACCO--0.0%
--------------------------------------------------------------------------------
25,000 Dr Pep Btlg Hldgs, Sr. Disc. Note, 0/11.625%, 2/15/2003 23,250
-------------------------------------------------------------------------------- -------------
BROADCAST RADIO & TV--0.3%
--------------------------------------------------------------------------------
Chancellor Radio Broadcasting Co., 500 PIK Pfd. Shares, 12.25% 55,500
--------------------------------------------------------------------------------
25,000 Granite Broadcasting Corp, Sr. Sub. Note, 9.375%, 12/1/2005 23,938
--------------------------------------------------------------------------------
50,000 Heritage Media Corp., Sr. Sub. Note, 8.75%, 2/15/2006 48,500
--------------------------------------------------------------------------------
25,000 Pegasus Media, Note, 12.50%, 7/1/2005 27,125
--------------------------------------------------------------------------------
25,000 SFX Broadcasting, Inc., Sr. Sub. Note, 10.75%, 5/15/2006 26,313
--------------------------------------------------------------------------------
50,000 Sinclair Broadcast Group, Sr. Sub. Note, 10.00%, 9/30/2005 50,375
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
- --------------- -------------------------------------------------------------------------------- -------------
<C> <S> <C>
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
--------------------------------------------------------------------------------
BROADCAST RADIO & TV--CONTINUED
--------------------------------------------------------------------------------
$ 25,000 Sullivan Broadcasting, Sr. Sub. Note, 10.25%, 12/15/2005 $ 25,063
-------------------------------------------------------------------------------- -------------
Total 256,814
-------------------------------------------------------------------------------- -------------
BUSINESS EQUIPMENT & SERVICES--0.1%
--------------------------------------------------------------------------------
50,000 Knoll, Inc., Sr. Sub. Note, 10.875%, 3/15/2006 54,750
--------------------------------------------------------------------------------
25,000 Monarch Acquisition Corp., Sr. Note, 12.50%, 7/1/2003 27,875
--------------------------------------------------------------------------------
25,000 United Stationers Supply, Sr. Sub. Note, 12.75%, 5/1/2005 27,719
-------------------------------------------------------------------------------- -------------
Total 110,344
-------------------------------------------------------------------------------- -------------
CABLE TELEVISION--0.3%
--------------------------------------------------------------------------------
50,000 Cablevision Systems Corp., Sr. Sub. Note, 9.875%, 5/15/2006 50,625
--------------------------------------------------------------------------------
50,000 Charter Communication Southeast, Sr. Note, 11.25%, 3/15/2006 51,750
--------------------------------------------------------------------------------
50,000 Comcast UK Cable, Deb., 0/11.20%, 11/15/2007 34,875
--------------------------------------------------------------------------------
25,000 Echostar Satellite Broadcasting Corp., Sr. Disc. Note,
0/13.125%, 3/15/2004 19,125
--------------------------------------------------------------------------------
50,000 International Cabletel, Sr. Note, 0/11.50%, 2/1/2006 32,313
--------------------------------------------------------------------------------
25,000 People's Choice--TV, Unit, 0/13.125%, 6/1/2004 9,875
--------------------------------------------------------------------------------
25,000 Rogers Cablesystems Inc., Sr. Secd. 2nd Priority Note,
10.00%, 12/1/2007 26,500
--------------------------------------------------------------------------------
50,000 Telewest PLC, Sr. Disc. Deb., 0/11.00%, 10/1/2007 34,250
--------------------------------------------------------------------------------
50,000 UIH Australia/Pacific, Sr. Disc. Note, 0/14.00%, 5/15/2006 26,750
-------------------------------------------------------------------------------- -------------
Total 286,063
-------------------------------------------------------------------------------- -------------
CHEMICALS & PLASTICS--0.2%
--------------------------------------------------------------------------------
50,000 (b)Astor Corp., Sr. Sub. Note, 10.50%, 10/15/2006 51,000
--------------------------------------------------------------------------------
25,000 Crain Industries Inc., Sr. Sub. Note, 13.50%, 8/15/2005 28,188
--------------------------------------------------------------------------------
50,000 Harris Chemical, Sr. Note, 10.25%, 7/15/2001 51,625
--------------------------------------------------------------------------------
33,000 Polymer Group, Sr. Note, 12.25%, 7/15/2002 35,805
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT IN U.S.
OR SHARES DOLLARS
- --------------- -------------------------------------------------------------------------------- -------------
<C> <S> <C>
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
--------------------------------------------------------------------------------
CHEMICALS & PLASTICS--CONTINUED
--------------------------------------------------------------------------------
$ 25,000 RBX Corp., Sr. Sub. Note, Series B, 11.25%, 10/15/2005 $ 21,625
-------------------------------------------------------------------------------- -------------
Total 188,243
-------------------------------------------------------------------------------- -------------
CLOTHING & TEXTILES--0.1%
--------------------------------------------------------------------------------
50,000 Westpoint Stevens, Inc., Sr. Sub. Deb., 9.375%, 12/15/2005 51,625
-------------------------------------------------------------------------------- -------------
CONSUMER PRODUCTS--0.1%
--------------------------------------------------------------------------------
25,000 Hosiery Corp. of America, Sr. Sub. Note, 13.75%, 8/1/2002 27,625
--------------------------------------------------------------------------------
Hosiery Corp. of America, 25 Common Shares 138
--------------------------------------------------------------------------------
25,000 Playtex Family Products Corp., Sr. Sub. Note, 9.00%, 12/15/2003 24,875
--------------------------------------------------------------------------------
25,000 Simmons Co., Sr. Sub. Note, 10.75%, 4/15/2006 26,125
-------------------------------------------------------------------------------- -------------
Total 78,763
-------------------------------------------------------------------------------- -------------
CONTAINER & GLASS PRODUCTS--0.1%
--------------------------------------------------------------------------------
50,000 Owens Illinois, Inc., Sr. Sub. Note, 9.75%, 8/15/2004 52,250
--------------------------------------------------------------------------------
25,000 Packaging Resources, Inc., Sr. Note, 11.625%, 5/1/2003 26,375
-------------------------------------------------------------------------------- -------------
Total 78,625
-------------------------------------------------------------------------------- -------------
COSMETICS & TOILETRIES--0.0%
--------------------------------------------------------------------------------
25,000 Revlon Consumer Products, Sr. Sub. Note, 10.50%, 2/15/2003 26,313
-------------------------------------------------------------------------------- -------------
ECOLOGICAL SERVICES & EQUIPMENT--0.1%
--------------------------------------------------------------------------------
50,000 (b)Allied Waste, Sr. Sub. Note, 10.25%, 12/1/2006 51,313
--------------------------------------------------------------------------------
50,000 (a)*Mid-American Waste System, Sr. Sub. Note, 12.25%, 2/15/2003 20,500
-------------------------------------------------------------------------------- -------------
Total 71,813
-------------------------------------------------------------------------------- -------------
FOOD & DRUG RETAILERS--0.1%
--------------------------------------------------------------------------------
25,000 Carr Gottstein Foods Co., Sr. Sub. Note, 12.00%, 11/15/2005 26,750
--------------------------------------------------------------------------------
50,000 Ralph's Grocery Co., Sr. Note, 10.45%, 6/15/2004 51,938
-------------------------------------------------------------------------------- -------------
Total 78,688
-------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
- --------------- -------------------------------------------------------------------------------- -------------
<C> <S> <C>
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
--------------------------------------------------------------------------------
FOOD PRODUCTS--0.0%
--------------------------------------------------------------------------------
$ 25,000 Van de Kamp's, Inc., Sr. Sub. Note, 12.00%, 9/15/2005 $ 27,500
-------------------------------------------------------------------------------- -------------
FOREST PRODUCTS--0.1%
--------------------------------------------------------------------------------
25,000 Four M Corp, Sr. Note, 12.00%, 6/1/2006 25,813
--------------------------------------------------------------------------------
25,000 Repap New Brunswick, 2nd Priority Sr. Secd. Note,
10.625%, 4/15/2005 24,375
--------------------------------------------------------------------------------
25,000 Riverwood International, Sr. Sub. Note, 10.875%, 4/1/2008 22,750
--------------------------------------------------------------------------------
25,000 Stone Container, Sr. Note, 11.50%, 10/1/2004 26,375
-------------------------------------------------------------------------------- -------------
Total 99,313
-------------------------------------------------------------------------------- -------------
HEALTHCARE--0.1%
--------------------------------------------------------------------------------
50,000 (b)Dade International, Inc., Sr. Sub. Note, 11.125%, 5/1/2006 54,250
-------------------------------------------------------------------------------- -------------
HOTELS, MOTELS, INNS & CASINOS--0.0%
--------------------------------------------------------------------------------
25,000 Courtyard by Marriott, Sr. Note, 10.75%, 2/1/2008 26,500
-------------------------------------------------------------------------------- -------------
INDUSTRIAL PRODUCTS & EQUIPMENT--0.1%
--------------------------------------------------------------------------------
25,000 Cabot Safety Corp., Sr. Sub. Note, 12.50%, 7/15/2005 28,063
--------------------------------------------------------------------------------
25,000 Fairfield Manufacturing Co., Inc., Sr. Sub. Note, 11.375%, 7/1/2001 25,625
--------------------------------------------------------------------------------
50,000 Mettler-Toledo, Inc., Sr. Sub. Note, 9.75%, 10/1/2006 52,625
-------------------------------------------------------------------------------- -------------
Total 106,313
-------------------------------------------------------------------------------- -------------
LEISURE & ENTERTAINMENT--0.2%
--------------------------------------------------------------------------------
50,000 AMF Group, Inc., Sr. Sub. Disc. Note, 0/12.25%, 3/15/2006 31,875
--------------------------------------------------------------------------------
25,000 Cobblestone Golf, Sr. Note, 11.50%, 6/1/2003 26,188
--------------------------------------------------------------------------------
50,000 Premier Parks, Sr. Note, 12.00%, 8/15/2003 54,750
--------------------------------------------------------------------------------
75,000 Six Flags Theme Parks, Sr. Sub. Disc. Note, 0/12.25%, 6/15/2005 69,375
-------------------------------------------------------------------------------- -------------
Total 182,188
-------------------------------------------------------------------------------- -------------
MACHINERY & EQUIPMENT--0.1%
--------------------------------------------------------------------------------
50,000 Alvey Systems, Sr. Sub. Note, 11.375%, 1/31/2003 52,500
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
- --------------- -------------------------------------------------------------------------------- -------------
<C> <S> <C>
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
--------------------------------------------------------------------------------
MACHINERY & EQUIPMENT--CONTINUED
--------------------------------------------------------------------------------
$ 33,000 Primeco, Inc., Sr. Sub. Note, 12.75%, 3/1/2005 $ 37,620
-------------------------------------------------------------------------------- -------------
Total 90,120
-------------------------------------------------------------------------------- -------------
OIL & GAS--0.0%
--------------------------------------------------------------------------------
25,000 Mesa Operating Company, Sr. Sub. Note, 10.625%, 7/1/2006 27,063
-------------------------------------------------------------------------------- -------------
PRINTING & PUBLISHING--0.1%
--------------------------------------------------------------------------------
50,000 Garden State Newspapers, Inc., Sr. Sub. Note, 12.00%, 7/1/2004 53,625
-------------------------------------------------------------------------------- -------------
REAL ESTATE--0.0%
--------------------------------------------------------------------------------
25,000 Trizec Finance, Sr. Note, 10.875%, 10/15/2005 27,688
-------------------------------------------------------------------------------- -------------
STEEL--0.1%
--------------------------------------------------------------------------------
25,000 Bayou Steel Corp., 1st Mtg. Note, 10.25%, 3/1/2001 23,375
--------------------------------------------------------------------------------
25,000 GS Technologies Operating Co., Inc., Sr. Note, 12.00%, 9/1/2004 25,875
--------------------------------------------------------------------------------
25,000 Republic Engineered Steel, 1st Mtg. Note, 9.875%, 12/15/2001 22,844
-------------------------------------------------------------------------------- -------------
Total 72,094
-------------------------------------------------------------------------------- -------------
SURFACE TRANSPORTATION--0.1%
--------------------------------------------------------------------------------
25,000 Ameritruck Distribution, Sr. Sub. Note, 12.25%, 11/15/2005 24,875
--------------------------------------------------------------------------------
25,000 Gearbulk Holding Limited, Sr. Note, 11.25%, 12/1/2004 27,250
--------------------------------------------------------------------------------
25,000 Great Dane Holdings, Sr. Sub. Deb., 12.75%, 8/1/2001 25,125
--------------------------------------------------------------------------------
50,000 Stena AB, Sr. Note, 10.50%, 12/15/2005 53,563
-------------------------------------------------------------------------------- -------------
Total 130,813
-------------------------------------------------------------------------------- -------------
TELECOMMUNICATIONS & CELLULAR--0.3%
--------------------------------------------------------------------------------
50,000 American Communications, Sr. Disc. Note, 0/12.75%, 4/1/2006 27,375
--------------------------------------------------------------------------------
50,000 Arch Communications, Sr. Disc. Note, 0/10.875%, 3/15/2008 29,125
--------------------------------------------------------------------------------
50,000 Intermedia Communications, Sr. Disc. Note, 0/12.50%, 5/15/2006 33,125
--------------------------------------------------------------------------------
50,000 Millicom International, Sr. Disc. Note, 13.50%, 6/1/2006 29,625
--------------------------------------------------------------------------------
25,000 Nextel Communications, Inc., Sr. Disc. Note, 0/11.50%, 9/1/2003 18,938
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT IN U.S.
OR SHARES DOLLARS
- --------------- -------------------------------------------------------------------------------- -------------
<C> <S> <C>
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
HIGH YIELD BONDS--CONTINUED
--------------------------------------------------------------------------------
TELECOMMUNICATIONS & CELLULAR--CONTINUED
--------------------------------------------------------------------------------
$ 25,000 Paging Network, Sr. Sub. Note, 10.125%, 8/1/2007 $ 25,156
--------------------------------------------------------------------------------
50,000 Teleport Communications, Sr. Disc. Note, 0/11.125%, 7/1/2007 34,250
--------------------------------------------------------------------------------
50,000 Vanguard Cellular Systems, Deb., 9.375%, 4/15/2006 50,375
-------------------------------------------------------------------------------- -------------
Total 247,969
-------------------------------------------------------------------------------- -------------
UTILITIES--0.1%
--------------------------------------------------------------------------------
50,000 California Energy Co., Sr. Disc. Note, 0/10.25%, 1/15/2004 52,375
--------------------------------------------------------------------------------
El Paso Electric Co., 542 PIK Pfd. Shares, Series A, 11.40% 59,771
-------------------------------------------------------------------------------- -------------
Total 112,146
-------------------------------------------------------------------------------- -------------
TOTAL HIGH YIELD BONDS 2,670,998
-------------------------------------------------------------------------------- -------------
INVESTMENT GRADE BONDS--9.7%
--------------------------------------------------------------------------------
AEROSPACE & DEFENSE--0.3%
--------------------------------------------------------------------------------
250,000 McDonnell Douglas Finance, Note, 9.40%, 10/15/2001 270,558
-------------------------------------------------------------------------------- -------------
BANKING--1.2%
--------------------------------------------------------------------------------
250,000 Bank of Montreal, Sub. Note, 7.80%, 4/1/2007 270,648
--------------------------------------------------------------------------------
250,000 Chase Manhattan, Sub. Note, 8.00%, 5/1/2005 255,975
--------------------------------------------------------------------------------
200,000 National Bank of Canada, Sub. Note, 8.125%, 8/15/2004 217,754
--------------------------------------------------------------------------------
350,000 Santander Finance Issuances, Bank Guarantee, 7.875%, 4/15/2005 375,641
-------------------------------------------------------------------------------- -------------
Total 1,120,018
-------------------------------------------------------------------------------- -------------
BEVERAGE & TOBACCO--0.4%
--------------------------------------------------------------------------------
100,000 Philip Morris Cos., Inc., Deb., 6.00%, 7/15/2001 97,875
--------------------------------------------------------------------------------
250,000 RJR Nabisco, Inc., Note, 9.25%, 8/15/2013 257,910
-------------------------------------------------------------------------------- -------------
Total 355,785
-------------------------------------------------------------------------------- -------------
CABLE TELEVISION--0.5%
--------------------------------------------------------------------------------
400,000 TKR Cable, Inc., Sr. Note, 10.50%, 10/30/2007 443,128
-------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
PRINCIPAL IN U.S.
AMOUNT DOLLARS
- --------------- -------------------------------------------------------------------------------- -------------
<C> <S> <C>
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
INVESTMENT GRADE BONDS--CONTINUED
--------------------------------------------------------------------------------
CHEMICALS & PLASTICS--0.4%
--------------------------------------------------------------------------------
$ 350,000 (b)Bayer Corp., Deb., 6.50%, 10/1/2002 $ 355,502
-------------------------------------------------------------------------------- -------------
ELECTRONICS--0.2%
--------------------------------------------------------------------------------
200,000 Harris Corp, Deb., 10.375%, 12/1/2018 224,632
-------------------------------------------------------------------------------- -------------
FINANCE--RETAIL--0.3%
--------------------------------------------------------------------------------
250,000 Household Finance, Deb., 6.45%, 2/1/2009 243,993
-------------------------------------------------------------------------------- -------------
FINANCIAL INTERMEDIARIES--1.4%
--------------------------------------------------------------------------------
85,000 American General Corp., S.F. Deb., 9.625%, 2/1/2018 91,969
--------------------------------------------------------------------------------
250,000 Green Tree Financial Corp, Sr. Sub. Note, 10.25%, 6/1/2002 294,400
--------------------------------------------------------------------------------
325,000 Lehman Bros., Inc., Sr. Sub. Note, 6.125%, 2/1/2001 320,866
--------------------------------------------------------------------------------
200,000 Merrill Lynch, Medium Term Note, 7.25%, 6/14/2004 201,732
--------------------------------------------------------------------------------
100,000 Salomon, Inc., Sr. Note, 9.00%, 2/15/1999 105,541
--------------------------------------------------------------------------------
300,000 Salomon, Inc., Sr. Note, 7.02%, 9/25/1998 304,473
-------------------------------------------------------------------------------- -------------
Total 1,318,981
-------------------------------------------------------------------------------- -------------
FOOD & DRUG RETAILERS--0.3%
--------------------------------------------------------------------------------
225,000 Hook-Superx, Inc., Sr. Note, 10.125%, 6/1/2002 239,830
-------------------------------------------------------------------------------- -------------
GOVERNMENT AGENCY--0.3%
--------------------------------------------------------------------------------
250,000 Federal National Mortgage Association, 8.59%, 2/3/2005 257,453
-------------------------------------------------------------------------------- -------------
INDUSTRIAL PRODUCTS & EQUIPMENT--0.3%
--------------------------------------------------------------------------------
250,000 Joy Technologies, Inc, Sr. Note, 10.25%, 9/1/2003 276,850
-------------------------------------------------------------------------------- -------------
INSURANCE--1.0%
--------------------------------------------------------------------------------
350,000 Conseco, Inc., Sr. Note, 10.50%, 12/15/2004 425,338
--------------------------------------------------------------------------------
265,000 Continental Corp, Note, 8.25%, 4/15/1999 277,166
--------------------------------------------------------------------------------
250,000 Sunamerica, Inc., Medium Term Note, 7.34%, 8/30/2005 260,716
-------------------------------------------------------------------------------- -------------
Total 963,220
-------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OR FOREIGN VALUE
CURRENCY IN U.S.
PAR AMOUNT DOLLARS
- --------------- -------------------------------------------------------------------------------- -------------
<C> <S> <C>
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
INVESTMENT GRADE BONDS--CONTINUED
--------------------------------------------------------------------------------
OIL & GAS--0.6%
--------------------------------------------------------------------------------
$ 275,000 Tosco Corp, Sr. Note, 7.625%, 5/15/2006 $ 290,664
--------------------------------------------------------------------------------
250,000 USX Corp., Note, 6.375%, 7/15/1998 251,280
-------------------------------------------------------------------------------- -------------
Total 541,944
-------------------------------------------------------------------------------- -------------
PRINTING & PUBLISHING--0.4%
--------------------------------------------------------------------------------
400,000 News America Holdings, Sr. Note, 7.50%, 3/1/2000 413,252
-------------------------------------------------------------------------------- -------------
SERVICES--0.3%
--------------------------------------------------------------------------------
250,000 Loewen Group Int'l, Sr. Note, 8.25%, 4/15/2003 257,828
-------------------------------------------------------------------------------- -------------
SOVEREIGN GOVERNMENT--1.0%
--------------------------------------------------------------------------------
300,000 (b)Freeport Terminal (Malta), GTD. Global Note, 7.50%, 3/29/2009 315,453
--------------------------------------------------------------------------------
250,000 Quebec Province, Deb., 7.50%, 7/15/2023 257,623
--------------------------------------------------------------------------------
100,000 Republic of South Africa, Global Bond Deb., 9.625%, 12/15/1999 107,125
--------------------------------------------------------------------------------
250,000 Republic of Colombia, Note, 7.25%, 2/15/2003 248,668
-------------------------------------------------------------------------------- -------------
Total 928,869
-------------------------------------------------------------------------------- -------------
UTILITIES--0.8%
--------------------------------------------------------------------------------
300,000 Duke Power Co., 1st Mtg. Note, 7.00%, 9/1/2005 304,782
--------------------------------------------------------------------------------
300,000 Gulf States Util, FMB, 6.75%, 10/1/1998 301,401
--------------------------------------------------------------------------------
125,000 Pedernales Electric Coop, 10.875%, 9/1/2017 136,294
-------------------------------------------------------------------------------- -------------
Total 742,477
-------------------------------------------------------------------------------- -------------
TOTAL INVESTMENT GRADE BONDS 8,954,320
-------------------------------------------------------------------------------- -------------
FOREIGN BONDS--5.5%
--------------------------------------------------------------------------------
AUSTRALIAN DOLLAR--0.2%
--------------------------------------------------------------------------------
78,000 Queensland Treas Global, Local Gov't. Guarantee, 8.00%, 5/14/2003 66,622
--------------------------------------------------------------------------------
65,000 Queensland Treas Global, Local Gov't. Guarantee, 8.00%, 8/14/2001 55,002
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN VALUE
CURRENCY IN U.S.
PAR AMOUNT DOLLARS
- --------------- -------------------------------------------------------------------------------- -------------
<C> <S> <C>
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN BONDS--CONTINUED
--------------------------------------------------------------------------------
AUSTRALIAN DOLLAR--CONTINUED
--------------------------------------------------------------------------------
100,000 State Bank of New South Wales, 12.25%, 2/26/2001 $ 96,400
-------------------------------------------------------------------------------- -------------
Total 218,024
-------------------------------------------------------------------------------- -------------
BELGIUM FRANC--0.1%
--------------------------------------------------------------------------------
514,000 Belgian Govt., Bond, 6.50%, 3/31/2005 17,107
--------------------------------------------------------------------------------
2,000,000 Belgium Kingdom, 7.75%, 10/15/2004 71,833
-------------------------------------------------------------------------------- -------------
Total 88,940
-------------------------------------------------------------------------------- -------------
CANADIAN DOLLAR--0.3%
--------------------------------------------------------------------------------
167,000 Canada Government, Deb., 6.50%, 6/1/2004 129,459
--------------------------------------------------------------------------------
200,000 Ontario Hydro, 9.00%, 6/24/2002 173,235
-------------------------------------------------------------------------------- -------------
Total 302,694
-------------------------------------------------------------------------------- -------------
DANISH KRONE--0.3%
--------------------------------------------------------------------------------
898,000 Denmark--Bullet, Bond, 8.00%, 3/15/2006 166,319
--------------------------------------------------------------------------------
600,000 Denmark, 8.00%, 5/15/2003 112,378
-------------------------------------------------------------------------------- -------------
Total 278,697
-------------------------------------------------------------------------------- -------------
FRENCH FRANC--0.2%
--------------------------------------------------------------------------------
270,000 France O.A.T., Bond, 7.25%, 4/25/2006 57,941
--------------------------------------------------------------------------------
73,000 France O.A.T., Bond, 7.50%, 4/25/2005 101,076
-------------------------------------------------------------------------------- -------------
Total 159,017
-------------------------------------------------------------------------------- -------------
DEUTSCHE MARK--1.5%
--------------------------------------------------------------------------------
79,000 Deutschland Republic, Deb., 6.25%, 1/4/2024 49,154
--------------------------------------------------------------------------------
38,000,000 KFW International Finance, 6.00%, 11/29/1999 382,001
--------------------------------------------------------------------------------
100,000 KFW International Finance, Bank Guarantee, 6.75%, 6/20/2005 69,462
--------------------------------------------------------------------------------
600,000 KFW International Finance, 7.00%, 5/12/2000 124,263
--------------------------------------------------------------------------------
700,000 Treuhandanstalt, 7.75%, 10/1/2002 515,409
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN VALUE
CURRENCY IN U.S.
PAR AMOUNT DOLLARS
- --------------- -------------------------------------------------------------------------------- -------------
<C> <S> <C>
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN BONDS--CONTINUED
--------------------------------------------------------------------------------
DEUTSCHE MARK--CONTINUED
--------------------------------------------------------------------------------
408,000 Treuhandanstalt, Foreign Gov't. Guarantee, 6.875%, 6/11/2003 $ 288,128
-------------------------------------------------------------------------------- -------------
Total 1,428,417
-------------------------------------------------------------------------------- -------------
IRISH POUND--0.1%
--------------------------------------------------------------------------------
20,000 Irish Govt, Bond, 6.50%, 10/18/2001 34,516
--------------------------------------------------------------------------------
20,000 Treasury, Deb., 6.25%, 4/1/1999 33,995
-------------------------------------------------------------------------------- -------------
Total 68,511
-------------------------------------------------------------------------------- -------------
ITALIAN LIRA--0.5%
--------------------------------------------------------------------------------
80,000,000 BTPS, Bond, 10.50%, 11/1/2000 59,426
--------------------------------------------------------------------------------
480,000,000 Buoni Poliennali Del Tes, 9.50%, 1/1/2005 355,450
-------------------------------------------------------------------------------- -------------
Total 414,876
-------------------------------------------------------------------------------- -------------
JAPANESE YEN--0.4%
--------------------------------------------------------------------------------
24,000,000 Export-Import Bank Japan, 4.375%, 10/1/2003 239,947
--------------------------------------------------------------------------------
10,000,000 Interamerican Development, Deb., 7.25%, 5/15/2000 105,465
-------------------------------------------------------------------------------- -------------
Total 345,412
-------------------------------------------------------------------------------- -------------
NETHERLANDS GUILDER--0.3%
--------------------------------------------------------------------------------
40,000 Bank Ned Gemeenten, Bond, 6.375%, 1/4/2006 24,209
--------------------------------------------------------------------------------
60,000 LKB-global Bd, Bank Guarantee, 6.00%, 1/25/2006 39,321
--------------------------------------------------------------------------------
350,000 Netherlands Government, 5.75%, 1/15/2004 208,055
--------------------------------------------------------------------------------
60,000 Netherlands Government, 6.00%, 1/15/2006 35,771
-------------------------------------------------------------------------------- -------------
Total 307,356
-------------------------------------------------------------------------------- -------------
NEW ZEALAND DOLLAR--0.1%
--------------------------------------------------------------------------------
41,000 New Zealand Government, 8.00%, 2/15/2001 30,326
--------------------------------------------------------------------------------
70,000 New Zealand Government, Bond, 8.00%, 7/15/1998 50,632
-------------------------------------------------------------------------------- -------------
Total 80,958
-------------------------------------------------------------------------------- -------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN VALUE
CURRENCY IN U.S.
PAR AMOUNT DOLLARS
- --------------- -------------------------------------------------------------------------------- -------------
<C> <S> <C>
BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREIGN BONDS--CONTINUED
--------------------------------------------------------------------------------
NORWEGIAN KRONE--0.2%
--------------------------------------------------------------------------------
330,000 NGB, Bond, 9.00%, 1/31/1999 $ 55,943
--------------------------------------------------------------------------------
420,000 Norwegian Government, Bond, 7.00%, 5/31/2001 69,740
--------------------------------------------------------------------------------
315,000 Norwegian Govt., Foreign Gov't. Guarantee, 5.75%, 11/30/2004 48,212
-------------------------------------------------------------------------------- -------------
Total 173,895
-------------------------------------------------------------------------------- -------------
PORTUGUESE ESCUDO--0.0%
--------------------------------------------------------------------------------
4,500,000 Portuguese Ot's, Bond, 11.875%, 2/23/2000 33,627
-------------------------------------------------------------------------------- -------------
SPANISH PESETA--0.4%
--------------------------------------------------------------------------------
20,000,000 Spanish Government, 10.00%, 2/28/2005 183,449
--------------------------------------------------------------------------------
12,000,000 Spanish Government, Bond, 8.80%, 4/30/2006 101,945
--------------------------------------------------------------------------------
4,340,000 Spanish Government, Bond, 9.40%, 4/30/1999 36,023
--------------------------------------------------------------------------------
4,950,000 Spanish Government., Deb., 10.10%, 2/28/2001 43,638
-------------------------------------------------------------------------------- -------------
Total 365,055
-------------------------------------------------------------------------------- -------------
SWEDISH KRONA--0.3%
--------------------------------------------------------------------------------
1,000,000 Stadshypotekskas, Foreign Gov't. Guarantee, Series 1551,
7.50%, 3/17/1999 155,221
--------------------------------------------------------------------------------
900,000 Sweden, 6.00%, 2/9/2005 126,939
-------------------------------------------------------------------------------- -------------
Total 282,160
-------------------------------------------------------------------------------- -------------
UNITED KINGDOM POUND--0.6%
--------------------------------------------------------------------------------
80,000 British Gas PLC, 8.875%, 7/8/2008 141,308
--------------------------------------------------------------------------------
29,000 UK Treasury, Deb., 8.50%, 12/7/2005 52,489
--------------------------------------------------------------------------------
175,000 UK Conversion, 9.00%, 3/3/2000 311,777
--------------------------------------------------------------------------------
30,000 UK Treasury, Bond, 8.00%, 12/7/2015 52,927
--------------------------------------------------------------------------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN
CURRENCY
PAR AMOUNT VALUE
OR PRINCIPAL IN U.S.
AMOUNT DOLLARS
- --------------- -------------------------------------------------------------------------------- -------------
<C> <S> <C>
FOREIGN BONDS--CONTINUED
--------------------------------------------------------------------------------
UNITED KINGDOM POUND--CONTINUED
--------------------------------------------------------------------------------
20,000 UK Treasury, Bond, 7.50%, 12/7/2006 $ 33,582
-------------------------------------------------------------------------------- -------------
Total 592,083
-------------------------------------------------------------------------------- -------------
TOTAL FOREIGN BONDS 5,139,722
-------------------------------------------------------------------------------- -------------
TOTAL BONDS (IDENTIFIED COST $76,450,642) 77,439,622
-------------------------------------------------------------------------------- -------------
(D) REPURCHASE AGREEMENTS--5.1%
- -------------------------------------------------------------------------------------------------
$ 3,765,000 BT Securities Corporation, 5.720%, dated 11/29/1996, due 12/2/1996 3,765,000
--------------------------------------------------------------------------------
1,000,000 (e)Goldman Sachs Group, LP, 5.320%, dated 11/18/1996, due 12/18/ 1996 1,000,000
-------------------------------------------------------------------------------- -------------
TOTAL REPURCHASE AGREEMENTS (AT AMORTIZED COST) 4,765,000
-------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST $90,302,714)(F) $ 92,586,307
-------------------------------------------------------------------------------- -------------
</TABLE>
(a) Non-income producing security.
(b) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. At November 30, 1996, these securities
amounted to $978,454 which represents 1.1% of net assets.
(c) These securities are subject to dollar roll transactions.
(d) The repurchase agreements are fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investments in the repurchase agreements are through participation in joint
accounts with other Federated Funds.
(e) Although final maturity falls beyond seven days, a liquidity feature is
included in each transaction to permit termination of the repurchase
agreement within seven days if the creditworthiness of the issuer is
downgraded.
(f) The cost of investments for federal tax purposes amounts to $90,316,595.
The net unrealized appreciation of investments on a federal tax basis
amounts to $2,269,712 which is comprised of $2,496,822 appreciation and
$227,110 depreciation at November 30, 1996.
Note: The categories of investments are shown as a percentage of net assets
($92,581,568) at November 30, 1996.
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
The following acronyms are used throughout this portfolio:
ACES--Adjustable Convertible Extendable Securities
ADR--American Depository Receipt
GTD--Guaranty
LP--Limited Partnership
PEPS--Participating Equity Preferred Stock
PIK--Payment in Kind
PLC--Public Limited Company
TBA--To Be Announced
*MID-AMERICAN WASTE SYSTEMS, INC.
On February 15, 1996 and August 15, 1996, Mid-American Waste Systems failed to
make its scheduled interest payment. Currently, the company is in negotiations
with its debt holders and has retained an investment bank to evalute its
options. The unofficial subordinated bondholders group has retained legal
counsel and financial advisors and is monitoring the situation closely.
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ----------------------------------------------------------------------------------------------------
Total investments in securities, at value (identified cost $90,302,714, and tax cost $90,316,595) $ 92,586,307
- ----------------------------------------------------------------------------------------------------
Income receivable 1,177,002
- ----------------------------------------------------------------------------------------------------
Receivable for investments sold 500,676
- ----------------------------------------------------------------------------------------------------
Receivable for shares sold 84,423
- ----------------------------------------------------------------------------------------------------
Deferred expenses 25,943
- ---------------------------------------------------------------------------------------------------- ------------
Total assets 94,374,351
- ----------------------------------------------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------------------------------
Payable for investments purchased $ 536,429
- -----------------------------------------------------------------------------------------
Payable for shares redeemed 25,918
- -----------------------------------------------------------------------------------------
Income distribution payable 204,775
- -----------------------------------------------------------------------------------------
Payable to Bank 51,824
- -----------------------------------------------------------------------------------------
Payable for dollar roll transactions 903,087
- -----------------------------------------------------------------------------------------
Payable for taxes withheld 1,632
- -----------------------------------------------------------------------------------------
Accrued expenses 69,118
- ----------------------------------------------------------------------------------------- ---------
Total liabilities 1,792,783
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSETS for 8,769,181 shares outstanding $ 92,581,568
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSETS CONSIST OF:
- ----------------------------------------------------------------------------------------------------
Paid in capital $ 89,433,734
- ----------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and translation of assets
and liabilities in foreign currency 2,282,499
- ----------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments, foreign currency
transactions, and futures contracts 618,374
- ----------------------------------------------------------------------------------------------------
Undistributed net investment income 246,961
- ---------------------------------------------------------------------------------------------------- ------------
Total Net Assets $ 92,581,568
- ---------------------------------------------------------------------------------------------------- ------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ----------------------------------------------------------------------------------------------------
Institutional Shares $67,122,076 / 6,357,713 shares outstanding $10.56
- ---------------------------------------------------------------------------------------------------- ------------
Select Shares $25,459,492 / 2,411,468 shares outstanding $10.56
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED INCOME FUND
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -----------------------------------------------------------------------------------------------------
Dividends (net of foreign taxes withheld of $313) $ 273,343
- -----------------------------------------------------------------------------------------------------
Interest (net of dollar roll expense of $50,792) (net of foreign taxes withheld of $5,090) 4,939,855
- ----------------------------------------------------------------------------------------------------- ---------
Total income 5,213,198
- -----------------------------------------------------------------------------------------------------
EXPENSES:
- ------------------------------------------------------------------------------------------
Investment advisory fee $ 599,171
- ------------------------------------------------------------------------------------------
Administrative personnel and services fee 155,001
- ------------------------------------------------------------------------------------------
Custodian fees 43,093
- ------------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 64,943
- ------------------------------------------------------------------------------------------
Directors'/Trustees' fees 4,026
- ------------------------------------------------------------------------------------------
Auditing fees 14,622
- ------------------------------------------------------------------------------------------
Legal fees 4,349
- ------------------------------------------------------------------------------------------
Portfolio accounting fees 80,011
- ------------------------------------------------------------------------------------------
Distribution services fee--Select Shares 155,333
- ------------------------------------------------------------------------------------------
Shareholder services fee--Institutional Shares 147,946
- ------------------------------------------------------------------------------------------
Shareholder services fee--Select Shares 51,778
- ------------------------------------------------------------------------------------------
Share registration costs 57,812
- ------------------------------------------------------------------------------------------
Printing and postage 28,243
- ------------------------------------------------------------------------------------------
Insurance premiums 8,722
- ------------------------------------------------------------------------------------------
Taxes 1,534
- ------------------------------------------------------------------------------------------
Miscellaneous 20,974
- ------------------------------------------------------------------------------------------ ---------
Total expenses 1,437,558
- ------------------------------------------------------------------------------------------
Waivers--
- -------------------------------------------------------------------------------
Waiver of investment advisory fee $(479,814)
- -------------------------------------------------------------------------------
Waiver of distribution services fee--Select Shares (51,778)
- -------------------------------------------------------------------------------
Waiver of shareholder services fee--Institutional Shares (118,357)
- ------------------------------------------------------------------------------- ---------
Total waivers (649,949)
- ------------------------------------------------------------------------------------------ ---------
Net expenses 787,609
- ----------------------------------------------------------------------------------------------------- ---------
Net investment income 4,425,589
- ----------------------------------------------------------------------------------------------------- ---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FOREIGN CURRENCY AND FUTURES CONTRACTS:
- -----------------------------------------------------------------------------------------------------
Net realized gain on investments, foreign currency transactions, and futures contracts 649,318
- -----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments, translation of assets
and liabilities in foreign currency, and futures contracts 410,861
- ----------------------------------------------------------------------------------------------------- ---------
Net realized and unrealized gain on investments, foreign currency, and futures contracts 1,060,179
- ----------------------------------------------------------------------------------------------------- ---------
Change in net assets resulting from operations $5,485,768
- ----------------------------------------------------------------------------------------------------- ---------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
NOVEMBER 30,
1996 1995
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------------------------------------
Net investment income $ 4,425,589 $ 2,908,367
- -------------------------------------------------------------------------------------
Net realized gain (loss) on investments, foreign currency transactions and futures
contracts ($629,064 and $729,136, net gains respectively, as computed for federal tax
purposes) 649,318 911,082
- -------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments, translation of
assets and liabilities in foreign currency and futures contracts 410,861 2,481,101
- ------------------------------------------------------------------------------------- ------------ ------------
Change in net assets resulting from operations 5,485,768 6,300,550
- ------------------------------------------------------------------------------------- ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -------------------------------------------------------------------------------------
Distributions from net investment income
- -------------------------------------------------------------------------------------
Institutional Shares (3,457,532) (2,431,427)
- -------------------------------------------------------------------------------------
Select Shares (1,037,906) (394,936)
- -------------------------------------------------------------------------------------
Distributions from net realized gains on investments, foreign currency transactions
and futures contracts
- -------------------------------------------------------------------------------------
Institutional Shares (332,234) --
- -------------------------------------------------------------------------------------
Select Shares (91,563) --
- ------------------------------------------------------------------------------------- ------------ ------------
Change in net assets resulting from distributions to shareholders (4,919,235) (2,826,363)
- ------------------------------------------------------------------------------------- ------------ ------------
SHARE TRANSACTIONS--
- -------------------------------------------------------------------------------------
Proceeds from sale of shares 48,463,331 36,889,780
- -------------------------------------------------------------------------------------
Net asset value of shares issued to shareholders
in payment of distributions declared 2,121,547 900,372
- -------------------------------------------------------------------------------------
Cost of shares redeemed (23,349,415) (14,374,680)
- ------------------------------------------------------------------------------------- ------------ ------------
Change in net assets resulting from share transactions 27,235,463 23,415,472
- ------------------------------------------------------------------------------------- ------------ ------------
Change in net assets 27,801,996 26,889,659
- -------------------------------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------------------------------
Beginning of period 64,779,572 37,889,913
- ------------------------------------------------------------------------------------- ------------ ------------
End of period (including undistributed net investment income of $246,961 and
$305,359, respectively) $ 92,581,568 $ 64,779,572
- ------------------------------------------------------------------------------------- ------------ ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED MANAGED INCOME FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
(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 portfolios. The financial statements
included herein are only those of Federated Managed Income Fund (the "Fund"), a
diversified portfolio. The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held. The
investment objective of the Fund is to seek current income.
The Fund offers two classes of shares: Institutional Shares and Select Shares.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Listed equity securities are valued at the last sale
price reported on a national securities exchange. U.S. government
securities, listed corporate bonds, other fixed income and asset-backed
securities, and unlisted securities and private placement securities are
generally valued at the mean of the latest bid and asked price as furnished
by an independent pricing service. Short-term securities are valued at the
prices provided by an independent pricing service. However, short-term
securities with remaining maturities of sixty days or less at the time of
purchase may be valued at amortized cost, which approximates fair market
value.
With respect to valuation of foreign securities, trading in foreign
countries may be completed at time which vary from the closing of the New
York Stock Exchange. Therefore, foreign securities are valued at the latest
closing price on the exchange on which they are traded prior to the closing
of the New York Stock Exchange. Foreign securities quoted in foreign
currencies are translated into U.S. dollars at the foreign exchange rate in
effect at noon, eastern time, on the day the value of the foreign security
is determined.
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.
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral
securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code"). Dividend
income and distributions to shareholders are recorded on the ex-dividend
date.
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. The following reclassifications have been
made to the financial statements.
<TABLE>
<CAPTION>
INCREASE (DECREASE)
<S> <C>
ACCUMULATED UNDISTRIBUTED NET
NET REALIZED GAIN INVESTMENT INCOME
<CAPTION>
$(11,451) $11,451
</TABLE>
Net investment income, net realized gains/losses, and net assets were not
affected by this reclassification.
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
However, federal taxes may be imposed on the Fund upon the disposition of
certain investments in passive foreign investment companies. Withholding
taxes on foreign interest and dividends have been provided for in
accordance with the Fund's understanding of the applicable country's tax
rules and rates.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized over a period not to exceed five years from the Fund's
commencement date.
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
FUTURES CONTRACTS--The Fund purchases stock index futures contracts to
manage cashflows, enhance yield, and to potentially reduce transaction
costs. Upon entering into a stock index futures contract with a broker, the
Fund is required to deposit in a segregated account a specified amount of
cash or U.S. government securities. Futures contracts are valued daily and
unrealized gains or losses are recorded in a "variation margin" account.
Daily, the Fund receives from or pays to the broker a specified amount of
cash based upon changes in the variation margin account. When a contract is
closed, the Fund recognizes a realized gain or loss. Futures contracts have
market risks, including the risk that the change in value of the contract
may not correlate with changes in value of the underlying securities. For
the year ended November 30, 1996, the Fund had realized gains of $56,192 on
futures contracts. As of November 30, 1996, the Fund had no outstanding
futures contracts.
FOREIGN EXCHANGE CONTRACTS--The Fund may enter into foreign currency
contracts for the delayed delivery of securities or foreign currency
exchange transactions. These contracts are used to hedge the Fund against
currency fluctuations. Risks may arise upon entering these transactions
from the potential inability of counter-parts 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 purposes as unrealized until the
settlement date. At November 30, 1996, the Fund had no outstanding foreign
currency commitments.
FOREIGN CURRENCY TRANSLATION--The accounting records of the Fund are
maintained in U.S. dollars. All assets and liabilities denominated in
foreign currencies ("FC") are translated into U.S. dollars based on the
rate of exchange of such currencies against U.S. dollars on the date of
valuation. Purchases and sales of securities, income and expenses are
translated at the rate of exchange quoted on the respective date that such
transactions are recorded. Differences between income and expense amounts
recorded and collected or paid are adjusted when reported by the custodian
bank. The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales
of FCs, currency gains or losses realized 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 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,
1996 is as follows:
<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE ACQUISITION COST
<S> <C> <C>
Allied Waste 11/25/1996 $ 50,000
Astor Corp. 10/2/1996 49,750
Bayer Corp. 3/21/1996-4/17/1996 345,302
Dade International, Inc. 4/30/1996-5/17/1996 50,906
First Nationwide Escrow 9/13/1996 50,625
Freeport Terminal (Malta) 7/19/1994 284,196
Westinghouse Electric Corp. 9/27/1995-3/14/1996 97,725
</TABLE>
DOLLAR ROLL TRANSACTIONS--The Fund enters into dollar roll transactions,
with respect to mortgage securities issued by GNMA, FNMA and FHLMC, in
which the Fund sells mortgage securities to financial institutions and
simultaneously agrees to accept substantially similar (same type, coupon
and maturity) securities at a later date at an agreed upon price. Dollar
roll transactions are short-term financing arrangements which will not
exceed twelve months. The Fund will use the proceeds generated from the
transactions to invest in short-term investments, which may enhance the
Fund's current yield and total return.
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. Transactions in shares were as follows:
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1996 1995
INSTITUTIONAL SHARES SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold 2,995,976 $ 31,129,010 2,449,773 $ 25,139,690
- --------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 135,176 1,403,094 68,764 702,502
- --------------------------------------------------------
Shares redeemed (1,600,230) (16,630,503) (1,244,562) (12,651,519)
- -------------------------------------------------------- ----------- ------------- ----------- -------------
Net change resulting from Institutional Shares
transactions 1,530,922 $ 15,901,601 1,273,975 $ 13,190,673
- -------------------------------------------------------- ----------- ------------- ----------- -------------
<CAPTION>
YEAR ENDED NOVEMBER 30,
1996 1995
SELECT SHARES SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold 1,668,304 $ 17,334,321 1,144,376 $ 11,750,090
- --------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 69,234 718,453 19,145 197,870
- --------------------------------------------------------
Shares redeemed (648,056) (6,718,912) (168,971) (1,723,161)
- -------------------------------------------------------- ----------- ------------- ----------- -------------
Net change resulting from Select Shares
transactions 1,089,482 $ 11,333,862 994,550 $ 10,224,799
- -------------------------------------------------------- ----------- ------------- ----------- -------------
Net change resulting from share transactions 2,620,404 $ 27,235,463 2,268,525 $ 23,415,472
- -------------------------------------------------------- ----------- ------------- ----------- -------------
</TABLE>
(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 0.75% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive any portion of its fee. The Adviser can modify or
terminate this voluntary waiver at any time at its sole discretion.
Under the terms of a sub-advisory agreement between the Adviser and Federated
Global Research Corp. (the "Sub-Adviser"), 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.
ADMINISTRATIVE FEE--Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ is based on the level of average
aggregate daily net assets of all funds advised by subsidiaries of Federated
Investors for the period. The administrative fee received during the period of
the Administrative Services Agreement shall be at least $125,000 per portfolio
and $30,000 per each additional class of shares.
DISTRIBUTION SERVICES FEE--The Fund has adopted a Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will
compensate Federated Securities Corp. ("FSC"), the principal distributor, from
the net assets of the Fund to finance activities intended to result in the sale
of the Fund's Select Shares. The Plan provides that the Fund may incur
distribution expenses of up to 0.75% of average net assets, annually, to
compensate FSC. The distributor may voluntarily choose to waive any portion of
its fee. The distributor can modify or terminate this voluntary waiver at any
time at its sole discretion.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25%
of average daily net assets of the Fund shares for the period. The fee paid to
FSS is used to finance certain services for shareholders and to maintain
shareholder accounts. FSS may voluntarily choose to waive any portion of its
fee. FSS can modify or terminate this voluntary waiver at any time at its sole
discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--FServ, through its
subsidiary, Federated Shareholder Services Company ("FSSC") serves as transfer
and dividend disbursing agent for the Fund. The fee paid to FSSC is based on the
size, type, and number of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Trust's accounting records for
which it receives a fee. The fee is based on the level of the Trust's average
daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses of $91,334 were borne initially
by Adviser. The Fund has agreed to reimburse Adviser for the organizational
expenses during the five year period following effective date. For the period
ended November 30, 1996, the Fund paid $13,406 pursuant to this agreement.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended November 30, 1996, were as follows:
<TABLE>
<S> <C>
PURCHASES $ 128,713,847
- -------------------------------------------------------------------------------------------------- --------------
SALES $ 99,461,101
- -------------------------------------------------------------------------------------------------- --------------
</TABLE>
FEDERATED MANAGED INCOME FUND
- --------------------------------------------------------------------------------
(6) CONCENTRATION OF CREDIT RISK
The Fund invests in securities of non-U.S. issuers. Although the Fund maintains
a diversified investment portfolio, the political or economic developments
within a particular country or region may have an adverse effect on the ability
of domiciled issuers to meet their obligations. Additionally, political or
economic developments may have an effect on the liquidity and volatility of
portfolio securities and currency holdings.
At November 30, 1996, the diversification of industries was as follows:
<TABLE>
<CAPTION>
INDUSTRY % OF NET ASSETS INDUSTRY % OF NET ASSETS
<S> <C> <C> <C>
Aerospace & Military Technology 0.3 Finance Intermediaries 1.3
Agency 1.4 Food & Drug Retailers 0.4
Automotive 0.2 Government Agency 27.2
Banking 1.3 Healthcare 0.9
Basic Industry 0.5 Industrial Products & Equipment 0.4
Beverage & Tobacco 0.4 Insurance 1.1
Broadcast Radio & T.V. 0.3 Leisure & Entertainment 0.2
Business Equipment & Services 0.1 Oil & Gas 2.0
Cable Television 0.7 Printing & Publishing 0.5
Cash Equivalents 5.2 Producer Manufacturing 0.4
Chemicals & Plastics 0.6 Retail Trade 0.3
Clothing & Textiles 0.1 Services 0.6
Consumer Durables 0.2 Sovereign 4.6
Consumer Non-Durables 0.9 State & Provincial 0.3
Container & Glass Products 0.1 Supranational 0.1
Ecological Services & Equipment 1.5 Surface Transportation 0.1
Electrical Utilities 4.5 Technology 0.3
Electronics 0.5 Telecommunications & Cellular 0.1
Energy Minerals 0.9 Transportation 0.1
Finance 1.0 Treasury Securities 38.8
Finance--Retail 0.3 Utilities 2.0
</TABLE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
MANAGED SERIES TRUST
(Federated Managed Income Fund):
We have audited the accompanying statement of assets and liabilities of
Federated Managed Income Fund (an investment portfolio of Managed Series Trust,
a Massachusetts business trust), including the schedule of portfolio
investments, as of November 30, 1996, and 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 26 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, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Federated Managed Income Fund, an investment portfolio of Managed Series Trust,
as of November 30, 1996, 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 15, 1997
APPENDIX
- --------------------------------------------------------------------------------
STANDARD AND POOR'S RATINGS GROUP LONG-TERM DEBT RATINGS
AAA--Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.
A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB--Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.
B--Debt rated B has greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or
BB- rating.
CCC--Debt rated CCC has currently identifiable vulnerability to default and is
dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating.
CC--The rating CC typically is applied to debt subordinated to senior debt that
is assigned an actual or implied CCC debt rating.
C--The rating C typically is applied to debt subordinated to senior debt which
is assigned an actual or implied CCC- debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.
CI--The rating CI is reserved for income bonds on which no interest is being
paid.
D--Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if
the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. The D rating also will be used
upon the filing of a bankruptcy petition if debt service payments are
jeopardized.
MOODY'S INVESTORS SERVICE, INC., CORPORATE BOND RATINGS
Aaa--Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment some time in the future.
Baa--Bonds which are rated Baa are considered as medium-grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well.
Ba--Bonds which are Ba are judged to have speculative elements; their future
cannot be considered as well-assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca--Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C--Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
FITCH INVESTORS SERVICE, INC., LONG-TERM DEBT RATINGS
AAA--Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA--Bonds considered to be investment grade and of very high quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F-1+.
A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB--Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds and, therefore, impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.
BB--Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.
B--Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.
CCC--Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.
CC--Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C--Bonds are in imminent default in payment of interest or principal.
DDD, DD, AND D--Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. DDD
represents the highest potential for recovery on these bonds, and D represents
the lowest potential for recovery.
NR--NR indicates that Fitch does not rate the specific issue.
PLUS (+) OR MINUS (-): Plus or minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the AAA category.
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Federated Managed Income Fund
Institutional Shares Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Sub-Adviser
Federated Global Research Corp. 175 Water Street
New York, NY 10038-4965
- ---------------------------------------------------------------------------------------------------------------------
Custodian
State Street Bank and P.O. Box 8600
Trust Company Boston, Massachusetts 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Shareholder Services Company P.O. Box 8600
Boston, Massachusetts 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
THIS PAGE INTENTIONALLY LEFT BLANK
THIS PAGE INTENTIONALLY LEFT BLANK
FEDERATED MANAGED
INCOME FUND
INSTITUTIONAL SHARES
PROSPECTUS
A Diversified Portfolio of
Managed Series Trust,
an Open-End Management
Investment Company
Prospectus dated January 31, 1997
[LOGO] FEDERATED INVESTORS
Since 1955
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.
[LOGO]
RECYCLED
PAPER
Cusip 56166K107
3122013A-IS (1/97)
FEDERATED MANAGED INCOME FUND
FEDERATED MANAGED GROWTH AND INCOME FUND
FEDERATED MANAGED GROWTH FUND
FEDERATED MANAGED AGGRESSIVE GROWTH FUND
(PORTFOLIOS OF MANAGED SERIES TRUST)
INSTITUTIONAL SHARES
SELECT SHARES
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
respective prospectuses for Institutional Shares and Select Shares of
Federated Managed Income Fund, Federated Managed Growth and Income
Fund, Federated Managed Growth Fund and Federated Managed Aggressive
Growth Fund, all dated
January 31, 1997. This Statement is not a prospectus itself. You may
request a copy of a prospectus or a paper copy of this Statement, if
you have received it electronically, free of charge by calling 1-800-
341-7400.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Statement dated January 31, 1997
Federated Securities Corp. is the distributor of the Funds
and is a subsidiary of Federated Investors.
Cusip 56166K 800
Cusip 56166K 701
Cusip 56166K 404
Cusip 56166K 305
Cusip 56166K 602
Cusip 56166K 503
Cusip 56166K 206
Cusip 56166K 107
3122014B (1/97)
[/R]
GENERAL INFORMATION ABOUT THE TRUST 1
INVESTMENT OBJECTIVES AND POLICIES 1
Small Company Stocks 1
Mortgage-Backed Securities 1
Corporate Debt Obligations 1
Foreign Debt Obligations 2
Warrants 2
Futures and Options Transactions 2
Foreign Currency Transactions 4
Repurchase Agreements 6
Reverse Repurchase Agreements 6
When-Issued and Delayed Delivery
Transactions 6
Lending of Portfolio Securities 6
Restricted and Illiquid Securities
6<
/R>
Portfolio Turnover 7
Weighted Average Portfolio Duration 7
INVESTMENT LIMITATIONS 8
MANAGED SERIES TRUST MANAGEMENT
10
Trust Ownership 14
Trustees Compensation 15
Trustee Liability 15
INVESTMENT ADVISORY SERVICES 16
Adviser to the Trust 16
Advisory Fees 16
BROKERAGE TRANSACTIONS 16
OTHER SERVICES 17
Fund Administration 17
Custodian and Portfolio Accountant 17
Transfer Agent 17
Independent Public Accountants 17
PURCHASING SHARES 17
DISTRIBUTION PLAN AND SHAREHOLDER
SERVICES AGREEMENT 18
Conversion to Federal Funds 18
DETERMINING NET ASSET VALUE 19
Determining Market Value of Securities 19
Trading in Foreign Securities 19
REDEEMING SHARES 19
Redemption in Kind 19
MASSACHUSETTS PARTNERSHIP LAW 20
TAX STATUS 20
The Portfolios' Tax Status 20
Foreign Taxes 20
Shareholders' Tax Status 20
TOTAL RETURN 21
YIELD 21
PERFORMANCE COMPARISONS 22
Economic and Market Information 23
ABOUT FEDERATED INVESTORS
24
GENERAL INFORMATION ABOUT THE TRUST
Managed Series Trust (the "Trust") was established as a Massachusetts
business trust on November 15, 1993. As of the date of this Statement, the
Trust consists of the following four separate portfolios of securities
(collectively, the "Portfolios" and each individually, the "Portfolio"):
Federated Managed Income Fund; Federated Managed Growth and Income Fund;
Federated Managed Growth Fund; and Federated Managed Aggressive Growth
Fund. Each Portfolio has two classes of shares of beneficial interest,
Institutional Shares and Select Shares. Prior to June 30, 1995, the
Institutional Shares of each portfolio of the Trust were known as
Institutional Service Shares.
INVESTMENT OBJECTIVES AND POLICIES
The prospectuses discuss the objectives of the Portfolios and the policies
that each employs to achieve those objectives. The following discussion
supplements the description of the Portfolios' investment policies set
forth in the prospectuses. The Portfolios' respective investment objectives
cannot be changed without approval of shareholders. Except as noted, the
investment policies described below may be changed by the Board of Trustees
("Trustees") without shareholder approval. Shareholders will be notified
before any material change in these policies becomes effective.
SMALL COMPANY STOCKS
Stocks in the small capitalization sector of the United States equity
market have historically been more volatile in price than larger
capitalization stocks, such as those included in the Standard & Poor's 500
Index. This is because, among other things, small companies have less
certain growth prospects than larger companies; have a lower degree of
liquidity in the equity market; and tend to have a greater sensitivity to
changing economic conditions. Further, in addition to exhibiting greater
volatility, the stocks of small companies may, to some degree, fluctuate
independently of the stocks of large companies; that is, the stocks of
small companies may decline in price as the price of large company stocks
rises or vice versa.
MORTGAGE-BACKED SECURITIES
PRIVATELY ISSUED MORTGAGE-RELATED SECURITIES
The privately issued mortgage-related securities purchased by the
Portfolios generally represent an ownership interest in federal agency
mortgage pass-through securities, such as those issued by Government
National Mortgage Association ("GNMA"). The terms and characteristics
of the mortgage instruments may vary among pass-through mortgage loan
pools.
Privately issued mortgage-related securities generally pay back
principal and interest over the life of the security. At the time the
Portfolios reinvest the payments and any unscheduled prepayments of
principal received, the Portfolios may receive a rate of interest
which is actually lower than the rate of interest paid on these
securities ("prepayment risks"). Privately issued mortgage-related
securities are subject to higher prepayment risks than most other
types of debt instruments with prepayment risks because the underlying
mortgage loans may be prepaid without penalty or premium. Prepayment
risks on privately issued mortgage-related securities tend to increase
during periods of declining mortgage interest rates because many
borrowers refinance their mortgages to take advantage of the more
favorable rates. Prepayments on privately issued mortgage-related
securities are also affected by other factors, such as the frequency
with which people sell their homes or elect to make unscheduled
payments on their mortgages.
The market for privately issued mortgage-related securities has
expanded considerably since its inception. The size of the primary
issuance market and the active participation in the secondary market
by securities dealers and other investors make government-related
pools highly liquid.
CORPORATE DEBT OBLIGATIONS
The corporate debt obligations in which the Portfolios invest may bear
fixed, floating, floating and contingent, or increasing rates of interest.
The Portfolios may invest in investment-grade corporate debt obligations
(which are rated BBB or higher by nationally recognized statistical rating
organizations) or high yield corporate debt obligations (which are rated BB
or lower by nationally recognized statistical rating organizations).
FOREIGN DEBT OBLIGATIONS
The Portfolios may invest in investment-grade debt securities (which are
rated BBB or higher by nationally recognized statistical rating
organizations) of countries other than the United States.
WARRANTS
The Portfolios may invest in warrants. Warrants are basically options to
purchase common stock at a specific price (usually at a premium above the
market value of the optioned common stock at issuance) valid for a specific
period of time. Warrants may have a life ranging from less than one year to
twenty years, or they may be perpetual. However, most warrants have
expiration dates after which they are worthless. In addition, a warrant is
worthless if the market price of the common stock does not exceed the
warrant's exercise price during the life of the warrant. Warrants have no
voting rights, pay no dividends, and have no rights with respect to the
assets of the corporation issuing them. The percentage increase or decrease
in the market price of the warrant may tend to be greater than the
percentage increase or decrease in the market price of the optioned common
stock. Warrants acquired in units or attached to securities may be deemed
to be without value for purposes of this policy.
FUTURES AND OPTIONS TRANSACTIONS
The Portfolios may attempt to hedge all or a portion of its portfolio by
buying and selling futures contracts and options on futures contracts.
FUTURES CONTRACTS
A futures contract is a firm commitment by two parties, the seller who
agrees to make delivery of the specific type of security called for in
the contract ("going short") and the buyer who agrees to take delivery
of the security ("going long") at a certain time in the future.
However, a stock index futures contract is an agreement pursuant to
which two parties agree to take or make delivery of an amount of cash
equal to the difference between the value of the index at the close of
the last trading day of the contract and the price at which the index
was originally written. No physical delivery of the underlying
security in the index is made.
The purpose of the acquisition or sale of a futures contact by the
Portfolios is to protect the Portfolios from fluctuations in the value
of their securities caused by anticipated changes in interest rates or
market conditions. For example, in the fixed-income securities market,
price moves inversely to interest rates. A rise in rates results in a
drop in price. Conversely, a drop in rates results in a rise in price.
In order to hedge its holdings of fixed income securities against a
rise in market interest rates, a Portfolio could enter into contracts
to deliver securities at a predetermined price (i.e., "go short") to
protect itself against the possibility that the prices of its fixed-
income securities may decline during the Portfolio's anticipated
holding period. A Portfolio would agree to purchase securities in the
future at a predetermined price (i.e., "go long") to hedge against a
decline in market interest rates.
PURCHASING PUT OPTIONS ON FUTURES CONTRACTS
The Portfolios may purchase listed put options or over-the-counter put
options on futures contracts. Unlike entering directly into a futures
contract, which requires the purchaser to buy a financial instrument
on a set date at a specified price, the purchase of a put option on a
futures contract entitles (but does not obligate) its purchaser to
decide on or before a future date whether to assume a short position
at the specified price. A Portfolio would purchase put options on
futures contracts to protect its portfolio securities against
decreases in value resulting from market factors such as an
anticipated increase in interest rates.
Generally, if the hedged portfolio securities decrease in value during
the term of an option, the related futures contracts will also
decrease in value and the option will increase in value. In such an
event, a Portfolio will normally close out its option by selling an
identical option. If the hedge is successful, the proceeds received by
a Portfolio upon the sale of the second option may be large enough to
offset both the premium paid by the Portfolio for the original option
plus the decrease in value of the hedged securities.
Alternatively, a Portfolio may exercise its put option to close out
the position. To do so, it would simultaneously enter into a futures
contract of the type underlying the option (for a price less than the
strike price of the option) and exercise the option. The Portfolio
would then deliver the futures contract in return for payment of the
strike price. If a Portfolio neither closes out nor exercises an
option, the option will expire on the date provided in the option
contract, and only the premium paid for the contract will be lost.
WRITING PUT OPTIONS ON FUTURES CONTRACTS
The Portfolios may write listed put options on financial futures
contracts to hedge its portfolio against a decrease in market interest
rates. When a Portfolio writes a put option on a futures contract, it
receives a premium for undertaking the obligation to assume a long
futures position (buying a futures contract) at a fixed price at any
time during the life of the option. As market interest rates decrease,
the market price of the underlying futures contract normally
increases.
As the market value of the underlying futures contract increases, the
buyer of the put option has less reason to exercise the put because
the buyer can sell the same futures contract at a higher price in the
market. The premium received by a Portfolio can then be used to offset
the higher prices of portfolio securities to be purchased in the
future due to the decrease in market interest rates.
Prior to the expiration of the put option, or its exercise by the
buyer, a Portfolio may close out the option by buying an identical
option. If the hedge is successful, the cost of buying the second
option will be less than the premium received by a Portfolio for the
initial option.
PURCHASING CALL OPTIONS ON FUTURES CONTRACTS
An additional way in which the Portfolios may hedge against decreases
in market interest rates is to buy a listed call option on a financial
futures contract. When a Portfolio purchases a call option on a
futures contract, it is purchasing the right (not the obligation) to
assume a long futures position (buy a futures contract) at a fixed
price at any time during the life of the option. As market interest
rates fall, the value of the underlying futures contract will normally
increase, resulting in an increase in value of a Portfolio's option
position. When the market price of the underlying futures contract
increases above the strike price plus premium paid, a Portfolio could
exercise its option and buy the futures contract below market price.
Prior to the exercise or expiration of the call option, a Portfolio
could sell an identical call option and close out its position. If the
premium received upon selling the offsetting call is greater than the
premium originally paid, a Portfolio has completed a successful hedge.
WRITING CALL OPTIONS ON FUTURES CONTRACTS
The Portfolios may write listed call options or over-the-counter call
options on futures contracts to hedge against, for example, an
increase in market interest rates. When a Portfolio writes a call
option on a futures contract, it is undertaking the obligation of
assuming a short futures position (selling a futures contract) at the
strike price at any time during the life of the option if the option
is exercised. As market interest rates rise or as stock prices fall,
causing the prices of futures to go down, a Portfolio's obligation
under a call option on a future (to sell a futures contract) costs
less to fulfill, causing the value of a Portfolio's call option
position to increase.
In other words, as the underlying future's price falls below the
strike price, the buyer of the option has no reason to exercise the
call, so that a Portfolio keeps the premium received for the option.
This premium can help substantially to offset the drop in value of a
Portfolio's portfolio securities.
Prior to the expiration of a call written by a Portfolio, or exercise
of it by the buyer, a Portfolio may close out the option by buying an
identical option. If the hedge is successful, the cost of the second
option will be less than the premium received by a Portfolio for the
initial option. The net premium income of a Portfolio will then
substantially offset the decrease in value of the hedged securities.
LIMITATION ON OPEN FUTURES POSITIONS
A Portfolio will not maintain open positions in futures contracts it
has sold or options it has written on futures contracts if, in the
aggregate, the value of the open positions (marked to market) exceeds
the current market value of its securities portfolio plus or minus the
unrealized gain or loss on those open positions, adjusted for the
correlation of volatility between the hedged securities and the
futures contracts. If this limitation is exceeded at any time, a
Portfolio will take prompt action to close out a sufficient number of
open contracts to bring its open futures and options positions within
this limitation.
"MARGIN" IN FUTURES TRANSACTIONS
Unlike the purchase or sale of a security, the Portfolios do not pay
or receive money upon the purchase or sale of a futures contract.
Rather, a Portfolio is required to deposit an amount of "initial
margin" in cash or U.S. Treasury bills with the custodian (or the
broker, if legally permitted). The nature of initial margin in futures
transactions is different from that of margin in securities
transactions in that futures contracts initial margin does not involve
a borrowing by a Portfolio to finance the transactions. Initial margin
is in the nature of a performance bond or good-faith deposit on the
contract which is returned to a Portfolio upon termination of the
futures contract, assuming all contractual obligations have been
satisfied.
A futures contract held by a Portfolio is valued daily at the official
settlement price of the exchange on which it is traded. Each day a
Portfolio pays or receives cash, called "variation margin," equal to
the daily change in value of the futures contract. This process is
known as "marking to market." Variation margin does not represent a
borrowing or loan by a Portfolio but is instead settlement between a
Portfolio and the broker of an amount one would owe the other if the
futures contract expired. In computing its daily net asset value, a
Portfolio will mark to market its open futures positions.
The Portfolios are also required to deposit and maintain margin when
they write call options on futures contracts.
PURCHASING AND WRITING OVER-THE-COUNTER OPTIONS
The Portfolios may purchase and write over-the-counter options on
portfolio securities in negotiated transactions with the buyers or
writers of the options for those options on portfolio securities held
by a Portfolio and not traded on an exchange.
Over-the-counter options are two-party contracts with price and terms
negotiated between buyer and seller. In contrast, exchange-traded
options are third-party contracts with standardized strike prices and
expiration dates and are purchased from a clearing corporation.
Exchange-traded options have a continuous liquid market while over-
the-counter options may not.
FOREIGN CURRENCY TRANSACTIONS
CURRENCY RISKS
The exchange rates between the U.S. dollar and foreign currencies are
a function of such factors as supply and demand in the currency
exchange markets, international balances of payments, governmental
intervention, speculation and other economic and political conditions.
Although the Portfolios value their assets daily in U.S. dollars, the
Portfolios may not convert their holdings of foreign currencies to
U.S. dollars daily. The Portfolios may incur conversion costs when
they convert their holdings to another currency. Foreign exchange
dealers may realize a profit on the difference between the price at
which the Portfolios buy and sell currencies.
The Portfolios will engage in foreign currency exchange transactions
in connection with their investments in the securities. The Portfolios
will conduct their foreign currency exchange transactions either on a
spot (i.e., cash) basis at the spot rate prevailing in the foreign
currency exchange market or through forward contracts to purchase or
sell foreign currencies.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Portfolios may enter into forward foreign currency exchange
contracts in order to protect themselves against a possible loss
resulting from an adverse change in the relationship between the U.S.
dollar and a foreign currency involved in an underlying transaction.
However, forward foreign currency exchange contracts may limit
potential gains which could result from a positive change in such
currency relationships. The Portfolios' investment adviser believes
that it is important to have the flexibility to enter into forward
foreign currency exchange contracts whenever it determines that it is
in the Portfolios' best interest to do so. The Portfolios will not
speculate in foreign currency exchange.
The Portfolios will not enter into forward foreign currency exchange
contracts or maintain a net exposure in such contracts when they would
be obligated to deliver an amount of foreign currency in excess of the
value of their portfolio securities or other assets denominated in
that currency or, in the case of a "cross-hedge" denominated in a
currency or currencies that the Portfolios' investment adviser
believes will tend to be closely correlated with that currency with
regard to price movements. Generally, the Portfolios will not enter
into a forward foreign currency exchange contract with a term longer
than one year.
FOREIGN CURRENCY OPTIONS
A foreign currency option provides the option buyer with the right to
buy or sell a stated amount of foreign currency at the exercise price
on a specified date or during the option period. The owner of a call
option has the right, but not the obligation, to buy the currency.
Conversely, the owner of a put option has the right, but not the
obligation, to sell the currency.
When the option is exercised, the seller (i.e., writer) of the option
is obligated to fulfill the terms of the sold option. However, either
the seller or the buyer may, in the secondary market, close its
position during the option period at any time prior to expiration.
A call option on foreign currency generally rises in value if the
underlying currency appreciates in value, and a put option on foreign
currency generally falls in value if the underlying currency
depreciates in value. Although purchasing a foreign currency option
can protect a Portfolio against an adverse movement in the value of a
foreign currency, the option will not limit the movement in the value
of such currency. For example, if a Portfolio were holding securities
denominated in a foreign currency that was appreciating and had
purchased a foreign currency put to hedge against a decline in the
value of the currency, the Portfolio would not have to exercise their
put option. Likewise, if a Portfolio were to enter into a contract to
purchase a security denominated in foreign currency and, in
conjunction with that purchase, were to purchase a foreign currency
call option to hedge against a rise in value of the currency, and if
the value of the currency instead depreciated between the date of
purchase and the settlement date, the Portfolio would not have to
exercise its call. Instead, the Portfolio could acquire in the spot
market the amount of foreign currency needed for settlement.
SPECIAL RISKS ASSOCIATED WITH FOREIGN CURRENCY OPTIONS
Buyers and sellers of foreign currency options are subject to the same
risks that apply to options generally. In addition, there are certain
additional risks associated with foreign currency options. The markets
in foreign currency options are relatively new, and the Portfolios'
ability to establish and close out positions on such options is
subject to the maintenance of a liquid secondary market. Although the
Portfolios will not purchase or write such options unless and until,
in the opinion of the Portfolios' investment adviser, the market for
them has developed sufficiently to ensure that the risks in connection
with such options are not greater than the risks in connection with
the underlying currency, there can be no assurance that a liquid
secondary market will exist for a particular option at any specific
time.
In addition, options on foreign currencies are affected by all of
those factors that influence foreign exchange rates and investments
generally.
The value of a foreign currency option depends upon the value of the
underlying currency relative to the U.S. dollar. As a result, the
price of the option position may vary with changes in the value of
either or both currencies and may have no relationship to the
investment merits of a foreign security. Because foreign currency
transactions occurring in the interbank market involve substantially
larger amounts than those that may be involved in the use of foreign
currency options, investors may be disadvantaged by having to deal in
an odd lot market (generally consisting of transactions of less than
$1 million) for the underlying foreign currencies at prices that are
less favorable than for round lots.
There is no systematic reporting of last sale information for foreign
currencies or any regulatory requirement that quotations available
through dealers or other market sources be firm or revised on a timely
basis. Available quotation information is generally representative of
very large transactions in the interbank market and thus may not
reflect relatively smaller transactions (i.e., less than $1 million)
where rates may be less favorable. The interbank market in foreign
currencies is a global, around-the-clock market. To the extent that
the U.S. option markets are closed while the markets for the
underlying currencies remain open, significant price and rate
movements may take place in the underlying markets that cannot be
reflected in the options markets until they reopen.
FOREIGN CURRENCY FUTURES TRANSACTIONS
By using foreign currency futures contracts and options on such
contracts, the Portfolios may be able to achieve many of the same
objectives as they would through the use of forward foreign currency
exchange contracts. The Portfolios may be able to achieve these
objectives possibly more effectively and at a lower cost by using
futures transactions instead of forward foreign currency exchange
contracts.
SPECIAL RISKS ASSOCIATED WITH FOREIGN CURRENCY FUTURES CONTRACTS AND
RELATED OPTIONS
Buyers and sellers of foreign currency futures contracts are subject
to the same risks that apply to the use of futures generally. In
addition, there are risks assocated with foreign currency futures
contracts and their use as a hedging device similar to those
associated with options on futures currencies, as described above.
Options on foreign currency futures contracts may involve certain
additional risks. Trading options on foreign currency foreign currency
futures contracts is relatively new. The ability to establish and
close out positions on such options is subject to the maintenance of a
liquid secondary market. To reduce this risk, the Portfolios will not
purchase or write options on foreign currency futures contracts unless
and until, in the opinion of the Portfolios' investment adviser, the
market for such options has developed sufficiently that the risks in
connection with such options are not greater than the risks in
connection with transactions in the underlying foreign currency
futures contracts. Compared to the purchase or sale of foreign
currency futures contracts, the purchase of call or put options on
futures contracts involves less potential risk to the Portfolios
because the maximum amount at risk is the premium paid for the option
(plus transaction costs). However, there may be circumstances when the
purchase of a call or put option on a futures contract would result in
a loss, such as when there is no movement in the price of the
underlying currency or futures contract.
REPURCHASE AGREEMENTS
The Portfolios or their custodian will take possession of the securities
subject to repurchase agreements and these securities will be marked to
market daily. To the extent that the original seller does not repurchase
the securities from the Portfolio, the Portfolio could receive less than
the repurchase price in any sale of such securities. In the event that a
defaulting seller files for bankruptcy or becomes insolvent, disposition of
such securities by a Portfolio might be delayed pending court action. The
Portfolios believe that under the regular procedures normally in effect for
custody of a Portfolio's portfolio securities subject to repurchase
agreements, a court of competent jurisdiction would rule in favor of a
Portfolio and allow retention or disposition of such securities. The
Portfolios will only enter into repurchase agreements with banks and other
recognized financial institutions such as broker/dealers which are deemed
by the Portfolios' investment adviser to be creditworthy pursuant to
guidelines established by the Trustees.
REVERSE REPURCHASE AGREEMENTS
The Portfolios may also enter into reverse repurchase agreements. These
transactions are similar to borrowing cash. In a reverse repurchase
agreement, a Portfolio transfers possession of a portfolio instrument to
another person, such as a financial institution, broker, or dealer, in
return for a percentage of the instrument's market value in cash, and
agrees that on a stipulated date in the future the Portfolio will
repurchase the portfolio instrument by remitting the original consideration
plus interest at an agreed upon rate. The use of reverse repurchase
agreements may enable a Portfolio to avoid selling portfolio instruments at
a time when a sale may be deemed to be disadvantageous, but the ability to
enter into reverse repurchase agreements does not ensure that a Portfolio
will be able to avoid selling portfolio instruments at a disadvantageous
time.
When effecting reverse repurchase agreements, liquid assets of a Portfolio,
in a dollar amount sufficient to make payment for the obligations to be
purchased, are segregated at the trade date. These securities are marked to
market daily and are maintained until the transaction is settled.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an
advantageous price or yield for the Portfolios. No fees or other expenses,
other than normal transaction costs, are incurred. However, liquid assets
of the Portfolios sufficient to make payment for the securities to be
purchased are segregated on a Portfolio's records at the trade date. These
assets are marked to market daily and are maintained until the transaction
has been settled. The Portfolio do not intend to engage in when-issued and
delayed delivery transactions to an extent that would cause the segregation
of more than 20% of the total value of a Portfolio's assets.
LENDING OF PORTFOLIO SECURITIES
The collateral received when the Portfolios lend portfolio securities must
be valued daily and, should the market value of the loaned securities
increase, the borrower must furnish additional collateral to the particular
Portfolio. During the time portfolio securities are on loan, the borrower
pays the Portfolios any dividends or interest paid on such securities.
Loans are subject to termination at the option of the Portfolios or the
borrower. The Portfolios may pay reasonable administrative and custodial
fees in connection with a loan and may pay a negotiated portion of the
interest earned on the cash or equivalent collateral to the borrower or
placing broker.
RESTRICTED AND ILLIQUID SECURITIES
The Portfolios may invest in commercial paper issued in reliance on the
exemption from registration afforded by Section 4(2) of the Securities Act
of 1933. Section 4(2) commercial paper is restricted as to disposition
under federal securities law and is generally sold to institutional
investors, such as the Portfolios, who agree that they are purchasing paper
for investment purposes and not with a view to public distribution. Any
resale by the purchaser must be in an exempt transaction. Section 4(2)
commercial paper is normally resold to other institutional investors like
the Portfolios through or with the assistance of the issuer or investment
dealers who make a market in Section 4(2) commercial paper, thus providing
liquidity. The Portfolios believe that Section 4(2) commercial paper and
possibly certain other restricted securities which meet the criteria for
liquidity established by the Trustees are quite liquid. The Portfolios
intend, therefore, to treat the restricted securities which meet the
criteria for liquidity established by the Trustees, including Section 4(2)
commercial paper, as determined by the Portfolios' investment adviser, as
liquid and not subject to the investment limitation applicable to illiquid
securities. In addition, because Section 4(2) commercial paper is liquid,
the Portfolios intend to not subject such paper to the limitation
applicable to restricted securities.
The ability of the Trustees to determine the liquidity of certain
restricted securities is permitted under the Securities and Exchange
commission ("SEC") Staff position set forth in the adopting release for
Rule 144A under the Securities Act of 1933 (the "Rule"). The Rule is a non-
exclusive safe harbor for certain secondary market transactions involving
securities subject to restrictions on resale under federal securities laws.
The Rule provides an exemption from registration for resales of otherwise
restricted securities to qualified institutional buyers. The Rule was
expected to further enhance the liquidity of the secondary market for
securities eligible for resale under Rule 144A. The Portfolios believe that
the Staff of the SEC has left the question of determining the liquidity of
all restricted securities to the Trustees. The Trustees consider the
following criteria in determining the liquidity of certain restricted
securities:
othe frequency of trades and quotes for the security;
othe number of dealers willing to purchase or sell the security and
the number of other potential buyers;
odealer undertakings to make a market in the security; and
othe nature of the security and the nature of the marketplace trades.
PORTFOLIO TURNOVER
The Portfolios' investment adviser does not anticipate that portfolio
turnover will result in adverse tax consequences. However, relatively high
portfolio turnover may result in high transaction costs to the Portfolios.
For the fiscal years ended November 30, 1996 and 1995, the portfolio
turnover rates for Federated Managed Income Fund, Federated Managed Growth
and Income Fund, Federated Managed Growth Fund, and Federated Managed
Aggressive Growth Fund were 164% and 165%; 154% and 157%; 95% and 106%; and
86% and 139%, respectively.
WEIGHTED AVERAGE PORTFOLIO DURATION
Duration is a commonly used measure of the potential volatility of the
price of a debt security, or the aggregate market value of a portfolio of
debt securities, prior to maturity. Duration measures the magnitude of the
change in the price of a debt security relative to a given change in the
market rate of interest. The duration of a debt security depends on three
primary variables: the security's coupon rate, maturity date, and level of
market interest rates for similar debt securities. Generally, debt
securities with lower coupons or longer maturities will have a longer
duration than securities with higher coupons or shorter maturities.
Duration is calculated by dividing the sum of the time-weighted values of
cash flows of a security or portfolio of securities, including principal
and interest payments, by the sum of the present values of the cash flows.
Certain debt securities, such as asset-backed securities, may be subject to
prepayment at irregular intervals. The duration of these instruments will
be calculated based upon assumptions established by the investment adviser
as to the probable amount and sequence of principal prepayments.
Mathematically, duration is measured as follows:
Duration = PVCF1(1) + PVCF2(2) + PVCF3(3) +
... + PVCFn(n)
PVTCF PVTCF PVTCF PVTCF
where
PVCFt = the present value of the cash flow in period t discounted at the
prevailing yield-to-maturity
t = the period when the cash flow is received
n = remaining number of periods until maturity total present value of
the cash flow from the bond where the present value is determined
using the prevailing
PVTCF = yield-to-maturity
INVESTMENT LIMITATIONS
ISSUING SENIOR SECURITIES AND BORROWING MONEY
A Portfolio will not issue senior securities, except that it may
borrow money directly or through reverse repurchase agreements in
amounts up to one-third of the value of its total assets, including
the amount borrowed, and except to the extent that a Portfolio may
enter into futures contracts.
A Portfolio will not borrow money or engage in reverse repurchase
agreements except as a temporary, extraordinary, or emergency measure
or to facilitate management of the Portfolio by enabling it to meet
redemption requests when the liquidation of portfolio securities is
deemed to be inconvenient or disadvantageous. A Portfolio will not
purchase any securities while any borrowings in excess of 5% of its
total assets are outstanding.
INVESTING IN COMMODITIES
The Portfolios will not invest in commodities, except that the
Portfolios reserve the right to engage in transactions involving
financial futures contracts, options, and forward contracts with
respect to foreign securities or currencies.
INVESTING IN REAL ESTATE
The Portfolios will not purchase or sell real estate, including
limited partnership interests, although the Portfolios may invest in
securities of issuers whose business involves the purchase or sale of
real estate or in securities which are secured by real estate or which
represent interests in real estate.
CONCENTRATION OF INVESTMENTS
A Portfolio will not invest 25% or more of the value of its total
assets in any one industry (other than securities issued by the U.S.
government, its agencies, or instrumentalities).
UNDERWRITING
A Portfolio will not underwrite any issue of securities, except as it
may be deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of securities which the Portfolio may
purchase in accordance with its investment objective, policies, and
limitations.
SELLING SHORT AND BUYING ON MARGIN
The Portfolios will not sell any securities short or purchase any
securities on margin, but may obtain such short-term credits as may be
necessary for clearance of purchases and sales of portfolio
securities. A deposit or payment by a Portfolio of initial or
variation margin in connection with financial futures contracts or
related options transactions is not considered the purchase of a
security on margin.
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its total
assets, a Portfolio will not purchase securities issued by any one
issuer (other than cash, cash items or securities issued or guaranteed
by the government of the United States or its agencies or
instrumentalities and repurchase agreements collateralized by such
securities) if as a result more than 5% of the value of its total
assets would be invested in the securities of that issuer or if it
would own more than 10% of the outstanding voting securities of such
issuer.
PLEDGING ASSETS
The Portfolios will not mortgage, pledge, or hypothecate any assets
except to secure permitted borrowings. In those cases, a Portfolio may
pledge assets having a market value not exceeding the lesser of the
dollar amounts borrowed or 15% of the value of total assets at the
time of the pledge. For purposes of this limitation, the following are
not deemed to be pledges: margin deposits for the purchase and sale of
financial futures contracts and related options; and segregation of
collateral arrangements made in connection with options activities or
the purchase of securities on a when-issued basis.
LENDING CASH OR SECURITIES
A Portfolio will not lend any of its assets except portfolio
securities. This shall not prevent the purchase or holding of U.S.
government obligations, corporate bonds, debentures, notes,
certificates of indebtedness, or other debt securities of any issuer,
repurchase agreements, or other transactions which are permitted by
the Portfolios' respective investment objectives, policies, or
Declaration of Trust.
The above investment limitations cannot be changed with respect to a
Portfolio without approval of that Portfolio's shareholders. The following
limitations may be changed by the Trustees without shareholder approval.
Shareholders will be notified before any material change in these
limitations becomes effective.
INVESTING IN ILLIQUID SECURITIES
A Portfolio will not invest more than 15% of the value of its net
assets in illiquid securities, including repurchase agreements
providing for settlement in more than seven days after notice, over-
the-counter options, and certain securities not determined by the
Trustees to be liquid.
INVESTING IN WARRANTS
A Portfolio will not invest more than 5% of its net assets in
warrants, including those acquired in units or attached to other
securities. For purposes of this investment restriction, warrants will
be valued at the lower of cost or market, except that warrants
acquired by a Portfolio in units with or attached to securities may be
deemed to be without value.
INVESTING IN PUT OPTIONS
A Portfolio will not purchase put options on securities, unless the
securities are held in the Portfolio's portfolio or unless the
Portfolio is entitled to them in deliverable form without further
payment or after segregating cash in the amount of any further
payment.
WRITING COVERED CALL OPTIONS
A Portfolio will not write call options on securities unless the
securities are held in the Portfolio's portfolio or unless the
Portfolio is entitled to them in deliverable form without further
payment or after segregating cash in the amount of any further
payment.
INVESTMENT IN SECURITIES OF OTHER INVESTMENT COMPANIES
A Portfolio will limit its investment in other investment companies to
no more than 3% of the total outstanding voting stock of any
investment company, will invest no more than 5% of total assets in any
one investment company, and will invest no more than 10% of its total
assets in investment companies in general. A Portfolio will purchase
securities of closed-end investment companies only in open-market
transactions involving only customary broker's commissions. However,
these limitations are not applicable if the securities are acquired in
a merger, consolidation, reorganization, or acquisition of assets. It
should be noted that investment companies incur certain expenses such
as management fees, and, therefore, any investment by a Portfolio in
shares of another investment company would be subject to such
duplicate expenses.
Except with respect to borrowing money, if a percentage limitation is
adhered to at the time of investment, a later increase or decrease in
percentage resulting from any change in value or net assets will not result
in a violation of such restriction.
No Portfolio expects to borrow money in excess of 5% of the value of its
net assets during the coming fiscal year.
For purposes of its policies and limitations, the Portfolios consider
certificates of deposit and demand and time deposits issued by a U.S.
branch of a domestic bank or savings association having capital, surplus,
and undivided profits in excess of $100,000,000 at the time of investment
to be "cash items."
MANAGED SERIES TRUST MANAGEMENT
Officers and Trustees are listed with their addresses, birthdates, present
positions with Managed Series Trust, and principal occupations.
John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated
Research Corp. and Federated Global Research Corp.; Chairman, Passport
Research, Ltd.; Chief Executive Officer and Director or Trustee of the
Funds.
Thomas G. Bigley
28th Floor, One Oxford Centre
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Chairman of the Board, Children's Hospital of Pittsburgh; formerly,
Senior Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc.; Trustee,
University of Pittsburgh; Director or Trustee of the Funds.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Trustee
President, Investment Properties Corporation; Senior Vice-President,
John R. Wood and Associates, Inc., Realtors; Partner or Trustee in private
real estate ventures in Southwest Florida; formerly, President, Naples
Property Management, Inc. and Northgate Village Development Corporation;
Director or Trustee of the Funds.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Trustee
Director and Member of the Executive Committee, Michael Baker, Inc.;
formerly, Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp.;
Director, Ryan Homes, Inc.; Director or Trustee of the Funds.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Trustee
of the Funds.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932[/R]
Trustee
Professor of Medicine, University of Pittsburgh; Medical Director,
University of Pittsburgh Medical Center - Downtown; Member, Board of
Directors, University of Pittsburgh Medical Center; formerly, Hematologist,
Oncologist, and Internist, Presbyterian and Montefiore Hospitals; Director
or Trustee of the Funds.
Edward L. Flaherty, Jr.@
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney of Counsel, Miller, Ament, Henny & Kochuba; Director, Eat'N
Park Restaurants, Inc.; formerly, Counsel, Horizon Financial, F.A., Western
Region; Director or Trustee of the Funds.
Glen R. Johnson*
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 2, 1929
President and Trustee
Trustee, Federated Investors; President and/or Trustee of some of the
Funds; staff member, Federated Securities Corp.
Peter E. Madden
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL
Birthdate: March 16, 1942
Trustee
Consultant; Former State Representative, Commonwealth of Massachusetts;
formerly, President, State Street Bank and Trust Company and State Street
Boston Corporation; Director or Trustee of the Funds.
Gregor F. Meyer
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee
Attorney, Member of Miller, Ament, Henny & Kochuba; Chairman, Meritcare,
Inc.; Director, Eat'N Park Restaurants, Inc.; Director or Trustee of the
Funds.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting Partner,
Mollica, Murray and Hogue; Director or Trustee of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, International Politics; Management Consultant; Trustee,
Carnegie Endowment for International Peace, RAND Corporation, Online
Computer Library Center, Inc., National Defense University, U.S. Space
Foundation and Czech Management Center; President Emeritus, University of
Pittsburgh; Founding Chairman, National Advisory Council for Environmental
Policy and Technology, Federal Emergency Management Advisory Board and
Czech Management Center; Director or Trustee of the Funds.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public relations/Marketing/Conference Planning, Manchester Craftsmen's
Guild; Restaurant Consultant, Frick Art & History Center; Conference
Coordinator, University of Pittsburgh Art History Department; Director or
Trustee of the Funds.
J. Christopher Donahue
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
Executive Vice President
President and Trustee, Federated Investors, Federated Advisers,
Federated Management, and Federated Research; President and Director,
Federated Research Corp. and Federated Global Research Corp.; President,
Passport Research, Ltd.; Trustee, Federated Shareholder Services Company,
and Federated Shareholder Services; Director, Federated Services Company;
President or Executive Vice President of the Funds; Director or Trustee of
some of the Funds. Mr. Donahue is the son of John F. Donahue, Chairman and
Trustee of the Company.
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930[/R]
Executive Vice President
Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice
President, Federated Advisers, Federated Management, Federated Research,
Federated Research Corp., Federated Global Research Corp. and Passport
Research, Ltd.; Executive Vice President and Director, Federated Securities
Corp.; Trustee, Federated Shareholder Services Company; Trustee or Director
of some of the Funds; President, Executive Vice President and Treasurer of
some of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President, Secretary and Treasurer
Executive Vice President, Secretary, and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management, and Federated Research;
Director, Federated Research Corp. and Federated Global Research Corp.;
Trustee, Federated Shareholder Services Company; Director, Federated
Services Company; President and Trustee, Federated Shareholder Services;
Director, Federated Securities Corp.; Executive Vice President and
Secretary of the Funds; Treasurer of some of the Funds.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Chairman and
Director, Federated Securities Corp.; President or Vice President of some
of the Funds; Director or Trustee of some of the Funds.
*This Trustee is deemed to be an ``interested person'' as defined in
the Investment Company Act of 1940.
@Member of the Executive Committee. The Executive Committee of the
Board of Trustees handles the responsibilities of the Board between
meetings of the Board.
As used in the table above, "The Funds" and "Funds" mean the following
investment companies: 111 Corcoran Funds; Annuity Management Series; Arrow
Funds; Automated Government Money Trust; Blanchard Funds; Blanchard
Precious Metals Fund, Inc.; Cash Trust Series II; Cash Trust Series, Inc. ;
DG Investor Series; Edward D. Jones & Co. Daily Passport Cash Trust;
Federated Adjustable Rate U.S. Government Fund, Inc.; Federated American
Leaders Fund, Inc.; Federated ARMs Fund; Federated Equity Funds; Federated
Equity Income Fund, Inc.; Federated Fund for U.S. Government Securities,
Inc.; Federated GNMA Trust; Federated Government Income Securities, Inc.;
Federated Government Trust; Federated High Income Bond Fund, Inc.;
Federated High Yield Trust; Federated Income Securities Trust; Federated
Income Trust; Federated Index Trust; Federated Institutional Trust;
Federated Insurance Series; Federated Investment Portfolios; Federated
Investment Trust; Federated Master Trust; Federated Municipal Opportunities
Fund, Inc.; Federated Municipal Securities Fund, Inc.; Federated Municipal
Trust; Federated Short-Term Municipal Trust; Federated Short-Term U.S.
Government Trust; Federated Stock and Bond Fund, Inc.; Federated Stock
Trust; Federated Tax-Free Trust; Federated Total Return Series, Inc.;
Federated U.S. Government Bond Fund; Federated U.S. Government Securities
Fund: 1-3 Years; Federated U.S. Government Securities Fund: 2-5 Years;
Federated U.S. Government Securities Fund: 5-10 Years; Federated Utility
Fund, Inc.; First Priority Funds; Fixed Income Securities, Inc.; High Yield
Cash Trust; Intermediate Municipal Trust; International Series, Inc.;
Investment Series Funds, Inc.; Investment Series Trust; Liberty Term
Trust, Inc. - 1999; Liberty U.S. Government Money Market Trust; Liquid Cash
Trust; Managed Series Trust; Money Market Management, Inc.; Money Market
Obligations Trust; Money Market Trust; Municipal Securities Income Trust;
Newpoint Funds; Peachtree Funds; RIMCO Monument Funds; Targeted Duration
Trust; Tax-Free Instruments Trust; The Planters Funds; The Starburst Funds;
The Starburst Funds II; The Virtus Funds; Trust for Financial Institutions;
Trust for Government Cash Reserves; Trust for Short-Term U.S. Government
Securities; Trust for U.S. Treasury Obligations; and World Investment
Series, Inc.
TRUST OWNERSHIP
Officers and Trustees as a group own less than 1% of the Trust's
outstanding shares.
As of January 2, 1997, the following shareholders of record owned 5% or
more of the outstanding Institutional Shares of Federated Managed Income
Fund: Western Bank, Medford, OR, owned approximately 540,298 shares
(8.39%); and The Peoples Bank & Trust Co., Tupelo, MS, owned approximately
326,702 shares (5.07%).
As of January 2, 1997, the following shareholders of record owned 5%
or more of the outstanding Select Shares of Federated Managed Income Fund:
The Farmers Company, Lititz, PA, owned approximately 215,506 shares
(8.81%); and Federated Bank & Trust TTEE, Pittsburgh, PA, owned
approximately 197,375 shares (8.07%).
As of January 2, 1997, the following shareholders of record owned 5% or
more of the outstanding Institutional Shares of Federated Managed Growth
and Income Fund: ENBTRUST, Marysville, KS, owned approximately 226,549
shares (5.71%); and Keith Co., Monroe, LA, owned approximately 318,422
shares (8.03%).[/R]
As of January 2, 1997, the following shareholders of record owned 5% or
more of the outstanding Select Shares of Federated Managed Growth and
Income Fund: Western Bank, Medford, OR, owned approximately 1,005,631
shares (7.08%); and LaSalle National Trust NA, Chicago, IL, owned
approximately 915,756 shares (6.45%).
As of January 2, 1997, the following shareholders of record owned 5% or
more of the outstanding Institutional Shares of Federated Managed Growth
Fund: Court Street Co., Pueblo, CO, owned approximately 579,546 shares
(5.05%); and Western Bank, Medford, OR, owned approximately 587,916 shares
(5.13%).
As of January 2, 1997, the following shareholders of record owned 5% or
more of the outstanding Select Shares of Federated Managed Growth Fund:
ENBTRUST, Marysville, KS, owned approximately 294,888 shares (5.66%); and
Keith Co., Monroe, LA, owned approximately 705,888 shares (13.56%).
As of January 2, 1997, no shareholder of record owned 5% or more of the
outstanding Institutional Shares of Federated Managed Aggressive Growth
Fund.
As of January 2, 1997, the following shareholders of record owned 5% or
more of the outstanding Select Shares of Federated Managed Aggressive
Growth Fund: F M Co., Zeeland, MI, owned approximately 139,305 shares
(5.26%); Union National Bank & Trust Co., Souderton, PA, owned
approximately 243,875 shares (9.21%); Keith Co., Monroe, LA, owned
approximately 162,626 shares (6.14%); and Federated Bank & Trust TTEE,
Pittsburgh, PA, owned approximately 165,209 shares (6.24%).
TRUSTEES COMPENSATION
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
TRUST TRUST*# FROM FUND COMPLEX +
John F. Donahue $0 $0 for the Trust and
Chairman and Trustee 56 other investment companies in
the Fund Complex
Thomas G. Bigley $1,362.29 $108,725 for the Trust and
Trustee 56 other investment companies in
the Fund Complex
John T. Conroy, Jr.$1,498.74 $119,615 for the Trust and
Trustee 56 other investment companies in
the Fund Complex
William J. Copeland$1,498.74 $119,615 for the Trust and
Trustee 56 other investment companies in
the Fund Complex
Glen R. Johnson $0 $0 for the Trust and
President and Trustee 8 other investment companies in the
Fund Complex
James E. Dowd $1,498.74 $119,615 for the Trust and
Trustee 56 other investment companies in
the Fund Complex
Lawrence D. Ellis, M.D. $1,362.29
$108,725 for the Trust and
Trustee 56 other investment companies in
the Fund Complex
Edward L. Flaherty, Jr. $1,498.74
$119,615 for the Trust and
Trustee 56 other investment companies in
the Fund Complex
Peter E. Madden $1,362.29 $108,725 for the Trust and
Trustee 56 other investment companies in
the Fund Complex
Gregor F. Meyer $1,362.29 $108,725 for the Trust and
Trustee 56 other investment companies in
the Fund Complex
John E. Murray, Jr., $1,362.29
$108,725 for the Trust and
Trustee 56 other investment companies in
the Fund Complex
Wesley W. Posvar $1,362.29 $108,725 for the Trust and
Trustee 56 other investment companies in
the Fund Complex
Marjorie P. Smuts $1,362.29 $108,725 for the Trust and
Trustee 56 other investment companies in
the Fund Complex
*Information is furnished for the fiscal year ended November 30,
1996
#The aggregate compensation is provided for the Trust which is comprised of
four portfolios.
+The information is provided for the last calendar year.
TRUSTEE LIABILITY
The Trust's Declaration of Trust provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law. However, they are
not protected against any liability to which they would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of their office.
INVESTMENT ADVISORY SERVICES
ADVISER TO THE TRUST
The Trust's investment adviser is Federated Management (the "Adviser") and
the Trust's sub-adviser is Federated Global Research Corporation ( the
`Sub-Adviser''). They are subsidiaries of Federated Investors. All the
voting securities of Federated Investors are owned by a trust, the trustees
of which are John F. Donahue, his wife and his son, J. Christopher Donahue.
ADVISORY FEES
For their advisory services, the Adviser and Sub-Adviser receive an annual
investment advisory fee as described in the prospectus of each Portfolio.
For the fiscal years ended November 30, 1996, 1995, and for the
period from January 18, 1994 (start of business) to November 30, 1994, the
Adviser for Federated Managed Income Fund earned advisory fees of $599,171,
$354,801 and $126,272, respectively, of which $479,814, $354,801 and
$126,272, respectively, were waived. For the fiscal years ended November
30, 1996, 1995, and for the period from January 27, 1994 (start of
business) to November 30, 1994, the Adviser for Federated Managed Growth
and Income Fund, Federated Managed Growth Fund, and Federated Managed
Aggressive Growth Fund earned advisory fees of $1,264,932, $606,491 and
$154,964; $1,108,082, $434,181 and $97,226; and $434,558, $183,693 and
$50,507, respectively, of which $179,385, $243,174 and $121,127; $299,180,
$294,373 and $97,226; and $393,073, $183,693 and $50,507, respectively,
were waived.
For the fiscal year ended November 30, 1996, and for the period from
November 20, 1995 to November 30, 1995, the Sub-Adviser for Federated
Managed Income Fund, Federated Managed Growth and Income Fund, Federated
Managed Growth Fund, and Federated Managed Aggressive Growth Fund earned
advisory fees $2,837 and $886; $110,351 and $2,518; $143,091 and $3,587;
and $12,035 and $0, respectively, none of which were waived.[/R]
BROKERAGE TRANSACTIONS
The Adviser may select brokers and dealers who offer brokerage and
research services. These services may be furnished directly to the
Portfolios or to the Adviser and may include: advice as to the advisability
of investing in securities; security analysis and reports; economic
studies; industry studies; receipt of quotations for portfolio evaluations;
and similar services. Research services provided by brokers and dealers may
be used by the Adviser or its affiliates in advising the Portfolios and
other accounts. To the extent that receipt of these services may supplant
services for which the Adviser or its affiliates might otherwise have paid,
it would tend to reduce their expenses. The Adviser and its affiliates
exercise reasonable business judgment in selecting brokers who offer
brokerage and research services to execute securities transactions. They
determine in good faith that commissions charged by such persons are
reasonable in relationship to the value of the brokerage and research
services provided. For the fiscal years ended November 30, 1996, 1995, and
for the period from May 25, 1994 (date of initial public investment) to
November 30, 1994, Federated Managed Income Fund, Federated Managed Growth
and Income Fund, Federated Managed Growth Fund, and Federated Managed
Aggressive Growth Fund paid total brokerage commissions of $19,712, $10,473
and $13,743; $168,036, $82,752 and $37,993; $291,744, $104,808 and $38,358;
and $163,845, $70,266 and $28,757, respectively.
Although investment decisions for the Portfolios are made independently
from those of any other accounts managed by the Adviser, investments of the
type the Portfolios may make may also be made by those other accounts. When
the Portfolios and one or more other accounts managed by the Adviser are
prepared to invest in, or desire to dispose of, the same security,
available investments or opportunities for sales will be allocated in a
manner believed by the Adviser to be equitable to each. In some cases, this
procedure may adversely affect the price paid or received by the Portfolios
or the size of the position obtained or disposed of by the Portfolios. In
other cases, however, it is believed that coordination and the ability to
participate in volume transactions will be to the benefit of the
Portfolios.
OTHER SERVICES
Affiliates of the Adviser may, from time to time, provide certain
electronic equipment and software to institutional customers in order to
facilitate the purchase of shares of funds offered by Federated Securities
Corp.
FUND ADMINISTRATION
Federated Services Company, a subsidiary of Federated Investors,
provides administrative personnel and services to the Portfolios for a fee
as described in the prospectus of each Portfolio. From March 1, 1994, to
March 1, 1996, Federated Administrative Services served as the Trust's
Administrator. Prior to March 1, 1994, Federated Administrative Services,
Inc., served as the Trust's Administrator. Both former Administrators are
subsidiaries of Federated Investors. For purposes of this Statement of
Additional Information, Federated Services Company, Federated
Administrative Services and Federated Administrative Services, Inc. may
hereinafter collectively be referred to as the "Administrators". With
regard to Federated Managed Income Fund, for the fiscal years ended
November 30, 1996 and 1995, and for the period from January 18, 1994 (start
of business) to November 30, 1994, the Administrators collectively earned
$155,001, $155,000, and $41,192, respectively. With regard to Federated
Managed Growth and Income Fund, for the fiscal years ended November 30,
1996 and 1995, and for the period from January 27, 1994 (start of business)
to November 30, 1994, the Administrators collectively earned $155,001,
$155,000 and $42,041, respectively. With regard to Federated Managed Growth
Fund, for the fiscal years ended November 30, 1996 and1995, and for the
period from January 27, 1994 (start of business) to November 30, 1994, the
Administrators collectively earned $155,001, $155,000 and $42,466,
respectively. With regard to Federated Managed Aggressive Growth Fund, for
the fiscal years ended November 30, 1996 and 1995, and for the period from
January 27, 1994 (start of business) to November 30, 1994, the
Administrators collectively earned $155,001, $155,000 and $41,617,
respectively.
CUSTODIAN AND PORTFOLIO ACCOUNTANT
State Street Bank and Trust Company, Boston, MA, is custodian for the
securities and cash of the Trust. Federated Services Company, Pittsburgh,
PA, provides certain accounting and recordkeeping services with respect to
the Trust's portfolio investments. The fee paid for this service is based
upon the level of the Trust's average net assets for the period plus out-
of-pocket expenses.
TRANSFER AGENT
Federated Services Company, through its registered transfer agent,
Federated Shareholder Services Company, maintains all necessary shareholder
records. For its services, the transfer agent receives a fee based on the
size, type and number of accounts and transactions made by
shareholders.
INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accountants for the Portfolios are Arthur Andersen
LLP, Pittsburgh, Pennsylvania.
PURCHASING SHARES
Shares of the Portfolios are sold at the net asset value on days that the
New York Stock Exchange is open for business. The procedure for purchasing
shares of the Portfolios is explained in each Portfolio's respective
prospectus under "Investing in Institutional Shares" or "Investing in
Select Shares."
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES AGREEMENT
With respect to Select Shares, the Trust has adopted a Distribution Plan
in accordance with Investment Company Act Rule 12b-1. Additionally, the
Trust has adopted a Shareholder Services Agreement with respect to both
Select Shares and Institutional Shares.
These arrangements permit the payment of fees to financial institutions,
the distributor, and Federated Shareholder Services, to stimulate
distribution activities and to cause services to be provided to
shareholders by a representative who has knowledge of the shareholder's
particular circumstances and goals. These activities and services may
include, but are not limited to, marketing efforts; providing office space,
equipment, telephone facilities, and various clerical, supervisory,
computer, and other personnel as necessary or beneficial to establish and
maintain shareholder accounts and records; processing purchase and
redemption transactions and automatic investments of client account cash
balances; answering routine client inquiries; and assisting clients in
changing dividend options, account designations, and addresses.
By adopting the Distribution Plan, the Trustees expect that the Portfolios
will be able to achieve a more predictable flow of cash for investment
purposes and to meet redemptions. This will facilitate more efficient
portfolio management and assist the Portfolios in pursuing their investment
objectives. By identifying potential investors whose needs are served by
the Portfolios' objectives, and properly servicing these accounts, it may
be possible to curb sharp fluctuations in rates of redemptions and sales.
Other benefits, which may be realized under either arrangement, may
include: (1) providing personal services to shareholders; (2) investing
shareholder assets with a minimum of delay and administrative detail; (3)
enhancing shareholder recordkeeping systems; and (4) responding promptly to
shareholders' requests and inquiries concerning their accounts.
For the fiscal years ended November 30, 1996 and 1995, and for the
period from January 27, 1994 (start of business) to November 30, 1994, the
Select Shares of the Portfolios incurred distribution service fees as
follows: Federated Managed Income Fund incurred $155,333, $55,959 and
$13,223, of which $51,778, $18,653 and $4,407, respectively, were waived;
Federated Managed Growth and Income Fund incurred $262,062, $82,559 and
$10,942, of which $87,354, $27,520 and $3,647, respectively, were waived;
Federated Managed Growth Fund incurrred $331,734, $87,921 and $7,223, of
which $110,578, $29,307 and $2,408, respectively, were waived; and
Federated Managed Aggressive Growth Fund incurred $163,831, $40,751 and
$4,543, respectively, of which $54,610, $13,584 and $1,514, respectively,
were waived.
In addition, for the fiscal years ended November 30, 1996 and 1995, and
for the period from January 18, 1994 (start of business) to November 30,
1994, the Select Shares and Institutional Shares of Federated Managed
Income Fund paid shareholder services fees in the amounts of $51,778,
$18,653 and $4,404; and $147,946, $99,614 and $0, respectively, of which
$0, $0 and $0; and $118,357, $99,614 and $0, respectively, were waived. For
the fiscal years ended November 30, 1996 and 1995, and for the period from
January 27, 1994 (start of business) to November 30, 1994, the Select
Shares and Institutional Shares of Federated Managed Growth and Income Fund
paid shareholder services fees in the amounts of $87,354, $27,520 and
$3,647; and $334,548, $174,647 and $0, respectively, of which $0, $0 and
$0; and $267,638, $174,647 and $0, respectively, were waived. For the
fiscal years ended November 30, 1996 and 1995, and for the period from
January 27, 1994 (start of business) to November 30, 1994, the Select
Shares and Institutional Shares of Federated Managed Growth Fund paid
shareholder services fees in the amount of $110,578, $29,307 and $2,408;
and $258,783, $115,420 and $0, respectively, of which $0, $0 and $0; and
$207,026, $115,420 and $0, respectively, were waived. For the fiscal years
ended November 30, 1996 and 1995, and for the period from January 27, 1994
(start of business) to November 30, 1994, the Select Shares and
Institutional Shares of Federated Managed Aggressive Growth Fund paid
shareholder services fees in the amount of $54,610, $13,584 and $1,514; and
$90,242, $47,647 and $0, respectively, of which $0, $0 and $0; and $72,194,
$47,647 and $0, respectively, were waived.
CONVERSION TO FEDERAL FUNDS
It is each Portfolio's policy to be as fully invested as possible so that
maximum income may be earned. To this end, all payments from shareholders
must be in federal funds or be converted into federal funds. State Street
Bank and Trust Company acts as the shareholder's agent in depositing checks
and converting them to federal funds.
DETERMINING NET ASSET VALUE
Net asset value generally changes each day. The days on which net asset
value is calculated by each Portfolio are described in the prospectus. Net
asset value will not be calculated on days on which the New York Stock
Exchange is closed.
DETERMINING MARKET VALUE OF SECURITIES
Market values of each Portfolio's portfolio securities are determined as
follows:
ofor equity securities, according to the last sale price in the
market in which they are primarily traded (either a national
securities exchange or the over-the-counter market), if available;
oin the absence of recorded sales for equity securities, according to
the mean between the last closing bid and asked prices;
ofor bonds and other fixed-income securities, as determined by an
independent pricing service;
ofor short-term obligations, according to the prices as furnished by
an independent pricing service;
ofor short-term obligations with remaining maturities of 60 days or
less at the time of purchase, at amortized cost, or at fair value as
determined in good faith by the Trustees; and
ofor all other securities, at fair value as determined in good faith
by the Trustees.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may consider yield, quality,
coupon rate, maturity, type of issue, trading characteristics, and other
market data.
The Portfolios will value futures contracts, options, and put options on
futures at their market values established by the exchanges at the close of
option trading on such exchanges unless the Trustees determines in good
faith that another method of valuing option positions is necessary to
appraise their fair market value.
TRADING IN FOREIGN SECURITIES
Trading in foreign securities may be completed at times which vary from the
closing of the New York Stock Exchange. In computing the net asset value,
the Portfolios value foreign securities at the latest closing price on the
exchange on which they are traded immediately prior to the closing of the
New York Stock Exchange. Certain foreign currency exchange rates may also
be determined at the latest rate prior to the closing of the New York Stock
Exchange. Foreign securities quoted in foreign currencies are translated
into U.S. dollars at current rates. Occasionally, events that affect these
values and exchange rates may occur between the times at which they are
determined and the closing of the New York Stock Exchange. If such events
materially affect the value of portfolio securities, these securities may
be valued at their fair value as determined in good faith by the Trustees,
although the actual calculation may be done by others.
REDEEMING SHARES
The Portfolios redeem shares at the next computed net asset value after the
particular Portfolio receives the redemption request. Redemption procedures
are explained in the prospectuses under the section entitled "Redeeming
Institutional Shares" or "Redeeming Select Shares."
Because portfolio securities of the Portfolios may be traded on foreign
exchanges which trade on Saturdays or on holidays on which the Portfolios
will not make redemptions, the net asset value of Shares of the Portfolios
may be significantly affected on days when shareholders do not have an
opportunity to redeem their Shares.
REDEMPTION IN KIND
Although the Trust intends to redeem shares in cash, it reserves the right
under certain circumstances to pay the redemption price in whole or in part
by a distribution of securities from the respective Portfolio's investment
portfolio. To the extent available, such securities will be readily
marketable.
Redemption in kind will be made in conformity with applicable SEC rules,
taking such securities at the same value employed in determining net asset
value and selecting the securities in a manner that the Trustees determine
to be fair and equitable.
The Trust has elected to be governed by Rule 18f-1 of the Investment
Company Act of 1940, under which, with respect to each Portfolio, the Trust
is obligated to redeem shares for any one shareholder in cash only up to
the lesser of $250,000 or 1% of the respective class's net asset value
during any 90-day period.
Redemption in kind is not as liquid as a cash redemption. If redemption is
made in kind, shareholders receiving their securities and selling them
before their maturity could receive less than the redemption value of their
securities and could incur certain transaction costs.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect
its shareholders, the Trust has filed legal documents with Massachusetts
that expressly disclaim the liability of its shareholders for acts or
obligations of the Trust. These documents require notice of this disclaimer
to be given in each agreement, obligation, or instrument the Trust or its
Trustees enter into or sign.
In the unlikely event a shareholder is held personally liable for the
Trust's obligations, the Trust is required by the Declaration of Trust to
use its property to protect or compensate the shareholder. On request, the
Trust will defend any claim made and pay any judgment against a shareholder
for any act or obligation of the Trust. Therefore, financial loss resulting
from liability as a shareholder will occur only if the Trust itself cannot
meet its obligations to indemnify shareholders and pay judgments against
them.
TAX STATUS
THE PORTFOLIOS' TAX STATUS
The Portfolios expect to pay no federal income tax because they expect to
meet the requirements of Subchapter M of the Internal Revenue Code
applicable to regulated investment companies and to receive the special tax
treatment afforded to such companies. To qualify for this treatment, each
Portfolio must, among other requirements:
oderive at least 90% of its gross income from dividends, interest and
gains from the sale of securities;
oderive less than 30% of its gross income from the sale of securities
held less than three months;
oinvest in securities within certain statutory limits; and
odistribute to its shareholders at least 90% of its net income earned
during the year.
However, the Portfolios may invest in the stock of certain foreign
corporations which would constitute a Passive Foreign Investment Company
(PFIC). Federal income taxes may be imposed on the Portfolios upon
disposition of PFIC investments.
Each Portfolio will be treated as a single, separate entity for federal
income tax purposes so that income and losses (including capital gains and
losses) realized by a Portfolio will not be combined for tax purposes with
income and losses realized by any of the other Portfolios.
FOREIGN TAXES
Investment income on certain foreign securities in which the Portfolios may
invest may be subject to foreign withholding or other taxes that could
reduce the return on these securities. Tax treaties between the United
States and foreign countries, however, may reduce or eliminate the amount
of foreign taxes to which the Portfolios would be subject.
SHAREHOLDERS' TAX STATUS
Shareholders are subject to federal income tax on dividends and capital
gains received as cash or additional shares. The dividends received
deduction for corporations will apply to ordinary income distributions to
the extent the distribution represents amounts that would qualify for the
dividends received deduction to a particular fund if that fund were a
regular corporation and to the extent designated by a fund as so
qualifying. These dividends, and any short-term capital gains, are taxable
as ordinary income.
CAPITAL GAINS
Shareholders will pay federal tax on long-term capital gains
distributed to them regardless of how long they have held the shares
of the particular Portfolio.
TOTAL RETURN
The average annual total return for the Portfolios is the average
compounded rate of return for a given period that would equate a $1,000
initial investment to the ending redeemable value of that investment. The
ending redeemable value is compounded by multiplying the number of shares
owned at the end of the period by the net asset value per share at the end
of the period. The number of shares owned at the end of the period is based
on the number of shares purchased at the beginning of the period with
$1,000, adjusted over the period by any additional shares, assuming the
monthly reinvestment of all dividends and distributions.
With respect to Federated Managed Income Fund, for the one-year period
ended November 30, 1996 and for the period from May 25, 1994 (date of
initial public investment) through November 30, 1996, the average annual
total returns for Institutional Shares were 6.98% and 8.71%, respectively,
and 6.23% and 7.92%, respectively, for Select Shares.
With respect to Federated Managed Growth and Income Fund, for the one-year
period ended November 30, 1996, and for the period from May 25, 1994 (date
of initial public investment) through November 30, 1996, the average annual
total returns for Institutional Shares were 8.54% and 10.52%, respectively,
for, and 7.92% and 9.81%, respectively, for Select Shares.
With respect to Federated Managed Growth Fund, for the one-year period
ended November 30, 1996, and for the period from May 25, 1994 (date of
initial public investment) through November 30, 1996, the average annual
total returns for Institutional Shares were 12.54% and 13.08%,
respectively, and 11.75% and 12.31%, respectively, for Select Shares.
With respect to Federated Managed Aggressive Growth Fund, for the one-
year period ended November 30, 1996, and for the period from May 25, 1994
(date of initial public investment) through November 30, 1996, the average
annual total returns for Institutional Shares were 14.13% and 13.64%,
respectively, and 13.22% and 12.91%, respectively, for Select Shares.
YIELD
The yield for both classes of each Portfolio is determined by dividing the
net investment income per share (as defined by the SEC) earned by the
particular Portfolio over a thirty-day period by the maximum offering price
per share of the particular Portfolio on the last day of the period. This
value is then annualized using semi-annual compounding. This means that the
amount of income generated during the thirty-day period is assumed to be
generated each month over a twelve month period and is reinvested every six
months. The yield does not necessarily reflect income actually earned by
the particular Portfolio because of certain adjustments required by the SEC
and, therefore, may not correlate to the dividends or other distributions
paid to shareholders.
To the extent that financial institutions charge fees in connection with
services provided in conjunction with an investment in a Portfolio, the
performance will be reduced for those shareholders paying those fees.
Federated Managed Income Fund's 30-day SEC yields for the period ended
November 30, 1996, for Institutional Shares and Select Shares were 5.38%
and 4.68%, respectively.
Federated Managed Growth and Income Fund's 30-day SEC yields for the
period ended November 30, 1996, for Institutional Shares and Select Shares
were 4.34% and 3.64%, respectively.
Federated Managed Growth Fund's 30-day SEC yields for for the period
ended November 30, 1996, for Institutional Shares and Select Shares were
3.30% and 2.61%, respectively.
Federated Managed Aggressive Growth Fund's 30-day SEC yields for the
period ended November 30, 1996, for Institutional Shares and Select Shares
were 2.60% and 1.91%, respectively.
PERFORMANCE COMPARISONS
Each Portfolio's performance of both classes of shares depends upon such
variables as:
oportfolio quality;
oaverage portfolio maturity;
otype of instruments in which the particular Portfolio is invested;
ochanges in the expenses of the Trust, the particular Portfolio or
either class of shares; and
ovarious other factors.
Each Portfolio's performance fluctuates on a daily basis largely because
net earnings and offering price per share fluctuate daily. Both net
earnings and offering price per share are factors in the computation of
yield and total return for each class of the Portfolios.
Investors may use financial publications and/or indices to obtain a more
complete view of a Portfolio's performance of either class of shares. When
comparing performance of either class of shares, investors should consider
all relevant factors such as the composition of any index used, prevailing
market conditions, portfolio compositions of other funds, and methods used
to value portfolio securities and compute offering price. The financial
publications and/or indices which a Portfolio uses in advertising may
include:
oLIPPER ANALYTICAL SERVICES, INC., ranks funds in various fund
categories by making competitive calculations using total return.
Total return assumes the reinvestment of all capital gains
distributions and income dividends and takes into account any change
in net asset value over a specified period of time. From time to
time, a Portfolio will quote its Lipper ranking in advertising and
sales literature.
oSTANDARD & POOR'S RATINGS GROUP UTILITY INDEX is an unmanaged index
of common stocks from forty different utilities. This index
indicates daily changes in the price of the stocks. The index also
provides figures for changes in price from the beginning of the year
to date and for a twelve-month period.
oSTANDARD & POOR'S RATINGS GROUP DAILY STOCK PRICE INDEX OF 500
COMMON STOCKS, a composite index of common stocks in industry,
transportation, and financial and public utility companies, can be
used to compare to the total returns of funds whose portfolios are
invested primarily in common stocks. In addition, the Standard &
Poor's index assumes reinvestments of all dividends paid by stocks
listed on its index. Taxes due on any of these distributions are not
included, nor are brokerage or other fees calculated in the Standard
& Poor's figures.
oSTANDARD & POOR'S RATINGS GROUP SMALL STOCK INDEX, is a broadly
diversified index consisting of approximately 600 small
capitalization common stocks that can be used to compare to the
total returns of funds whose portfolios are invested primarily in
small capitalization common stocks.
oEUROPE, AUSTRALIA, AND FAR EAST (EAFE) is a market capitalization
weighted foreign securities index, which is widely used to measure
the performance of European, Australian, New Zealand and Far Eastern
stock markets. The index covers approximately 1,020 companies drawn
from 18 countries in the above regions. The index values its
securities daily in both U.S. dollars and local currency and
calculates total returns monthly. EAFE U.S. dollar total return is a
net dividend figure less Luxembourg withholding tax. The EAFE is
monitored by Capital International, S.A., Geneva, Switzerland.
oRUSSELL 2000 INDEX is a broadly diversified index consisting of
approximately 2,000 small capitalization common stocks that can be
used to compare to the total returns of funds whose portfolios are
invested primarily in small capitalization common stocks.
oLEHMAN BROTHERS TREASURY INTERMEDIATE BOND INDEX (U.S. DOLLARS) is
an index composed of all bonds covered by the Lehman Brothers
Treasury Bond Index with maturities between one and 9.9 years. Total
return comprises price appreciation/depreciation and income as a
percentage of the original investment. Indexes are rebalanced
monthly by market capitalization.
oLEHMAN BROTHERS TREASURY LONG-TERM BOND INDEX (U.S. DOLLARS) is an
index composed of all bonds covered by the Lehman Brothers Treasury
Bond Index with maturities of 10 years or greater. Total return
comprises price appreciation/depreciation and income as a percentage
of the original investment. Indexes are rebalanced monthly by market
capitalization.
oJ.P. MORGAN GLOBAL NON-U.S. GOVERNMENT BOND INDEX is a total return,
market capitalization weighted index, rebalanced monthly consisting
of the following countries: Australia, Belgium, Canada, Denmark,
France, Germany, Italy, Japan, Netherlands, Spain, Sweden and United
Kingdom.
oLEHMAN BROTHERS CORPORATE INTERMEDIATE BOND INDEX (U.S. DOLLARS) is
a subset of the Lehman Brothers Corporate Bond Index covering all
corporate, publicly issued, fixed-rate, nonconvertible U.S. debt
issues rated at least Baa with at least $50 million principal
outstanding and maturity less than 10 years.
oLEHMAN BROTHERS CORPORATE B INDEX is an index composed of all bonds
covered by Lehman Brothers High Yield Index rated "B" by Moody's
Investors Service. Bonds have a minimum amount outstanding of $100
million and at least one year to maturity. Total return comprises
price appreciation/depreciation and income as a percentage of the
original investment. Indexes are rebalanced monthly by market
capitalization.
oLEHMAN BROTHERS MORTGAGE-BACKED SECURITIES INDEX includes 15- and
30-year fixed-rate securities backed by mortgage pools of the
Government National Mortgage Association (GNMA), Federal Home Loan
Mortgage Corporation (FHLMC), and Federal National Mortgage
Corporation (FNMA). Graduated payment mortgages (GPMs) and balloons
are included in the index.
oLEHMAN BROTHERS GOVERNMENT/CORPORATE (TOTAL) INDEX is comprised of
approximately 5,000 issues which include non-convertible bonds
publicly issued by the U.S. government or its agencies; corporate
bonds guaranteed by the U.S. government and quasi-federal
corporations; and publicly issued, fixed rate, non-convertible
domestic bonds of companies in industry, public utilities and
finance. The average maturity of these bonds approximates nine
years. Tracked by Lehman Brothers, Inc., the index calculates total
returns for one month, three month, twelve month and ten year
periods and year-to-date.
oLEHMAN BROTHERS INTERMEDIATE GOVERNMENT/CORPORATE BOND INDEX is an
unmanaged index comprised of all the bonds issued by the Lehman
Brothers Government/Corporate Bond Index with maturities between 1
and 9.99 years. Total return is based on price
appreciation/depreciation and income as a percentage of the original
investment. Indices are rebalanced monthly by market capitalization.
oLEHMAN BROTHERS HIGH YIELD INDEX covers the universe of fixed
rate, publicly issued, noninvestment grade debt registered with the
SEC. All bonds included in the High Yield Index must be dollar-
denominated and nonconvertible and have at least one year remaining
to maturity and an outstanding par value of at least $100 million.
Generally securities must be rated Ba1 or lower by Moodys Investors
Service, including defaulted issues. If no Moodys rating is
available, bonds must be rated BB+ or lower by S&P; and if no S&P
rating is available, bonds must be rated below investment grade by
Fitch Investor's Service. A small number of unrated bonds is
included in the index; to be eligible they must have previously held
a high yield rating or have been associated with a high yield
issuer, and must trade accordingly.
oMORNINGSTAR, INC., an independent rating service, is the publisher
of the bi-weekly Mutual Fund Values. Mutual Fund Values rates more
than 1,000 NASDAQ-listed mutual funds of all types, according to
their risk-adjusted returns. The maximum rating is five stars, and
ratings are effective for two weeks.
Advertisements and other sales literature for both classes of shares of the
Portfolios may quote total returns which are calculated on non-standardized
base periods. The total returns represent the historic change in the value
of an investment in either class of shares of the Portfolios based on
monthly or quarterly, as applicable, reinvestment of dividends over a
specified period of time.
Advertising and other promotional literature may include charts, graphs
and other illustrations using the Portfolios' returns, or returns in
general, that demonstrate basic investment concepts such as tax-deferred
compounding, dollar-cost averaging and systematic investment. In addition,
the Portfolios can compare their performance, or performance for the types
of securities in which they invest, to a variety of other investments, such
as bank savings accounts, certificates of deposit, and Treasury bills.
ECONOMIC AND MARKET INFORMATION
Advertising and sales literature for the Trust may include discussions of
economic, financial and political developments and their effect on the
securities market. Such discussions may take the form of commentary on
these developments by Trust portfolio managers and their views and analysis
on how such developments could affect the Trust. In addition, advertising
and sales literature may quote statistics and give general information
about the mutual fund industry, including the growth of the industry, from
sources such as the Investment Company Institute.
ABOUT FEDERATED INVESTORS
Federated Investors is dedicated to meeting investor needs which is
reflected in its investment decision making-structured, straightforward,
and consistent. This has resulted in a history of competitive performance
with a range of competitive investment products that have gained the
confidence of thousands of clients and their customers.
The company's disciplined security selection process is firmly rooted in
sound methodologies backed by fundamental and technical research.
Investment decisions are made and executed by teams of portfolio managers,
analysts, and traders dedicated to specific market sectors. These traders
handle trillions of dollars in annual trading volume.
In the equity sector, Federated Investors has more than 26 years'
experience. As of December 31, 1996, Federated managed 31 equity funds
totaling approximately $7.6 billion in assets across growth, value, equity
income, international, index and sector (i.e. utility) styles. Federated's
value-oriented management style combines quantitative and qualitative
analysis and features a structured, computer-assisted composite modeling
system that was developed in the 1970s.
In the corporate bond sector, as of December 31, 1996, Federated Investors
managed 12 money market funds, and 17 bond funds with assets approximating
$17.2 billion, and $4.0 billion, respectively. Federated's corporate bond
decision making--based on intensive, diligent credit analysis--is backed
by over 21 years of experience in the corporate bond sector. In 1972,
Federated introduced one of the first high-yield bond funds in the
industry. In 1983, Federated was one of the first fund managers to
participate in the asset-backed securities market, a market totaling more
than $200 billion.
In the government sector, as of December 31, 1996, Federated Investors
managed 9 mortgage-backed, 5 government/agency and 17 government money
market mutual funds, with assets approximating $6.3 billion, $1.7 billion
and $23.6 billion, respectively. Federated trades approximately $309
million in U.S. government and mortgage-backed securities daily and places
$17 billion in repurchase agreements each day. Federated introduced the
first U.S. government fund to invest in U.S. government bond securities in
1969. Federated has been a major force in the short- and intermediate-term
government markets since 1982 and currently manages nearly $30 billion in
government funds within these maturity ranges.
J. Thomas Madden, Executive Vice President, oversees Federated
Investors' equity and high yield corporate bond management while William D.
Dawson, Executive Vice President, oversees Federated Investors' domestic
fixed income management. Henry A. Frantzen, Executive Vice President,
oversees the management of Federated Investors' international and global
portfolios.
MUTUAL FUND MARKET
Twenty-seven percent of American households are pursuing their financial
goals through mutual funds. These investors, as well as businesses and
institutions, have entrusted over $3 trillion to the more than 5,500 funds
available.*
Federated Investors, through its subsidiaries, distributes mutual funds for
a variety of investment applications. Specific markets include:
INSTITUTIONAL CLIENTS
Federated Investors meets the needs of more than 4,000 institutional
clients nationwide by managing and servicing separate accounts and mutual
funds for a variety of applications, including defined benefit and defined
contribution programs, cash management, and asset/liability management.
Institutional clients include corporations, pension funds, tax-exempt
entities, foundations/endowments, insurance companies, and investment and
financial advisors. The marketing effort to these institutional clients is
headed by John B. Fisher, President, Institutional Sales Division.
TRUST ORGANIZATIONS
Other institutional clients include close relationships with more than
1,500 banks and trust organizations. Virtually all of the trust divisions
of the top 100 bank holding companies use Federated funds in their clients'
portfolios. The marketing effort to trust clients is headed by Mark R.
Gensheimer, Executive Vice President, Bank Marketing & Sales.
BROKER/DEALERS AND BANK BROKER/DEALER SUBSIDIARIES
Federated funds are available to consumers through major brokerage
firms nationwide--including 200 New York Stock Exchange firms--supported by
more wholesalers than any other mutual fund distributor. Federated's
service to financial professionals and institutions has earned it high
rankings in several surveys performed by DALBAR, Inc. DALBAR is recognized
as the industry benchmark for service quality measurement. The marketing
effort to these firms is headed by James F. Getz, President, Broker/Dealer
Division.
*Source: Investment Company Institute
[/R]
PART C. OTHER INFORMATION.
Item 24. Financial Statements and Exhibits:
(a) Financial Statements (Included in Part A).
(b) Exhibits:
(1) (i)...............Conformed Copy of Declaration of Trust
of the Registrant (1);
(ii)...............Conformed Copy of Amendment No. 1 to
Declaration of Trust (1);
(iii)...............Conformed Copy of Amendment No. 2 to
Declaration of Trust (2);
(iv)...............Conformed Copy of Amendment No. 4 to
Declaration of Trust (5);
(2) Copy of By-Laws of the Registrant (1);
(3) Not applicable;
(4) Copy of Specimen Certificates for Shares of Beneficial
Interest of the Registrant (2);
(5) (i)...............Conformed Copy of Investment Advisory
Contract of the Registrant (3);
(ii)...............Conformed Copy of Sub-Advisory Contract;
+
(6) (i)Conformed Copy of Distributor's Contract of the
Registrant (3);
(ii) The Registrant incorporates the conformed copy of
the specimen Mutual Funds Sales and Service Agreement;
Mutual Fund Service Agreement, and Plan Trustee/Mutual Funds
Service Agreement from Item 24(b)(6) of the Cash Trust
Series II Registration Statement on Form N-1A, filed with
the Commission on July 24, 1995. (File Numbers 33-38550 and
811-6269);
(7) Not applicable;
(8) Conformed Copy of Custodian Agreement of the Registrant (4);
+ All exhibits have been filed electronically.
(1) Response is incorporated by reference to Registrant's Initial
Registration Statement on Form N-1A filed December 2, 1993 (File
Nos. 33-51247 and 811-7129).
(2) Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A filed February 11, 1994 (File Nos. 33-
51247 and 811-7129).
(3) Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 2 on Form N-1A filed March 2, 1994 (File Nos. 33-51247
and 811-7129).
(4) Response is incorporated by reference to Registrant's Post Effective
Amendment No. 1 on Form N-1A filed September 30, 1994 (File Nos. 33-
51247 and 811-7129).
(5) Response is incorporated by reference to Registrant's Post Effective
Amendment No. 5 on Form N-1A filed January 29, 1996 (File Nos. 33-
51247 and 811-7129).
(9)(i) Conformed copy of Agreement for Fund Accounting Services,
Administrative Services, Transfer Agency Services, and
Custody Services Procurement; +
(ii) Conformed Copy of Shareholder Services Agreement of
the Registrant (4);
(iii) The Registrant hereby incorporates the conformed copy
of the Shareholder Services Sub-Contract between National
Pensions Alliance, Ltd. and Federated Shareholder Services
from Item 24(b)(9)(ii) of the Federated GNMA Trust
Registration Statement on Form N-1A, filed with the
Commission on March 25, 1996. (File Nos. 2-75670 and 811-
2275);
(iv) The Registrant hereby incorporates the conformed copy
of the Shareholder Services Sub-Contract between Fidelity
and Federated Shareholder Services from Item 24(b)(9)(iii)
of the Federated GNMA Trust Registration Statement of Form
N-1A, filed with the Commission on March 25, 1996. (File
Nos. 2-75670 and 811-3375);
(v) The response and exhibits described in Item 24(b)(6)
are hereby incorporated by reference;
(10) Conformed copy of Opinion and Consent of Counsel as to
legality of shares being registered (2);
(11) Conformed Copy of Consent of Independent Public
Accountants;+
+ All exhibits have been filed electronically.
(1) Response is incorporated by reference to Registrant's Initial
Registration Statement on Form N-1A filed December 2, 1993 (File
Nos. 33-51247 and 811-7129).
(2) Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A filed February 11, 1994 (File Nos. 33-
51247 and 811-7129).
(3) Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 2 on Form N-1A filed March 2, 1994 (File Nos. 33-51247
and 811-7129).
(4) Response is incorporated by reference to Registrant's Post Effective
Amendment No. 1 on Form N-1A filed September 30, 1994 (File Nos. 33-
51247 and 811-7129).
(12) Not applicable;
(13) Conformed Copy of Initial Capital Understanding (2);
(14) Not applicable;
(15) (i) Conformed Copy of Distribution Plan (4);
(ii) The responses described in Item 24(b)6 are hereby
incorporated by reference;
(16) Copy of Schedules for Computation of Fund Performance Data
(4);
(17) Copy of Financial Data Schedules;+
(18) The Registrant hereby incorporates the conformed copy of the
specimen Multiple Class Plan from Item 24(b)(18) of the
World Investment Series, Inc. Registration Statement on Form
N-1A, filed with the Commission on January 26, 1996 (File
Nos. 33-52149 and 811-07141; and
(19) Conformed Copy of Power of Attorney.+
Item 25. Persons Controlled by or Under Common Control with Registrant:
None.
Item 26. Number of Holders of Securities:
Number of Record
Holders
Title of Class as of January 2, 1997
- -
Shares of beneficial interest
(no par value)
Federated Managed Income Fund
Institutional Shares 812
Select Shares 682
Federated Managed Growth and Income Fund
Institutional Shares 1,307
Select Shares 1,434
Federated Managed Growth Fund
Institutional Shares 1,577
Select Shares 1,642
Federated Managed Aggressive Growth Fund
Institutional Shares 1,187
Select Shares 1,471
Item 27. Indemnification: (2)
+ All exhibits have been filed electronically.
(2) Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A filed February 11, 1994 (File Nos. 33-
51247 and 811-7129).
(4) Response is incorporated by reference to Registrant's Post Effective
Amendment No. 1 on Form N-1A filed September 30, 1994 (File Nos. 33-
51247 and 811-7129).
Item 28. Business and Other Connections of Investment Adviser:
(a)For a description of the other business of the investment
adviser, see the section entitled "Trust Information -
Management of the Trust" in Part A. The affiliations with
the Registrant of four of the Trustees and one of the
Officers of the investment adviser are included in Part B of
this Registration Statement under "Managed Series Trust
Management - Officers and Trustees." The remaining Trustee
of the investment adviser, his position with the investment
adviser, and, in parentheses, his principal occupation is:
Mark D. Olson (Partner, Wilson, Halbrook & Bayard), 107 W.
Market Street, Georgetown, Delaware 19947.
The remaining Officers of the investment adviser are: William
D. Dawson, III, Henry A. Frantzen, J. Thomas Madden, and Mark
L. Mallon, Executive Vice Presidents; Peter R. Anderson, Drew
J. Collins, Jonathan C. Conley, Mark E. Durbiano, J. Alan
Minteer, and Mary Jo Ochson, Senior Vice Presidents; J. Scott
Albrecht, Joseph M. Balestrino, Randall S. Bauer, David F.
Belton, David A. Briggs, Kenneth J. Cody, Deborah A.
Cunningham, Michael P. Donnelly, Alexandre de Bethmann, Linda
A. Duessel, Kathleen M. Foody-Malus, Thomas M. Franks, Edward
C. Gonzales, James E. Grefenstette, Stephen A. Keen, Mark S.
Kopinski, Robert M. Kowit, Jeff A. Kozemchak, Marian R.
Marinack, Sandra L. McInerney, Susan M. Nason, Robert J.
Ostrowski, Charles A. Ritter, Frank Semack, William F. Stotz,
Tracey P. Stouffer, Edward J. Tiedge, Christopher H. Wiles,
and Jolanta M. Wysocka, Vice Presidents; Thomas R. Donahue,
Treasurer; and Stephen A. Keen, Secretary. The business
address of each of the Officers of the investment adviser is
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-
3779. These individuals are also officers of a majority of
the investment advisers to the Funds listed in Part B of this
Registration Statement.
Item 29. Principal Underwriters:
(a)Federated Securities Corp., the Distributor for shares of the
Registrant, also acts as principal underwriter for the
following open-end investment companies: American Leaders
Fund; 111 Corcoran Funds; Arrow Funds; Automated Government
Money Trust; BayFunds; Blanchard Funds; Blanchard Precious
Metals Fund, Inc.; Cash Trust Series II; Cash Trust Series,
Inc.; DG Investor Series; Edward D. Jones & Co. Daily
Passport Cash Trust; Federated Adjustable Rate U.S.
Government Fund, Inc.; Federated American Leaders Fund, Inc.;
Federated ARMs Fund; Federated Equity Funds; Federated Equity
Income Fund, Inc.; Federated Fund for U.S. Government
Securities, Inc.; Federated GNMA Trust; Federated Government
Income Securities, Inc.; Federated Government Trust;
Federated High Income Bond Fund, Inc.; Federated High Yield
Trust; Federated Income Securities Trust; Federated Income
Trust; Federated Index Trust; Federated Institutional Trust;
Federated Insurance Series; Federated Investment Portfolios;
Federated Investment Trust; Federated Master Trust; Federated
Municipal Opportunities Fund, Inc.; Federated Municipal
Securities Fund, Inc.; Federated Municipal Trust; Federated
Short-Term Municipal Trust; Federated Short-Term U.S.
Government Trust; Federated Stock and Bond Fund, Inc.;
Federated Stock Trust; Federated Tax-Free Trust; Federated
Total Return Series, Inc.; Federated U.S. Government Bond
Fund; Federated U.S. Government Securities Fund: 1-3 Years;
Federated U.S. Government Securities Fund: 2-5 Years;
Federated U.S. Government Securities Fund: 5-10 Years;
Federated Utility Fund, Inc.; First Priority Funds; Fixed
Income Securities, Inc.; High Yield Cash Trust; Independence
One Mutual Funds; Intermediate Municipal Trust; International
Series, Inc.; Investment Series Funds, Inc.; Investment
Series Trust; Liberty U.S. Government Money Market Trust;
Liquid Cash Trust; Marshall Funds, Inc.; Money Market
Management, Inc.; Money Market Obligations Trust; Money
Market Trust; Municipal Securities Income Trust; Newpoint
Funds; Peachtree Funds; RIMCO Monument Funds; SouthTrust
Vulcan Funds; Star Funds; Targeted Duration Trust; Tax-Free
Instruments Trust; The Biltmore Funds; The Biltmore Municipal
Funds; The Monitor Funds; The Planters Funds; The Starburst
Funds; The Starburst Funds II; The Virtus Funds; Tower Mutual
Funds; Trust for Financial Institutions; Trust for Government
Cash Reserves; Trust for Short-Term U.S. Government
Securities; Trust for U.S. Treasury Obligations; Vision Group
of Funds, Inc.; and World Investment Series, Inc.
Federated Securities Corp. also acts as principal underwriter for the
following closed-end investment company: Liberty Term Trust, Inc.- 1999.
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Richard B. Fisher Director, Chairman, Chief Vice President
Federated Investors Tower Executive Officer, Chief
Pittsburgh, PA 15222-3779 Operating Officer, Asst.
Secretary, and Asst.
Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive Vice President and Trustee
Federated Investors Tower President, Federated,
Pittsburgh, PA 15222-3779 Securities Corp.
Thomas R. Donahue Director, Assistant Secretary,
Federated Investors Tower Assistant Treasurer
Pittsburgh, PA 15222-3779 Federated Securities Corp
John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark R. Gensheimer Executive Vice President of --
Federated Investors Tower Bank/Trust, Federated
Pittsburgh, PA 15222-3779 Securities Corp.
Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard W. Boyd Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Solon A. Person, IV Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John B. Bohnet Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Byron F. Bowman Vice President, Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Dale R. Browne Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Leonard Corton, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Kevin J. Crenny Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Daniel T. Culbertson Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
G. Michael Cullen Vice President, --
Federated Investors Tower Federated Securites Corp.
Pittsburgh, PA 15222-3779
Laura M. Deger Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John K. Goettlicher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Craig S. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James E. Hickey Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
H. Joseph Kennedy Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Steven A. La Versa Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Mihm Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
J. Michael Miller Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. O'Brien Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert D. Oehlschlager Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas A. Peters III Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Edward L. Smith Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard Suder Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jamie M. Teschner Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul A. Uhlman Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Miles J. Wallace Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Edward J. Wojnarowski Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. Wolff Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Edward R. Bozek Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Charlene H. Jennings Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
J. Timothy Radcliff Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Denis McAuley Treasurer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Leslie K. Platt Assistant Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(c) Not applicable.
Item 30. Location of Accounts and Records:
All accounts and records required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and Rules 31a-1 through 31a-3 promulgated
thereunder are maintained at one of the following locations:
Registrant Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Shareholder Services Company P.O. Box 8600
("Transfer Agent and Dividend Boston, MA 02266-8600
Disbursing Agent")
Federated Services Company Federated Investors Tower
("Administrator") Pittsburgh, PA 15222-3779
Federated Management Federated Investors Tower
("Adviser") Pittsburgh, PA 15222-3779
State Street Bank and Trust Company P.O. Box 8600
("Custodian") Boston, MA 02266-8600
Item 31. Management Services: Not applicable.
Item 32. Undertakings:
Registrant hereby undertakes to comply with the provisions of
Section 16(c) of the 1940 Act with respect to the removal of
Trustees and the calling of special shareholder meetings by
shareholders.
Registrant undertakes to furnish each person to whom a prospectus
is delivered with a copy of the Registrant's latest annual report
to shareholders, upon request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, MANAGED SERIES TRUST,
certifies that it meets all of the requirements for effectiveness of this
Amendment to its Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to its
Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of Pittsburgh and Commonwealth of
Pennsylvania, on the 28th day of January, 1997.
MANAGED SERIES TRUST
BY: /s/ J. Crilley Kelly
J. Crilley Kelly, Assistant Secretary
Attorney in Fact for John F. Donahue
January 28, 1997
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to its Registration Statement has been signed below by the
following person in the capacity and on the date indicated:
NAME TITLE DATE
By:/s/ J. Crilley Kelly
J. Crilley Kelly Attorney In Fact January 28, 1997
ASSISTANT SECRETARY For the Persons
Listed Below
NAME TITLE
John F. Donahue* Chairman and Trustee
(Chief Executive Officer)
Glen R. Johnson* President and Trustee
John W. McGonigle* Exec. Vice Pres., Secretary
and Treasurer
(Principal Financial and
Accounting Officer)
Thomas G. Bigley * Trustee
John T. Conroy, Jr.* Trustee
William J. Copeland* Trustee
James E. Dowd* Trustee
Lawrence D. Ellis, M.D.* Trustee
Edward L. Flaherty, Jr.* Trustee
Peter E. Madden* Trustee
Gregor F. Meyer* Trustee
John E. Murray, Jr. Trustee
Wesley W. Posvar* Trustee
Marjorie P. Smuts* Trustee
* By Power of Attorney
Exhibt 5(ii) under Form N-1A
Exhibit 10 under Item 601 Reg. S-K
MANAGED SERIES TRUST
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is made between Federated Management, a Delaware
business trust (hereinafter referred to as "Adviser") and Federated Global
Research Corp., a Delaware corporation having its principal place of
business in New York, New York (hereinfter referred to as the "Sub-
Adviser").
WITNESSETH:
That the parties hereto, intending to be legally bound hereby agree as
follows:
1. Sub-Adviser hereby agrees to furnish to Adviser in its capacity
as investment adviser to Federated Managed Aggressive Growth Fund,
Federated Managed Growth Fund, Federated Managed Growth and Income Fund,
and Federated Managed Income Fund (individually, a `Fund'', collectively,
the "Funds"), portfolios of Managed Series Trust ("Trust"), such investment
advice, statistical and other factual information, as may from time to time
be reasonably requested by Adviser for the Fund which may be offered in one
or more classes of shares ("Classes").
2. For its services under this Agreement, Sub-Adviser shall receive
from Adviser an annual fee ("the Sub-Advisory Fee"), as set forth in the
exhibits hereto. In the event that the fee due from the Trust to the
Adviser on behalf of the Fund is reduced in order to meet expense
limitations imposed on the Fund by state securities laws or regulations,
the Sub-Advisory Fee shall be reduced by one-half of said reduction in the
fee due from the Trust to the Adviser on behalf of the Fund.
Notwithstanding any other provision of this Agreement, the Sub-Adviser
may from time to time and for such periods as it deems appropriate, reduce
its compensation (and, if appropriate, assume expenses of the Fund or Class
of the Fund) to the extent that the Fund's expenses exceed such lower
expense limitation as the Sub-Adviser may, by notice to the Trust on behalf
of the Fund, voluntarily declare to be effective.
3. This Agreement shall begin for a Fund on the date that the
parties execute an exhibit to this Agreement relating to such Fund and
shall continue in effect for a Fund for two years from the date of its
execution and from year to year thereafter, subject to the provisions for
termination and all of the other terms and conditions hereof if: (a) such
continuation shall be specifically approved at least annually by the vote
of a majority of the Trustees of the Trust, including a majority of the
Trustees who are not parties to this Agreement or interested persons of any
such party (other than as Trustees of the Trust) cast in person at a
meeting called for that purpose; and (b) Adviser shall not have notified
the Trust in writing at least sixty (60) days prior to the anniversary date
of this Agreement in any year thereafter that it does not desire such
continuation with respect to the Fund.
4. Notwithstanding any provision in this Agreement, it may be
terminated at any time without the payment of any penalty: (a) by the
Trustees of the Trust or by a vote of a majority of the outstanding voting
securities (as defined in Section 2(a)(42) of the Act) of the Fund on sixty
(60) days' written notice to Sub-Adviser; or (b) by Sub-Adviser or Adviser
upon 120 days' written notice to the other party to the Agreement.
5. This Agreement shall automatically terminate:
(a) in the event of its assignment (as defined in the Investment
Company Act of 1940); or
(b) in the event of termination of the Investment Advisory
Contract for any reason whatsoever.
6. So long as both Adviser and Sub-Adviser shall be legally
qualified to act as an investment adviser to the Fund, neither Adviser nor
Sub-Adviser shall act as an investment adviser (as such term is defined in
the Investment Company Act of 1940) to the Fund except as provided herein
and in the Investment Advisory Contract or in such other manner as may be
expressly agreed between Adviser and Sub-Adviser.
Provided, however, that if the Adviser or Sub-Adviser shall resign
prior to the end of any term of this Agreement or for any reason be unable
or unwilling to serve for a successive term which has been approved by the
Trustees of the Trust pursuant to the provisions of Paragraph 3 of this
Agreement or Paragraph 6 of the Investment Advisory Contract, the remaining
party, Sub-Adviser or Adviser as the case may be, shall not be prohibited
from serving as an investment adviser to such Fund by reason of the
provisions of this Paragraph 6.
7. This Agreement may be amended from time to time by agreement of
the parties hereto provided that such amendment shall be approved both by
the vote of a majority of Trustees of the Trust, including a majority of
Trustees who are not parties to this Agreement or interested persons, as
defined in Section 2(a)(19) of the Investment Company Act of 1940, of any
such party at a meeting called for that purpose, and, where required by
Section 15(a)(2) of the Act, by the holders of a majority of the
outstanding voting securities (as defined in Section 2(a)(42) of the
Investment Company Act of 1940) of the Fund.
Exhibit A
Managed Series Trust
Federated Managed Aggressive Growth Fund, Federated Managed Growth Fund,
Federated Managed Growth and Income Fund, and Federated Managed Income Fund
Sub-Advisory Contract
For all services rendered by Sub-Adviser hereunder, Sub-Adviser shall
receive from the Adviser an allocable portion of each Fund's investment
advisory fee. Such allocation shall be based on the amount of foreign
securities which Sub-Adviser is managing for each Fund. The Sub-Advisory
Fee shall be accrued daily, and paid daily as set forth in the Primary
Advisory Contract dated December 1, 1993.
This Exhibit duly incorporates by reference the Sub-Advisory
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed on their behalf by their duly authorized officers, and their
corporate seals to be affixed hereto this 20th day of November, 1995.
ATTEST: FEDERATED MANAGEMENT
/s/ Stephen A. Keen By:/s/ William D. Dawson, III
Stephen A. Keen William D. Dawson, III
Secretary Vice President
FEDERATED GLOBAL RESEARCH CORP.
/s/ Stephen A. Keen By:/s/ Henry A. Frantzen
------------ -----------
Stephen A. Keen Henry A. Frantzen
Secretary Executive Vice President
Exhibit 9(i) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
AGREEMENT
FOR
FUND ACCOUNTING SERVICES,
ADMINISTRATIVE SERVICES,
TRANSFER AGENCY SERVICES
AND
CUSTODY SERVICES PROCUREMENT
AGREEMENT made as of March 1, 1996, by and between those investment
companies listed on Exhibit 1 as may be amended from time to time, having
their principal office and place of business at Federated Investors Tower,
Pittsburgh, PA 15222-3779 (the `Investment Company''), on behalf of the
portfolios (individually referred to herein as a `Fund'' and collectively
as `Funds'') of the Investment Company, and FEDERATED SERVICES COMPANY, a
Pennsylvania corporation, having its principal office and place of business
at Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779 on behalf
of itself and its subsidiaries (the `Company'').
WHEREAS, the Investment Company is registered as an open-end management
investment company under the Investment Company Act of 1940, as amended
(the `1940 Act''), with authorized and issued shares of capital stock or
beneficial interest (`Shares'');
WHEREAS, the Investment Company may desire to retain the Company as fund
accountant to provide fund accounting services (as herein defined)
including certain pricing, accounting and recordkeeping services for each
of the Funds, including any classes of shares issued by any Fund
(`Classes'') if so indicated on Exhibit 1, and the Company desires to
accept such appointment;
WHEREAS, the Investment Company may desire to appoint the Company as its
administrator to provide it with administrative services (as herein
defined), if so indicated on Exhibit, and the Company desires to accept
such appointment;
WHEREAS, the Investment Company may desire to appoint the Company as its
transfer agent and dividend disbursing agent to provide it with transfer
agency services (as herein defined) if so indicated on Exhibit 1, and agent
in connection with certain other activities, and the Company desires to
accept such appointment; and
WHEREAS, the Investment Company may desire to appoint the Company as its
agent to select, negotiate and subcontract for custodian services from an
approved list of qualified banks if so indicated on Exhibit 1, and the
Company desires to accept such appointment; and
NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, the parties
hereto agree as follows:
SECTION ONE: FUND ACCOUNTING.
ARTICLE 1. APPOINTMENT.
The Investment Company hereby appoints the Company to provide certain
pricing and accounting services to the Funds, and/or the Classes, for the
period and on the terms set forth in this Agreement. The Company accepts
such appointment and agrees to furnish the services herein set forth in
return for the compensation as provided in Article 3 of this Section.
ARTICLE 2. THE COMPANY'S DUTIES.
Subject to the supervision and control of the Investment Company's Board
of Trustees or Directors (`Board''), the Company will assist the
Investment Company with regard to fund accounting for the Investment
Company, and/or the Funds, and/or the Classes, and in connection therewith
undertakes to perform the following specific services;
A. Value the assets of the Funds using: primarily, market quotations,
including the use of matrix pricing, supplied by the independent
pricing services selected by the Company in consultation with the
adviser, or sources selected by the adviser, and reviewed by the
board; secondarily, if a designated pricing service does not provide
a price for a security which the Company believes should be
available by market quotation, the Company may obtain a price by
calling brokers designated by the investment adviser of the fund
holding the security, or if the adviser does not supply the names of
such brokers, the Company will attempt on its own to find brokers to
price those securities; thirdly, for securities for which no market
price is available, the Pricing Committee of the Board will
determine a fair value in good faith. Consistent with Rule 2a-4 of
the 40 Act, estimates may be used where necessary or appropriate.
The Company's obligations with regard to the prices received from
outside pricing services and designated brokers or other outside
sources, is to exercise reasonable care in the supervision of the
pricing agent. The Company is not the guarantor of the securities
prices received from such agents and the Company is not liable to
the Fund for potential errors in valuing a Fund's assets or
calculating the net asset value per share of such Fund or Class when
the calculations are based upon such prices. All of the above
sources of prices used as described are deemed by the Company to be
authorized sources of security prices. The Company provides daily to
the adviser the securities prices used in calculating the net asset
value of the fund, for its use in preparing exception reports for
those prices on which the adviser has comment. Further, upon receipt
of the exception reports generated by the adviser, the Company
diligently pursues communication regarding exception reports with
the designated pricing agents;
B. Determine the net asset value per share of each Fund and/or Class,
at the time and in the manner from time to time determined by the
Board and as set forth in the Prospectus and Statement of Additional
Information (``Prospectus') of each Fund;
C. Calculate the net income of each of the Funds, if any;
D. Calculate realized capital gains or losses of each of the Funds
resulting from sale or disposition of assets, if any;
E. Maintain the general ledger and other accounts, books and financial
records of the Investment Company, including for each Fund, and/or
Class, as required under Section 31(a) of the 1940 Act and the Rules
thereunder in connection with the services provided by the Company;
F. Preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
the records to be maintained by Rule 31a-1 under the 1940 Act in
connection with the services provided by the Company. The Company
further agrees that all such records it maintains for the Investment
Company are the property of the Investment Company and further
agrees to surrender promptly to the Investment Company such records
upon the Investment Company's request;
G. At the request of the Investment Company, prepare various reports or
other financial documents in accordance with generally accepted
accounting principles as required by federal, state and other
applicable laws and regulations; and
H. Such other similar services as may be reasonably requested by the
Investment Company.
The foregoing, along with any additional services that the Company shall
agree in writing to perform for the Investment Company under this Section
One, shall hereafter be referred to as `Fund Accounting Services.''
ARTICLE 3. COMPENSATION AND ALLOCATION OF EXPENSES.
A. The Funds will compensate the Company for Fund Accounting Services
in accordance with the fees agreed upon from time to time between
the parties hereto. Such fees do not include out-of-pocket
disbursements of the Company for which the Funds shall reimburse the
Company. Out-of-pocket disbursements shall include, but shall not be
limited to, the items agreed upon between the parties from time to
time.
B. The Fund and/or the Class, and not the Company, shall bear the cost
of: custodial expenses; membership dues in the Investment Company
Institute or any similar organization; transfer agency expenses;
investment advisory expenses; costs of printing and mailing stock
certificates, Prospectuses, reports and notices; administrative
expenses; interest on borrowed money; brokerage commissions; taxes
and fees payable to federal, state and other governmental agencies;
fees of Trustees or Directors of the Investment Company; independent
auditors expenses; legal and audit department expenses billed to the
Company for work performed related to the Investment Company, the
Funds, or the Classes; law firm expenses; organizational expenses;
or other expenses not specified in this Article 3 which may be
properly payable by the Funds and/or Classes.
C. The compensation and out-of-pocket expenses attributable to the Fund
shall be accrued by the Fund and shall be paid to the Company no
less frequently than monthly, and shall be paid daily upon request
of the Company. The Company will maintain detailed information about
the compensation and out-of-pocket expenses by Fund and Class.
D. Any schedule of compensation agreed to hereunder, as may be adjusted
from time to time, shall be dated and signed by a duly authorized
officer of the Investment Company and/or the Funds and a duly
authorized officer of the Company.
E. The fee for the period from the effective date of this Agreement
with respect to a Fund or a Class to the end of the initial month
shall be prorated according to the proportion that such period bears
to the full month period. Upon any termination of this Agreement
before the end of any month, the fee for such period shall be
prorated according to the proportion which such period bears to the
full month period. For purposes of determining fees payable to the
Company, the value of the Fund's net assets shall be computed at the
time and in the manner specified in the Fund's Prospectus.
F. The Company, in its sole discretion, may from time to time
subcontract to, employ or associate with itself such person or
persons as the Company may believe to be particularly suited to
assist it in performing Fund Accounting Services. Such person or
persons may be affiliates of the Company, third-party service
providers, or they may be officers and employees who are employed by
both the Company and the Investment Company; provided, however, that
the Company shall be as fully responsible to each Fund for the acts
and omissions of any such subcontractor as it is for its own acts
and omissions. The compensation of such person or persons shall be
paid by the Company and no obligation shall be incurred on behalf of
the Investment Company, the Funds, or the Classes in such respect.
SECTION TWO: ADMINISTRATIVE SERVICES.
ARTICLE 4. APPOINTMENT.
The Investment Company hereby appoints the Company as Administrator for
the period on the terms and conditions set forth in this Agreement. The
Company hereby accepts such appointment and agrees to furnish the services
set forth in Article 5 of this Agreement in return for the compensation set
forth in Article 9 of this Agreement.
ARTICLE 5. THE COMPANY'S DUTIES.
As Administrator, and subject to the supervision and control of the
Board and in accordance with Proper Instructions (as defined hereafter)
from the Investment Company the Company will provide facilities, equipment,
and personnel to carry out the following administrative services for
operation of the business and affairs of the Investment Company and each of
its portfolios:
A. prepare, file, and maintain the Investment Company's governing
documents and any amendments thereto, including the Charter (which
has already been prepared and filed), the By-laws and minutes of
meetings of the Board and Shareholders;
B. prepare and file with the Securities and Exchange Commission and the
appropriate state securities authorities the registration statements
for the Investment Company and the Investment Company's shares and
all amendments thereto, reports to regulatory authorities and
shareholders, prospectuses, proxy statements, and such other
documents all as may be necessary to enable the Investment Company
to make a continuous offering of its shares;
C. prepare, negotiate, and administer contracts (if any) on behalf of
the Investment Company with, among others, the Investment Company's
investment advisers and distributors, subject to any applicable
restrictions of the Board or the 1940 Act;
D. calculate performance data of the Investment Company for
dissemination to information services covering the investment
company industry;
E. prepare and file the Investment Company's tax returns;
F. coordinate the layout and printing of publicly disseminated
prospectuses and reports;
G. perform internal audit examinations in accordance with a charter to
be adopted by the Company and the Investment Company;
H. assist with the design, development, and operation of the Investment
Company and the Funds;
I. provide individuals reasonably acceptable to the Board for
nomination, appointment, or election as officers of the Investment
Company, who will be responsible for the management of certain of
the Investment Company's affairs as determined by the Investment
Company's Board; and
J. consult with the Investment Company and its Board on matters
concerning the Investment Company and its affairs.
The foregoing, along with any additional services that the Company shall
agree in writing to perform for the Investment Company under this Section
4, shall hereafter be referred to as "Administrative Services."
ARTICLE 6. RECORDS.
The Company shall create and maintain all necessary books and records in
accordance with all applicable laws, rules and regulations, including but
not limited to records required by Section 31(a) of the Investment Company
act of 1940 and the rules thereunder, as the same may be amended from time
to time, pertaining to the Administrative Services performed by it and not
otherwise created and maintained by another party pursuant to contract with
the Investment Company. Where applicable, such records shall be maintained
by the Company for the periods and in the places required by Rule 31a-2
under the 1940 Act. The books and records pertaining to the Investment
Company which are in the possession of the Company shall be the property of
the Investment Company. The Investment Company, or the Investment
Company's authorized representatives, shall have access to such books and
records at all times during the Company's normal business hours. Upon the
reasonable request of the Investment Company, copies of any such books and
records shall be provided promptly by the Company to the Investment Company
or the Investment Company's authorized representatives.
ARTICLE 7. DUTIES OF THE FUND.
The Fund assumes full responsibility for the preparation, contents and
distribution of its own offering document and for complying with all
applicable requirements the 1940 Act, the Internal Revenue Code, and any
other laws, rules and regulations of government authorities having
jurisdiction.
ARTICLE 8. EXPENSES.
The Company shall be responsible for expenses incurred in providing
office space, equipment, and personnel as may be necessary or convenient to
provide the Administrative Services to the Investment Company, including
the compensation of the Company employees who serve as trustees or
directors or officers of the Investment Company. The Investment Company
shall be responsible for all other expenses incurred by the Company on
behalf of the Investment Company, including without limitation postage and
courier expenses, printing expenses, travel expenses, registration fees,
filing fees, fees of outside counsel and independent auditors, or other
professional services, organizational expenses, insurance premiums, fees
payable to persons who are not the Company's employees, trade association
dues, and other expenses properly payable by the Funds and/or the Classes.
ARTICLE 9. COMPENSATION.
For the Administrative Services provided, the Investment Company hereby
agrees to pay and the Company hereby agrees to accept as full compensation
for its services rendered hereunder an administrative fee at an annual rate
per Fund, as specified below.
The compensation and out of pocket expenses attributable to the Fund
shall be accrued by the Fund and paid to the Company no less frequently
than monthly, and shall be paid daily upon request of the Company. The
Company will maintain detailed information about the compensation and out
of pocket expenses by the Fund.
MAX. ADMIN. AVERAGE DAILY NET ASSETS
FEE OF THE FUNDS
.150% on the first $250 million
.125% on the next $250 million
.100% on the next $250 million
.075% on assets in excess of $750 million
(Average Daily Net Asset break-points are on a complex-wide basis)
However, in no event shall the administrative fee received during any
year of the Agreement be less than, or be paid at a rate less than would
aggregate $125,000 per Fund and $30,000 per Class. The minimum fee set
forth above in this Article 9 may increase annually upon each March 1
anniversary of this Agreement over the minimum fee during the prior 12
months, as calculated under this agreement, in an amount equal to the
increase in Pennsylvania Consumer Price Index (not to exceed 6% annually)
as last reported by the U.S. Bureau of Labor Statistics for the twelve
months immediately preceding such anniversary.
ARTICLE 10. RESPONSIBILITY OF ADMINISTRATOR.
A. The Company shall not be liable for any error of judgment or mistake
of law or for any loss suffered by the Investment Company in
connection with the matters to which this Agreement relates, except
a loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from
reckless disregard by it of its obligations and duties under this
Agreement. The Company shall be entitled to rely on and may act
upon advice of counsel (who may be counsel for the Investment
Company) on all matters, and shall be without liability for any
action reasonably taken or omitted pursuant to such advice. Any
person, even though also an officer, director, trustee, partner,
employee or agent of the Company, who may be or become an officer,
director, trustee, partner, employee or agent of the Investment
Company, shall be deemed, when rendering services to the Investment
Company or acting on any business of the Investment Company (other
than services or business in connection with the duties of the
Company hereunder) to be rendering such services to or acting solely
for the Investment Company and not as an officer, director, trustee,
partner, employee or agent or one under the control or direction of
the Company even though paid by the Company.
B. The Company shall be kept indemnified by the Investment Company and
be without liability for any action taken or thing done by it in
performing the Administrative Services in accordance with the above
standards. In order that the indemnification provisions contained
in this Article 10 shall apply, however, it is understood that if in
any case the Investment Company may be asked to indemnify or hold
the Company harmless, the Investment Company shall be fully and
promptly advised of all pertinent facts concerning the situation in
question, and it is further understood that the Company will use all
reasonable care to identify and notify the Investment Company
promptly concerning any situation which presents or appears likely
to present the probability of such a claim for indemnification
against the Investment Company. The Investment Company shall have
the option to defend the Company against any claim which may be the
subject of this indemnification. In the event that the Investment
Company so elects, it will so notify the Company and thereupon the
Investment Company shall take over complete defense of the claim,
and the Company shall in such situation initiate no further legal or
other expenses for which it shall seek indemnification under this
Article. the Company shall in no case confess any claim or make any
compromise in any case in which the Investment Company will be asked
to indemnify the Company except with the Investment Company's
written consent.
SECTION THREE: TRANSFER AGENCY SERVICES.
ARTICLE 11. TERMS OF APPOINTMENT.
Subject to the terms and conditions set forth in this Agreement, the
Investment Company hereby appoints the Company to act as, and the Company
agrees to act as, transfer agent and dividend disbursing agent for each
Fund's Shares, and agent in connection with any accumulation, open-account
or similar plans provided to the shareholders of any Fund
(`Shareholder(s)''), including without limitation any periodic investment
plan or periodic withdrawal program.
ARTICLE 12. DUTIES OF THE COMPANY.
The Company shall perform the following services in accordance with
Proper Instructions as may be provided from time to time by the Investment
Company as to any Fund:
A. Purchases
(1) The Company shall receive orders and payment for the purchase
of shares and promptly deliver payment and appropriate
documentation therefore to the custodian of the relevant Fund,
(the ``Custodian'). The Company shall notify the Fund and the
Custodian on a daily basis of the total amount of orders and
payments so delivered.
(2) Pursuant to purchase orders and in accordance with the Fund's
current Prospectus, the Company shall compute and issue the
appropriate number of Shares of each Fund and/or Class and hold
such Shares in the appropriate Shareholder accounts.
(3) For certificated Funds and/or Classes, if a Shareholder or its
agent requests a certificate, the Company, as Transfer Agent,
shall countersign and mail by first class mail, a certificate
to the Shareholder at its address as set forth on the transfer
books of the Funds, and/or Classes, subject to any Proper
Instructions regarding the delivery of certificates.
(4) In the event that any check or other order for the purchase of
Shares of the Fund and/or Class is returned unpaid for any
reason, the Company shall debit the Share account of the
Shareholder by the number of Shares that had been credited to
its account upon receipt of the check or other order, promptly
mail a debit advice to the Shareholder, and notify the Fund
and/or Class of its action. In the event that the amount paid
for such Shares exceeds proceeds of the redemption of such
Shares plus the amount of any dividends paid with respect to
such Shares, the Fund and/the Class or its distributor will
reimburse the Company on the amount of such excess.
B. Distribution
(1) Upon notification by the Funds of the declaration of any
distribution to Shareholders, the Company shall act as Dividend
Disbursing Agent for the Funds in accordance with the
provisions of its governing document and the then-current
Prospectus of the Fund. The Company shall prepare and mail or
credit income, capital gain, or any other payments to
Shareholders. As the Dividend Disbursing Agent, the Company
shall, on or before the payment date of any such distribution,
notify the Custodian of the estimated amount required to pay
any portion of said distribution which is payable in cash and
request the Custodian to make available sufficient funds for
the cash amount to be paid out. The Company shall reconcile the
amounts so requested and the amounts actually received with the
Custodian on a daily basis. If a Shareholder is entitled to
receive additional Shares by virtue of any such distribution or
dividend, appropriate credits shall be made to the
Shareholder's account, for certificated Funds and/or Classes,
delivered where requested; and
(2) The Company shall maintain records of account for each Fund and
Class and advise the Investment Company, each Fund and Class
and its Shareholders as to the foregoing.
C. Redemptions and Transfers
(1) The Company shall receive redemption requests and redemption
directions and, if such redemption requests comply with the
procedures as may be described in the Fund Prospectus or set
forth in Proper Instructions, deliver the appropriate
instructions therefor to the Custodian. The Company shall
notify the Funds on a daily basis of the total amount of
redemption requests processed and monies paid to the Company by
the Custodian for redemptions.
(2) At the appropriate time upon receiving redemption proceeds from
the Custodian with respect to any redemption, the Company shall
pay or cause to be paid the redemption proceeds in the manner
instructed by the redeeming Shareholders, pursuant to
procedures described in the then-current Prospectus of the
Fund.
(3) If any certificate returned for redemption or other request for
redemption does not comply with the procedures for redemption
approved by the Fund, the Company shall promptly notify the
Shareholder of such fact, together with the reason therefor,
and shall effect such redemption at the price applicable to the
date and time of receipt of documents complying with said
procedures.
(4) The Company shall effect transfers of Shares by the registered
owners thereof.
(5) The Company shall identify and process abandoned accounts and
uncashed checks for state escheat requirements on an annual
basis and report such actions to the Fund.
D. Recordkeeping
(1) The Company shall record the issuance of Shares of each Fund,
and/or Class, and maintain pursuant to applicable rules of the
Securities and Exchange Commission (``SEC') a record of the
total number of Shares of the Fund and/or Class which are
authorized, based upon data provided to it by the Fund, and
issued and outstanding. The Company shall also provide the Fund
on a regular basis or upon reasonable request with the total
number of Shares which are authorized and issued and
outstanding, but shall have no obligation when recording the
issuance of Shares, except as otherwise set forth herein, to
monitor the issuance of such Shares or to take cognizance of
any laws relating to the issue or sale of such Shares, which
functions shall be the sole responsibility of the Funds.
(2) The Company shall establish and maintain records pursuant to
applicable rules of the SEC relating to the services to be
performed hereunder in the form and manner as agreed to by the
Investment Company or the Fund to include a record for each
Shareholder's account of the following:
(a) Name, address and tax identification number (and whether
such number has been certified);
(b) Number of Shares held;
(c) Historical information regarding the account, including
dividends paid and date and price for all transactions;
(d) Any stop or restraining order placed against the account;
(e) Information with respect to withholding in the case of a
foreign account or an account for which withholding is
required by the Internal Revenue Code;
(f) Any dividend reinvestment order, plan application,
dividend address and correspondence relating to the
current maintenance of the account;
(g) Certificate numbers and denominations for any Shareholder
holding certificates;
(h) Any information required in order for the Company to
perform the calculations contemplated or required by this
Agreement.
(3) The Company shall preserve any such records required to be
maintained pursuant to the rules of the SEC for the periods
prescribed in said rules as specifically noted below. Such
record retention shall be at the expense of the Company, and
such records may be inspected by the Fund at reasonable times.
The Company may, at its option at any time, and shall forthwith
upon the Fund's demand, turn over to the Fund and cease to
retain in the Company's files, records and documents created
and maintained by the Company pursuant to this Agreement, which
are no longer needed by the Company in performance of its
services or for its protection. If not so turned over to the
Fund, such records and documents will be retained by the
Company for six years from the year of creation, during the
first two of which such documents will be in readily accessible
form. At the end of the six year period, such records and
documents will either be turned over to the Fund or destroyed
in accordance with Proper Instructions.
E. Confirmations/Reports
(1) The Company shall furnish to the Fund periodically the
following information:
(a) A copy of the transaction register;
(b) Dividend and reinvestment blotters;
(c) The total number of Shares issued and outstanding in each
state for ``blue sky''purposes as determined according to
Proper Instructions delivered from time to time by the
Fund to the Company;
(d) Shareholder lists and statistical information;
(e) Payments to third parties relating to distribution
agreements, allocations of sales loads, redemption fees,
or other transaction- or sales-related payments;
(f) Such other information as may be agreed upon from time to
time.
(2) The Company shall prepare in the appropriate form, file with
the Internal Revenue Service and appropriate state agencies,
and, if required, mail to Shareholders, such notices for
reporting dividends and distributions paid as are required to
be so filed and mailed and shall withhold such sums as are
required to be withheld under applicable federal and state
income tax laws, rules and regulations.
(3) In addition to and not in lieu of the services set forth above,
the Company shall:
(a) Perform all of the customary services of a transfer agent,
dividend disbursing agent and, as relevant, agent in
connection with accumulation, open-account or similar
plans (including without limitation any periodic
investment plan or periodic withdrawal program), including
but not limited to: maintaining all Shareholder accounts,
mailing Shareholder reports and Prospectuses to current
Shareholders, withholding taxes on accounts subject to
back-up or other withholding (including non-resident alien
accounts), preparing and filing reports on U.S. Treasury
Department Form 1099 and other appropriate forms required
with respect to dividends and distributions by federal
authorities for all Shareholders, preparing and mailing
confirmation forms and statements of account to
Shareholders for all purchases and redemptions of Shares
and other conformable transactions in Shareholder
accounts, preparing and mailing activity statements for
Shareholders, and providing Shareholder account
information; and
(b) provide a system which will enable the Fund to monitor the
total number of Shares of each Fund (and/or Class) sold in
each state (``blue sky reporting'). The Fund shall by
Proper Instructions (i) identify to the Company those
transactions and assets to be treated as exempt from the
blue sky reporting for each state and (ii) verify the
classification of transactions for each state on the
system prior to activation and thereafter monitor the
daily activity for each state. The responsibility of the
Company for each Fund's (and/or Class's) state blue sky
registration status is limited solely to the recording of
the initial classification of transactions or accounts
with regard to blue sky compliance and the reporting of
such transactions and accounts to the Fund as provided
above.
F. Other Duties
(1) The Company shall answer correspondence from Shareholders
relating to their Share accounts and such other correspondence
as may from time to time be addressed to the Company;
(2) The Company shall prepare Shareholder meeting lists, mail proxy
cards and other material supplied to it by the Fund in
connection with Shareholder meetings of each Fund; receive,
examine and tabulate returned proxies, and certify the vote of
the Shareholders;
(3) The Company shall establish and maintain facilities and
procedures for safekeeping of stock certificates, check forms
and facsimile signature imprinting devices, if any; and for the
preparation or use, and for keeping account of, such
certificates, forms and devices.
ARTICLE 13. DUTIES OF THE INVESTMENT COMPANY.
A. Compliance
The Investment Company or Fund assume full responsibility for the
preparation, contents and distribution of their own and/or their
classes' Prospectus and for complying with all applicable
requirements of the Securities Act of 1933, as amended (the ``1933
Act''), the 1940 Act and any laws, rules and regulations of
government authorities having jurisdiction.
B. Share Certificates
The Investment Company shall supply the Company with a sufficient
supply of blank Share certificates and from time to time shall renew
such supply upon request of the Company. Such blank Share
certificates shall be properly signed, manually or by facsimile, if
authorized by the Investment Company and shall bear the seal of the
Investment Company or facsimile thereof; and notwithstanding the
death, resignation or removal of any officer of the Investment
Company authorized to sign certificates, the Company may continue to
countersign certificates which bear the manual or facsimile
signature of such officer until otherwise directed by the Investment
Company.
C. Distributions
The Fund shall promptly inform the Company of the declaration of any
dividend or distribution on account of any Fund's shares.
ARTICLE 14. COMPENSATION AND EXPENSES.
A. Annual Fee
For performance by the Company pursuant to Section Three of this
Agreement, the Investment Company and/or the Fund agree to pay the
Company an annual maintenance fee for each Shareholder account as
agreed upon between the parties and as may be added to or amended
from time to time. Such fees may be changed from time to time
subject to written agreement between the Investment Company and the
Company. Pursuant to information in the Fund Prospectus or other
information or instructions from the Fund, the Company may sub-
divide any Fund into Classes or other sub-components for
recordkeeping purposes. The Company will charge the Fund the same
fees for each such Class or sub-component the same as if each were a
Fund.
B. Reimbursements
In addition to the fee paid under Article 7A above, the Investment
Company and/or Fund agree to reimburse the Company for out-of-pocket
expenses or advances incurred by the Company for the items agreed
upon between the parties, as may be added to or amended from time to
time. In addition, any other expenses incurred by the Company at the
request or with the consent of the Investment Company and/or the
Fund, will be reimbursed by the appropriate Fund.
C. Payment
The compensation and out-of-pocket expenses shall be accrued by the
Fund and shall be paid to the Company no less frequently than
monthly, and shall be paid daily upon request of the Company. The
Company will maintain detailed information about the compensation
and out-of-pocket expenses by Fund and Class.
D. Any schedule of compensation agreed to hereunder, as may be adjusted
from time to time, shall be dated and signed by a duly authorized
officer of the Investment Company and/or the Funds and a duly
authorized officer of the Company.
SECTION FOUR: CUSTODY SERVICES PROCUREMENT.
ARTICLE 15. APPOINTMENT.
The Investment Company hereby appoints Company as its agent to evaluate
and obtain custody services from a financial institution that (i) meets the
criteria established in Section 17(f) of the 1940 Act and (ii) has been
approved by the Board as eligible for selection by the Company as a
custodian (the `Eligible Custodian''). The Company accepts such
appointment.
ARTICLE 16. THE COMPANY AND ITS DUTIES.
Subject to the review, supervision and control of the Board, the Company
shall:
A. evaluate and obtain custody services from a financial institution
that meets the criteria established in Section 17(f) of the 1940 Act
and has been approved by the Board as being eligible for selection by
the Company as an Eligible Custodian;
B. negotiate and enter into agreements with Eligible Custodians for the
benefit of the Investment Company, with the Investment Company as a
party to each such agreement. The Company may, as paying agent, be a
party to any agreement with any such Eligible Custodian;
C. establish procedures to monitor the nature and the quality of the
services provided by Eligible Custodians;
D. monitor and evaluate the nature and the quality of services provided
by Eligible Custodians;
E. periodically provide to the Investment Company (i) written reports
on the activities and services of Eligible Custodians; (ii) the
nature and amount of disbursements made on account of the each Fund
with respect to each custodial agreement; and (iii) such other
information as the Board shall reasonably request to enable it to
fulfill its duties and obligations under Sections 17(f) and 36(b) of
the 1940 Act and other duties and obligations thereof;
F. periodically provide recommendations to the Board to enhance
Eligible Custodian's customer services capabilities and improve upon
fees being charged to the Fund by Eligible Custodian; and
The foregoing, along with any additional services that Company shall
agree in writing to perform for the Fund under this Section Four, shall
hereafter be referred to as "Custody Services Procurement."
ARTICLE 17. FEES AND EXPENSES.
A. Annual Fee
For the performance of Custody Services Procurement by the Company
pursuant to Section Four of this Agreement, the Investment Company
and/or the Fund agree to compensate the Company in accordance with
the fees agreed upon from time to time.
B. Reimbursements
In addition to the fee paid under Section 11A above, the Investment
Company and/or Fund agree to reimburse the Company for out-of-pocket
expenses or advances incurred by the Company for the items agreed
upon between the parties, as may be added to or amended from time to
time. In addition, any other expenses incurred by the Company at the
request or with the consent of the Investment Company and/or the
Fund, will be reimbursed by the appropriate Fund.
C. Payment
The compensation and out-of-pocket expenses shall be accrued by the
Fund and shall be paid to the Company no less frequently than
monthly, and shall be paid daily upon request of the Company. The
Company will maintain detailed information about the compensation
and out-of-pocket expenses by Fund.
D. Any schedule of compensation agreed to hereunder, as may be adjusted
from time to time, shall be dated and signed by a duly authorized
officer of the Investment Company and/or the Funds and a duly
authorized officer of the Company.
ARTICLE 18. REPRESENTATIONS.
The Company represents and warrants that it has obtained all required
approvals from all government or regulatory authorities necessary to enter
into this arrangement and to provide the services contemplated in Section
Four of this Agreement.
SECTION FIVE: GENERAL PROVISIONS.
ARTICLE 19. PROPER INSTRUCTIONS.
As used throughout this Agreement, a ``Proper Instruction'' means a
writing signed or initialed by one or more person or persons as the Board
shall have from time to time authorized. Each such writing shall set forth
the specific transaction or type of transaction involved. Oral instructions
will be deemed to be Proper Instructions if (a) the Company reasonably
believes them to have been given by a person previously authorized in
Proper Instructions to give such instructions with respect to the
transaction involved, and (b) the Investment Company, or the Fund, and the
Company promptly cause such oral instructions to be confirmed in writing.
Proper Instructions may include communications effected directly between
electro-mechanical or electronic devices provided that the Investment
Company, or the Fund, and the Company are satisfied that such procedures
afford adequate safeguards for the Fund's assets. Proper Instructions may
only be amended in writing.
ARTICLE 20. ASSIGNMENT.
Except as provided below, neither this Agreement nor any of the rights
or obligations under this Agreement may be assigned by either party without
the written consent of the other party.
A. This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
B. With regard to Transfer Agency Services, the Company may without
further consent on the part of the Investment Company subcontract
for the performance of Transfer Agency Services with
(1) its subsidiary, Federated Shareholder Service Company, a
Delaware business trust, which is duly registered as a transfer
agent pursuant to Section 17A(c)(1) of the Securities Exchange
Act of 1934, as amended, or any succeeding statute (``Section
17A(c)(1)''); or
(2) such other provider of services duly registered as a transfer
agent under Section 17A(c)(1) as Company shall select.
The Company shall be as fully responsible to the Investment Company
for the acts and omissions of any subcontractor as it is for its own
acts and omissions.
C. With regard to Fund Accounting Services, Administrative Services and
Custody Procurement Services, the Company may without further
consent on the part of the Investment Company subcontract for the
performance of such services with Federated Administrative Services,
a wholly-owned subsidiary of the Company.
D. The Company shall upon instruction from the Investment Company
subcontract for the performance of services under this Agreement
with an Agent selected by the Investment Company, other than as
described in B. and C. above; provided, however, that the Company
shall in no way be responsible to the Investment Company for the
acts and omissions of the Agent.
ARTICLE 21. DOCUMENTS.
A. In connection with the appointment of the Company under this
Agreement, the Investment Company shall file with the Company the
following documents:
(1) A copy of the Charter and By-Laws of the Investment Company and
all amendments thereto;
(2) A copy of the resolution of the Board of the Investment Company
authorizing this Agreement;
(3) Specimens of all forms of outstanding Share certificates of the
Investment Company or the Funds in the forms approved by the
Board of the Investment Company with a certificate of the
Secretary of the Investment Company as to such approval;
(4) All account application forms and other documents relating to
Shareholders accounts; and
(5) A copy of the current Prospectus for each Fund.
B. The Fund will also furnish from time to time the following
documents:
(1) Each resolution of the Board of the Investment Company
authorizing the original issuance of each Fund's, and/or
Class's Shares;
(2) Each Registration Statement filed with the SEC and amendments
thereof and orders relating thereto in effect with respect to
the sale of Shares of any Fund, and/or Class;
(3) A certified copy of each amendment to the governing document
and the By-Laws of the Investment Company;
(4) Certified copies of each vote of the Board authorizing officers
to give Proper Instructions to the Custodian and agents for
fund accountant, custody services procurement, and shareholder
recordkeeping or transfer agency services;
(5) Specimens of all new Share certificates representing Shares of
any Fund, accompanied by Board resolutions approving such
forms;
(6) Such other certificates, documents or opinions which the
Company may, in its discretion, deem necessary or appropriate
in the proper performance of its duties; and
(7) Revisions to the Prospectus of each Fund.
ARTICLE 22. REPRESENTATIONS AND WARRANTIES.
A. Representations and Warranties of the Company
The Company represents and warrants to the Fund that:
(1) it is a corporation duly organized and existing and in good
standing under the laws of the Commonwealth of Pennsylvania;
(2) It is duly qualified to carry on its business in each
jurisdiction where the nature of its business requires such
qualification, and in the Commonwealth of Pennsylvania;
(3) it is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this
Agreement;
(4) all requisite corporate proceedings have been taken to
authorize it to enter into and perform its obligations under
this Agreement;
(5) it has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement;
(6) it is in compliance with federal securities law requirements
and in good standing as an administrator and fund accountant;
and
B. Representations and Warranties of the Investment Company
The Investment Company represents and warrants to the Company that:
(1) It is an investment company duly organized and existing and in
good standing under the laws of its state of organization;
(2) It is empowered under applicable laws and by its Charter and
By-Laws to enter into and perform its obligations under this
Agreement;
(3) All corporate proceedings required by said Charter and By-Laws
have been taken to authorize it to enter into and perform its
obligations under this Agreement;
(4) The Investment Company is an open-end investment company
registered under the 1940 Act; and
(5) A registration statement under the 1933 Act will be effective,
and appropriate state securities law filings have been made and
will continue to be made, with respect to all Shares of each
Fund being offered for sale.
ARTICLE 23. STANDARD OF CARE AND INDEMNIFICATION.
A. Standard of Care
With regard to Sections One, Three and Four, the Company shall be
held to a standard of reasonable care in carrying out the provisions
of this Contract. The Company shall be entitled to rely on and may
act upon advice of counsel (who may be counsel for the Investment
Company) on all matters, and shall be without liability for any
action reasonably taken or omitted pursuant to such advice, provided
that such action is not in violation of applicable federal or state
laws or regulations, and is in good faith and without negligence.
B. Indemnification by Investment Company
The Company shall not be responsible for and the Investment Company
or Fund shall indemnify and hold the Company, including its
officers, directors, shareholders and their agents, employees and
affiliates, harmless against any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liabilities arising
out of or attributable to:
(1) The acts or omissions of any Custodian, Adviser, Sub-adviser or
other party contracted by or approved by the Investment Company
or Fund,
(2) The reliance on or use by the Company or its agents or
subcontractors of information, records and documents in proper
form which
(a) are received by the Company or its agents or
subcontractors and furnished to it by or on behalf of the
Fund, its Shareholders or investors regarding the
purchase, redemption or transfer of Shares and Shareholder
account information;
(b) are received by the Company from independent pricing
services or sources for use in valuing the assets of the
Funds; or
(c) are received by the Company or its agents or
subcontractors from Advisers, Sub-advisers or other third
parties contracted by or approved by the Investment
Company of Fund for use in the performance of services
under this Agreement;
(d) have been prepared and/or maintained by the Fund or its
affiliates or any other person or firm on behalf of the
Investment Company.
(3) The reliance on, or the carrying out by the Company or its
agents or subcontractors of Proper Instructions of the
Investment Company or the Fund.
(4) The offer or sale of Shares in violation of any requirement
under the federal securities laws or regulations or the
securities laws or regulations of any state that such Shares be
registered in such state or in violation of any stop order or
other determination or ruling by any federal agency or any
state with respect to the offer or sale of such Shares in such
state.
Provided, however, that the Company shall not be protected by
this Article 23.B. from liability for any act or omission
resulting from the Company's willful misfeasance, bad faith,
negligence or reckless disregard of its duties or failure to
meet the standard of care set forth in 23.A. above.
C. Reliance
At any time the Company may apply to any officer of the Investment
Company or Fund for instructions, and may consult with legal counsel
with respect to any matter arising in connection with the services
to be performed by the Company under this Agreement, and the Company
and its agents or subcontractors shall not be liable and shall be
indemnified by the Investment Company or the appropriate Fund for
any action reasonably taken or omitted by it in reliance upon such
instructions or upon the opinion of such counsel provided such
action is not in violation of applicable federal or state laws or
regulations. The Company, its agents and subcontractors shall be
protected and indemnified in recognizing stock certificates which
are reasonably believed to bear the proper manual or facsimile
signatures of the officers of the Investment Company or the Fund,
and the proper countersignature of any former transfer agent or
registrar, or of a co-transfer agent or co-registrar.
D. Notification
In order that the indemnification provisions contained in this
Article 23 shall apply, upon the assertion of a claim for which
either party may be required to indemnify the other, the party
seeking indemnification shall promptly notify the other party of
such assertion, and shall keep the other party advised with respect
to all developments concerning such claim. The party who may be
required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The
party seeking indemnification shall in no case confess any claim or
make any compromise in any case in which the other party may be
required to indemnify it except with the other party's prior written
consent.
ARTICLE 24. TERM AND TERMINATION OF AGREEMENT.
This Agreement shall be effective from March 1, 1996 and shall continue
until February 28, 2003 (`Term'). Thereafter, the Agreement will continue
for 18 month terms. The Agreement can be terminated by either party upon
18 months notice to be effective as of the end of such 18 month period. In
the event, however, of willful misfeasance, bad faith, negligence or
reckless disregard of its duties by the Company, the Investment Company has
the right to terminate the Agreement upon 60 days written notice, if
Company has not cured such willful misfeasance, bad faith, negligence or
reckless disregard of its duties within 60 days. The termination date for
all original or after-added Investment companies which are, or become, a
party to this Agreement. shall be coterminous. Investment Companies that
merge or dissolve during the Term, shall cease to be a party on the
effective date of such merger or dissolution.
Should the Investment Company exercise its rights to terminate, all out-
of-pocket expenses associated with the movement of records and materials
will be borne by the Investment Company or the appropriate Fund.
Additionally, the Company reserves the right to charge for any other
reasonable expenses associated with such termination. The provisions of
Articles 10 and 23 shall survive the termination of this Agreement.
ARTICLE 25. AMENDMENT.
This Agreement may be amended or modified by a written agreement
executed by both parties.
ARTICLE 26. INTERPRETIVE AND ADDITIONAL PROVISIONS.
In connection with the operation of this Agreement, the Company and the
Investment Company may from time to time agree on such provisions
interpretive of or in addition to the provisions of this Agreement as may
in their joint opinion be consistent with the general tenor of this
Agreement. Any such interpretive or additional provisions shall be in a
writing signed by both parties and shall be annexed hereto, provided that
no such interpretive or additional provisions shall contravene any
applicable federal or state regulations or any provision of the Charter. No
interpretive or additional provisions made as provided in the preceding
sentence shall be deemed to be an amendment of this Agreement.
ARTICLE 27. GOVERNING LAW.
This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the Commonwealth of Massachusetts
ARTICLE 28. NOTICES.
Except as otherwise specifically provided herein, Notices and other
writings delivered or mailed postage prepaid to the Investment Company at
Federated Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, or to the
Company at Federated Investors Tower, Pittsburgh, Pennsylvania, 15222-3779,
or to such other address as the Investment Company or the Company may
hereafter specify, shall be deemed to have been properly delivered or given
hereunder to the respective address.
ARTICLE 29. COUNTERPARTS.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original.
ARTICLE 30. LIMITATIONS OF LIABILITY OF TRUSTEES AND SHAREHOLDERS OF THE
COMPANY.
The execution and delivery of this Agreement have been authorized by the
Trustees of the Company and signed by an authorized officer of the Company,
acting as such, and neither such authorization by such Trustees nor such
execution and delivery by such officer shall be deemed to have been made by
any of them individually or to impose any liability on any of them
personally, and the obligations of this Agreement are not binding upon any
of the Trustees or Shareholders of the Company, but bind only the
appropriate property of the Fund, or Class, as provided in the Declaration
of Trust.
ARTICLE 31. MERGER OF AGREEMENT.
This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject
hereof whether oral or written.
ARTICLE 32. SUCCESSOR AGENT.
If a successor agent for the Investment Company shall be appointed by
the Investment Company, the Company shall upon termination of this
Agreement deliver to such successor agent at the office of the Company all
properties of the Investment Company held by it hereunder. If no such
successor agent shall be appointed, the Company shall at its office upon
receipt of Proper Instructions deliver such properties in accordance with
such instructions.
In the event that no written order designating a successor agent or
Proper Instructions shall have been delivered to the Company on or before
the date when such termination shall become effective, then the Company
shall have the right to deliver to a bank or trust company, which is a
`bank'' as defined in the 1940 Act, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $2,000,000, all properties held by the
Company under this Agreement. Thereafter, such bank or trust company shall
be the successor of the Company under this Agreement.
ARTICLE 33. FORCE MAJEURE.
The Company shall have no liability for cessation of services hereunder
or any damages resulting therefrom to the Fund as a result of work
stoppage, power or other mechanical failure, natural disaster, governmental
action, communication disruption or other impossibility of performance.
ARTICLE 34. ASSIGNMENT; SUCCESSORS.
This Agreement shall not be assigned by either party without the prior
written consent of the other party, except that either party may assign all
of or a substantial portion of its business to a successor, or to a party
controlling, controlled by, or under common control with such party.
Nothing in this Article 34 shall prevent the Company from delegating its
responsibilities to another entity to the extent provided herein.
ARTICLE 35. SEVERABILITY.
In the event any provision of this Agreement is held illegal, void or
unenforceable, the balance shall remain in effect.
ARTICLE 36. LIMITATIONS OF LIABILITY OF TRUSTEES AND SHAREHOLDERS OF
THE INVESTMENT COMPANY.
The execution and delivery of this Agreement have been authorized by the
Trustees of the Investment Company and signed by an authorized officer of
the Investment Company, acting as such, and neither such authorization by
such Trustees nor such execution and delivery by such officer shall be
deemed to have been made by any of them individually or to impose any
liability on any of them personally, and the obligations of this Agreement
are not binding upon any of the Trustees or Shareholders of the Investment
Company, but bind only the property of the Fund, or Class, as provided in
the Declaration of Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and
through their duly authorized officers, as of the day and year first above
written.
INVESTMENT COMPANIES
(LISTED ON EXHIBIT 1)
By: /s/ S. Elliott Cohan
S. Elliott Cohan
Assistant Secretary
FEDERATED SERVICES COMPANY
By: /s/ Thomas J. Ward
Thomas J. Ward
Secretary
EXHIBIT 1
CONTRACT
DATE INVESTMENT COMPANY
Portfolios
Classes
March 1, 1996 MANAGED SERIES TRUST
Federated Managed Aggressive Growth Fund
Institutional Shares
Select Shares
Federated Managed Growth Fund
Institutional Shares
Select Shares
Federated Managed Growth and Income Fund
Institutional Shares
Select Shares
Federated Managed Income Fund
Institutional Shares
Select Shares
FEDERATED SERVICES COMPANY provides the following services:
Administrative Services
Fund Accounting Services
Shareholder Recordkeeping Services
Custody Services Procurement
Exhibit 11 under Form N-1A
Exhibit 23 under Item 601/Reg. S-K
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use in Post-
Effective Amendment No. 6 to Form N-1A Registration Statement of Managed Series
Trust (Federated Managed Income Fund, Federated Managed Growth and Income Fund,
Federated Managed Growth Fund and Federated Managed Aggressive Growth Fund) of
our report dated January 15, 1997, on the financial statements as of November
30, 1996, included in or made a part of this registration statement.
/s/ Authur Andersen LLP
---
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
January 27, 1997
Exhibit 19 under Form N-1A
Exhibit 24 under Item 601/Reg. S-K
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
the Secretary and Assistant Secretary of
MANAGED SERIES TRUST and the Deputy General
Counsel of Federated Investors, and each of them, their true and lawful
attorneys-in-fact and agents, with full power of substitution and resubstitution
for them and in their names, place and stead, in any and all capacities, to sign
any and all documents to be filed with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, by means of the Securities and Exchange
Commission's electronic disclosure system known as EDGAR; and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to sign and perform each and
every act and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as each of them might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue thereof.
SIGNATURES TITLE DATE
/s/ John F. Donahue Chairman and TrusteeJanuary 10,1997
John F. Donahue (Chief Executive Officer)
/s/ Glen R. Johnson President and TrusteeJanuary 10, 1997
Glen R. Johnson
/s/ John W. McGonigle Treasurer, Executive Vice
John W. McGonigle President and SecretaryJanuary 10, 1997
(Principal Financial and
Accounting Officer)
/s/ Thomas G. Bigley Trustee January 10, 1997
Thomas G. Bigley
/s/ John T. Conroy, Jr. Trustee January 10, 1997
John T. Conroy, Jr.
SIGNATURES TITLE DATE
/s/ William J. Copeland Trustee January 10, 1997
William J. Copeland
/s/ James E. Dowd Trustee January 10, 1997
James E. Dowd
/s/ Lawrence D. Ellis, M.D. Trustee January 10, 1997
Lawrence D. Ellis, M.D.
/s/ Edward L. Flaherty, Jr. Trustee January 10, 1997
Edward L. Flaherty, Jr.
/s/ Peter E. Madden Trustee January 10, 1997
Peter E. Madden
/s/ Gregor F. Meyer Trustee January 10, 1997
Gregor F. Meyer
/s/ John E. Murray, Jr. Trustee January 10, 1997
John E. Murray, Jr.
/s/ Wesley W. Posvar Trustee January 10, 1997
Wesley W. Posvar
/s/ Marjorie P. Smuts Trustee January 10, 1997
Marjorie P. Smuts
Sworn to and subscribed before me this 10th day of January, 1997
/s/ Marie M. Hamm
Notarial Seal
Marie M. Hamm, Notary Public
Plum Boro, Allegheny County
My Commission Expires, Oct. 9, 2000
Member Pennsylvania Association of Notaries
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 041
<NAME> Managed Series Trust
Federated Managed Aggressive Growth Fund
Institutional Shares
<PERIOD-TYPE> 12-mos
<FISCAL-YEAR-END> Nov-30-1996
<PERIOD-END> Nov-30-1996
<INVESTMENTS-AT-COST> 75,129,420
<INVESTMENTS-AT-VALUE> 81,515,771
<RECEIVABLES> 861,001
<ASSETS-OTHER> 21,084
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 82,397,856
<PAYABLE-FOR-SECURITIES> 970,394
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 322,267
<TOTAL-LIABILITIES> 1,292,661
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 72,046,365
<SHARES-COMMON-STOCK> 3,970,973
<SHARES-COMMON-PRIOR> 2,209,617
<ACCUMULATED-NII-CURRENT> 285,713
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,386,770
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6,386,347
<NET-ASSETS> 49,715,145
<DIVIDEND-INCOME> 575,142
<INTEREST-INCOME> 1,749,683
<OTHER-INCOME> 0
<EXPENSES-NET> 763,839
<NET-INVESTMENT-INCOME> 1,560,986
<REALIZED-GAINS-CURRENT> 2,610,405
<APPREC-INCREASE-CURRENT> 3,708,316
<NET-CHANGE-FROM-OPS> 7,879,707
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,071,156
<DISTRIBUTIONS-OF-GAINS> 600,532
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,592,730
<NUMBER-OF-SHARES-REDEEMED> 946,450
<SHARES-REINVESTED> 115,076
<NET-CHANGE-IN-ASSETS> 43,151,705
<ACCUMULATED-NII-PRIOR> 342,257
<ACCUMULATED-GAINS-PRIOR> 608,988
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 434,558
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,283,716
<AVERAGE-NET-ASSETS> 58,239,535
<PER-SHARE-NAV-BEGIN> 11.590
<PER-SHARE-NII> 0.330
<PER-SHARE-GAIN-APPREC> 1.240
<PER-SHARE-DIVIDEND> 0.380
<PER-SHARE-DISTRIBUTIONS> 0.260
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 12.520
<EXPENSE-RATIO> 1.05
<AVG-DEBT-OUTSTANDING> 109,671
<AVG-DEBT-PER-SHARE> 0.020
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 042
<NAME> Managed Series Trust
Federated Managed Aggressive Growth Fund
Select Shares
<PERIOD-TYPE> 12-mos
<FISCAL-YEAR-END> Nov-30-1996
<PERIOD-END> Nov-30-1996
<INVESTMENTS-AT-COST> 75,129,420
<INVESTMENTS-AT-VALUE> 81,515,771
<RECEIVABLES> 861,001
<ASSETS-OTHER> 21,084
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 82,397,856
<PAYABLE-FOR-SECURITIES> 970,394
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 322,267
<TOTAL-LIABILITIES> 1,292,661
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 72,046,365
<SHARES-COMMON-STOCK> 2,511,248
<SHARES-COMMON-PRIOR> 1,065,312
<ACCUMULATED-NII-CURRENT> 285,713
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,386,770
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6,386,347
<NET-ASSETS> 31,390,050
<DIVIDEND-INCOME> 575,142
<INTEREST-INCOME> 1,749,683
<OTHER-INCOME> 0
<EXPENSES-NET> 763,839
<NET-INVESTMENT-INCOME> 1,560,986
<REALIZED-GAINS-CURRENT> 2,610,405
<APPREC-INCREASE-CURRENT> 3,708,316
<NET-CHANGE-FROM-OPS> 7,879,707
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 489,212
<DISTRIBUTIONS-OF-GAINS> 289,253
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,775,082
<NUMBER-OF-SHARES-REDEEMED> 389,611
<SHARES-REINVESTED> 60,465
<NET-CHANGE-IN-ASSETS> 43,151,705
<ACCUMULATED-NII-PRIOR> 342,257
<ACCUMULATED-GAINS-PRIOR> 608,988
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 434,558
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,283,716
<AVERAGE-NET-ASSETS> 58,239,535
<PER-SHARE-NAV-BEGIN> 11.590
<PER-SHARE-NII> 0.280
<PER-SHARE-GAIN-APPREC> 1.190
<PER-SHARE-DIVIDEND> 0.300
<PER-SHARE-DISTRIBUTIONS> 0.260
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 12.500
<EXPENSE-RATIO> 1.75
<AVG-DEBT-OUTSTANDING> 109,671
<AVG-DEBT-PER-SHARE> 0.020
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 031
<NAME> Managed Series Trust
Federated Managed Growth Fund
Institutional Shares
<PERIOD-TYPE> 12-Mos
<FISCAL-YEAR-END> Nov-30-1996
<PERIOD-END> Nov-30-1996
<INVESTMENTS-AT-COST> 181,761,615
<INVESTMENTS-AT-VALUE> 195,503,417
<RECEIVABLES> 2,701,557
<ASSETS-OTHER> 43,558
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 198,248,532
<PAYABLE-FOR-SECURITIES> 1,464,746
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 320,439
<TOTAL-LIABILITIES> 1,785,185
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 176,771,334
<SHARES-COMMON-STOCK> 11,139,678
<SHARES-COMMON-PRIOR> 5,929,677
<ACCUMULATED-NII-CURRENT> 1,177,636
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 4,772,024
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 13,742,353
<NET-ASSETS> 136,255,381
<DIVIDEND-INCOME> 1,346,574
<INTEREST-INCOME> 5,772,747
<OTHER-INCOME> 0
<EXPENSES-NET> 1,867,435
<NET-INVESTMENT-INCOME> 5,251,886
<REALIZED-GAINS-CURRENT> 5,108,532
<APPREC-INCREASE-CURRENT> 7,820,439
<NET-CHANGE-FROM-OPS> 18,180,857
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,611,245
<DISTRIBUTIONS-OF-GAINS> 1,417,081
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,436,864
<NUMBER-OF-SHARES-REDEEMED> 1,460,401
<SHARES-REINVESTED> 233,538
<NET-CHANGE-IN-ASSETS> 100,792,732
<ACCUMULATED-NII-PRIOR> 885,488
<ACCUMULATED-GAINS-PRIOR> 1,577,280
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,108,082
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,484,219
<AVERAGE-NET-ASSETS> 147,656,540
<PER-SHARE-NAV-BEGIN> 11.520
<PER-SHARE-NII> 0.410
<PER-SHARE-GAIN-APPREC> 0.970
<PER-SHARE-DIVIDEND> 0.440
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<PER-SHARE-NAV-END> 12.230
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<AVG-DEBT-OUTSTANDING> 564,877
<AVG-DEBT-PER-SHARE> 0.043
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 032
<NAME> Managed Series Trust
Federated Managed Growth Fund
Select Shares
<PERIOD-TYPE> 12-Mos
<FISCAL-YEAR-END> Nov-30-1996
<PERIOD-END> Nov-30-1996
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<INVESTMENTS-AT-VALUE> 195,503,417
<RECEIVABLES> 2,701,557
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<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 198,248,532
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<OTHER-ITEMS-LIABILITIES> 320,439
<TOTAL-LIABILITIES> 1,785,185
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 176,771,334
<SHARES-COMMON-STOCK> 4,934,260
<SHARES-COMMON-PRIOR> 2,379,438
<ACCUMULATED-NII-CURRENT> 1,177,636
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 4,772,024
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 13,742,353
<NET-ASSETS> 60,207,966
<DIVIDEND-INCOME> 1,346,574
<INTEREST-INCOME> 5,772,747
<OTHER-INCOME> 0
<EXPENSES-NET> 1,867,435
<NET-INVESTMENT-INCOME> 5,251,886
<REALIZED-GAINS-CURRENT> 5,108,532
<APPREC-INCREASE-CURRENT> 7,820,439
<NET-CHANGE-FROM-OPS> 18,180,857
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,261,400
<DISTRIBUTIONS-OF-GAINS> 583,800
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,200,775
<NUMBER-OF-SHARES-REDEEMED> 792,466
<SHARES-REINVESTED> 146,513
<NET-CHANGE-IN-ASSETS> 100,792,732
<ACCUMULATED-NII-PRIOR> 885,488
<ACCUMULATED-GAINS-PRIOR> 1,577,280
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,108,082
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,484,219
<AVERAGE-NET-ASSETS> 147,656,540
<PER-SHARE-NAV-BEGIN> 11.500
<PER-SHARE-NII> 0.360
<PER-SHARE-GAIN-APPREC> 0.940
<PER-SHARE-DIVIDEND> 0.370
<PER-SHARE-DISTRIBUTIONS> 0.230
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 12.200
<EXPENSE-RATIO> 1.75
<AVG-DEBT-OUTSTANDING> 564,877
<AVG-DEBT-PER-SHARE> 0.043
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 021
<NAME> Managed Series Trust
Federated Growth and Income Fund
Institutional Shares
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Nov-30-1996
<PERIOD-END> Nov-30-1996
<INVESTMENTS-AT-COST> 189,812,893
<INVESTMENTS-AT-VALUE> 200,235,951
<RECEIVABLES> 2,815,950
<ASSETS-OTHER> 27,907
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 203,079,808
<PAYABLE-FOR-SECURITIES> 977,682
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,218,828
<TOTAL-LIABILITIES> 2,196,510
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 186,775,845
<SHARES-COMMON-STOCK> 13,779,534
<SHARES-COMMON-PRIOR> 9,308,790
<ACCUMULATED-NII-CURRENT> 1,646,433
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,038,887
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 10,422,133
<NET-ASSETS> 156,635,110
<DIVIDEND-INCOME> 1,288,418
<INTEREST-INCOME> 8,443,514
<OTHER-INCOME> 0
<EXPENSES-NET> 2,022,969
<NET-INVESTMENT-INCOME> 7,708,963
<REALIZED-GAINS-CURRENT> 2,283,641
<APPREC-INCREASE-CURRENT> 4,291,960
<NET-CHANGE-FROM-OPS> 14,284,564
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5,990,819
<DISTRIBUTIONS-OF-GAINS> 1,517,396
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,128,986
<NUMBER-OF-SHARES-REDEEMED> 2,992,691
<SHARES-REINVESTED> 334,449
<NET-CHANGE-IN-ASSETS> 72,381,380
<ACCUMULATED-NII-PRIOR> 1,288,552
<ACCUMULATED-GAINS-PRIOR> 1,612,126
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,264,932
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,557,346
<AVERAGE-NET-ASSETS> 168,448,147
<PER-SHARE-NAV-BEGIN> 11.140
<PER-SHARE-NII> 0.500
<PER-SHARE-GAIN-APPREC> 0.410
<PER-SHARE-DIVIDEND> 0.520
<PER-SHARE-DISTRIBUTIONS> 0.160
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 11.370
<EXPENSE-RATIO> 1.05
<AVG-DEBT-OUTSTANDING> 973,137
<AVG-DEBT-PER-SHARE> 0.063
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 022
<NAME> Managed Series Trust
Federated Growth and Income Fund
Select Shares
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Nov-30-1996
<PERIOD-END> Nov-30-1996
<INVESTMENTS-AT-COST> 189,812,893
<INVESTMENTS-AT-VALUE> 200,235,951
<RECEIVABLES> 2,815,950
<ASSETS-OTHER> 27,907
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 203,079,808
<PAYABLE-FOR-SECURITIES> 977,682
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,218,828
<TOTAL-LIABILITIES> 2,196,510
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 186,775,845
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<SHARES-COMMON-PRIOR> 2,228,749
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<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 10,422,133
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<DIVIDEND-INCOME> 1,288,418
<INTEREST-INCOME> 8,443,514
<OTHER-INCOME> 0
<EXPENSES-NET> 2,022,969
<NET-INVESTMENT-INCOME> 7,708,963
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<APPREC-INCREASE-CURRENT> 4,291,960
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<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,327,197
<DISTRIBUTIONS-OF-GAINS> 372,550
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,283,902
<NUMBER-OF-SHARES-REDEEMED> 2,992,691
<SHARES-REINVESTED> 334,449
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<ACCUMULATED-NII-PRIOR> 1,288,552
<ACCUMULATED-GAINS-PRIOR> 1,612,126
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<PER-SHARE-NAV-BEGIN> 11.120
<PER-SHARE-NII> 0.430
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<EXPENSE-RATIO> 1.75
<AVG-DEBT-OUTSTANDING> 973,137
<AVG-DEBT-PER-SHARE> 0.063
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 011
<NAME> Managed Series Trust
Federated Managed Income Fund
Institutional Shares
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Nov-30-1996
<PERIOD-END> Nov-30-1996
<INVESTMENTS-AT-COST> 90,302,714
<INVESTMENTS-AT-VALUE> 92,586,307
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<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 618,374
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,282,499
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<OTHER-INCOME> 0
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<NET-CHANGE-FROM-OPS> 5,485,768
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<DISTRIBUTIONS-OF-GAINS> 332,234
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<NUMBER-OF-SHARES-SOLD> 2,995,976
<NUMBER-OF-SHARES-REDEEMED> 1,600,230
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<NET-CHANGE-IN-ASSETS> 27,801,996
<ACCUMULATED-NII-PRIOR> 305,359
<ACCUMULATED-GAINS-PRIOR> 404,304
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</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 012
<NAME> Managed Series Trust
Federated Managed Income Fund
Select Shares
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Nov-30-1996
<PERIOD-END> Nov-30-1996
<INVESTMENTS-AT-COST> 90,302,714
<INVESTMENTS-AT-VALUE> 92,586,307
<RECEIVABLES> 1,762,101
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<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 89,433,734
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<SHARES-COMMON-PRIOR> 1,321,986
<ACCUMULATED-NII-CURRENT> 246,961
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 618,374
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,282,499
<NET-ASSETS> 25,459,492
<DIVIDEND-INCOME> 273,343
<INTEREST-INCOME> 4,939,855
<OTHER-INCOME> 0
<EXPENSES-NET> 787,609
<NET-INVESTMENT-INCOME> 4,425,589
<REALIZED-GAINS-CURRENT> 649,318
<APPREC-INCREASE-CURRENT> 410,861
<NET-CHANGE-FROM-OPS> 5,485,768
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,037,906
<DISTRIBUTIONS-OF-GAINS> 91,563
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,668,304
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<SHARES-REINVESTED> 69,234
<NET-CHANGE-IN-ASSETS> 27,801,996
<ACCUMULATED-NII-PRIOR> 305,359
<ACCUMULATED-GAINS-PRIOR> 404,304
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,437,558
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<PER-SHARE-NAV-BEGIN> 10.540
<PER-SHARE-NII> 0.530
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<EXPENSE-RATIO> 1.50
<AVG-DEBT-OUTSTANDING> 1,014,026
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</TABLE>
