PRESIDENT'S MESSAGE
I am pleased to present the Semi-Annual Report to Shareholders of Federated
Managed Aggressive Growth Fund for the six-month period from December 1, 1997
through May 31, 1998. Included in this report is our investment review, followed
by a complete listing of the fund's holdings and financial statements.
In pursuit of its investment objective, the fund invests in a well-diversified
portfolio that focuses on stocks. At the end of the reporting period, 73.1% of
the fund's $144.6-million in net assets were invested across stocks, including
large-cap value, large-cap growth, small cap and foreign stocks. The rest of the
portfolio consisted of U.S. and foreign bonds.*
During the first half of the fund's fiscal year, the fund's Institutional Shares
delivered a total return of 9.89%** through a share price increase of $0.46,
dividends totaling $0.12 per share, and capital gains totaling $0.69 per share.
The fund's Select Shares produced a total return of 9.53%** through a share
price increase of $0.46, dividends totaling $0.07 per share, and capital gains
totaling $0.69 per share.
Thank you for pursuing your long-term goals through the extremely high
diversification and professional management of Federated Managed Aggressive
Growth Fund. As always, we welcome your comments and suggestions.
Sincerely,
/s/ Glen R. Johnson
Glen R. Johnson
President
July 15, 1998
* Foreign investing involves special risks including currency risk, increased
volatility of foreign securities, and differences in auditing and other
financial standards.
** Performance quoted represents past performance and is not indicative of
future results. Investment return and principal value will fluctuate, so
that an investor's shares, when redeemed, may be worth more or less than
their original cost.
INVESTMENT REVIEW
Performance For Six Months Ended May 31, 1998
The six month reporting period ended May 31, 1998 was a generally favorable one
for financial assets and Federated Managed Aggressive Growth Fund participated
in the advance. For the six months ended May 31, 1998, an investor in the fund's
Institutional Shares had a total return of 9.89%,* while an investor in the
fund's Select Shares had a total return of 9.53%.* As usual, performance among
asset classes showed wide variation. Reversing a pattern that has held for the
last few years, foreign stocks performed well over the last six months. Shares
of large companies in developed foreign countries outperformed on average shares
of U.S. large companies. European stock markets did especially well as investors
looked forward to the benefits of a new single currency for the European
Monetary Union. In the U.S. the strength in the market was primarily in large
company stocks as shares in small company stocks had solid but more moderate
returns. The bond market also delivered solid single digit returns as interest
rates fell during the period in response to an expected recession in Asia's
developing economies.
Asset Allocation as of May 31, 1998
Federated Managed Aggressive Growth Fund operates on an investment philosophy
that, over time, an investor with a diversified portfolio will achieve better
returns with the same risk, or the same returns with lower risk, than an
investor in a single asset category. Therefore, to ensure proper diversification
of its portfolio, the fund's investment policies require management to allocate
the portfolio among as many as eight asset categories and limit the weight of
each asset category. In allocating the fund's portfolio among asset categories,
fund management analyzes the relative value offered by each category under
prevailing market conditions. Fund management seeks to improve the fund's
performance by weighting most heavily the asset categories that management
believes will provide the best relative value. The following table shows the
allocation of the portfolio among different asset categories at May 31, 1998.
* Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
<TABLE>
<CAPTION>
Asset Categories As A Percentage of Total Net Assets
Permitted Percentage as of
Asset Category Range May 31, 1998
<S> <C> <C>
Bonds(1) 10-30 25.7
Treasury and Government
Securities 0-20 18.0
Mortgage-Backed Securities 0-10 0
Investment Grade
Corporate Bonds 0-10 0
High Yield Corporate Bonds 0-10 2.9
Foreign Bonds 0-10 4.8
Equities(1) 70-90 73.1
Large Company Stocks 40-60 44.4
Small Company Stocks 10-20 13.9
Foreign Stocks 10-20 14.8
</TABLE>
(1) Bonds convertible into equity securities at a price below the closing price
of the underlying equity securities on May 31, 1998 have been included under
the appropriate equity asset category.
The U.S. has enjoyed seven years of economic expansion which has driven
corporate profits strongly upward. The accompanying bull market in stocks has
pushed stock prices up even faster than earnings. However this favorable price
movement in stocks has created a valuation problem for U.S. stocks. Relative to
historical measures of value, U.S. stocks are richly priced. This implies that
long-term returns from these price levels are likely to be moderate. Moreover
stretched valuation levels for stocks make the bond market look more attractive.
Offsetting the valuation factors which favor bonds, the U.S. economy appears to
be in solid shape with good growth and low inflation. Moreover U.S. monetary
policy appears supportive of further price gains in financial assets. Thus fund
management moved equity exposure up during the period to normal levels in
response to this favorable near-term environment for equities.
Structure of the Bond Portfolio
Within the range of four to six years, the fund's bond duration is set at 4.5
years. This duration is set at a somewhat below average level in recognition
that the current economic cycle is one of the longest in post-war history and
late stages of business cycles are often unfavorable environments for bonds.
Therefore a somewhat conservative bond position is appropriate due to cyclical
concerns despite the favorable secular or longer-term outlook for bonds.
Within the bond portfolio, lower than normal yield advantages offered by
corporate bonds over U.S. Treasurys led fund management to underweight high
yield corporate bonds and to avoid the investment grade sector.
Structure of the Equity Portfolio
Equity exposure was increased in the portfolio, primarily in the large company
stock area. Other areas of the stock market such as small company stocks and
foreign stocks appear more reasonably valued than U.S. large company stocks.
However, the economic cycle appears to favor large company stocks. This economic
expansion has lasted seven years, substantially longer than the average U.S.
economic expansion. In the late stages of economic expansions, investors usually
begin to favor larger company stocks for their perceived stability of earnings.
Finally a rising dollar creates a performance drag for U.S. investors in foreign
stocks. Thus fund management held weights in the other equity asset classes near
neutral levels despite their valuation advantages.
PORTFOLIO OF INVESTMENTS
Federated Managed Aggressive Growth Fund
May 31, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
in U.S.
Shares Dollars
<C> <S> <C>
*Stocks--73.1%
Large-Cap Value Stocks--17.8%
Basic Industry--0.6%
20,700 Archer-Daniels-Midland Co. $ 390,713
3,400 Dow Chemical Co. 329,375
18,900 LTV Corporation 206,719
Total 926,807
Consumer Durables--0.8%
5,100 Eastman Kodak Co. 364,013
3,600 Ford Motor Co. 186,750
4,800 General Motors Corp. 345,300
10,900 Rubbermaid, Inc. 355,613
Total 1,251,676
Consumer Non-Durables--0.7%
4,800 BestFoods 270,900
6,400 Kimberly-Clark Corp. 317,200
10,400 RJR Nabisco Holdings Corp. 293,150
7,700 UST, Inc. 205,013
Total 1,086,263
Energy Minerals--2.4%
3,800 Atlantic Richfield Co. 299,725
5,100 Chevron Corp. 407,363
16,500 Exxon Corp. 1,163,250
10,000 Occidental Petroleum Corp. 276,250
12,600 Sun Co., Inc. 535,500
7,100 Texaco, Inc. 410,025
12,800 USX-Marathon Group 448,000
Total 3,540,113
Finance--3.2%
5,700 Allmerica Financial Corp. 357,319
943 Associates First Capital Corp., Class A 70,586
10,000 Banc One Corp. 551,250
Federated Managed Aggressive Growth Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Large-Cap Value Stocks--continued
Finance--continued
1,700 Bankers Trust New York Corp. $ 209,950
6,000 Bear Stearns Cos., Inc. 325,500
13,200 Block (H&R), Inc. 580,800
9,600 CIGNA Corp. 657,600
1,800 Chase Manhattan Corp. 244,688
11,800 First Union Corp. 652,688
2,300 Fleet Financial Group, Inc. 188,600
1,400 General RE Corp. 307,825
4,200 MBIA, Inc. 313,163
5,300 Washington Federal, Inc. 147,406
Total 4,607,375
Health Care--1.1%
14,800 Pharmacia & Upjohn, Inc. 653,975
16,500 U.S. Surgical Corp. 655,875
5,500 United Healthcare Corp. 352,000
Total 1,661,850
Producer Manufacturing--1.4%
16,400 ITT Industries, Inc. 604,750
11,100 Ingersoll-Rand Co. 500,194
8,000 Johnson Controls, Inc. 476,000
3,000 Loews Corp. 272,250
5,900 Parker-Hannifin Corp. 242,269
Total 2,095,463
Retail Trade--0.4%
19,500 (a)K Mart Corp. 377,813
8,000 Limited, Inc. 266,000
Total 643,813
Services--0.8%
5,000 CBS Corp. 158,750
12,900 Readers Digest Association, Inc., Class A 367,650
18,500 Waste Management, Inc. 601,250
Total 1,127,650
Federated Managed Aggressive Growth Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Large-Cap Value Stocks--continued
Technology--1.7%
7,900 AMP, Inc. $ 300,200
8,800 First Data Corp. 292,600
3,000 International Business Machines Corp. 352,125
2,600 Northrop Corp. 278,688
36,400 (a)Novell, Inc. 382,200
5,400 Raytheon Co., Class A 287,888
7,000 Storage Technology Corp. 587,125
Total 2,480,826
Transportation--0.6%
8,100 CNF Transportation, Inc. 332,606
8,700 Ryder Systems, Inc. 296,344
8,100 Southwest Airlines Co. 216,169
Total 845,119
Utilities--4.1%
5,900 AT&T Corp. 359,163
7,200 Bell Atlantic Corp. 659,700
6,100 CMS Energy Corp. 265,731
4,100 Columbia Gas System, Inc. 345,938
16,300 Entergy Corp. 428,894
10,600 GTE Corp. 618,113
12,300 Houston Industries, Inc. 352,088
14,100 MCI Communications Corp. 753,909
13,200 P G & E Corp. 415,800
7,000 Pacificorp 161,438
8,300 Public Service Enterprises Group, Inc. 274,419
5,900 Texas Utilities Co. 233,050
11,800 U.S. West, Inc. 598,850
Total 5,467,093
Total Large-Cap Value Stocks 25,734,048
Large Cap Growth Stocks--26.6%
Basic Industry--0.9%
2,400 Air Products & Chemicals, Inc. 208,800
Federated Managed Aggressive Growth Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Large-Cap Growth Stocks--continued
Basic Industry--continued
3,000 Avery Dennison Corp. $ 155,438
3,000 Bemis Co., Inc. 126,563
6,100 Crown Cork & Seal Co., Inc. 316,438
3,200 Hercules, Inc. 141,000
3,500 Martin Marietta Materials 161,000
3,400 Monsanto Co. 188,275
Total 1,297,514
Consumer Durables--0.1%
3,500 Harley Davidson, Inc. 125,125
Consumer Non-Durables--3.7%
6,400 Campbell Soup Co. 348,800
11,600 Coca-Cola Co. 909,150
16,200 Dial Corp. 401,963
2,100 Gillette Co. 245,963
5,200 (a)Jones Apparel Group, Inc. 329,550
9,200 PepsiCo, Inc. 375,475
18,000 Philip Morris Cos., Inc. 672,750
6,800 Procter & Gamble Co. 570,775
3,300 Quaker Oats Co. 190,369
3,700 Sara Lee Corp. 217,838
4,100 UST, Inc. 109,163
4,800 Universal Corp. 180,300
5,600 Wolverine World Wide, Inc. 138,250
6,800 Wrigley (Wm.), Jr. Co. 654,500
Total 5,344,846
Energy Minerals--0.5%
7,800 (a)BJ Services Co. 254,963
4,900 Diamond Offshore Drilling, Inc. 234,281
6,800 (a)Global Marine, Inc. 151,725
3,300 Halliburton Co. 156,338
Total 797,307
Federated Managed Aggressive Growth Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Large-Cap Growth Stocks--continued
Finance--5.7%
5,000 Ahmanson (H.F.) & Co. $ 381,250
6,200 Allstate Corp. 583,575
1,750 American International Group, Inc. 216,672
4,400 American Express Co. 451,550
4,200 Bank of New York Co., Inc. 256,725
3,000 BankAmerica Corp. 248,063
9,000 (a)Catellus Development Corp. 167,063
1,400 Citicorp 208,775
6,900 Conseco, Inc. 321,713
6,900 Equitable Companies Inc. 475,238
5,700 Federal National Mortgage Association 341,288
5,300 (a)Golden State Bancorp, Inc. 203,056
1,200 Household International, Inc. 162,375
15,200 MBNA Corp. 481,650
2,000 MGIC Investment Corp. 119,875
5,500 Marsh & McLennan Cos., Inc. 481,594
3,800 Mellon Bank Corp. 256,263
3,200 Merrill Lynch & Co., Inc. 286,400
10,200 Morgan Stanley, Dean Witter, Discover & Co. 796,238
8,800 NationsBank Corp. 666,600
6,900 Old Republic International Corp. 196,650
4,300 Sunamerica, Inc. 209,088
4,100 Torchmark Corp. 175,788
8,050 Travelers Group, Inc. 491,050
Total 8,178,539
Health Care--4.6%
9,500 Abbott Laboratories 704,781
19,500 (a)Beverly Enterprises, Inc. 279,094
6,300 Bristol-Myers Squibb Co. 677,250
2,800 (a)Centocor, Inc. 109,200
9,500 (a)Chiron Corp. 171,594
3,300 Guidant Corp. 212,644
Federated Managed Aggressive Growth Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Large-Cap Growth Stocks--continued
Health Care--continued
6,900 HBO & Co. $ 398,259
7,700 (a)HEALTHSOUTH Corp. 218,488
7,200 Johnson & Johnson 497,250
4,000 Lilly (Eli) & Co. 245,750
9,300 Merck & Co., Inc. 1,088,681
4,300 Pfizer, Inc. 450,694
4,600 (a)Quintiles Transnational Corp. 223,675
4,300 Schering Plough Corp. 359,856
3,100 United Healthcare Corp. 198,400
4,500 (a)Universal Health Services, Inc., Class B 247,500
8,100 Warner-Lambert Co. 516,881
Total 6,599,997
Producer Manufacturing--1.9%
2,300 Allied-Signal, Inc. 98,325
5,100 Dover Corp. 191,250
5,100 (a)EVI, Inc. 257,876
16,000 General Electric Co. 1,334,000
5,000 (a)Lexmark Intl. Group, Class A 277,500
3,700 Masco Corp. 208,125
5,500 Miller Herman, Inc. 152,281
3,200 Precision Castparts Corp. 184,400
Total 2,703,757
Retail Trade--1.6%
9,300 (a)General Nutrition Cos., Inc. 293,531
4,650 Home Depot, Inc. 365,316
8,700 (a)Safeway, Inc. 317,006
10,200 TJX Cos., Inc. 476,850
15,800 Wal-Mart Stores, Inc. 871,963
Total 2,324,666
Services--1.7%
4,708 (a)Cendant Corp. 102,105
3,900 (a)Chancellor Media Corp., Class A 163,069
Federated Managed Aggressive Growth Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Large-Cap Growth Stocks--continued
Services--continued
2,500 Disney (Walt) Co. $ 282,813
2,900 Gannett Co., Inc. 191,219
7,050 (a)Liberty Media Group, Class A 232,650
2,700 McDonald's Corp. 177,188
8,900 Service Corp. International 363,788
10,100 (a)Tricon Global Restaurants, Inc. 313,731
7,800 (a)Viacom, Inc., Class A 429,488
4,600 (a)Viacom, Inc., Class B 253,000
Total 2,509,051
Technology--4.8%
5,100 (a)America Online, Inc. 424,894
4,300 (a)Applied Materials, Inc. 137,600
10,200 (a)BMC Software, Inc. 469,838
6,800 (a)Cabletron Systems, Inc. 87,550
6,400 (a)Cadence Design Systems, Inc. 225,600
7,150 (a)Cisco Systems, Inc. 540,719
3,200 Computer Associates International, Inc. 168,000
4,600 (a)Dell Computer Corp. 379,069
8,400 (a)EMC Corp. Mass 348,075
9,300 First Data Corp. 309,225
3,300 Hillenbrand Industries, Inc. 203,775
7,400 Intel Corp. 528,638
5,200 Lucent Technologies, Inc. 368,875
13,000 (a)Microsoft Corp. 1,102,563
5,600 (a)Peoplesoft, Inc. 244,650
4,500 (a)SCI Systems, Inc. 153,563
10,600 (a)Seagate Technology, Inc. 245,125
7,200 (a)Sun Microsystems, Inc. 288,450
3,600 (a)Tellabs, Inc. 247,388
3,300 United Technologies Corp. 310,200
Total 6,783,797
Federated Managed Aggressive Growth Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Large-Cap Growth Stocks--continued
Transportation--0.1%
2,600 (a)Continental Airlines, Inc., Class B $ 147,063
Utilities--1.0%
8,200 (a)Airtouch Communications, Inc. 390,525
7,800 Coastal Corp. 549,900
3,600 (a)PanAmSat Corp. 196,650
3,900 (a)Teleport Communications Group, Inc., Class A 218,156
7,100 (a)WorldCom, Inc. 323,050
Total 1,678,281
Total Large Cap Growth Stocks 38,489,943
Small-Cap Stocks--13.9%
Basic Industry--0.8%
3,500 Cambrex Corp. 195,781
5,100 (a)Carbide/Graphite Group, Inc. 166,706
8,900 Furon Co. 141,844
3,200 Lone Star Industries, Inc. 240,600
4,200 (a)Lone Star Technologies, Inc. 79,800
11,200 Spartech Corp. 250,600
Total 1,075,331
Consumer Durables--1.0%
5,100 (a)Action Performance Companies, Inc. 141,844
6,500 (a)American Homestar Corporation 138,125
2,900 Carlisle Cos., Inc. 140,288
6,100 (a)Dura Automotive Systems, Inc. 221,125
3,800 (a)Gentex Corp. 139,175
10,600 (a)Helen of Troy Ltd. 202,725
5,000 Oakwood Homes Corp. 135,938
9,000 (a)Stanley Furniture Co. Inc. 182,250
3,900 (a)Toll Brothers, Inc. 100,425
Total 1,401,895
Consumer Non-Durables--0.7%
4,600 (a)Blyth Industries, Inc. 141,163
7,400 (a)Nautica Enterprise, Inc. 216,450
Federated Managed Aggressive Growth Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Small-Cap Stocks--continued
Consumer Non-Durables--continued
5,200 (a)North Face, Inc. $ 129,025
6,400 (a)Smithfield Foods, Inc. 172,800
3,600 (a)Suiza Foods Corp. 210,375
7,300 Wolverine World Wide, Inc. 180,219
Total 1,050,032
Energy Minerals--0.4%
2,600 Camco International, Inc. 181,350
15,800 (a)Comstock Resources, Inc. 158,000
5,800 (a)EEX Corp. 57,275
4,300 (a)Tuboscope Inc. 97,288
7,100 Vintage Petroleum, Inc. 128,688
Total 622,601
Finance--2.1%
5,000 (a)Amresco, Inc. 168,750
3,000 CMAC Investment Corp. 181,500
4,000 City National Corp. 147,000
8,000 Community First Bankshares, Inc. 195,000
3,270 (a)Delphi Financial Group, Inc., Class A 177,602
7,100 (a)Delta Financial Corp. 125,138
2,500 Enhance Financial Services Group, Inc. 162,813
2,100 Executive Risk, Inc. 132,169
3,600 (a)FIRSTPLUS Financial Group, Inc. 143,550
5,100 (a)FirstFed Financial Corp. 250,219
7,100 GBC Bancorp 203,238
6,300 (a)Imperial Bancorp 184,275
5,200 Mutual Risk Management Ltd. 182,325
9,300 North Fork Bancorp, Inc. 223,781
5,200 Sirrom Capital Corp. 138,450
4,900 (a)Triad Guaranty, Inc. 161,700
5,000 (a)United Rentals, Inc. 172,500
2,900 Vesta Insurance Group, Inc. 152,794
Total 3,102,804
Federated Managed Aggressive Growth Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Small-Cap Stocks--continued
Health Care--1.3%
6,100 (a)Access Health, Inc. $ 156,313
5,100 (a)Alternative Living Services, Inc. 138,338
7,000 (a)Aurora Bioscences, Inc. 52,938
23,200 (a)Balanced Care Corp. 185,600
3,500 (a)Curative Technologies, Inc. 98,438
5,200 (a)Genesis Health Ventures, Inc. 131,625
3,700 (a)Healthcare & Retirement Corp. 143,144
4,500 (a)Medicis Pharmaceutical Corp., Class A 183,656
2,900 (a)Patterson Dental Co. 94,250
5,600 (a)PharMerica, Inc. 68,250
6,000 (a)Phycor, Inc. 101,250
9,600 (a)Prime Medical Services 100,800
6,054 (a)Respironics, Inc. 99,513
4,200 (a)Sybron International Corp. 100,538
3,600 (a)Universal Health Services, Inc., Class B 198,000
Total 1,852,653
Producer Manufacturing--0.8%
6,600 (a)AFC Cable Systems, Inc. 222,750
7,100 (a)Ballantyne of Omaha, Inc. 130,019
600 C&D Technologies, Inc. 33,600
7,000 (a)Cable Design Technologies, Class A 164,938
2,600 (a)EVI, Inc. 131,463
5,000 (a)Rayovac Corp. 105,000
5,000 (a)SLI, Inc. 142,500
7,100 (a)US Office Products Co. 120,256
Total 1,050,526
Retail Trade--1.2%
4,200 (a)CDW Computer Centers, Inc. 172,988
8,400 Claire's Stores, Inc. 158,025
2,800 (a)Express Scripts, Inc., Class A 215,425
3,900 (a)Funco, Inc. 63,863
3,900 (a)Mens Wearhouse, Inc. 166,238
Federated Managed Aggressive Growth Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Small-Cap Stocks--continued
Retail Trade--continued
5,900 (a)Microage, Inc. $ 79,650
5,000 (a)O'Reilly Automotive, Inc. 162,500
5,200 (a)Pacific Sunwear of California 232,863
6,600 (a)Pomeroy Computer Resources 148,500
4,800 (a)Proffitts, Inc. 188,400
6,700 (a)Renters Choice, Inc. 178,388
6,400 (a)Zale Corp. 198,000
Total 1,964,840
Services--2.1%
5,900 (a)ABR Information Services, Inc. 151,188
4,400 (a)Allied Waste Industries, Inc. 116,600
7,200 (a)American Business Information, Class A 89,100
7,200 (a)American Business Information, Class B 90,900
6,550 (a)BARRA, Inc. 133,456
6,300 (a)Billing Concepts Corp. 146,475
4,300 (a)Caribiner International, Inc. 95,138
5,300 (a)Daisytek International Corp. 135,150
5,100 (a)FactSet Research Systems 165,431
4,400 (a)Labor Ready, Inc. 148,775
6,500 (a)Landrys Seafood Restaurants, Inc. 147,266
9,000 (a)Newpark Resources, Inc. 163,688
9,500 (a)Personnel Group of America, Inc. 192,375
8,900 (a)Prime Hospitality Corp. 159,644
11,400 (a)ProBusiness Services, Inc. 415,388
4,800 (a)Rural / Metro Corp. 113,400
2,100 (a)Snyder Communications, Inc. 84,656
5,500 (a)StaffMark, Inc. 202,125
5,500 (a)World Access, Inc. 172,563
Total 2,923,318
Technology--2.9%
6,200 (a)ATMI, Inc. 112,375
6,400 (a)Apex mPC Solutions, Inc. 160,800
Federated Managed Aggressive Growth Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Small-Cap Stocks--continued
Technology--continued
12,600 (a)Applied Voice Technology, Inc. $ 235,463
1,700 (a)Aspect Development, Inc. 97,219
9,800 (a)Atlantic Data Services, Inc. 128,625
5,900 (a)Benchmark Electronics, Inc. 119,106
7,300 (a)CHS Electronics, Inc. 145,088
6,100 (a)Ciber, Inc. 195,581
4,100 (a)Comverse Technology, Inc. 204,872
8,350 (a)Cybex Computer Products Corp. 192,050
7,600 (a)Cymer, Inc. 144,638
8,900 (a)DSP Group, Inc. 174,663
4,100 (a)Ducommun, Inc. 131,713
4,300 (a)Eltron International, Inc. 94,600
2,100 (a)Etec Systems, Inc. 76,781
4,200 (a)HADCO Corp. 134,925
4,800 (a)Integrated Circuit System, Inc. 66,150
6,800 (a)MRV Communications, Inc. 158,100
9,900 (a)Mastech Corp. 187,172
5,000 (a)Micrel, Inc. 156,406
3,500 (a)Microchip Technology, Inc. 85,750
2,600 (a)Orbotech, Ltd. 85,800
5,100 (a)Qlogic Corp. 206,550
2,400 (a)RELTEC Corp. 88,200
6,200 (a)SS&C Technologies, Inc. 102,300
2,300 (a)Sanmina Corp. 179,113
5,400 (a)Smart Modular Technologies, Inc. 73,913
3,500 (a)Transaction Systems Architects, Inc., Class A 141,750
3,000 (a)Vitesse Semiconductor Corp. 76,875
Total 3,956,578
Transportation--0.2%
2,400 Airlines Express International Corp. 61,950
3,700 Comair Holdings, Inc. 98,513
1,900 Expeditors International Washington, Inc. 76,000
Federated Managed Aggressive Growth Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Small-Cap Stocks--continued
Transportation--continued
1,900 (a)Heartland Express, Inc. $ 41,563
1,600 USFreightways Corp. 50,400
2,925 Werner Enterprises, Inc. 55,575
Total 384,001
Utilities--0.4%
1,000 Central Hudson Gas & Electric Service 43,688
800 Cilcorp, Inc. 35,250
1,400 Commonwealth Energy System 53,200
2,400 K N Energy, Inc. 129,900
1,100 New Jersey Resources Corp. 39,531
1,900 Piedmont Natural Gas, Inc. 60,206
4,000 (a)Premiere Technologies, Inc. 95,500
1,900 Sierra Pacific Resources 65,194
4,500 (a)Transaction Network Services, Inc. 91,688
1,200 WICOR, Inc. 54,900
Total 669,057
Total Small-Cap Stocks 20,053,636
Foreign Equity--14.8%
Argentina--0.1%
6,900 (a)Banco Rio de la Plata SA, ADR 82,800
Australia--0.2%
40,200 Austrim Ltd 77,288
55,000 Woolworth's Ltd. 189,096
Total 266,384
Belgium--0.1%
4,500 (a)Global TeleSystems Group, Inc., ADR 172,406
Brazil--0.0%
1,146,672 Companhia Energetica de Minas Gerais, Preference 37,886
Croatia--0.1%
5,280 (a)Pliva D.D., GDR, 144A 86,856
Finland--0.3%
18,000 Finnair 185,865
Federated Managed Aggressive Growth Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Foreign Equity--continued
Finland--continued
2,500 OY Nokia AB, ADR, Class A $ 162,344
1,810 Sampo Insurance Co. Ltd., Class A 84,104
Total 432,313
France--2.8%
1,528 AXA 173,921
2,100 Alcatel Alsthom 449,273
5,500 Assurances Generales de France 339,211
2,500 Banque Nationale de Paris 213,522
900 Compagnie de Saint Gobain 177,503
9,000 Dassault Systemes SA 419,689
1,070 Elf Aquitaine SA 148,616
1,000 Groupe Danon BSN SA 269,263
930 Guyenne Et Gascogne 348,187
750 Rexel 313,263
3,700 (a)SGS-Thomas Microelectronics N.V. (NY Reg Shs) 286,288
4,670 Scor SA 294,265
1,400 Societe Generale, Paris 277,286
3,500 Thomson-CSF 141,568
2,061 TOTAL SA-B 255,946
Total 4,107,801
Germany, Federal Republic Of--1.5%
150 Bayerische Motoren Werke AG 158,722
30 Bayerische Motoren Werke AG, New Share 31,358
4,000 Bhf-bank 164,103
3,380 Deutsche Bank, AG 290,973
4,150 Dresdner Bank AG, Frankfurt 233,288
600 Holzmann (Philipp) 165,784
359 Mannesmann AG 351,103
315 Muenchener Rueckversicherungs-Gesellschaft AG--REG 143,090
9,050 Skw Trostberg 367,732
2,800 Tarkett Sommer AG 109,850
Federated Managed Aggressive Growth Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Foreign Equity--continued
Germany, Federal Republic Of--continued
220 Volkswagen AG $ 178,417
Total 2,194,420
Hong Kong--0.4%
40,000 Cheung Kong 216,286
2,429 HSBC Holdings PLC 58,930
58,000 Henderson Land Development Co. Ltd. 205,085
85,000 (a)New World Development Co. Ltd. 200,736
Total 681,037
Ireland--0.2%
4,150 (a)Elan Corp. PLC, ADR 253,928
Italy--1.3%
7,900 Assicurazioni Generali 253,896
80,000 Banca di Roma 164,960
32,000 Banca Commerciale Italiana 188,942
24,000 Banca Intesa SPA 149,625
28,000 CREDITO ITALIANO ORD 156,166
30,300 ENI 214,237
48,000 ITALGAS 221,160
21,000 MONDADORI ORD 256,826
45,000 TELECOM ITALIA SPA 340,060
Total 1,945,872
Japan--1.4%
60 Circle K Japan Co. Ltd. 2,205
20,000 Fujitsu Ltd. 229,619
5,000 Ito-Yokado Co., Ltd. 249,115
24,000 Mitsubishi Estate Co. Ltd. 210,903
6 NTT Data Communications Systems Co. 240,884
30 Nippon Telegraph & Telephone Corp. 246,949
3,200 Orix Corp 208,188
3,000 Sony Corp. 253,448
11,600 Tokyo Electric Power Co. 221,965
Total 1,863,276
Federated Managed Aggressive Growth Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Foreign Equity--continued
Korea, Republic Of--0.0%
870 Pohang Iron and Steel Co. Ltd. $ 35,302
Malaysia--0.0%
1,000 Malayan United Industries Bhd 130
Netherlands--0.9%
6,483 ABN-Amro Holdings NV 156,996
5,435 ING GROEP, NV 373,225
5,000 KONINKLIJKE AHOLD NV 157,878
2,542 KONINKLIJKE PTT NEDERLAND NV 142,075
280 ORDINA BEHEER NV 355
7,000 ORDINA BEHEER NV 235,648
1,505 WOLTERS KLUWER NV 211,413
Total 1,277,590
Norway--0.2%
36,000 Christiania Bank 154,322
3,100 Transocean Offshore, Inc. 152,869
Total 307,191
Portugal--0.2%
3,600 BPI-SGPS SA 145,853
3,000 Cimpor Cimentos de Portugal 114,892
Total 260,745
Spain--0.8%
1,260 (a)Azucarera Ebro Agricolas, SA 32,508
2,400 Banco Popular Espanol 190,353
9,800 Endesa SA 234,734
5,860 Iberdrola SA 96,668
4,350 Repsol SA 241,683
7,390 Tabacalera SA 159,210
4,090 TELEFONICA SA 182,707
Total 1,137,863
Sweden--0.4%
7,000 Celsius B 181,312
19,000 Skand Enskilda BKN, Class A 316,372
Federated Managed Aggressive Growth Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Foreign Equity--continued
Sweden--continued
7,300 Telefonaktiebolaget LM Ericsson $ 208,178
Total 705,862
Switzerland--1.2%
140 (a)Baloise Holdings--REG 333,108
240 Nestle SA 514,020
183 Novartis AG--REG 309,797
24 (a)Roche Holding AG--GENUSS 246,804
143 UBS--Union Bank of Switzerland--BEARER 240,344
Total 1,644,073
United Kingdom--2.7%
19,500 Allied Domecq PLC 194,440
9,015 Barclays PLC 240,594
20,380 British Aerospace PLC 180,747
9,359 British Petroleum Co. PLC 137,422
7,250 British-Borneo Petroleum Syndicate PLC 45,590
9,000 Commercial Union PLC 163,608
24,000 Croda International 180,708
15,263 EMI Group PLC 129,133
10,890 General Electric Co. PLC 89,289
6,551 Glaxo Wellcome PLC 176,332
29,523 Guardian Royal Exchange PLC 187,576
31,000 (a)Guardian Royal Exchange PLC, Class B 10,126
24,000 Lasmo 113,678
18,000 National Westminster Bank, PLC, London 328,979
13,500 Prudential Corp. PLC 179,483
10,200 Reed International PLC 94,544
47,466 Rolls-Royce 226,183
33,000 Securicor PLC 249,552
5,942 Siebe PLC 148,973
12,519 Smithkline Beecham PLC 135,668
33,155 Vodafone Group PLC 364,444
Federated Managed Aggressive Growth Fund
Shares,
Units,
Principal
Amount or
Foreign
Currency Value
Par in U.S.
Amount Dollars
Stocks--continued
Foreign Equity--continued
United Kindom--continued
8,720 Zeneca Group $ 354,493
Total 3,931,562
Total Foreign Equity 21,425,297
Total Stocks (identified cost $91,720,687) 105,702,924
Bonds--25.7%
Treasury and Government Securities--18.0%
(b)Repurchase Agreement--5.7%
$ 8,195,000 BT Securities Corp., 5.570%, dated 5/29/1998, due 6/1/1998 (at amortized cost) 8,195,000
United States Treasury Securities--12.3%
226,000 United States Treasury Bond, 6.125%, 11/15/2027 236,206
3,100,000 United States Treasury Bond, 8.125%, 5/15/2021 3,954,081
705,000 United States Treasury Note, 6.375%, 8/15/2002 725,367
2,060,000 United States Treasury Note, 6.500%, 10/15/2006 2,171,425
210,000 United States Treasury Note, 6.625%, 5/15/2007 223,770
9,000,000 United States Treasury Bill, 6/18/1998 8,983,260
1,500,000 United States Treasury Bill, 6/25/1998 1,495,860
Total 17,789,969
Total Treasury and Government Securities 25,984,969
High Yield Bonds--2.9%
427,649 The High Yield Bond Portfolio 4,237,960
Foreign Bonds--4.8%
Australian Dollar--0.2%
85,000 QTC-Global Notes, Deb., 10.500%, 5/15/2003 64,995
260,000 West Aust T Corp, Local Gov't. Guarantee, 8.000%, 7/15/2003 182,447
Total 247,442
Austrian Mark--0.3%
610,000 Republic of Austria, Unsub., 6.500%, 1/10/2024 386,667
Federated Managed Aggressive Growth Fund
Foreign
Currency Value
Par in U.S.
Amount Dollars
Bonds--continued
Foreign Bonds--continued
Belgium Franc--0.0%
514,000 Belgian Govt., Bond, 6.500%, 3/31/2005 $ 15,321
Canadian Dollar--0.4%
204,000 Canada Government, Deb., 6.500%, 6/1/2004 148,804
405,000 Ontario Hydro, 9.000%, 6/24/2002 314,126
166,000 Ontario Hydro, Bond, 7.750%, 11/3/2005 129,677
Total 592,607
Danish Krone--0.3%
1,927,000 Denmark--Bullet, Bond, 8.000%, 3/15/2006 337,187
500,000 Denmark, 8.000%, 5/15/2003 83,886
Total 421,073
Deutsche Mark--1.0%
91,000 DG-HYPBK 5.750%, 1/22/2007 53,654
195,000 Depfa-Bank, 5.500%, 1/15/2013 111,519
382,000 European Investment Bank, 5.000%, 4/15/2008 420,319
20,000,000 KFW International Finance, 6.000%, 11/29/1999 156,257
150,000 KFW International Finance, Bank Guarantee, 6.750%, 6/20/2005 93,369
435,000 Treuhandanstalt, 7.750%, 10/1/2002 274,763
500,000 Treuhandanstalt, Foreign Gov't. Guarantee, 6.875%, 6/11/2003 309,065
Total 1,418,946
Greek Drachma--0.3%
110,000,000 Hellenic Republic, Bond, 8.800%, 6/19/2007 382,969
22,800,000 Hellenic Republic, FRN 10/23/2003 75,676
Total 458,645
Hungarian Forint--0.0%
16,200,000 Hungary Govt. Bond, 14.000%, 12/12/2002 71,299
Italian Lira--0.6%
150,000,000 Btps, Bond, 10.500%, 11/1/2000 96,689
215,000,000 Btps, Deb., 12.000%, 5/18/1999 130,210
380,000,000 Buoni Poliennali Del Tes, 9.500%, 1/1/2005 270,579
440,000,000 Buoni Poliennali Del Tes, Deb., 12.000%, 1/01/2002 309,251
Total 806,729
Federated Managed Aggressive Growth Fund
Foreign
Currency Value
Par in U.S.
Amount Dollars
Bonds--continued
Foreign Bonds--continued
Japanese Yen--0.2%
28,000,000 Interamerican Development Bank, Deb., 7.000%, 12/27/2000 $ 233,490
11,000,000 Interamerican Development, Deb., 7.250%, 5/15/2000 89,712
Total 323,202
Mexican Peso--0.1%
80,000 (a)Mexican Cetes, 2/11/1999 78,639
Netherlands Guilder--0.3%
255,000 Bank Ned Gemeenten, Bond, 6.375%, 1/4/2006 138,085
340,000 Bk Ned Gemeenten, Bond, 7.750%, 12/20/2004 195,778
130,000 KBG Global Bd, Bank Guarantee, 6.000%, 1/25/2006 77,596
90,000 Netherlands Government, 6.000%, 1/15/2006 48,221
Total 459,680
New Zealand Dollar--0.0%
61,000 New Zealand Government, 8.000%, 2/15/2001 33,397
55,000 New Zealand Government, Bond, 8.000%, 7/15/1998 29,449
Total 62,846
Norwegian Krone--0.2%
641,000 NGB 9.00% 1/31/99, Bond, 9.000%, 1/31/1999 87,215
490,000 Norwegian Government, 5.500%, 5/15/2009 64,660
330,000 Norwegian Government, Bond, 7.000%, 5/31/2001 45,868
247,000 Norwegian Govt., Foreign Gov't. Guarantee, 5.750%, 11/30/2004 33,325
Total 231,068
Polish Zloty--0.1%
490,000 Poland Govt. Bond, 12.000%, 6/12/2003 116,850
South African Rand--0.0%
365,000 Republic of South Africa, Bond, 12.500%, 12/21/2006 65,534
Spanish Peseta--0.3%
16,000,000 Spanish Government, 10.000%, 2/28/2005 136,224
31,900,000 Spanish Govt, Bond, 8.800%, 4/30/2006 262,378
8,540,000 Spanish Govt., Deb., 10.100%, 2/28/2001 64,494
Total 463,096
Federated Managed Aggressive Growth Fund
Foreign
Currency
Par
Amount,
Principal Value
Amount, in U.S.
or Shares Dollars
Bonds--continued
Foreign Bonds--continued
Swedish Krona--0.1%
800,000 Sweden, 6.000%, 2/9/2005 $ 108,374
500,000 Sweden, Deb., 13.000%, 6/15/2001 78,599
Total 186,973
United Kingdom Pound--0.3%
187,000 British Gas PLC, 8.875%, 7/8/2008 356,777
38,000 U.K. TREASURY, DEB., 8.500%, 12/7/2005 72,073
Total 428,850
United States Dollars--0.1%
$ 115,000 Federal National Mortgage Association, 6.500%, 7/10/2002 74,990
120,000 Tennesee Valley Authority--Global Bond, 6.375%, 9/18/2006 73,342
Total 148,332
Total Foreign Bonds 6,983,799
Total Bonds (identified cost $32,695,640) 37,206,728
Total Investments (identified cost $124,416,327)(c) $142,909,652
</TABLE>
* The Fund purchases index futures contracts to efficiently manage cash flows
resulting from shareholder purchases and redemptions, dividends and capital
gain payments to shareholders and corporate actions while maintaining
exposure to the index and minimize trading costs. The underlying face
amount, at value of open index futures contracts is $10,089,900 at May 31,
1998, which represents 7% of net assets. Taking into consideration these
open index futures contracts, the Fund's effective total exposure to stocks
is 81%, and increasing the total exposure to small company stocks is 21%.
(a) Non-income producing security.
(b) 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.
(c) The cost of investments for federal tax purposes amounts to $124,416,327.
The net unrealized appreciation/depreciation of investments on a federal
tax basis amounts to $18,493,325 which is comprised of $21,458,532
appreciation and $2,965,207 depreciation at May 31, 1998.
Note: The categories of investments are shown as a percentage of net assets
($144,562,650) at May 31, 1998.
The following acronym(s) are used throughout this portfolio:
ADR --American Depositary Receipt
FRN --Floating Rate Note
GDR --Global Depository Receipt
PLC --Public Limited Company
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF ASSETS AND LIABILITIES
Federated Managed Aggressive Growth Fund
May 31, 1998 (unaudited)
<TABLE>
<CAPTION>
Assets:
<S> <C> <C>
Total investments in securities, at value (identified and tax cost $124,416,327) $142,909,652
Cash 12,445
Cash denominated in foreign currencies (at identified cost $137,892) 137,589
Income receivable 505,274
Receivable for investments sold 2,828,106
Receivable for shares sold 129,435
Net receivable for foreign currency exchange contracts purchased & sold 541
Receivable for daily variation margin 504
Deferred organizational costs 22,641
Other assets 10,830
Total assets 146,557,017
Liabilities:
Payable for investments purchased $ 1,834,154
Payable for taxes withheld 9,772
Payable for daily variation margin 91,071
Accrued expenses 59,370
Total liabilities 1,994,367
Net Assets for 10,303,662 shares outstanding $144,562,650
Net Assets Consist of:
Paid in capital $120,938,840 Net unrealized appreciation of investments and
translation of assets and liabilities in foreign currency 18,255,391 Accumulated
net realized gain on investments and foreign currency transactions 5,580,783
Distributions in excess of net investment income (212,364)
Total Net Assets $144,562,650
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
Institutional Shares:
$88,643,860 divide 6,314,517 shares outstanding $14.04
Select Shares:
$55,918,790 divide 3,989,145 shares outstanding $14.02
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF OPERATIONS
Federated Managed Aggressive Growth Fund
Six Months Ended May 31, 1998 (unaudited)
<TABLE>
<CAPTION>
Investment Income:
<S> <C> <C> <C>
Dividends (net of foreign taxes withheld of $28,766) $ 752,123
Interest (net of foreign taxes withheld of $3,133) 1,083,285
Total income 1,835,408
Expenses:
Investment advisory fee $ 507,073
Administrative personnel and services fee 77,288
Custodian fees 16,363
Transfer and dividend disbursing agent fees and expenses 78,703
Directors'/Trustees' fees 2,062
Auditing fees 9,467
Legal fees 2,062
Portfolio accounting fees 31,436
Distribution services fee--Select Shares 191,042
Shareholder services fee--Institutional Shares 105,344
Shareholder services fee--Select Shares 63,681
Share registration costs 24,383
Printing and postage 22,641
Insurance premiums 1,821
Taxes 2,301
Miscellaneous 12,441
Total expenses 1,148,108
Waivers --
Waiver of investment advisory fee $ (84,572)
Waiver of distribution services fee--Select Shares (63,681)
Waiver of shareholder services fee--Institutional Shares (84,275)
Total waivers (232,528)
Net expenses 915,580
Net investment income 919,828
Realized and Unrealized Gain (Loss) on Investments and Foreign Currency:
Net realized gain on investments and foreign currency transactions 5,445,651
Net change in unrealized appreciation of investments and translation
of assets and liabilities in foreign currency 6,210,878
Net realized and unrealized gain on investments and foreign currency 11,656,529
Change in net assets resulting from operations $12,576,357
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Federated Managed Aggressive Growth Fund
Six Months
Ended
(unaudited) Year Ended
May 31, November 30,
1998 1997
<S> <C> <C>
Increase (Decrease) in Net Assets:
Operations--
Net investment income $ 919,828 $ 1,910,498
Net realized gain (loss) on investments and foreign currency transactions
($5,445,651 and $6,480,249, respectively, as computed for federal tax purposes) 5,445,651 6,131,980
Net change in unrealized appreciation/depreciation of investments
and translation of assets and liabilities in foreign currency 6,210,878 5,658,166
Change in net assets resulting from operations 12,576,357 13,700,644
Distributions to Shareholders--
Distributions from net investment income
Institutional Shares (716,773) (1,427,543)
Select Shares (263,787) (678,606)
Distributions from net realized gains on investments and foreign currency transactions
Institutional Shares (3,897,323) (1,462,069)
Select Shares (2,343,704) (920,615)
Change in net assets resulting from distributions to shareholders (7,221,587) (4,488,833)
Share Transactions--
Proceeds from sale of shares 33,872,729 65,432,150
Net asset value of shares issued to shareholders in payment of distributions declared 6,387,414 3,820,798
Cost of shares redeemed (22,837,303) (37,784,914)
Change in net assets resulting from share transactions 17,422,840 31,468,034
Change in net assets 22,777,610 40,679,845
Net Assets:
Beginning of period 121,785,040 81,105,195
End of period $144,562,650 $121,785,040
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
(For a share outstanding throughout each period)
Six Months
Ended
(unaudited)
May 31, Year Ended November 30,
1998 1997 1996 1995 1994(a)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 13.58 $ 12.52 $ 11.59 $ 9.82 $ 10.00
Income from investment operations
Net investment income 0.12 0.30 0.33 0.35 0.17
Net realized and unrealized gain (loss) on investments
and foreign currency 1.15 1.43 1.24 1.77 (0.25)
Total from investment operations 1.27 1.73 1.57 2.12 (0.08)
Less distributions
Distributions from net investment income (0.12) (0.31) (0.38) (0.33) (0.10)
Distributions from net realized gain on investments
and foreign currency transactions (0.69) (0.36) (0.26) (0.02) --
Total distributions (0.81) (0.67) (0.64) (0.35) (0.10)
Net asset value, end of period $ 14.04 $ 13.58 $ 12.52 $ 11.59 $ 9.82
Total return (b) 9.89% 14.40% 14.13% 21.96% (0.87%)
Ratios to average net assets
Expenses 1.09%* 1.05% 1.05% 1.00% 0.89%*
Net investment income 1.62%* 2.27% 2.96% 3.42% 3.42%*
Expense waiver/reimbursement (c) 0.33%* 0.52% 0.88% 1.71% 1.72%*(d)
Supplemental data
Net assets, end of period (000 omitted) $88,644 $76,271 $49,715 $25,611 $15,696
Average commission rate paid (e) $0.0177 $0.0069 $0.0037 -- --
Portfolio turnover 59% 115% 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 has no investment activity.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(d) The adviser waived $6,858 of the investment advisory fee, which represents
0.11% of average net assets, to comply with certain state limitations. The
remainder of the waiver/reimbursement was voluntary. This expense decrease
is reflected in both the expense and net investment income ratio shown
above.
(e) Represents total commissions paid on portfolio securities divided by total
portfolio shares purchased or sold on which commissions were charged.
(See Notes which are an integral part of the Financial Statements)
FINANCIAL HIGHLIGHTS -- SELECT SHARES
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended
(unaudited)
May 31, Year Ended November 30,
1998 1997 1996 1995 1994(a)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 13.56 $ 12.50 $ 11.59 $ 9.80 $ 10.00
Income from investment operations
Net investment income 0.07 0.18 0.28 0.17 0.13
Net realized and unrealized gain (loss) on investments
and foreign currency 1.15 1.46 1.19 1.89 (0.25)
Total from investment operations 1.22 1.64 1.47 2.06 (0.12)
Less distributions
Distributions from net investment income (0.07) (0.22) (0.30) (0.25) (0.08)
Distributions from net realized gain on investments
and foreign currency transactions (0.69) (0.36) (0.26) (0.02) --
Total distributions (0.76) (0.58) (0.56) (0.27) (0.08)
Net asset value, end of period $ 14.02 $ 13.56 $ 12.50 $ 11.59 $ 9.80
Total return (b) 9.53% 13.66% 13.22% 21.36% (1.20%)
Ratios to average net assets
Expenses 1.79%* 1.75% 1.75% 1.75% 1.64%*
Net investment income 0.93%* 1.29% 2.26% 2.65% 2.67%*
Expense waiver/reimbursement (c) 0.37%* 0.57% 0.93% 1.71% 1.97%*(d)
Supplemental data
Net assets, end of period (000 omitted) $55,919 $45,614 $31,390 $12,342 $ 1,673
Average commission rate paid (e) $0.0177 $0.0069 $0.0037 -- --
Portfolio turnover 59% 115% 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 has no investment activity.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(d) The adviser waived $6,858 of the investment advisory fee, which represents
0.11% of average net assets, to comply with certain state limitations. The
remainder of the waiver/reimbursement was voluntary. This expense decrease
is reflected in both the expense and net investment income ratio shown
above.
(e) Represents total commissions paid on portfolio securities divided by total
portfolio shares purchased or sold on which commissions were charged.
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
Federated Managed Aggressive Growth Fund
May 31, 1998 (unaudited)
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.
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.
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.
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 May 31, 1998, the Fund had realized
gains of $865,781 on future contracts. At May 31, 1998, the Fund had outstanding
futures contracts as set forth below:
<TABLE>
<CAPTION>
Unrealized
Contracts to Appreciation
Expiration Date Deliver/Receive Position (Depreciation)
<S> <C> <C> <C>
June 1998 37 S&P 500 Index Long ($241,014)
</TABLE>
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 counterparties
to meet the terms of their commitments and from unanticipated movements in
security prices or foreign exchange rates. The foreign currency transactions are
adjusted by the daily exchange rate of the underlying currency and any gains or
losses are recorded for financial statement purpose as unrealized until the
settlement date.
At May 31, 1998, the Fund had outstanding foreign currency commitments as set
forth below:
<TABLE>
<CAPTION>
Foreign Currency Unrealized
Settlement Units to In Exchange Contracts at Gain
Contracts Purchased: Date Deliver/Receive For Value (Loss)
<S> <C> <C> <C> <C> <C>
Netherlands Guilder 6/2/98 206,793 $103,293 $102,829 $ 464
Contracts Sold:
Danish Krone 6/3/98 1,310,955 193,367 192,847 (520)
Pound Sterling 6/3/98 61,676 100,563 100,736 173
Mexican Peso 6/1/98 767,750 87,047 87,047 --
Swedish Krona 6/2/98 2,048,573 260,965 261,388 424
Net Unrealized
Appreciation
(Depreciation) on
Foreign Exchange
Contracts $ 541
</TABLE>
Foreign Currency Translation
The accounting records of the Fund are maintained in U.S. dollars. All assets
and liabilities denominated in foreign currencies ("FC") are translated into
U.S. dollars based on the rate of exchange of such currencies against U.S.
dollars on the date of valuation. Purchases and sales of securities, income and
expenses are translated at the rate of exchange quoted on the respective date
that such transactions are recorded. Differences between income and expense
amounts recorded and collected or paid are adjusted when reported by the
custodian bank. The Fund does not isolate that portion of the results of
operations resulting from changes in foreign exchange rates on investments from
the fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss from
investments.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
FCs, currency gains or losses realized between the trade and settlement dates on
securities transactions, the difference between the amounts of dividends,
interest, and foreign withholding taxes recorded on the Fund's books, and the
U.S. dollar equivalent of the amounts actually received or paid. Net unrealized
foreign exchange gains and losses arise from changes in the value of assets and
liabilities other than investments in securities at fiscal year end, resulting
from changes in the exchange rate.
Dollar Roll Transactions
The Fund enters into dollar roll transactions, with respect to mortgage
securities issued by GNMA, FNMA and FHLMC, in which the Fund sells mortgage
securities to financial institutions and simultaneously agrees to accept
substantially similar (same type, coupon and maturity) securities at a later
date at an agreed upon price. Dollar roll transactions involve "to be announced"
securities and are therefore treated as 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.
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>
Six Months Ended
(unaudited) Year Ended
May 31, 1998 November 30, 1997
Institutional Shares Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Shares sold 1,524,962 $ 20,656,628 3,204,660 $ 41,207,438
Shares issued to shareholders in payment of distributions declared 306,251 3,951,143 189,433 2,352,593
Shares redeemed (1,133,062) (15,656,858) (1,748,701) (22,354,908)
Net change resulting from Institutional Shares transactions 698,151 $ 8,950,913 1,645,392 $ 21,205,123
Select Shares
Shares sold 966,597 $ 13,216,101 1,899,443 $ 24,224,712
Shares issued to shareholders in payment of distributions declared 189,301 2,436,271 118,629 1,468,205
Shares redeemed (522,926) (7,180,445) (1,173,146) (15,430,006)
Net change resulting from Select Shares transactions 632,972 $ 8,471,927 844,926 $ 10,262,911
Net change resulting from share transactions 1,331,123 $ 17,422,840 2,490,318 $ 31,468,034
</TABLE>
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 Fundexpense.
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, Inc. 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 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 the Adviser. The Fund
has agreed to reimburse the Adviser for the organizational expenses during the
five year period following the effective date. For the period ended May 31,
1998, the Fund paid $41,625 pursuant to this agreement.
General
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
Year 2000
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
Investment Transactions
Purchases and sales of investments, excluding short-term securities, for the
period ended May 31, 1998, were as follows:
Purchases $86,326,887
Sales $71,903,707
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 May 31, 1998, the diversification
of industries was as follows:
<TABLE>
<CAPTION>
Percent of Percent of
Industry Net Assets Industry Net Assets
<S> <C> <C> <C>
Aerospace & Military Technology 0.6% Health & Personal Care 1.1%
Agency 0.5 Insurance 1.3
Automobile 0.3 Machinery & Engineering 0.3
Banking 2.5 Merchandising 0.7
Beverage & Tobacco 0.2 Metals--Steel 0.0
Broadcasting & Publishing 0.2 Miscellaneous Materials & Commodities 0.1
Building Materials & Components 0.1 Multi-Industry 0.0
Chemicals 0.4 Publishing 0.2
Construction & Housing 0.2 Real Estate 0.6
Data Processing & Reproduction 0.6 Recreation, Other Consumer Goods 0.1
Electrical & Electronics 0.7 Sovereign Government 2.7
Electronic Components, Instruments 0.2 State/Provincial 0.0
Energy Equipment & Services 0.1 Supranational 0.5
Energy Sources 0.8 Technology 0.2
Finance 0.1 Telecommunications 1.3
Financial Intermediaries 0.2 Utilities--Electrical & Gas 0.8
Financial Services 0.7 Wholesale & International Trade 0.2
Food & Household Products 0.5
</TABLE>
TRUSTEES
John F. Donahue
Thomas G. Bigley
John T. Conroy, Jr.
William J. Copeland
James E. Dowd, Esq.
Lawrence D. Ellis, M.D.
Edward L. Flaherty, Jr., Esq.
Glen R. Johnson
Peter E. Madden
John E. Murray, Jr., J.D., S.J.D.
Wesley W. Posvar
Marjorie P. Smuts
OFFICERS
John F. Donahue
Chairman
Glen R. Johnson
President
J. Christopher Donahue
Executive Vice President
Edward C. Gonzales
Executive Vice President
John W. McGonigle
Executive Vice President, Treasurer, and Secretary
Richard B. Fisher
Vice President
Karen M. Brownlee
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectuses which contain facts
concerning its objective and policies, management fees, expenses and other
information.
[logo]
Federated Managed
Aggressive
Growth Fund
Institutional Shares
Select Shares
Federated Securities Corp., Distributor
Federated Investors, Inc.
Federated Investor Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
1-800-341-7400
www.federatedinvestors.com
Semi-Annual Report
to Shareholders
May 31, 1998
Cusip 56166K701
Cusip 56166K800
G00514-01 (7/98)
[recyled logo]
PRESIDENT'S MESSAGE
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders for Federated
Managed Growth Fund for the six-month period from December 1, 1997 through May
31, 1998. Included in this report is our investment review, followed by a
complete listing of the fund's holdings, financial statements and highlights.
In pursuit of its investment objective, the fund invests in a well-diversified
portfolio of stocks and bonds. At the end of the reporting period, 56.0% of the
fund's $255.2-million in net assets were invested across stocks, including large
company, small company, and foreign. The rest of the portfolio was diversified
among U.S. and foreign bonds.*
During the first half of the fund's fiscal year, the fund's Institutional Shares
delivered a total return of 8.20%** through dividends totaling $0.17 per share,
and capital gains totaling $0.88 per share. The fund's Select Shares produced a
total return of 7.85%** through dividends totaling $0.13 per share, and capital
gains totaling $0.88 per share.
Thank you for pursuing your long-term goals through the high level of
diversification and professional management of Federated Managed Growth Fund. As
always, we invite your comments and suggestions.
Sincerely,
/s/ Glen R. Johnson
Glen R. Johnson
President
July 15, 1998
* Foreign investing involves special risks including currency risk, increased
volatility of foreign securities, and differences in auditing and other
financial standards.
** Performance quoted represents past performance and is not indicative of
future results. Investment return and principal value will fluctuate, so that
an investor's shares, when redeemed, may be worth more or less than their
original cost.
INVESTMENT REVIEW
Performance For Six Months Ended May 31, 1998
The six month reporting period ended May 31, 1998 was a generally favorable one
for financial assets, and Federated Managed Growth Fund participated in the
advance. For the six months ended May 31, 1998, an investor in the fund's
Institutional Shares had a total return of 8.20%,* while an investor in the
fund's Select Shares had a total return of 7.85%.* As usual, performance among
asset classes showed wide variation. Reversing a pattern that has held for the
last few years, foreign stocks performed well over the reporting period. Shares
of large companies in developed foreign countries outperformed, on average,
shares of U.S. large companies. European stock markets did especially well as
investors looked forward to the benefits of a new single currency for the
European Monetary Union. In the U.S., the strength in the market was primarily
in large company stocks as shares in small company stocks had solid but more
moderate returns. The bond market also delivered solid single digit returns as
interest rates fell during the reporting period in response to an expected
recession in Asia's developing economies.
Asset Allocation as of May 31, 1998
Federated Managed Growth Fund operates on an investment philosophy that, over
time, an investor with a diversified portfolio will achieve better returns with
the same risk, or the same returns with lower risk, than an investor in a single
asset category. Therefore, to ensure proper diversification of its portfolio,
the fund's investment policies require management to allocate the portfolio
among as many as eight asset categories and limit the weight of each asset
category. In allocating the fund's portfolio among asset categories, fund
management analyzes the relative value offered by each category under prevailing
market conditions. Fund management seeks to improve the fund's performance by
weighting most heavily the asset categories that management believes will
provide the best relative value. The following table shows the allocation of the
portfolio among different asset categories at May 31, 1998.
*Performance quoted represents past performance and is not indicative of future
results. Investment return and principal value will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their original
cost.
<TABLE>
<CAPTION>
Asset Categories As A Percentage of Total Net Assets
Permitted Percentage as of
Asset Category Range May 31, 1998
<S> <C> <C>
Bonds (1) 30-50 43.6
U.S. Treasury Securities 0-40 22.3
Mortgage-Backed
Securities 0-15 6.5
Investment Grade
Corporate Bonds 0-15 7.1
High Yield Corporate Bonds 0-15 2.8
Foreign Bonds 0-15 4.9
Equities (1) 50-70 56.0
Large Company Stocks 30-50 33.3
Small Company Stocks 5-15 10.9
Foreign Stocks 5-15 11.8
</TABLE>
(1) Bonds convertible into equity securities at a price below the closing price
of the underlying equity securities on May 31, 1998 have been included under
the appropriate equity asset category.
The U.S. has enjoyed seven years of economic expansion which has driven
corporate profits strongly upward. The accompanying bull market in stocks has
pushed stock prices up even faster than earnings. However, this favorable price
movement in stocks has created a valuation problem for U.S. stocks. Relative to
historical measures of value, U.S. stocks are richly priced. This implies that
long-term returns from these price levels are likely to be moderate. Moreover,
stretched valuation levels for stocks make the bond market look more attractive.
Offsetting the valuation factors which favor bonds, the U.S. economy appears to
be in solid shape with good growth and low inflation. Moreover, U.S. monetary
policy appears supportive of further price gains in financial assets. Thus, fund
management moved equity exposure up during the reporting period to normal levels
in response to this favorable near-term environment for equities.
Structure of the Bond Portfolio
Within the range of four to six years, the fund's bond duration is set at 4.5
years. This duration is set at a somewhat below average level in recognition
that the current economic cycle is one of the longest in post-war history and
late stages of business cycles are often unfavorable environments for bonds.
Therefore, a somewhat conservative bond position is appropriate due to cyclical
concerns despite the favorable secular or longer-term outlook for bonds.
Within the bond portfolio, mortgage-backed securities were kept at normal levels
as their yield advantage was offset by the prospect of increased interest rate
volatility, which usually causes mortgage-backed securities to underperform
comparable U.S. Treasurys. Lower than normal yield advantages offered by
corporate bonds over U.S. Treasurys led fund management to underweight both
investment grade and high yield corporate bonds.
Structure of the Equity Portfolio
Equity exposure was increased in the portfolio, primarily in the large company
stock area. Other areas of the stock market such as small company stocks and
foreign stocks appear more reasonably valued than U.S. large company stocks.
However, the economic cycle appears to favor large company stocks. This economic
expansion has lasted seven years, substantially longer than the average U.S.
economic expansion. In the late stages of economic expansions, investors usually
begin to favor larger company stocks for their perceived stability of earnings.
Finally, a rising dollar creates a performance drag for U.S. investors in
foreign stocks. Thus, fund management held weights in the other equity asset
classes near neutral levels despite their valuation advantages.
PORTFOLIO OF INVESTMENTS
Federated Managed Growth Fund
May 31, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
in U.S.
Shares Dollars
<C> <S> <C>
*Stocks--56.0%
Large-Company Value Stocks--16.7%
Basic Industry--0.6%
26,600 Archer-Daniels-Midland Co. $ 502,075
4,400 Dow Chemical Co. 426,250
26,000 LTV Corporation 284,375
5,300 Martin Marietta Materials 243,800
Total 1,456,500
Consumer Durables--0.6%
6,800 Eastman Kodak Co. 485,350
4,600 Ford Motor Co. 238,625
6,200 General Motors Corp. 446,013
14,200 Rubbermaid, Inc. 463,275
Total 1,633,263
Consumer Non-Durables--0.7%
6,000 BestFoods 338,625
8,600 Kimberly-Clark Corp. 426,238
13,700 RJR Nabisco Holdings Corp. 386,169
10,200 UST, Inc. 271,575
8,000 Universal Corp. 300,500
Total 1,723,107
Energy Minerals--1.9%
5,100 Atlantic Richfield Co. 402,262
10,400 (a)BJ Services Co. 339,950
6,700 Chevron Corp. 535,162
21,800 Exxon Corp. 1,536,890
12,500 Occidental Petroleum Corp. 345,313
16,300 Sun Co., Inc. 692,750
9,300 Texaco, Inc. 537,075
16,700 USX-Marathon Group 584,500
Total 4,973,902
Value
in U.S.
Shares Dollars
Stocks--continued
Large-Company Value Stocks--continued
Finance--5.0%
7,900 Ahmanson (H.F.) & Co. $ 602,375
7,600 Allmerica Financial Corp. 476,425
8,600 Allstate Corp. 809,475
2,600 American International Group, Inc. 321,912
1,205 Associates First Capital Corp., Class A 90,193
13,300 Banc One Corp. 733,162
6,300 Bank of New York Co., Inc. 385,087
4,700 BankAmerica Corp. 388,631
2,300 Bankers Trust New York Corp. 284,050
7,900 Bear Stearns Cos., Inc. 428,575
8,400 Block (H&R), Inc. 369,600
12,300 CIGNA Corp. 842,550
2,300 Chase Manhattan Corp. 312,656
1,900 Citicorp 283,337
9,300 Equitable Companies Inc. 640,538
15,600 First Union Corp. 862,875
3,200 Fleet Financial Group, Inc. 262,400
1,800 General RE Corp. 395,775
7,900 (a)Golden State Bancorp, Inc. 302,669
5,600 MBIA, Inc. 417,550
5,100 Marsh & McLennan Cos., Inc. 446,569
5,700 Mellon Bank Corp. 384,394
5,200 Merrill Lynch & Co., Inc. 465,400
7,800 Morgan Stanley, Dean Witter, Discover & Co. 608,888
11,700 NationsBank Corp. 886,275
10,650 Old Republic International Corp. 303,525
6,600 Torchmark Corp. 282,975
7,100 Washington Federal, Inc. 197,469
Total 12,785,330
Health Care--0.9%
20,400 Pharmacia & Upjohn, Inc. 901,425
21,700 U.S. Surgical Corp. 862,575
Federated Managed Growth Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Large-Company Value Stocks--continued
Health Care--continued
7,500 United Healthcare Corp. $ 480,000
Total 2,244,000
Producer Manufacturing--1.1%
22,600 ITT Industries, Inc. 833,375
14,600 Ingersoll-Rand Co. 657,913
10,400 Johnson Controls, Inc. 618,800
3,900 Loews Corp. 353,925
8,200 Parker-Hannifin Corp. 336,713
Total 2,800,726
Retail Trade--0.4%
26,200 (a)K Mart Corp. 507,625
14,000 Limited, Inc. 465,500
Total 973,125
Services--0.6%
6,900 CBS Corp. 219,075
17,500 Readers Digest Association, Inc., Class A 498,750
26,800 Waste Management, Inc. 871,000
Total 1,588,825
Technology--1.3%
10,800 AMP, Inc. 410,400
11,700 First Data Corp. 389,025
4,000 International Business Machines Corp. 469,500
3,500 Northrop Corp. 375,156
47,900 (a)Novell, Inc. 502,950
7,200 Raytheon Co., Class A 383,850
9,200 (a)Storage Technology Corp. 771,650
Total 3,302,531
Transportation--0.5%
10,500 CNF Transportation, Inc. 431,156
500 (a)Continental Airlines, Inc., Class B 28,281
11,400 Ryder Systems, Inc. 388,313
Federated Managed Growth Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Large-Company Value Stocks--continued
Transportation--continued
11,800 Southwest Airlines Co. $ 314,913
Total 1,162,663
Utilities--3.1%
7,800 AT&T Corp. 474,825
8,700 Bell Atlantic Corp. 797,137
8,000 CMS Energy Corp. 348,500
10,900 Coastal Corp. 768,450
5,300 Columbia Gas System, Inc. 447,188
20,300 Entergy Corp. 534,144
14,000 GTE Corp. 816,375
16,200 Houston Industries, Inc. 463,725
19,400 MCI Communications Corp. 1,037,284
18,100 P G & E Corp. 570,150
9,700 Pacificorp 223,706
10,900 Public Service Enterprises Group, Inc. 360,381
7,800 Texas Utilities Co. 308,100
15,600 U.S. West, Inc. 791,700
Total 7,941,665
Total Large-Company Value Stocks 42,585,637
Large-Company Growth Stocks--16.6%
Basic Industry--0.6%
2,900 Air Products & Chemicals, Inc. 252,300
4,000 Avery Dennison Corp. 207,250
3,600 Bemis Co., Inc. 151,875
8,500 Crown Cork & Seal Co., Inc. 440,938
4,400 Hercules, Inc. 193,875
4,700 Monsanto Co. 260,263
Total 1,506,501
Consumer Durables--0.1%
5,300 Harley Davidson, Inc. 189,475
Consumer Non-Durables--2.6%
7,800 Campbell Soup Co. 425,100
Federated Managed Growth Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Large-Company Growth Stocks--continued
Consumer Non-Durables--continued
14,400 Coca-Cola Co. $ 1,128,590
19,700 Dial Corp. 488,806
2,800 Gillette Co. 327,950
7,500 (a)Jones Apparel Group, Inc. 475,313
11,300 PepsiCo, Inc. 461,181
23,200 Philip Morris Cos., Inc. 867,100
8,700 Procter & Gamble Co. 730,256
4,500 Quaker Oats Co. 259,594
4,400 Sara Lee Corp. 259,050
5,800 UST, Inc. 154,425
7,900 Wolverine World Wide, Inc. 195,031
8,200 Wrigley (Wm.), Jr. Co. 789,250
Total 6,561,646
Energy Minerals--0.3%
6,900 Diamond Offshore Drilling, Inc. 329,906
9,500 (a)Global Marine, Inc. 211,969
5,000 Halliburton Co. 236,875
Total 778,750
Finance--1.9%
5,300 American Express Co. 543,912
9,500 Block (H&R), Inc. 418,000
12,600 (a)Catellus Development Corp. 233,887
9,400 Conseco, Inc. 438,275
7,500 Federal National Mortgage Association 449,063
1,700 Household International, Inc. 230,031
21,000 MBNA Corp. 665,438
2,700 MGIC Investment Corp. 161,831
2,800 Marsh & McLennan Cos., Inc. 245,175
6,800 Morgan Stanley, Dean Witter, Discover & Co. 530,825
5,200 Sunamerica, Inc. 252,850
11,700 Travelers Group, Inc. 713,700
Total 4,882,987
Federated Managed Growth Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Large-Company Growth Stocks--continued
Health Care--3.4%
11,500 Abbott Laboratories $ 853,156
24,100 (a)Beverly Enterprises, Inc. 344,931
8,100 Bristol-Myers Squibb Co. 870,750
3,800 (a)Centocor, Inc. 148,200
11,500 (a)Chiron Corp. 207,719
4,700 Guidant Corp. 302,856
9,600 HBO & Co. 554,100
10,600 (a)HEALTHSOUTH Corp. 300,775
9,200 Johnson & Johnson 635,375
5,600 Lilly (Eli) & Co. 344,050
11,600 Merck & Co., Inc. 1,357,915
6,000 Pfizer, Inc. 628,875
7,400 (a)Quintiles Transnational Corp. 359,825
6,000 Schering Plough Corp. 502,125
3,800 United Healthcare Corp. 243,200
6,300 (a)Universal Health Services, Inc., Class B 346,500
11,400 Warner-Lambert Co. 727,463
Total 8,727,815
Producer Manufacturing--1.2%
3,100 Allied-Signal, Inc. 132,525
6,200 Dover Corp. 232,500
20,100 General Electric Co. 1,675,828
6,900 (a)Lexmark Intl. Group, Class A 382,950
4,500 Masco Corp. 253,125
7,400 Miller Herman, Inc. 204,888
4,500 Precision Castparts Corp. 259,313
Total 3,141,129
Retail Trade--1.2%
13,000 (a)General Nutrition Cos., Inc. 410,313
6,600 Home Depot, Inc. 518,513
10,600 (a)Safeway, Inc. 386,238
12,400 TJX Cos., Inc. 579,700
Federated Managed Growth Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Large-Company Growth Stocks--continued
Retail Trade--continued
19,600 Wal-Mart Stores, Inc. $ 1,081,665
Total 2,976,429
Services--1.3%
6,693 (a)Cendant Corp. 145,154
5,200 (a)Chancellor Media Corp., Class A 217,425
3,300 Disney (Walt) Co. 373,313
4,100 Gannett Co., Inc. 270,344
9,900 (a)Liberty Media Group, Class A 326,700
3,500 McDonald's Corp. 229,688
10,700 Service Corp. International 437,363
12,400 (a)Tricon Global Restaurants, Inc. 385,175
10,000 (a)Viacom, Inc., Class A 550,625
5,700 (a)Viacom, Inc., Class B 313,500
Total 3,249,287
Technology--3.4%
7,200 (a)America Online, Inc. 599,850
6,000 (a)Applied Materials, Inc. 192,000
12,400 (a)BMC Software, Inc. 571,175
9,300 (a)Cabletron Systems, Inc. 119,737
8,500 (a)Cadence Design Systems, Inc. 299,625
8,650 (a)Cisco Systems, Inc. 654,156
3,900 Computer Associates International, Inc. 204,750
5,600 (a)Dell Computer Corp. 461,475
10,100 (a)EMC Corp. Mass 418,519
12,000 First Data Corp. 399,000
4,100 Hillenbrand Industries, Inc. 253,175
9,800 Intel Corp. 700,088
7,400 Lucent Technologies, Inc. 524,938
16,400 (a)Microsoft Corp. 1,390,922
7,800 (a)Peoplesoft, Inc. 340,763
7,200 (a)SCI Systems, Inc. 245,700
14,500 (a)Seagate Technology, Inc. 335,313
Federated Managed Growth Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Large-Company Growth Stocks--continued
Technology--continued
8,700 (a)Sun Microsystems, Inc. $ 348,544
5,300 (a)Tellabs, Inc. 364,209
4,100 United Technologies Corp. 385,400
Total 8,809,339
Utilities--0.6%
9,900 (a)Airtouch Communications, Inc. 471,487
4,800 (a)PanAmSat Corp. 262,200
5,500 (a)Teleport Communications Group, Inc., Class A 307,656
8,600 (a)WorldCom, Inc. 391,300
Total 1,432,643
Total Large-Company Growth Stocks 42,256,001
Small-Company Stocks--10.9%
Basic Industry--0.6%
4,700 Cambrex Corp. 262,906
6,900 (a)Carbide/Graphite Group, Inc. 225,544
12,200 Furon Co. 194,438
4,400 Lone Star Industries, Inc. 330,825
5,800 (a)Lone Star Technologies, Inc. 110,200
15,300 Spartech Corp. 342,338
Total 1,466,251
Consumer Durables--0.7%
6,900 (a)Action Performance Companies, Inc. 191,906
8,900 (a)American Homestar Corporation 189,125
4,000 Carlisle Cos., Inc. 193,500
8,400 (a)Dura Automotive Systems, Inc. 304,500
5,200 (a)Gentex Corp. 190,450
14,500 (a)Helen of Troy Ltd. 277,313
6,900 Oakwood Homes Corp. 187,594
12,300 (a)Stanley Furniture Co. Inc. 249,075
5,300 (a)Toll Brothers, Inc. 136,475
Total 1,919,938
Federated Managed Growth Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Small-Company Stocks--continued
Consumer Non-Durables--0.5%
6,300 (a)Blyth Industries, Inc. $ 193,331
10,100 (a)Nautica Enterprise, Inc. 295,425
7,100 (a)North Face, Inc. 176,169
8,800 (a)Smithfield Foods, Inc. 237,600
4,900 (a)Suiza Foods Corp. 286,344
10,000 Wolverine World Wide, Inc. 246,875
Total 1,435,744
Energy Minerals--0.3%
3,500 Camco International, Inc. 244,125
21,100 (a)Comstock Resources, Inc. 211,000
8,000 (a)EEX Corp. 79,000
5,900 (a)Tuboscope Inc. 133,488
9,700 Vintage Petroleum, Inc. 175,813
Total 843,426
Finance--1.7%
6,800 (a)Amresco, Inc. 229,500
4,100 CMAC Investment Corp. 248,050
5,500 City National Corp. 202,125
10,900 Community First Bankshares, Inc. 265,688
4,494 (a)Delphi Financial Group, Inc., Class A 244,080
9,700 (a)Delta Financial Corp. 170,963
3,500 Enhance Financial Services Group, Inc. 227,938
2,900 Executive Risk, Inc. 182,519
5,000 (a)FIRSTPLUS Financial Group, Inc. 199,375
7,000 (a)FirstFed Financial Corp. 343,438
9,800 GBC Bancorp 280,525
8,600 (a)Imperial Bancorp 251,550
7,100 Mutual Risk Management Ltd. 248,944
12,600 North Fork Bancorp, Inc. 303,188
7,100 Sirrom Capital Corp. 189,038
6,700 (a)Triad Guaranty, Inc. 221,100
6,800 (a)United Rentals, Inc. 234,600
Federated Managed Growth Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Small-Company Stocks--continued
Finance--continued
4,000 Vesta Insurance Group, Inc. $ 210,750
Total 4,253,371
Health Care--1.0%
8,300 (a)Access Health, Inc. 212,687
6,800 (a)Alternative Living Services, Inc. 184,450
9,500 (a)Aurora Biosciences, Inc. 71,844
31,800 (a)Balanced Care Corp. 254,400
4,700 (a)Curative Technologies, Inc. 132,188
7,100 (a)Genesis Health Ventures, Inc. 179,719
5,000 (a)Healthcare & Retirement Corp. 193,438
6,100 (a)Medicis Pharmaceutical Corp., Class A 248,956
4,000 (a)Patterson Dental Co. 130,000
9,900 (a)PharMerica, Inc. 120,656
8,200 (a)Phycor, Inc. 138,375
13,100 (a)Prime Medical Services 137,550
8,259 (a)Respironics, Inc. 135,757
5,700 (a)Sybron International Corp. 136,444
4,800 (a)Universal Health Services, Inc., Class B 264,000
Total 2,540,464
Producer Manufacturing--0.7%
9,175 (a)AFC Cable Systems, Inc. 309,656
9,800 (a)Ballantyne of Omaha, Inc. 179,462
900 C&D Technologies, Inc. 50,400
9,550 (a)Cable Design Technologies, Class A 225,022
10,700 (a)EVI, Inc. 541,019
6,800 (a)Rayovac Corp. 142,800
6,900 (a)SLI, Inc. 196,650
9,700 (a)US Office Products Co. 164,294
Total 1,809,303
Retail Trade--1.1%
5,700 (a)CDW Computer Centers, Inc. 234,769
11,500 Claire's Stores, Inc. 216,344
Federated Managed Growth Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Small-Company Stocks--continued
Retail Trade--continued
3,900 (a)Express Scripts, Inc., Class A $ 300,056
5,400 (a)Funco, Inc. 88,425
5,300 (a)Mens Wearhouse, Inc. 225,913
9,000 (a)Microage, Inc. 121,500
6,800 (a)O'Reilly Automotive, Inc. 221,000
7,100 (a)Pacific Sunwear of California 317,947
9,000 (a)Pomeroy Computer Resources 202,500
6,600 (a)Proffitts, Inc. 259,050
9,200 (a)Renters Choice, Inc. 244,950
8,800 (a)Zale Corp. 272,250
Total 2,704,704
Services--1.6%
8,000 (a)ABR Information Services, Inc. 205,000
6,100 (a)Allied Waste Industries, Inc. 161,650
9,900 (a)American Business Information, Class A 122,512
9,900 (a)American Business Information, Class B 124,987
8,950 (a)BARRA, Inc. 182,356
8,600 (a)Billing Concepts Corp. 199,950
5,900 (a)Caribiner International, Inc. 130,537
7,200 (a)Daisytek International Corp. 183,600
6,800 (a)FactSet Research Systems 220,575
6,000 (a)Labor Ready, Inc. 202,875
8,800 (a)Landrys Seafood Restaurants, Inc. 199,375
12,300 (a)Newpark Resources, Inc. 221,888
13,000 (a)Personnel Group of America, Inc. 263,250
12,100 (a)Prime Hospitality Corp. 217,044
15,700 (a)ProBusiness Services, Inc. 572,069
6,500 (a)Rural/Metro Corp. 153,563
2,800 (a)Snyder Communications, Inc. 112,875
7,500 (a)StaffMark, Inc. 275,625
7,600 (a)World Access, Inc. 238,450
Total 3,988,181
Federated Managed Growth Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Small-Company Stocks--continued
Technology--2.1%
8,500 (a)ATMI, Inc. $ 154,062
8,700 (a)Apex mPC Solutions, Inc. 218,587
17,200 (a)Applied Voice Technology, Inc. 321,425
2,300 (a)Aspect Development, Inc. 131,531
13,300 (a)Atlantic Data Services, Inc. 174,562
8,200 (a)Benchmark Electronics, Inc. 165,537
10,000 (a)CHS Electronics, Inc. 198,750
8,100 (a)Ciber, Inc. 259,706
5,800 (a)Comverse Technology, Inc. 289,819
11,350 (a)Cybex Computer Products Corp. 261,050
10,400 (a)Cymer, Inc. 197,925
12,200 (a)DSP Group, Inc. 239,425
5,600 (a)Ducommun, Inc. 179,900
5,800 (a)Eltron International, Inc. 127,600
2,800 (a)Etec Systems, Inc. 102,375
5,200 (a)HADCO Corp. 167,050
6,500 (a)Integrated Circuit System, Inc. 89,578
9,400 (a)MRV Communications, Inc. 218,550
13,500 (a)Mastech Corp. 255,234
6,900 (a)Micrel, Inc. 215,841
4,800 (a)Microchip Technology, Inc. 117,600
3,600 (a)Orbotech, Ltd. 118,800
7,000 (a)Qlogic Corp. 283,500
5,500 (a)RELTEC Corp. 202,125
8,500 (a)SS&C Technologies, Inc. 140,250
3,100 (a)Sanmina Corp. 241,413
7,400 (a)Smart Modular Technologies, Inc. 101,288
4,800 (a)Transaction Systems Architects, Inc., Class A 194,400
4,000 (a)Vitesse Semiconductor Corp. 102,500
Total 5,470,383
Transportation--0.2%
3,300 Airlines Express International Corp. 85,181
Federated Managed Growth Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Small-Company Stocks--continued
Transportation--continued
5,000 Comair Holdings, Inc. $ 133,125
2,600 Expeditors International Washington, Inc. 104,000
2,600 (a)Heartland Express, Inc. 56,875
2,200 USFreightways Corp. 69,300
4,050 Werner Enterprises, Inc. 76,950
Total 525,431
Utilities--0.4%
1,400 Central Hudson Gas & Electric Service 61,162
1,100 Cilcorp, Inc. 48,469
1,900 Commonwealth Energy System 72,200
3,300 K N Energy, Inc. 178,613
1,500 New Jersey Resources Corp. 53,906
2,600 Piedmont Natural Gas, Inc. 82,388
5,500 (a)Premiere Technologies, Inc. 131,313
2,600 Sierra Pacific Resources 89,213
6,100 (a)Transaction Network Services, Inc. 124,288
1,700 WICOR, Inc. 77,775
Total 919,327
Total Small-Company Stocks 27,876,523
Foreign Stocks--11.8%
Argentina--0.0%
9,700 (a)Banco Rio de la Plata SA, ADR 116,400
Australia--0.2%
61,700 Austrim Ltd 118,624
79,000 Woolworth's Ltd. 271,611
Total 390,235
Belgium--0.1%
6,400 (a)Global TeleSystems Group, Inc., ADR 245,200
Brazil--0.0%
1,863,801 Companhia Energetica de Minas Gerais, Preference 61,580
Croatia--0.0%
6,720 (a)Pliva D.D., GDR, 144A 110,544
Federated Managed Growth Fund
Value
Shares in U.S.
or Units Dollars
Stocks--continued
Foreign Stocks--continued
Finland--0.2%
25,000 Finnair $ 258,145
3,600 OY Nokia AB, ADR, Class A 233,775
2,530 Sampo Insurance Co. Ltd., Class A 117,559
Total 609,479
France--2.2%
2,100 AXA 239,027
3,000 Alcatel Alsthom 641,818
7,800 Assurances Generales de France 481,063
3,300 Banque Nationale de Paris 281,849
1,410 Compagnie de Saint Gobain 278,088
13,000 Dassault Systemes SA 606,218
1,550 Elf Aquitaine SA 215,285
1,600 Groupe Danon BSN SA 430,821
1,330 Guyenne Et Gascogne 497,944
1,050 Rexel 438,568
5,250 (a)SGS-Thomas Microelectronics N.V. (NY Reg Shs) 406,219
3,400 Scor SA 214,240
2,000 Societe Generale, Paris 396,122
5,200 Thomson-CSF 210,329
2,600 TOTAL SA-B 322,881
Total 5,660,472
Germany, Federal Republic Of--1.3%
210 Bayerische Motoren Werke AG 222,211
42 Bayerische Motoren Werke AG, New Share 43,901
5,600 Bhf-bank 229,744
6,100 Deutsche Bank, AG 525,128
6,065 Dresdner Bank Ag, Frankfurt 340,938
850 Holzmann (Philipp) 234,861
550 Mannesmann AG 537,901
465 Muenchener Rueckversicherungs-Gesellschaft AG--REG 211,227
13,000 Skw Trostberg 528,233
4,100 Tarkett Sommer AG 160,852
Value
Shares in U.S.
or Units Dollars
Stocks--continued
Foreign Stocks--continued
Germany, Federal Republic Of--continued
315 Volkswagen AG $ 255,460
Total 3,290,456
Hong Kong--0.4%
57,000 Cheung Kong 308,207
3,751 HSBC Holdings PLC 91,004
83,000 Henderson Land Development Co. Ltd. 293,483
122,000 (a)New World Development Co. Ltd. 288,115
Total 980,809
Ireland--0.1%
6,000 (a)Elan Corp. PLC, ADR 367,125
Italy--1.1%
11,500 Assicurazioni Generali 369,596
115,000 Banca di Roma 237,130
45,000 Banca Commerciale Italiana 265,700
34,000 Banca Intesa SPA 211,968
40,000 CREDITO ITALIANO ORD 223,094
52,150 ENI 368,728
68,000 ITALGAS 313,311
30,000 MONDADORI ORD 366,894
60,000 TELECOM ITALIA SPA 453,413
Total 2,809,834
Japan--1.1%
20 Circle K Japan Co. Ltd. 735
30,000 Fujitsu Ltd. 344,429
7,000 Ito-Yokado Co., Ltd. 348,762
40,000 Mitsubishi Estate Co. Ltd. 351,506
9 NTT Data Communications Systems Co. 361,326
34 Nippon Telegraph & Telephone Corp. 279,876
4,500 Orix Corp 292,765
6,000 Sony Corp. 506,896
16,500 Tokyo Electric Power Co. 315,727
Total 2,802,022
Federated Managed Growth Fund
Value
Shares in U.S.
or Units Dollars
Stocks--continued
Foreign Stocks--continued
Korea, Republic Of--0.0%
870 Pohang Iron and Steel Co. Ltd. $ 35,302
Netherlands--0.7%
9,116 ABN-Amro Holdings NV 220,776
6,428 ING GROEP, NV 441,415
7,000 KONINKLIJKE AHOLD NV 221,029
3,559 KONINKLIJKE PTT NEDERLAND NV 198,917
10,400 ORDINA BEHEER NV 337,210
1,959 WOLTERS KLUWER NV 275,188
Total 1,694,535
Norway--0.2%
52,000 Christiania Bank 222,909
4,500 Transocean Offshore, Inc. 221,906
Total 444,815
Philippines--0.0%
50 (a)Filinvest Land, Inc. 4
Portugal--0.1%
5,000 BPI-SGPS S.A. 202,573
Spain--0.7%
1,800 (a)Azucarera Ebro Agricolas, SA 46,440
3,300 Banco Popular Espanol 261,735
15,600 Endesa SA 373,659
8,050 Iberdrola SA 132,794
5,925 Repsol SA 329,188
10,840 Tabacalera SA 233,537
6,490 TELEFONICA SA 289,919
Total 1,667,272
Sweden--0.4%
10,000 Celsius B 259,018
27,000 Skand Enskilda BKN, Class A 449,581
10,400 Telefonaktiebolaget LM Ericsson 296,582
Total 1,005,181
Federated Managed Growth Fund
Value
Shares in U.S.
or Units Dollars
Stocks--continued
Foreign Stocks--continued
Switzerland--0.8%
200 Baloise Holdings-REG $ 475,869
170 Nestle SA 364,097
306 Novartis AG--REG 518,021
32 Roche Holding AG--GENUSS 329,072
205 UBS--Union Bank of Switzerland--BEARER 344,549
Total 2,031,608
United Kingdom--2.2%
40,500 Allied Domecq PLC 403,838
7,369 Barclays PLC 196,680
30,117 British Aerospace PLC 267,102
14,876 British Petroleum Co. PLC 218,433
10,250 British-Borneo Petroleum Syndicate PLC 64,454
15,000 Commercial Union PLC 272,680
34,500 Croda International 259,768
20,710 EMI Group PLC 175,217
17,450 General Electric Co. PLC 143,076
8,599 Glaxo Wellcome PLC 231,458
40,000 Guardian Royal Exchange PLC 254,142
42,000 (a)Guardian Royal Exchange PLC, Class B 13,720
33,000 Lasmo 156,307
20,000 National Westminster Bank, PLC, London 365,533
18,800 Prudential Corp. PLC 249,947
16,400 Reed International PLC 152,011
65,665 ROLLS-ROYCE 312,904
47,000 SECURICOR PLC 355,423
9,568 SIEBE PLC 239,899
17,627 SMITHKLINE BEECHAM PLC 191,023
45,212 VODAFONE GROUP PLC 496,976
13,450 ZENECA GROUP 546,781
Total 5,567,372
Total Foreign Stocks 30,092,818
Total Stocks (identified cost $116,906,035) 142,810,979
Federated Managed Growth Fund
Value
Principal in U.S.
Amount Dollars
Bonds--43.6%
Treasury--22.3%
(b)Repurchase Agreements and Government Securities--6.6%
$ 15,090,000 BT Securities Corp., 5.570%, dated 5/29/1998, due 6/1/1998 $ 15,090,000
1,380,000 (c)Goldman Sachs Group, LP, 5.480%, dated 4/17/1998, due 6/10/1998 1,380,000
420,000 (c)Goldman Sachs Group, LP, 5.490%, dated 5/6/1998, due 6/10/1998 420,000
Total (at amortized cost) 16,890,000
United States Treasury Securities--15.7%
5,500,000 United States Treasury Bill, 6/18/1998 5,489,770
5,000,000 United States Treasury Bill, 6/25/1998 4,986,200
1,244,000 United States Treasury Bond, 6.125%, 11/15/2027 1,300,179
7,000,000 United States Treasury Bond, 8.125%, 5/15/2021 8,928,570
8,473,000 United States Treasury Note, 5.750%, 8/15/2003 8,540,106
675,000 United States Treasury Note, 6.250%, 2/15/2003 693,029
8,225,000 United States Treasury Note, 6.500%, 10/15/2006 8,669,890
1,255,000 United States Treasury Note, 6.625%, 5/15/2007 1,337,290
Total 39,945,034
Total Repurchase Agreements, Treasury and Government Securities 56,835,034
Mortgage-Backed Securities--6.5%
Government Agency--6.5%
258,753 Federal Home Loan Mortgage Corp., 8.000%, 5/1/2006 265,625
247,795 Federal Home Loan Mortgage Corp., 7.500%, 10/1/2025 255,462
783,515 Federal Home Loan Mortgage Corp., 7.500%, 7/1/2026 806,777
379,465 Federal Home Loan Mortgage Corp., 7.500%, 7/1/2026 390,375
483,346 Federal Home Loan Mortgage Corp., 8.000%, 10/1/2010 499,509
708,186 Federal Home Loan Mortgage Corp., 7.000%, 1/1/2011 722,788
134,110 Federal Home Loan Mortgage Corp., 7.000%, 4/1/2009 137,044
374,268 Federal Home Loan Mortgage Corp., 6.500%, 10/1/2010 377,542
570,368 Federal Home Loan Mortgage Corp., 6.500%, 5/1/2011 574,823
942,623 Federal Home Loan Mortgage Corp., 6.000%, 7/1/2011 934,743
1,380,000 (d)Federal Home Loan Mortgage Corp., 7.000%, TBA 1,402,687
405,000 Federal National Mortgage Association, 6.500%, 7/10/2002 264,094
1,219,335 Federal National Mortgage Association, 7.000%, 2/1/2024 1,247,526
777,138 Federal National Mortgage Association, 7.500%, 11/1/2010 800,452
Federated Managed Growth Fund
Value
Principal in U.S.
Amount Dollars
Bonds--continued
Mortgage-Backed Securities--continued
Government Agency--continued
$ 88,004 Federal National Mortgage Association, 8.500%, 2/1/2025 $ 92,321
1,440,237 Federal National Mortgage Association, 6.500%, 10/1/2025 1,436,033
806,834 Federal National Mortgage Association, 8.000%, 5/1/2027 839,406
420,000 (d)Federal National Mortgage Association, 7.000%, TBA 426,035
777,098 Government National Mortgage Association, 8.500%, 2/15/2022 823,242
532,264 Government National Mortgage Association, 7.000%, 1/15/2024 542,079
446,778 Government National Mortgage Association, 6.500%, 1/15/2024 447,198
210,147 Government National Mortgage Association, 7.000%, 5/15/2024 213,955
202,608 Government National Mortgage Association, 8.000%, 11/15/2024 211,156
389,738 Government National Mortgage Association, 7.500%, 12/15/2027 401,551
380,278 Government National Mortgage Association, 8.000%, 5/15/2025 396,082
356,772 Government National Mortgage Association, 8.000%, 7/15/2025 371,599
789,806 Government National Mortgage Association, 7.500%, 2/15/2026 815,720
985,618 Government National Mortgage Association, 7.000%, 1/15/2028 1,001,329
Total Mortgage-Backed Securities 16,697,153
High Yield Bonds--2.8%
723,793 (e)The High Yield Bond Portfolio 7,172,787
Investment Grade Bonds--7.1%
Aerospace & Defense--0.3%
600,000 McDonnell Douglas Finance, Medium Term Note, 6.375%, 7/15/1999 604,206
Automobile--0.3%
225,000 Arvin Industries, Inc., Note, 6.750%, 3/15/2008 225,484
450,000 Dana Corp., Note, 7.000%, 3/15/2028 459,869
Total 685,353
Banking--0.6%
100,000 City National Bank, Sub. Note, 6.375%, 1/15/2008 99,459
330,000 (f)Den Danske Bank, Note, 7.400% 6/15/2010 347,140
250,000 National Bank of Canada, Sub. Note, 8.125%, 8/15/2004 272,793
500,000 Santander Finance Issuances, Bank Guarantee, 7.875%, 4/15/2005 539,370
330,000 (f)Swedbank, Sub., 7.500% 11/29/2049 340,207
Total 1,598,969
Federated Managed Growth Fund
Value
Principal in U.S.
Amount Dollars
Bonds--continued
Investment Grade Bonds--continued
Beverage & Tobacco--0.2%
$ 50,000 Philip Morris Cos., Inc., Deb., 6.000%, 7/15/2001 $ 49,423
450,000 Philip Morris Cos., Inc., Deb., 9.250%, 2/15/2000 471,875
Total 521,298
Broadcast Radio & TV--0.2%
500,000 SCI Television, Sr. Secd. Note, 11.000%, 6/30/2005 507,240
Cable Television--0.7%
460,000 Continental Cablevision, Sr. Deb., 9.500%, 8/1/2013 544,493
1,000,000 TKR Cable Inc., 10.500%, 10/30/2007 1,108,630
Total 1,653,123
Chemicals & Plastics--0.2%
500,000 (f)Bayer Corp., Deb., 6.500%, 10/1/2002 511,275
Education--0.2%
500,000 Boston University, 7.625%, 7/15/2097 577,637
Financial Intermediaries--0.8%
450,000 DLJ, Note, 6.875%, 11/1/2005 462,695
450,000 Green Tree Financial Corp, Sr. Sub. Note, 10.250%, 6/1/2002 500,900
250,000 Lehman Brothers Holdings Inc, Note, 6.900%, 1/29/2001 254,765
300,000 Lehman Brothers Holding, Bond, 6.200%, 1/15/2002 300,261
300,000 Lehman Brothers, Inc., Sr. Sub. Note, 7.375%, 1/15/2007 318,342
150,000 Salomon, Inc., Note, 7.200%, 2/1/2004 156,662
Total 1,993,625
Forest Products--0.2%
450,000 Quno Corp., Sr. Note, 9.125%, 5/15/2005 491,238
Government Agency--0.3%
840,000 TVA 11/15/2029 795,245
Insurance--0.8%
225,000 Conseco, Inc., Sr. Note, 10.500%, 12/15/2004 270,770
300,000 NAC Re Corp, Note, 8.000%, 6/15/1999 306,207
450,000 Provident Cos., Inc., Bond, 7.405%, 3/15/2038 467,441
250,000 Sunamerica Inc, Medium Term Note, 7.340%, 8/30/2005 266,596
450,000 Sunamerica, Inc., Sr. Note, 9.000%, 1/15/1999 458,721
Federated Managed Growth Fund
Value
Principal in U.S.
Amount Dollars
Bonds--continued
Investment Grade Bonds--continued
Insurance--continued
$ 250,000 (f)USF&G Cap, 8.312%, 7/1/2046 $ 293,863
Total 2,063,598
Leisure & Entertainment--0.2%
500,000 Viacom, Inc., Sr. Note, 7.750%, 6/1/2005 534,695
Metals & Mining--0.2%
275,000 Barrick Gold Corp., Deb., 7.500%, 5/1/2007 292,628
250,000 Santa Fe Pacific Gold, Note, 8.375%, 7/01/2005 271,443
Total 564,071
Pharmaceutical--0.2%
550,000 American Home Products Corp., Note, 7.700%, 2/15/2000 565,736
Retailers--0.4%
400,000 Harcourt General, Sr. Deb., 7.200%, 8/1/2027 406,088
550,000 Sears, Roebuck & Co., Medium Term Note, 7.320%, 4/24/2000 563,475
Total 969,563
Services--0.3%
200,000 Loewen Group Int'l, Sr. Note, 8.250%, 4/15/2003 212,676
450,000 Service Corp. Int'l, Note, 6.500%, 3/15/2008 454,104
Total 666,780
Sovereign--0.2%
500,000 Export-Import Bank Korea, Note, 6.500%, 5/15/2000 467,154
Sovereign Government--0.4%
530,000 Republic Of South Africa, Global Bond Deb., 9.625%, 12/15/1999 551,529
535,000 Republic of Colombia, Note, 7.250%, 2/15/2003 512,931
Total 1,064,460
Surface Transportation--0.2%
500,000 Trans Ocean Container Corp., Sr. Sub. Note, 12.250%, 7/1/2004 564,465
Technology Services--0.1%
3,200 Microsoft Corp., Conv. Pfd., Series A, $2.196 298,800
Utilities--0.1%
100,000 Cajun Electric Power, 9.520%, 3/15/2019 105,072
400,000 Tennessee Valley Authority--Global Bond, 6.375%, 9/18/2006 244,472
Total 349,544
Total Investment Grade Bonds 18,048,075
Federated Managed Growth Fund
Foreign Value
Currency in U.S.
Par Amount Dollars
Bonds--continued
Foreign Bonds--4.9%
Australian Dollar--0.2%
213,000 QTC-Global Notes, Deb., 10.500%, 5/15/2003 $ 162,871
310,000 West Aust T Corp, Local Gov't. Guarantee, 8.000%, 7/15/2003 217,533
Total 380,404
Austrian Mark--0.2%
915,000 Republic of Austria, Unsub., 6.500%, 1/10/2024 580,000
Belgian Franc--0.0%
2,570,000 Belgian Govt., Bond, 6.500%, 3/31/2005 76,604
Canadian Dollar--0.5%
569,000 Canada Government, Deb., 6.500%, 6/1/2004 415,047
400,000 Ontario Hydro, 9.000%, 6/24/2002 310,248
739,000 Ontario Hydro, Bond, 7.750%, 11/3/2005 577,297
Total 1,302,592
Danish Krone--0.1%
1,200,000 Denmark, 8.000%, 5/15/2003 201,327
Deutsche Mark--1.1%
727,000 DG-HYPBK 5.750%, 1/22/2007 428,642
260,000 Depfa-Bank, 5.500%, 1/15/2013 148,692
822,000 European Investment Bank, 5.000%, 4/15/2008 904,457
42,000,000 KFW International Finance, 6.000%, 11/29/1999 328,139
500,000 KFW International Finance, Bank Guarantee, 6.750%, 6/20/2005 311,230
1,050,000 Treuhandanstalt, 7.750%, 10/1/2002 663,220
Total 2,784,380
Greek Drachma--0.5%
165,000,000 Hellenic Republic, Bond, 8.800%, 6/19/2007 574,454
181,800,000 Hellenic Republic, FRN 10/23/2003 603,414
Total 1,177,868
Hungarian Forint--0.0%
25,000,000 Hungary Govt, Bond, 14.000%, 12/12/2002 110,030
Italian Lira--0.7%
265,000,000 Btps, Bond, 10.500%, 11/1/2000 170,816
425,000,000 Btps, Deb., 12.000%, 5/18/1999 257,393
Federated Managed Growth Fund
Foreign Value
Currency in U.S.
Par Amount Dollar
Bonds--continued
Foreign Bonds--continued
Italian Lira--continued
1,225,000,000 Buoni Poliennali Del Tes, 9.500%, 1/1/2005 $ 872,272
510,000,000 Buoni Poliennali Del Tes, Deb., 12.000%, 1/01/2002 358,451
Total 1,658,932
Japanese Yen--0.0%
10,000,000 Interamerican Development, Deb., 7.250%, 5/15/2000 81,556
Mexican Peso--0.0%
120,000 Mexican Cetes, 2/11/1999 117,959
Netherlands Guilder--0.3%
285,000 Bank Ned Gemeenten, Bond, 6.375%, 1/4/2006 154,330
400,000 Bk Ned Gemeenten, Bond, 7.750%, 12/20/2004 230,327
220,000 Lkb-global Bd, Bank Guarantee, 6.000%, 1/25/2006 131,316
300,000 Netherlands Government, 6.000%, 1/15/2006 160,737
Total 676,710
New Zealand Dollar--0.1%
205,000 New Zealand Government, 8.000%, 2/15/2001 112,234
270,000 New Zealand Government, Bond, 8.000%, 7/15/1998 144,567
Total 256,801
Norwegian Krone--0.3%
1,429,000 NGB Bond, 9.000%, 1/31/1999 194,430
730,000 Norwegian Government, 5.500%, 5/15/2009 96,330
1,620,000 Norwegian Government, Bond, 7.000%, 5/31/2001 225,169
1,215,000 Norwegian Govt., Foreign Gov't. Guarantee, 5.750%, 11/30/2004 163,926
Total 679,855
Polish Zloty--0.1%
730,000 Poland Govt Bond, 12.000%, 6/12/2003 174,083
South African Rand--0.0%
550,000 Republic of South Africa, Bond, 12.500%, 12/21/2006 98,750
Spanish Peseta--0.3%
40,000,000 Spanish Government, 10.000%, 2/28/2005 340,561
44,300,000 Spanish Govt, Bond, 8.800%, 4/30/2006 364,368
15,030,000 Spanish Govt., Deb., 10.100%, 2/28/2001 113,506
Total 818,435
Federated Managed Growth Fund
Foreign Value
Currency in U.S.
Par Amount Dollar
Bonds--continued
Foreign Bonds--continued
Swedish Krona--0.1%
1,000,000 Stadshypotekskas, Foreign Gov't. Guarantee, Series 1551, 7.500%, 3/17/1999 $ 130,341
700,000 Sweden, Deb., 13.000%, 6/15/2001 110,039
Total 240,380
United Kingdom Pound--0.4%
366,000 British Gas PLC, 8.875%, 7/8/2008 698,291
145,000 U.K. TREASURY, DEB., 8.500%, 12/7/2005 275,017
Total 973,308
Total Foreign Bonds 12,389,974
Total Bonds (identified cost $108,732,725) 111,143,023
Total Investments (identified cost $225,638,760)(g) $253,954,002
</TABLE>
* The Fund purchases index futures contracts to efficiently manage cash flows
resulting from shareholder purchases and redemptions, dividends and capital
gain payment to shareholders and corporate actions while maintaining exposure
to the index and to minimize trading costs. The underlying face amount, at
value, of open index futures contracts is $10,089,900 at May 31, 1998, which
represents 4.0% of net assets. Taking into consideration these open index
futures contracts, the Fund's effective total exposure to stocks is 60.0%,
and the increased total exposure to small company stocks is 14.9%
(a) Non-income producing security.
(b) 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
investment in the repurchase agreements are through participation in joint
accounts with other Federated funds.
(c) 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.
(d) These securities are subject to dollar roll transactions.
(e) The High Yield Bond Portfolio is a diversified portfolio of below investment
grade securities.
(f) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. At May 31, 1998, these securities amounted to
$1,492,485 which represents 0.6% of net assets.
(g) The cost of investments for federal tax purposes amounts to $225,638,760.
The net unrealized appreciation/depreciation of investments on a federal tax
basis amounts to $28,315,242 which is comprised of $33,296,318 appreciation
and $4,981,076 depreciation at May 31, 1998.
Note: The categories of investments are shown as a percentage of net assets
($255,182,134) at May 31, 1998.
The following acronym(s) are used throughout this portfolio: ADR --American
Depositary Receipt FRN --Floating Rate Note GDR --Global Depository Receipt LP
- --Limited Partnership MBIA --Municipal Bond Investors Assurance PLC --Public
Limited Company SA --Support Agreement SPA --Standby Purchase Agreement TBA --To
Be Announced TRANs --Tax and Revenue Anticipation Notes
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF ASSETS AND LIABILITIES
Federated Managed Growth Fund
May 31, 1998 (unaudited)
<TABLE>
<CAPTION>
Assets:
<S> <C> <C>
Total investments in securities, at value (identified and tax cost $225,638,760) $253,954,002
Cash 17,518
Cash denominated in foreign currencies (at identified cost $848,787) 850,859
Income receivable 1,531,725
Receivable for investments sold 4,258,916
Receivable for shares sold 173,821
Receivable for foreign currency exchange contracts purchased and sold 1,096
Deferred organizational costs 22,654
Other assets 12,867
Total assets 260,823,458
Liabilities:
Payable for investments purchased $ 3,617,998
Payable for dollar roll transactions 1,821,347
Payable for taxes withheld 14,111
Payable for daily variation margin 91,575
Accrued expenses 96,293
Total liabilities 5,641,324
Net Assets for 19,588,533 shares outstanding $255,182,134
Net Assets Consist of:
Paid in capital $218,779,708
Net unrealized appreciation of investments and translation of assets and liabilities
in foreign currency 28,056,728
Accumulated net realized gain on investments and foreign currency transactions 8,033,993
Undistributed net investment income 311,705
Total Net Assets $255,182,134
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
Institutional Shares:
$173,358,904 O 13,294,193 shares outstanding $13.04
Select Shares:
$81,823,230 O 6,294,340 shares outstanding $13.00
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF OPERATIONS
Federated Managed Growth Fund
Six Months Ended May 31, 1998 (unaudited)
<TABLE>
<CAPTION>
Investment Income:
<S> <C> <C> <C>
Dividends (net of foreign taxes withheld of $40,300) $ 1,100,217
Interest (net of dollar roll expense of $15,648 and foreign taxes withheld of $4,785) 3,417,891
Total income 4,518,108
Expenses:
Investment advisory fee $ 918,685
Administrative personnel and services fee 92,807
Custodian fees 22,616
Transfer and dividend disbursing agent fees and expenses 84,860
Directors'/Trustees' fees 3,036
Auditing fees 7,355
Legal fees 2,848
Portfolio accounting fees 44,006
Distribution services fee--Select Shares 290,165
Shareholder services fee--Institutional Shares 210,992
Shareholder services fee--Select Shares 96,722
Share registration costs 14,423
Printing and postage 15,168
Insurance premiums 2,426
Taxes 2,128
Miscellaneous 12,434
Total expenses 1,820,671
Waivers--
Waiver of distribution services fee--Select Shares $ (96,722)
Waiver of shareholder services fee--Institutional Shares (168,794)
Total waivers (265,516)
Net expenses 1,555,155
Net investment income 2,962,953
Realized and Unrealized Gain on Investments and Foreign Currency:
Net realized gain on investments and foreign currency transactions 7,605,659 Net
change in unrealized appreciation of investments and translation of assets and
liabilities in foreign currency 8,607,577
Net realized and unrealized gain on investments and foreign currency 16,213,236
Change in net assets resulting from operations $19,176,189
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF CHANGES IN NET ASSETS
Federated Managed Growth Fund
<TABLE>
<CAPTION>
Six Months
Ended
(unaudited) Year Ended
May 31, November 30,
1998 1997
<S> <C> <C>
Increase (Decrease) in Net Assets:
Operations--
Net investment income $ 2,962,953 $ 6,276,504
Net realized gain on investments and foreign currency transactions
($7,657,831 and $16,550,986, respectively, as computed for federal tax purposes) 7,605,659 15,812,213
Net change in unrealized appreciation of investments and translation of assets
and liabilities in foreign currency 8,607,577 5,706,798
Change in net assets resulting from operations 19,176,189 27,795,515
Distributions to Shareholders--
Distributions from net investment income
Institutional Shares (2,230,910) (4,729,122)
Select Shares (753,689) (1,781,932)
Distributions from net realized gains on investments and foreign currency transactions
Institutional Shares (10,981,747) (3,327,990)
Select Shares (4,961,147) (1,494,754)
Change in net assets resulting from distributions to shareholders (18,927,493) (11,333,798)
Share Transactions--
Proceeds from sale of shares 49,111,521 104,253,170
Net asset value of shares issued to shareholders in
payment of distributions declared 14,785,929 8,122,432
Cost of shares redeemed (45,228,484) (89,036,194)
Change in net assets resulting from share transactions 18,668,966 23,339,408
Change in net assets 18,917,662 39,801,125
Net Assets:
Beginning of period 236,264,472 196,463,347
End of period (including undistributed net investment
income of $311,705 and $333,351, respectively) $255,182,134 $236,264,472
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
Federated Managed Growth Fund
<TABLE>
<CAPTION>
(For a share outstanding throughout each period)
Six Months
Ended
(unaudited)
May 31, Year Ended November 30,
1998 1997 1996 1995 1994(a)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 13.10 $ 12.23 $ 11.52 $ 9.82 $ 10.00
Income from investment operations
Net investment income 0.17 0.38 0.41 0.40 0.20
Net realized and unrealized gain (loss) on investments and
foreign currency 0.82 1.19 0.97 1.70 (0.26)
Total from investment operations 0.99 1.57 1.38 2.10 (0.06)
Less distributions
Distributions from net investment income (0.17) (0.40) (0.44) (0.40) (0.12)
Distributions from net realized gain on investments and foreign
currency transactions (0.88) (0.30) (0.23) -- --
Total distributions (1.05) (0.70) (0.67) (0.40) (0.12)
Net asset value, end of period $ 13.04 $ 13.10 $ 12.23 $ 11.52 $ 9.82
Total return (b) 8.20% 13.39% 12.54% 21.79% (0.59%)
Ratios to average net assets
Expenses 1.04%* 1.05% 1.05% 1.00% 0.89%*
Net investment income 2.63%* 3.07% 3.77% 4.29% 4.28%*
Expense waiver/reimbursement (c) 0.20%* 0.26% 0.40% 0.76% 0.90%*
Supplemental data
Net assets, end of period (000 omitted) $173,359 $163,519 $136,255 $68,313 $28,973
Average commission rate paid (d) $ 0.0164 $ 0.0068 $ 0.0020 -- --
Portfolio turnover 53% 136% 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.
(d) Represents total commissions paid on portfolio securities divided by total
portfolio shares purchased or sold on which commissions were charged.
(See Notes which are an integral part of the Financial Statements)
FINANCIAL HIGHLIGHTS--SELECT SHARES
Federated Managed Growth Fund
<TABLE>
<CAPTION>
(For a share outstanding throughout each period)
Six Months
Ended
(unaudited)
May 31, Year Ended November 30,
1998 1997 1996 1995 1994(a)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 13.06 $ 12.20 $ 11.50 $ 9.81 $ 10.00
Income from investment operations
Net investment income 0.13 0.30 0.36 0.23 0.15
Net realized and unrealized gain (loss) on investments and
foreign currency 0.82 1.18 0.94 1.79 (0.24)
Total from investment operations 0.95 1.48 1.30 2.02 (0.09)
Less distributions
Distributions from net investment income (0.13) (0.32) (0.37) (0.33) (0.10)
Distributions from net realized gain on investments and foreign
currency transactions (0.88) (0.30) (0.23) -- --
Total distributions (1.01) (0.62) (0.60) (0.33) (0.10)
Net asset value, end of period $ 13.00 $ 13.06 $ 12.20 $ 11.50 $ 9.81
Total return (b) 7.85% 12.56% 11.75% 20.95% (0.90%)
Ratios to average net assets
Expenses 1.74%* 1.75% 1.75% 1.75% 1.70%*
Net investment income 1.93%* 2.37% 3.06% 3.48% 3.53%*
Expense waiver/reimbursement (c) 0.25%* 0.31% 0.45% 0.76% 1.15%*
Supplemental data
Net assets, end of period (000 omitted) $81,823 $72,746 $60,208 $27,358 $ 2,952
Average commission rate paid (d) $0.0164 $0.0068 $0.0020 -- --
Portfolio turnover 53% 136% 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.
(d) Represents total commissions paid on portfolio securities divided by total
portfolio shares purchased or sold on which commissions were charged.
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
Federated Managed Growth Fund
May 31, 1998 (unaudited)
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").
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.
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
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. Listed equity securities are valued
at the last sale price reported on a national securities exchange. Short-term
securities are valued at the prices provided by an independent pricing service.
However, short-term securities with remaining maturities of sixty days or less
at the time of purchase may be valued at amortized cost, which approximates fair
market value. Investments in other open-end regulated investment companies are
valued at net asset 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.
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.
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 May 31, 1998, the Fund had realized
gains of $779,595 on futures contracts.
At May 31, 1998, the Fund had outstanding futures contracts as set forth below:
Contracts to Unrealized
Expiration Date Deliver/Receive Position Depreciation
June 1998 37 S&P 500 Index Long $328,943
Foreign Exchange Contracts
The Fund may enter into foreign currency commitments for the delayed delivery of
securities or foreign currency exchange transactions. The Fund may enter into
foreign currency contract transactions to protect assets against adverse changes
in foreign currency exchange rates or exchange control regulations. Purchased
contracts are used to acquire exposure to foreign currencies; whereas, 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
counterparties to meet the terms of their commitments and from unanticipated
movements in security prices or foreign exchange rates. The foreign currency
transactions are adjusted by the daily exchange rate of the underlying currency
and any gains or losses are recorded for financial statement purpose as
unrealized until the settlement date.
At May 31, 1998, the Fund had outstanding foreign currency commitments as set
forth below:
<TABLE>
<CAPTION>
Foreign Currency Unrealized
Settlement Contracts to In Exchange Contracts at Gain
Contracts Purchased: Date Deliver/Receive For Value (Loss)
<S> <C> <C> <C> <C> <C>
Netherlands Guilder 6/2/98 $ 441,159 $220,359 $219,367 $ 992
Contracts Sold:
Danish Krone 6/3/98 1,892,406 279,131 278,381 (750)
Pound Sterling 6/3/98 92,514 150,845 151,104 259
Mexican Peso 6/1/98 201,929 22,894 22,894 --
Swedish Krona 6/2/98 2,880,805 366,981 367,576 595
Net Gain on Foreign Exchange Contracts: $1,096
</TABLE>
Foreign Currency Translation
The accounting records of the Fund are maintained in U.S. dollars. All assets
and liabilities denominated in foreign currencies ("FC") are translated into
U.S. dollars based on the rate of exchange of such currencies against U.S.
dollars on the date of valuation. Purchases and sales of securities, income and
expenses are translated at the rate of exchange quoted on the respective date
that such transactions are recorded. Differences between income and expense
amounts recorded and collected or paid are adjusted when reported by the
custodian bank. The Fund does not isolate that portion of the results of
operations resulting from changes in foreign exchange rates on investments from
the fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss from
investments.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
FCs, currency gains or losses realized between the trade and settlement dates on
securities transactions, the difference between the amounts of dividends,
interest, and foreign withholding taxes recorded on the Fund's books, and the
U.S. dollar equivalent of the amounts actually received or paid. Net unrealized
foreign exchange gains and losses arise from changes in the value of assets and
liabilities other than investments in securities at fiscal year end, resulting
from changes in the exchange rate.
Dollar Roll Transactions
The Fund enters into dollar roll transactions, with respect to mortgage
securities issued by GNMA, FNMA and FHLMC, in which the Fund sells mortgage
securities to financial institutions and simultaneously agrees to accept
substantially similar (same type, coupon and maturity) securities at a later
date at an agreed upon price. Dollar roll transactions involve "to be announced"
securities and are treated as short-term financing arrangements which will not
exceed twelve months. The Fund will use the proceeds generated from the
transactions to invest in short-term investments, which may enhance the Fund's
current yield and total return.
Restricted Securities
Restricted securities are securities that may only be resold upon registration
under federal securities laws or in transactions exempt from such registration.
In some cases, the issuer of restricted securities has agreed to register such
securities for resale, at the issuer's expense either upon demand by the Fund or
in connection with another registered offering of the securities. Many
restricted securities may be resold in the secondary market in transactions
exempt from registration. Such restricted securities may be determined to be
liquid under criteria established by the Trustees. The Fund will not incur any
registration costs upon such resales. The Fund's restricted securities are
valued at the price provided by dealers in the secondary market or, if no market
prices are available, at the fair value as determined by the Fund's pricing
committee.
Additional information on each restricted security held at May 31, 1998 is as
follows:
<TABLE>
<CAPTION>
Security Acquisition Date Acquisition Cost
<S> <C> <C>
Bayer Corp. 5/21/96-7/1/97 $493,905
Den Danske Bank 1/7/98 347,266
Swedbank 1/7/98 344,642
USF&G Cap 7/3/97 250,000
Use of Estimates
</TABLE>
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.
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.
<TABLE>
<CAPTION>
Transactions in shares were as follows:
Six Months Ended Year Ended
May 31, 1998 November 30, 1997
Institutional Shares Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Shares sold 2,669,154 $ 34,016,142 5,853,857 $ 72,401,751
Shares issued to shareholders in payment of distributions declared 779,211 9,501,588 420,257 5,082,597
Shares redeemed (2,640,292) (33,831,172) (4,927,672) (60,980,593)
Net change resulting from Institutional Share transactions 808,073 $ 9,686,558 1,346,442 $ 16,503,755
Select Shares
Shares sold 1,180,087 $ 15,095,379 2,599,873 $ 31,851,419
Shares issued to shareholders in payment of distributions declared 434,562 5,284,341 252,195 3,039,835
Shares redeemed (891,322) (11,397,312) (2,215,315) (28,055,601)
Net change resulting from Select Share transactions 723,327 $ 8,982,408 636,753 $ 6,835,653
Net change resulting from share transactions 1,531,400 $ 18,668,966 1,983,195 $ 23,339,408
</TABLE>
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, Inc. 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 the Select Shares' 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 for the period. The fee paid to FSS is used to finance certain
services for Federated 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 the Adviser. The Fund
has reimbursed the Adviser for these expenses. These expenses have been deferred
and are being amortized over the five year period following the Fund's effective
date. For the year ended November 30, 1997, the Fund expensed $41,663 of
organizational expenses.
General
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
Year 2000
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
Investment Transactions
Purchases and sales of investments, excluding short-term securities, for the
period ended May 31, 1998, were as follows:
Purchases $126,212,969
Sales $121,075,133
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 May 31, 1998, the diversification of industries was as follows:
<TABLE>
<CAPTION>
Percentage of Percentage of
Industry Net Assets Industry Net Assets
<S> <C> <C> <C>
Aerospace & Military Technology 0.5 Insurance 0.9
Agency 0.6 Machinery & Engineering 0.3
Automobile 0.2 Merchandising 0.5
Banking 2.6 Metals & Mining 0.1
Beverage & Tobacco 0.2 Metals--Steel 0.0
Broadcasting & Publishing 0.2 Miscellaneous Materials &
Chemicals 0.3 Commodities 0.1
Construction & Housing 0.2 Publishing 0.1
Data Processing & Reproduction 0.5 Real Estate 0.5
Electrical & Electronics 0.6 Recreation, Other Consumer Goods 0.1
Electronic Components, Instruments 0.2 Sovereign 3.0
Energy Equipment & Services 0.1 Sovereign Government 0.6
Energy Sources 0.7 State/Provincial 0.1
Finance 0.1 Supranational 0.4
Financial Intermediaries 0.3 Technology 0.1
Financial Services 0.6 Telecommunications 1.1
Food & Household Products 0.3 Utilities 0.3
Forest Products 0.2 Utilities--Electrical & Gas 0.5
Health & Personal Care 0.9 Wholesale & International Trade 0.2
</TABLE>
TRUSTEES
John F. Donahue
Thomas G. Bigley
John T. Conroy, Jr.
William J. Copeland
James E. Dowd, Esq.
Lawrence D. Ellis, M.D.
Edward L. Flaherty, Jr., Esq.
Glen R. Johnson
Peter E. Madden
John E. Murray, Jr., J.D., S.J.D.
Wesley W. Posvar
Marjorie P. Smuts
OFFICERS
John F. Donahue
Chairman
Glen R. Johnson
President
J. Christopher Donahue
Executive Vice President
Edward C. Gonzales
Executive Vice President
John W. McGonigle
Executive Vice President, Treasurer, and Secretary
Richard B. Fisher
Vice President
Karen M. Brownlee
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectuses which contain facts
concerning its objective and policies, management fees, expenses and other
information.
[LOGO]
Federated Managed
Growth Fund
Institutional Shares
Select Shares
Federated Securities Corp., Distributor
Federated Investors, Inc.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
1-800-341-7400
www.federatedinvestors.com
Semi-Annual Report
to Shareholders
May 31, 1998
Cusip 56166K503
Cusip 56166K602
G00515-01 (7/98) [RECYCLED LOGO]
PRESIDENT'S MESSAGE
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders for Federated
Managed Growth and Income Fund for the six-month period from December 1, 1997
through May 31, 1998. Included in this report is our investment review, followed
by a complete listing of the fund's holdings, financial statements and
highlights.
In pursuit of its investment objective, the fund invests in a well-diversified
portfolio of stocks and bonds. At the end of the reporting period, the fund's
$227-million in net assets were invested across U.S. stocks (35.1%), foreign
stocks (2.5%), U.S. bonds (59.4%) and foreign bonds (5.1%).*
During the first half of the fund's fiscal year, the fund's Institutional Shares
delivered a total return of 6.74%** through dividends totaling $0.23 per share
and capital gains totaling $0.62 per share. The fund's Select Shares produced a
total return of 6.45%** through dividends totaling $0.19 per share and capital
gains totaling $0.62 per share.
Thank you for pursuing your financial goals through the high level of
diversification and professional management of Federated Managed Growth and
Income Fund. As always, we invite your comments and suggestions.
Sincerely,
/s/ Glen R. Johnson
Glen R. Johnson
President
July 15, 1998
* Foreign investing involves special risks including currency risk, increased
volatility of foreign securities, and differences in auditing and other
financial standards.
** Performance quoted represents past performance and is not indicative of
future results. Investment return and principal value will fluctuate, so that
an investor's shares, when redeemed, may be worth more or less than their
original cost.
INVESTMENT REVIEW
Performance For Six Months Ended May 31, 1998
The six month reporting period ended May 31, 1998 was a generally favorable one
for financial assets, and Federated Managed Growth and Income Fund participated
in the advance. For the six months ended May 31, 1998, an investor in the fund's
Institutional Shares had a total return of 6.74%,* while an investor in the
fund's Select Shares had a total return of 6.45%.* Reversing a pattern that has
held for the last few years, foreign stocks performed well over the last six
months. Shares of large companies in developed foreign countries outperformed,
on average, shares of U.S. large companies. European stock markets did
especially well as investors looked forward to the benefits of a new single
currency for the European Monetary Union. In the U.S., the strength in the
market was primarily in large company stocks as shares in utility companies and
small company stocks had solid but more moderate returns. The bond market also
delivered solid single digit returns as interest rates fell during the reporting
period in response to an expected recession in Asia's developing economies.
Asset Allocation as of May 31, 1998
Federated Managed Growth and Income Fund operates on an investment philosophy
that, over time, an investor with a diversified portfolio will achieve better
returns with the same risk, or the same returns with lower risk, than an
investor in a single asset category. Therefore, to ensure proper diversification
of its portfolio, the fund's investment policies require management to allocate
the portfolio among as many as nine asset categories and limit the weight of
each asset category. In allocating the fund's portfolio among asset categories,
fund management analyzes the relative value offered by each category under
prevailing market conditions. Fund management seeks to improve the fund's
performance by weighting most heavily the asset categories that management
believes will provide the best relative value. The following table shows the
allocation of the portfolio among different asset categories at May 31, 1998.
* Performance quoted represents past performance and is not indicative of
future results. Investment return and principal value will fluctuate, so that
an investor's shares, when redeemed, may be worth more or less than their
original cost.
<TABLE>
<CAPTION>
Asset Categories As A Percentage of Total Net Assets
Permitted Percentage as of
Asset Category Range May 31, 1998
<S> <C> <C>
Bonds (1) 50-70 64.5
U.S. Treasury Securities 0-56 31.7
Mortgage-Backed Securities 0-35 13.9
Investment Grade
Corporate Bonds 0-35 10.9
High Yield Corporate Bonds 0-10 2.9
Foreign Bonds 0-10 5.1
Equities (1) 30-50 37.6
Large Company Stocks 22.5-37.5 27.0
Utility Stocks 2.5-7.5 5.5
Small Company Stocks 0-5 2.6
Foreign Stocks 0-5 2.5
</TABLE>
(1) Bonds convertible into equity securities at a price below the closing price
of the underlying equity securities on May 31, 1998 have been included under
the appropriate equity asset category.
The U.S. has enjoyed seven years of economic expansion which has driven
corporate profits strongly upward. The accompanying bull market in stocks has
pushed stock prices up even faster than earnings. However, this favorable price
movement in stocks has created a valuation problem for U.S. stocks. Relative to
historical measures of value, U.S. stocks are richly priced. This implies that
long-term returns from these price levels are likely to be moderate. Moreover,
stretched valuation levels for stocks make the bond market look more attractive.
Offsetting the valuation factors which favor bonds, the U.S. economy appears to
be in solid shape with good growth and low inflation. Moreover, U.S. monetary
policy appears supportive of further price gains in financial assets. Thus, fund
management moved equity exposure up during the reporting period to normal levels
in response to this favorable near-term environment for equities.
Structure of the Bond Portfolio
Within the range of four to six years, the fund's bond duration is set at 4.5
years. This duration is set at a somewhat below average level in recognition
that the current economic cycle is one of the longest in post-war history and
late stages of business cycles are often unfavorable environments for bonds.
Therefore, a somewhat conservative bond position is appropriate due to cyclical
concerns despite the favorable secular or longer-term outlook for bonds.
Within the bond portfolio, mortgage-backed securities were kept at normal levels
as their yield advantage was offset by the prospect of increased interest rate
volatility, which usually causes mortgage-backed securities to underperform
comparable U.S. Treasurys. Lower than normal yield advantages offered by
corporate bonds over U.S. Treasurys led fund management to underweight both
investment grade and high yield corporate bonds.
Structure of the Equity Portfolio
Equity exposure was increased in the portfolio, primarily in the large company
stock area. Other areas of the stock market such as utilities, small company
stocks, and foreign stocks appear more reasonably valued than U.S. large company
stocks. However, the economic cycle appears to favor large company stocks. This
economic expansion has lasted seven years, substantially longer than the average
U.S. economic expansion. In the late stages of economic expansions, interest
rates usually rise, putting pressure on utility stocks, and investors usually
begin to favor larger company stocks for their perceived stability of earnings.
Finally, a rising dollar creates a performance drag for U.S. investors in
foreign stocks. Thus, fund management held weights in the other equity asset
classes near neutral levels despite their valuation advantages.
PORTFOLIO OF INVESTMENTS
Federated Managed Growth And Income Fund
May 31, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
in U.S.
Shares Dollars
<C> <S> <C>
*Stocks--37.6%
Large-Company Value Stocks--13.7%
Basic Industry--0.5%
19,500 Archer-Daniels-Midland Co. $ 368,063
3,300 Dow Chemical Co. 319,688
19,100 LTV Corporation 208,906
3,800 Martin Marietta Materials 174,800
Total 1,071,457
Consumer Durables--0.5%
4,700 Eastman Kodak Co. 335,463
3,400 Ford Motor Co. 176,375
4,600 General Motors Corp. 330,913
10,500 Rubbermaid, Inc. 342,563
Total 1,185,314
Consumer Non-Durables--0.6%
4,800 BestFoods 270,900
6,200 Kimberly-Clark Corp. 307,288
9,400 RJR Nabisco Holdings Corp. 264,963
7,500 UST, Inc. 199,688
4,800 Universal Corp. 180,300
Total 1,223,139
Energy Minerals--1.6%
3,600 Atlantic Richfield Co. 283,950
6,600 (a)BJ Services Co. 215,738
4,900 Chevron Corp. 391,388
15,700 Exxon Corp. 1,106,849
9,200 Occidental Petroleum Corp. 254,150
12,100 Sun Co., Inc. 514,250
6,900 Texaco, Inc. 398,475
12,300 USX-Marathon Group 430,500
Total 3,595,300
Federated Managed Growth And Income Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Large-Company Value Stocks--continued
Finance--4.0%
5,700 Ahmanson (H.F.) & Co. $ 434,625
5,600 Allmerica Financial Corp. 351,050
6,352 Allstate Corp. 597,881
1,800 American International Group, Inc. 222,863
891 Associates First Capital Corp., Class A 66,665
9,500 Banc One Corp. 523,687
4,500 Bank of New York Co., Inc. 275,063
3,300 BankAmerica Corp. 272,869
1,700 Bankers Trust New York Corp. 209,950
5,800 Bear Stearns Cos., Inc. 314,650
6,100 Block (H&R), Inc. 268,400
9,000 CIGNA Corp. 616,499
1,700 Chase Manhattan Corp. 231,094
1,400 Citicorp 208,775
5,800 Equitable Companies Inc. 399,475
11,200 First Union Corp. 619,499
2,200 Fleet Financial Group, Inc. 180,400
1,300 General RE Corp. 285,838
5,700 (a)Golden State Bancorp, Inc. 218,381
4,100 MBIA, Inc. 305,706
3,700 Marsh & McLennan Cos., Inc. 323,981
4,100 Mellon Bank Corp. 276,494
3,700 Merrill Lynch & Co., Inc. 331,150
5,700 Morgan Stanley, Dean Witter, Discover & Co. 444,956
8,400 NationsBank Corp. 636,299
7,650 Old Republic International Corp. 218,025
4,700 Torchmark Corp. 201,513
5,000 Washington Federal, Inc. 139,063
Total 9,174,851
Health Care--0.7%
14,900 Pharmacia & Upjohn, Inc. 658,393
15,900 U.S. Surgical Corp. 632,024
Federated Managed Growth And Income Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Large-Company Value Stocks--continued
Health Care--continued
5,500 United Healthcare Corp. $ 352,000
Total 1,642,417
Producer Manufacturing--0.9%
16,600 ITT Industries, Inc. 612,124
10,700 Ingersoll-Rand Co. 482,169
7,600 Johnson Controls, Inc. 452,200
2,900 Loews Corp. 263,175
6,000 Parker-Hannifin Corp. 246,375
Total 2,056,043
Retail Trade--0.3%
19,000 (a)K Mart Corp. 368,125
10,000 Limited, Inc. 332,500
Total 700,625
Services--0.5%
4,400 CBS Corp. 139,700
13,000 Readers Digest Association, Inc., Class A 370,500
19,600 Waste Management, Inc. 637,000
Total 1,147,200
Technology--1.1%
7,900 AMP, Inc. 300,200
8,400 First Data Corp. 279,300
2,900 International Business Machines Corp. 340,388
2,500 Northrop Corp. 267,969
35,100 (a)Novell, Inc. 368,550
5,300 Raytheon Co., Class A 282,556
6,700 (a)Storage Technology Corp. 561,962
Total 2,400,925
Transportation--0.4%
7,800 CNF Transporation, Inc. 320,288
3,000 (a)Continental Airlines, Inc., Class B 169,688
8,300 Ryder Systems, Inc. 282,719
Federated Managed Growth And Income Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Large-Company Value Stocks--continued
Transportation--continued
8,800 Southwest Airlines Co. $ 234,850
Total 1,007,545
Utilities--2.6%
5,600 AT&T Corp. 340,900
6,700 Bell Atlantic Corp. 613,887
5,900 CMS Energy Corp. 257,019
7,900 Coastal Corp. 556,949
3,900 Columbia Gas System, Inc. 329,063
15,000 Entergy Corp. 394,688
10,100 GTE Corp. 588,955
11,800 Houston Industries, Inc. 337,775
14,200 MCI Communications Corp. 759,255
13,300 P G & E Corp. 418,950
7,000 Pacificorp 161,438
8,000 Public Service Enterprises Group, Inc. 264,500
5,600 Texas Utilities Co. 221,200
11,200 U.S. West, Inc. 568,400
Total 5,812,979
Total Large-Company Value Stocks 31,017,795
Large-Company Growth-Stocks--13.3%
Basic Industry--0.5%
2,100 Air Products & Chemicals, Inc. 182,700
3,000 Avery Dennison Corp. 155,438
2,700 Bemis Co., Inc. 113,906
6,100 Crown Cork & Seal Co., Inc. 316,438
3,200 Hercules, Inc. 141,000
2,900 Monsanto Co. 160,588
Total 1,070,070
Consumer Durables--0.1%
4,000 Harley Davidson, Inc. 143,000
Consumer Non-Durables--2.1%
5,600 Campbell Soup Co. 305,200
Federated Managed Growth And Income Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Large-Company Growth-Stocks--continued
Consumer Non-Durables--continued
10,400 Coca-Cola Co. $ 815,100
14,100 Dial Corp. 349,856
2,100 Gillette Co. 245,963
5,300 (a)Jones Apparel Group, Inc. 335,888
7,700 PepsiCo, Inc. 314,256
16,700 Philip Morris Cos., Inc. 624,162
6,300 Procter & Gamble Co. 528,805
3,500 Quaker Oats Co. 201,906
3,200 Sara Lee Corp. 188,400
4,300 UST, Inc. 114,488
5,600 Wolverine World Wide, Inc. 138,250
5,900 Wrigley (Wm.), Jr. Co. 567,874
Total 4,730,148
Energy Minerals--0.2%
4,400 Diamond Offshore Drilling, Inc. 210,375
6,000 (a)Global Marine, Inc. 133,875
3,700 Halliburton Co. 175,288
Total 519,538
Finance--1.5%
3,800 American Express Co. 389,975
6,800 Block (H&R), Inc. 299,200
8,500 (a)Catellus Development Corp. 157,781
7,100 Conseco, Inc. 331,038
5,300 Federal National Mortgage Association 317,338
1,200 Household International, Inc. 162,375
14,850 MBNA Corp. 470,559
1,900 MGIC Investment Corp. 113,881
2,000 Marsh & McLennan Cos., Inc. 175,125
4,900 Morgan Stanley, Dean Witter, Discover & Co. 382,506
3,700 Sunamerica, Inc. 179,913
8,250 Travelers Group, Inc. 503,250
Total 3,482,941
Federated Managed Growth And Income Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Large-Company Growth-Stocks--continued
Health Care--2.8%
8,200 Abbott Laboratories $ 608,337
16,700 (a)Beverly Enterprises, Inc. 239,019
6,000 Bristol-Myers Squibb Co. 645,000
2,800 (a)Centocor, Inc. 109,200
8,300 (a)Chiron Corp. 149,919
3,400 Guidant Corp. 219,088
6,800 HBO & Co. 392,488
7,500 (a)HEALTHSOUTH Corp. 212,813
6,500 Johnson & Johnson 448,906
4,000 Lilly (Eli) & Co. 245,750
8,400 Merck & Co., Inc. 983,324
4,500 Pfizer, Inc. 471,656
5,200 (a)Quintiles Transnational Corp. 252,850
4,400 Schering Plough Corp. 368,225
2,700 United Healthcare Corp. 172,800
4,400 (a)Universal Health Services, Inc., Class B 242,000
8,400 Warner-Lambert Co. 536,024
Total 6,297,399
Producer Manufacturing--1.1%
2,200 Allied-Signal, Inc. 94,050
4,400 Dover Corp. 165,000
4,500 (a)EVI, Inc. 227,981
14,500 General Electric Co. 1,208,937
5,100 (a)Lexmark Intl. Group, Class A 283,050
3,200 Masco Corp. 180,000
5,200 Miller Herman, Inc. 143,975
3,200 Precision Castparts Corp. 184,400
Total 2,487,393
Retail Trade--0.9%
9,600 (a)General Nutrition Cos., Inc. 303,000
4,750 Home Depot, Inc. 373,172
7,600 (a)Safeway, Inc. 276,925
Federated Managed Growth And Income Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Large-Company Growth-Stocks--continued
Retail Trade--continued
8,900 TJX Cos., Inc. $ 416,075
14,400 Wal-Mart Stores, Inc. 794,700
Total 2,163,872
Services--1.0%
4,970 (a)Cendant Corp. 107,787
3,800 (a)Chancellor Media Corp., Class A 158,888
2,400 Disney (Walt) Co. 271,500
2,900 Gannett Co., Inc. 191,219
7,350 (a)Liberty Media Group, Class A 242,550
2,500 McDonald's Corp. 164,063
7,700 Service Corp. International 314,738
9,100 (a)Tricon Global Restaurants, Inc. 282,669
4,400 (a)Viacom, Inc., Class A 242,275
4,400 (a)Viacom, Inc., Class B 242,000
Total 2,217,689
Technology--2.7%
5,200 (a)America Online, Inc. 433,225
4,300 (a)Applied Materials, Inc. 137,600
8,800 (a)BMC Software, Inc. 405,350
6,900 (a)Cabletron Systems, Inc. 88,838
6,400 (a)Cadence Design Systems, Inc. 225,600
5,400 (a)Cisco Systems, Inc. 408,375
2,800 Computer Associates International, Inc. 147,000
3,800 (a)Dell Computer Corp. 313,144
6,300 (a)EMC Corp. Mass 261,056
9,300 First Data Corp. 309,225
2,900 Hillenbrand Industries, Inc. 179,075
7,100 Intel Corp. 507,205
5,200 Lucent Technologies, Inc. 368,875
11,800 (a)Microsoft Corp. 1,000,787
4,900 (a)Peoplesoft, Inc. 214,069
5,200 (a)SCI Systems, Inc. 177,450
Federated Managed Growth And Income Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Large-Company Growth-Stocks--continued
Technology--continued
10,700 (a)Seagate Technology, Inc. $ 247,438
6,300 (a)Sun Microsystems, Inc. 252,394
3,700 (a)Tellabs, Inc. 254,259
2,900 United Technologies Corp. 272,600
Total 6,203,565
Utilities--0.4%
7,100 (a)Airtouch Communications, Inc. 338,138
3,500 (a)PanAmSat Corp. 191,188
3,900 (a)Teleport Communications Group, Inc., Class A 218,156
5,400 (a)WorldCom, Inc. 245,700
Total 993,182
Total Large-Company Growth-Stocks 30,308,797
Small-CompanyStocks --2.6%
Basic Industry--0.1%
1,000 Cambrex Corp. 55,938
1,500 (a)Carbide/Graphite Group, Inc. 49,031
2,600 Furon Co. 41,438
900 Lone Star Industries, Inc. 67,669
1,200 (a)Lone Star Technologies, Inc. 22,800
3,200 Spartech Corp. 71,600
Total 308,476
Consumer Durables--0.2%
1,500 (a)Action Performance Companies, Inc. 41,719
1,900 (a)American Homestar Corporation 40,375
800 Carlisle Cos., Inc. 38,700
1,800 (a)Dura Automotive Systems, Inc. 65,250
1,100 (a)Gentex Corp. 40,288
3,100 (a)Helen of Troy Ltd. 59,288
1,500 Oakwood Homes Corp. 40,781
2,600 (a)Stanley Furniture Co. Inc. 52,650
1,100 (a)Toll Brothers, Inc. 28,325
Total 407,376
Federated Managed Growth And Income Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Small-CompanyStocks --continued
Consumer Non-Durables--0.1%
1,300 (a)Blyth Industries, Inc. $ 39,894
2,100 (a)Nautica Enterprise, Inc. 61,425
1,500 (a)North Face, Inc. 37,219
1,900 (a)Smithfield Foods, Inc. 51,300
1,000 (a)Suiza Foods Corp. 58,438
2,100 Wolverine World Wide, Inc. 51,844
Total 300,120
Energy Minerals--0.1%
800 Camco International, Inc. 55,800
4,100 (a)Comstock Resources, Inc. 41,000
1,700 (a)EEX Corp. 16,788
1,200 (a)Tuboscope Inc. 27,150
2,100 Vintage Petroleum, Inc. 38,063
Total 178,801
Finance--0.4%
1,400 (a)Amresco, Inc. 47,250
900 CMAC Investment Corp. 54,450
1,200 City National Corp. 44,100
2,300 Community First Bankshares, Inc. 56,063
920 (a)Delphi Financial Group, Inc., Class A 49,968
2,100 (a)Delta Financial Corp. 37,013
700 Enhance Financial Services Group, Inc. 45,588
600 Executive Risk, Inc. 37,763
1,100 (a)FIRSTPLUS Financial Group, Inc. 43,863
1,500 (a)FirstFed Financial Corp. 73,594
2,100 GBC Bancorp 60,113
1,800 (a)Imperial Bancorp 52,650
1,500 Mutual Risk Management Ltd. 52,594
2,650 North Fork Bancorp, Inc. 63,766
1,500 Sirrom Capital Corp. 39,938
1,400 (a)Triad Guaranty, Inc. 46,200
1,500 (a)United Rentals, Inc. 51,750
Federated Managed Growth And Income Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Small-CompanyStocks --continued
Finance--continued
800 Vesta Insurance Group, Inc. $ 42,150
Total 898,813
Health Care--0.3%
1,800 (a)Access Health, Inc. 46,125
1,600 (a)Alternative Living Services, Inc. 43,400
2,000 (a)Aurora Bioscences, Inc. 15,125
6,900 (a)Balanced Care Corp. 55,200
1,000 (a)Curative Technologies, Inc. 28,125
1,500 (a)Genesis Health Ventures, Inc. 37,969
1,100 (a)Healthcare & Retirement Corp. 42,556
1,300 (a)Medicis Pharmaceutical Corp., Class A 53,056
800 (a)Patterson Dental Co. 26,000
1,600 (a)PharMerica, Inc. 19,502
1,800 (a)Phycor, Inc. 30,375
2,800 (a)Prime Medical Services 29,400
1,736 (a)Respironics, Inc. 28,536
1,800 (a)Sybron International Corp. 43,088
1,100 (a)Universal Health Services, Inc., Class B 60,500
Total 558,957
Producer Manufacturing--0.1%
1,700 (a)AFC Cable Systems, Inc. 57,375
2,100 (a)Ballantyne of Omaha, Inc. 38,456
700 C&D Technologies, Inc. 39,200
2,000 (a)Cable Design Technologies, Class A 47,125
800 (a)EVI, Inc. 40,000
1,500 (a)Rayovac Corp. 31,500
1,500 (a)SLI, Inc. 42,750
2,100 (a)US Office Products Co. 35,569
Total 331,975
Retail Trade--0.2%
1,200 (a)CDW Computer Centers, Inc. 49,425
2,400 Claire's Stores, Inc. 45,150
Federated Managed Growth And Income Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Small-CompanyStocks --continued
Retail Trade--continued
800 (a)Express Scripts, Inc., Class A $ 61,550
1,100 (a)Funco, Inc. 18,013
1,100 (a)Mens Wearhouse, Inc. 46,888
800 (a)Microage, Inc. 10,800
1,400 (a)O'Reilly Automotive, Inc. 45,500
1,500 (a)Pacific Sunwear of California 67,172
1,900 (a)Pomeroy Computer Resources 42,750
1,400 (a)Proffitts, Inc. 54,950
2,000 (a)Renters Choice, Inc. 53,250
1,900 (a)Zale Corp. 58,781
Total 554,229
Services--0.4%
1,700 (a)ABR Information Services, Inc. 43,563
1,300 (a)Allied Waste Industries, Inc. 34,450
2,100 (a)American Business Information, Class A 25,988
2,100 (a)American Business Information, Class B 26,513
1,900 (a)BARRA, Inc. 38,713
1,800 (a)Billing Concepts Corp. 41,850
1,300 (a)Caribiner International, Inc. 28,763
1,500 (a)Daisytek International Corp. 38,250
1,500 (a)FactSet Research Systems 48,656
1,300 (a)Labor Ready, Inc. 43,956
1,900 (a)Landrys Seafood Restaurants, Inc. 43,047
2,700 (a)Newpark Resources, Inc. 49,106
2,800 (a)Personnel Group of America, Inc. 56,700
2,600 (a)Prime Hospitality Corp. 46,638
3,400 (a)ProBusiness Services, Inc. 123,888
1,400 (a)Rural / Metro Corp. 33,075
600 (a)Snyder Communications, Inc. 24,188
1,600 (a)StaffMark, Inc. 58,800
1,600 (a)World Access, Inc. 50,200
Total 856,344
Federated Managed Growth And Income Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Small-CompanyStocks --continued
Technology--0.5%
1,800 (a)ATMI, Inc. $ 32,625
1,900 (a)Apex mPC Solutions, Inc. 47,738
3,700 (a)Applied Voice Technology, Inc. 69,144
500 (a)Aspect Development, Inc. 28,594
2,800 (a)Atlantic Data Services, Inc. 36,750
1,600 (a)Benchmark Electronics, Inc. 32,300
2,100 (a)CHS Electronics, Inc. 41,738
1,800 (a)Ciber, Inc. 57,713
1,000 (a)Comverse Technology, Inc. 49,969
2,450 (a)Cybex Computer Products Corp. 56,350
2,200 (a)Cymer, Inc. 41,869
2,600 (a)DSP Group, Inc. 51,025
1,200 (a)Ducommun, Inc. 38,550
1,200 (a)Eltron International, Inc. 26,400
600 (a)Etec Systems, Inc. 21,938
1,200 (a)HADCO Corp. 38,550
1,400 (a)Integrated Circuit System, Inc. 19,294
2,000 (a)MRV Communications, Inc. 46,500
2,900 (a)Mastech Corp. 54,828
1,500 (a)Micrel, Inc. 46,922
1,000 (a)Microchip Technology, Inc. 24,500
800 (a)Orbotech, Ltd. 26,400
1,500 (a)Qlogic Corp. 60,750
1,200 (a)RELTEC Corp. 44,100
1,800 (a)SS&C Technologies, Inc. 29,700
700 (a)Sanmina Corp. 54,513
1,600 (a)Smart Modular Technologies, Inc. 21,900
1,000 (a)Transaction Systems Architects, Inc., Class A 40,500
700 (a)Vitesse Semiconductor Corp. 17,938
Total 1,159,098
Transportation--0.1%
700 Airlines Express International Corp. 18,069
Federated Managed Growth And Income Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Small-CompanyStocks --continued
Transportation--continued
1,100 Comair Holdings, Inc. $ 29,288
600 Expeditors International Washington, Inc. 24,000
500 (a)Heartland Express, Inc. 10,938
500 USFreightways Corp. 15,750
875 Werner Enterprises, Inc. 16,625
Total 114,670
Utilities--0.1%
300 Central Hudson Gas & Electric Service 13,106
200 Cilcorp, Inc. 8,813
400 Commonwealth Energy System 15,200
700 K N Energy, Inc. 37,888
300 New Jersey Resources Corp. 10,781
500 Piedmont Natural Gas, Inc. 15,844
1,200 (a)Premiere Technologies, Inc. 28,650
500 Sierra Pacific Resources 17,156
1,300 (a)Transaction Network Services, Inc. 26,488
400 WICOR, Inc. 18,300
Total 192,226
Total Small-Company Stocks 5,861,085
Utility Stocks--5.5%
Electric Utilities: Central--0.9%
6,000 Ameren Corp. 234,750
14,900 CMS Energy Corp. 649,081
9,900 Cinergy Corp. 319,894
19,950 DPL, Inc. 344,138
20,200 NIPSCO Industries, Inc. 542,875
Total 2,090,738
Electric Utilities: East--0.3%
11,000 DQE, Inc. 361,625
8,000 Public Service Enterprises Group, Inc. 264,500
Total 626,125
Federated Managed Growth And Income Fund
Value
in U.S.
Shares Dollars
Stocks--continued
Utility Stocks--continued
Electric Utilities: South--1.7%
5,800 Dominion Resources, Inc. $ 230,188
11,100 Duke Energy Corp. 639,638
12,900 Entergy Corp. 339,431
10,400 FPL Group, Inc. 638,950
14,200 Houston Industries, Inc. 406,475
8,400 SCANA Corp. 242,025
19,900 Southern Co. 528,594
13,400 TECO Energy, Inc. 350,913
14,600 Texas Utilities Co. 576,700
Total 3,952,914
Electric Utilities: West--0.9%
8,000 Montana Power Co. 290,000
5,100 New Century Energies, Inc. 234,600
11,900 P G & E Corp. 374,850
19,800 Pacificorp 456,638
11,900 Pinnacle West Capital Corp. 534,756
8,400 Puget Sound Energy, Inc. 219,450
Total 2,110,294
Natural Gas Distribution--0.6%
6,000 Consolidated Natural Gas Co. 339,375
15,500 MCN Corp. 558,000
10,000 Pacific Enterprises 380,625
Total 1,278,000
Oil/Gas Transmission--1.1%
3,100 Columbia Gas System, Inc. 261,563
16,000 El Paso Natural Gas 618,000
14,900 Enron Corp. 746,863
7,900 Sonat, Inc. 309,581
17,000 Williams Companies, Inc. 551,438
Total 2,487,445
Total Utility Stocks 12,545,516
Federated Managed Growth And Income Fund
Value
Shares or in U.S.
Units Dollars
Stocks--continued
Foreign Equity--2.5%
Argentina--0.0%
1,900 (a)Banco Rio de la Plata SA, ADR $ 22,800
Australia--0.0%
12,200 Austrim Ltd 23,456
15,000 Woolworth's Ltd. 51,572
Total 75,028
Belgium--0.0%
1,200 (a)Global TeleSystems Group, Inc., ADR 45,975
Brazil--0.0%
473,598 Companhia Energetica de Minas Gerais, Preference 15,648
Croatia--0.0%
1,200 (a)Pliva D.D., GDR, 144A 19,740
Finland--0.1%
5,000 Finnair 51,629
700 OY Nokia AB, ADR, Class A 45,456
480 Sampo Insurance Co. Ltd., Class A 22,304
Total 119,389
France--0.5%
821 AXA 93,448
600 Alcatel Alsthom 128,364
1,500 Assurances Generales de France 92,512
650 Banque Nationale de Paris 55,516
320 Compagnie de Saint Gobain 63,112
2,500 Dassault Systemes SA 116,580
310 Elf Aquitaine SA 43,057
330 Groupe Danon BSN SA 88,857
250 Guyenne Et Gascogne 93,599
200 Rexel 83,537
1,000 (a)SGS-Thomas Microelectronics N.V. (NY Reg Shs) 77,375
400 Societe Generale, Paris 79,224
1,000 Thomson-CSF 40,448
560 TOTAL SA-B 69,544
Total 1,125,173
Federated Managed Growth And Income Fund
Value
Shares or in U.S.
Units Dollars
Stocks--continued
Foreign Equity--continued
Germany--0.3%
50 Bayerische Motoren Werke AG $ 52,907
10 Bayerische Motoren Werke AG, New Share 10,453
1,100 BHF-BANK 45,128
1,200 DEUTSCHE BANK, AG 103,304
2,225 DRESDNER BANK AG, FRANKFURT 125,076
160 HOLZMANN (PHILIPP) 44,209
100 MANNESMANN AG 97,800
2,400 SKW TROSTBERG 97,520
700 TARKETT SOMMER AG 27,463
60 VOLKSWAGEN AG 48,659
Total 652,519
Hong Kong--0.1%
11,000 Cheung Kong 59,479
839 HSBC Holdings PLC 20,355
16,000 Henderson Land Development Co. Ltd. 56,575
23,000 (a)New World Development Co. Ltd. 54,317
Total 190,726
Italy--0.2%
2,200 Assicurazioni Generali 70,705
22,000 Banca di Roma 45,364
9,000 Banca Commerciale Italiana 53,140
8,000 Credito Italiano Ord 44,619
6,400 Eni 45,251
12,000 Italgas 55,290
6,000 Mondadori Ord 73,379
12,000 Telecom Italia SPA 90,683
Total 478,431
Japan--0.2%
20 Circle K Japan Co. Ltd. 735
7,000 Fujitsu Ltd. 80,367
1,000 Ito-Yokado Co., Ltd. 49,823
6,000 Mitsubishi Estate Co. Ltd. 52,726
Federated Managed Growth And Income Fund
Value
Shares or in U.S.
Units Dollars
Stocks--continued
Foreign Equity--continued
Japan--continued
2 NTT Data Communications Systems Co. $ 80,295
8 Nippon Telegraph & Telephone Corp. 65,853
1,000 Orix Corp 65,059
1,000 Sony Corp. 84,483
3,100 Tokyo Electric Power Co. 59,318
Total 538,659
Netherlands--0.2%
1,823 ABN-Amro Holdings NV 44,155
1,433 ING GROEP, NV 98,405
1,400 KONINKLIJKE AHOLD NV 44,206
711 KONINKLIJKE PTT NEDERLAND NV 39,739
80 ORDINA BEHEER NV 101
2,000 ORDINA BEHEER NV 67,328
343 WOLTERS KLUWER NV 48,183
Total 342,117
Norway--0.0%
10,000 Christiania Bank 42,867
850 Transocean Offshore, Inc. 41,916
Total 84,783
Portugal--0.0%
1,000 BPI-SGPS S.A. 40,515
South Korea--0.0%
870 Pohang Iron and Steel Co. Ltd. 35,302
Spain--0.1%
360 (a)Azucarera Ebro Agricolas, SA 9,288
660 Banco Popular Espanol 52,347
2,760 Endesa SA 66,109
1,200 Iberdrola SA 19,795
1,200 Repsol SA 66,671
2,378 Telefonica SA 106,229
Total 320,439
Federated Managed Growth And Income Fund
Value
Shares or in U.S.
Units Dollars
Stocks--continued
Foreign Equity--continued
Sweden--0.1%
2,000 Celsius B $ 51,804
3,000 Skand Enskilda BKN, Class A 49,953
Total 101,757
Switzerland--0.2%
40 Baloise Holdings-REG 95,174
35 Nestle SA 74,961
58 Novartis AG--REG 98,187
6 Roche Holding AG--GENUSS 61,701
40 UBS--Union Bank of Switzerland--BEARER 67,229
Total 397,252
United Kingdom--0.5%
4,500 Allied Domecq PLC 44,871
2,752 Barclays PLC 73,446
10,976 British Aerospace PLC 97,344
3,147 British Petroleum Co. PLC 46,210
2,000 British-Borneo Petroleum Syndicate PLC 12,576
3,000 Commercial Union PLC 54,536
6,500 Croda International 48,942
3,879 EMI Group PLC 32,818
6,560 General Electric Co. PLC 53,787
1,800 Glaxo Wellcome PLC 48,450
7,619 Guardian Royal Exchange PLC 48,408
8,000 (a)Guardian Royal Exchange PLC, Class B 2,613
6,500 Lasmo 30,788
2,000 National Westminster Bank, PLC, London 36,553
3,500 Prudential Corp. PLC 46,533
3,700 Reed International PLC 34,295
13,133 ROLLS-ROYCE 62,581
9,500 SECURICOR PLC 71,841
3,326 SIEBE PLC 83,387
3,305 SMITHKLINE BEECHAM PLC 35,816
6,042 VODAFONE GROUP PLC 66,414
Federated Managed Growth And Income Fund
Shares ,
Units or Value
Principal in U.S.
Amount Dollars
Stocks--continued
Foreign Equity--continued
United Kingdom--continued
2,540 Zeneca Group $ 103,258
Total 1,135,467
Total Foreign Equity 5,741,720
Total Stocks (identified cost $69,191,886) 85,474,913
Bonds--64.5%
Treasury and Government Securities--31.7%
(b)Repurchase Agreements--8.9%
$ 13,435,000 BT Securities Corp., 5.570%, dated 5/29/1998, due 6/1/1998 13,435,000
2,522,000 (c)Goldman Sachs Group, LP, 5.480%, dated 4/17/1998, due 6/10/1998 2,522,000
2,213,000 (c)Goldman Sachs Group, LP, 5.490%, dated 5/6/1998, due 6/10/1998 2,213,000
2,000,000 (c)Morgan Stanley Group, Inc., 5.500%, dated 5/11/1998, due 6/10/1998 2,000,000
Total (at amortized cost) 20,170,000
U.S. Treasury Securities--22.8%
5,000,000 United States Treasury Bill, 6/18/1998 4,990,700
2,500,000 United States Treasury Bill, 6/25/1998 2,493,100
3,105,000 United States Treasury Bond, 6.125%, 11/15/2027 3,245,222
5,355,000 United States Treasury Bond, 8.125%, 5/15/2021 6,830,356
1,100,000 United States Treasury Note, 7.250%, 5/15/2004 1,190,123
13,398,000 United States Treasury Note, 5.750%, 8/15/2003 13,504,112
3,110,000 United States Treasury Note, 6.500%, 10/15/2006 3,278,220
15,300,000 United States Treasury Note, 6.625%, 5/15/2007 16,303,221
Total 51,835,054
Total Treasury and Government Securities 72,005,054
Mortgage-Backed Securities--13.9%
Government Agency--13.9%
421,433 Federal Home Loan Mortgage Corp. 9.000%, 5/1/2017 449,353
287,312 Federal Home Loan Mortgage Corp., 7.500%, 5/1/2024 296,828
853,357 Federal Home Loan Mortgage Corp., 7.500%, 12/1/2022 882,422
205,189 Federal Home Loan Mortgage Corp., 7.000%, 7/1/2024 209,869
1,436,290 Federal Home Loan Mortgage Corp., 7.500%, 6/1/2026 1,478,933
237,108 Federal Home Loan Mortgage Corp., 8.000%, 11/1/2009 245,183
Federated Managed Growth And Income Fund
Value
Principal in U.S.
Amount Dollars
Bonds--continued
Mortgage-Backed Securities--continued
Government Agency--continued
$ 1,551,528 Federal Home Loan Mortgage Corp., 6.500, 3/1/2011 $ 1,563,645
224,383 Federal Home Loan Mortgage Corp., 7.000%, 4/1/2009 229,292
476,031 Federal Home Loan Mortgage Corp., 7.000%, 4/1/2009 486,446
440,923 Federal Home Loan Mortgage Corp., 6.500, 5/1/2011 444,366
2,000,000 (d)Federal Home Loan Mortgage Corp., 6.500%, TBA 1,990,000
2,522,000 (d)Federal Home Loan Mortgage Corp., 7.000%, TBA 2,563,462
563,567 Federal National Mortgage Association, 7.500%, 9/1/2009 580,823
406,253 Federal National Mortgage Association, 7.000%, 7/1/2024 414,378
106,181 Federal National Mortgage Association, 7.500%, 6/1/2009 109,432
88,004 Federal National Mortgage Association, 8.500%, 2/1/2025 92,321
800,860 Federal National Mortgage Association, 6.500%, 9/1/2025 798,858
490,906 Federal National Mortgage Association, 6.500%, 7/1/2026 489,374
2,385,770 Federal National Mortgage Association, 8.000%, 5/1/2027 2,482,084
851,621 Federal National Mortgage Association, 6.500, 3/1/2028 846,299
1,494,820 Federal National Mortgage Association, 6.000%, 4/1/2013 1,477,062
1,363,000 (d)Federal National Mortgage Association, 7.000%, TBA 1,382,586
850,000 (d)Federal National Mortgage Association, 7.500%, TBA 874,973
975,865 Government National Mortgage Association, 8.500%, 10/15/2022 1,033,811
784,501 Government National Mortgage Association, 6.500%, 1/15/2024 785,238
712,999 Government National Mortgage Association, 8.000%, 11/15/2024 743,081
98,458 Government National Mortgage Association, 9.500%, 12/15/2025 107,411
762,660 Government National Mortgage Association, 7.500%, 12/15/2027 785,776
212,733 Government National Mortgage Association, 7.000%, 8/15/2024 216,588
2,543,097 Government National Mortgage Association, 7.000%, 10/15/2027 2,583,634
1,718,455 Government National Mortgage Association, 7.500%, 12/15/2027 1,770,541
502,605 Government National Mortgage Association, 7.000%, 2/15/2028 510,300
997,059 Government National Mortgage Association, 7.000%, 11/15/2024 1,015,126
1,548,068 Government National Mortgage Association, 8.000%, 9/15/2017 1,630,797
Total Mortgage-Backed Securities 31,570,292
Federated Managed Growth And Income Fund
Value
Principal in U.S.
Amount Dollars
Bonds--continued
Investment Grade Bonds--10.9%
Aerospace & Defense--0.3%
$ 350,000 McDonnell Douglas Finance, Medium Term Note, 6.375%, 7/15/1999 $ 352,454
250,000 McDonnell Douglas Finance, Note, 9.400%, 10/15/2001 263,125
Total 615,579
Automobile--0.6%
825,000 Arvin Industries, Inc., Note, 6.750%, 3/15/2008 826,775
600,000 Dana Corp., Note, 7.000%, 3/15/2028 613,158
Total 1,439,933
Banking--1.0%
100,000 City National Bank, Sub. Note, 6.375%, 1/15/2008 99,459
250,000 Crestar Financial Corp, Sub. Note, 8.750%, 11/15/2004 283,040
400,000 (e)Den Danske Bank, Note, 7.400% 6/15/2010 420,776
300,000 National Bank of Canada, Sub. Note, 8.125%, 8/15/2004 327,351
285,000 PNC Funding Corp, Sub. Note, 6.875%, 7/15/2007 295,619
400,000 Santander Finance Issuances, Bank Guarantee, 7.875%, 4/15/2005 431,496
400,000 (e)Swedbank, Sub., 7.500% 11/29/2049 412,372
Total 2,270,113
Beverage & Tobacco--0.2%
150,000 Philip Morris Cos., Inc., Deb., 6.000%, 7/15/2001 148,268
350,000 Phillip Morris Cos., Inc., Deb., 9.250%, 2/15/2000 367,014
Total 515,282
Broadcast Radio & TV--0.1%
250,000 SCI Television, Sr. Secd. Note, 11.000%, 6/30/2005 253,620
Cable Television--0.6%
350,000 Continental Cablevision, Sr. Note, 8.500%, 9/15/2001 374,906
1,000,000 TKR Cable Inc., 10.500%, 10/30/2007 1,108,630
Total 1,483,536
Chemicals & Plastics--0.2%
450,000 (e)Bayer Corp., Deb., 6.500%, 10/1/2002 460,148
Ecological Services & Equipment--0.1%
275,000 Waste Management, Deb., 8.750%, 5/1/2018 313,264
Federated Managed Growth And Income Fund
Value
Principal in U.S.
Amount Dollars
Bonds--continued
Investment Grade Bonds--continued
Education--0.2%
$ 375,000 Boston University, 7.625%, 7/15/2097 $ 433,227
Electronics--0.1%
300,000 Harris Corp, Deb., 10.375%, 12/1/2018 321,426
Finance--Automotive--0.5%
700,000 Ford Motor Credit Corp., Unsub., 6.875%, 6/05/2001 712,397
350,000 GMAC, Medium Term Note, 7.500%, 5/25/2000 360,374
Total 1,072,771
Finance--Retail--0.1%
150,000 Household Finance, Deb., 6.450%, 2/1/2009 149,624
Financial Intermediaries--1.3%
400,000 DLJ, Note, 6.875%, 11/1/2005 411,284
400,000 Green Tree Financial Corp, Sr. Sub. Note, 10.250%, 6/1/2002 445,244
400,000 Lehman Brothers Holdings Inc, Note, 6.900%, 1/29/2001 407,624
300,000 Lehman Brothers Holding, Bond, 6.200%, 1/15/2002 300,261
300,000 Lehman Brothers, Inc., Sr. Sub. Note, 7.375%, 1/15/2007 318,342
505,000 Salomon, Inc., 7.000%, 5/15/2000 514,479
225,000 Salomon, Inc., Note, 7.200%, 2/1/2004 234,992
346,113 (e)World Financial, Pass Thru Cert., Series 96 WFP-B, 6.910%, 9/1/2013 357,873
Total 2,990,099
Forest Products--0.3%
650,000 Quno Corp., Sr. Note, 9.125%, 5/15/2005 709,566
Government Agency--0.1%
250,000 Federal National Mortgage Association, 7.430%, 8/4/2005 250,880
Insurance--1.6%
250,000 AFC Capital Trust I, Bond, 8.207%, 2/3/2027 285,805
350,000 Conseco, Inc., Sr. Note, 10.500%, 12/15/2004 421,197
845,000 Continental Corp, Note, 8.250%, 4/15/1999 861,875
350,000 NAC Re Corp, Note, 8.000%, 6/15/1999 357,242
600,000 Provident Cos., Inc., Bond, 7.405%, 3/15/2038 623,254
250,000 Sunamerica Inc, Medium Term Note, 7.340%, 8/30/2005 266,596
425,000 Sunamerica, Inc., Sr. Note, 9.000%, 1/15/1999 433,237
Federated Managed Growth And Income Fund
Value
Principal in U.S.
Amount Dollars
Bonds--continued
Investment Grade Bonds--continued
Insurance--continued
$ 250,000 USF&G Corp., Company Guarantee, 8.470%, 1/10/2027 $ 283,998
Total 3,533,204
Leisure & Entertainment--0.2%
350,000 Viacom, Inc., Sr. Note, 7.750%, 6/1/2005 374,287
Metals & Mining--0.3%
150,000 Barrick Gold Corp., Deb., 7.500%, 5/1/2007 159,615
450,000 Santa Fe Pacific Gold, Note, 8.375%, 7/01/2005 488,597
Total 648,212
Oil & Gas--0.2%
350,000 USX Corp., Note, 6.375%, 7/15/1998 350,763
Pharmaceutical--0.3%
750,000 American Home Products Corp., Note, 7.700%, 2/15/2000 771,458
Retailers--0.7%
450,000 Harcourt General, Sr. Deb., 7.200%, 8/1/2027 456,849
400,000 May Department Stores, Deb., 8.125%, 8/15/2035 448,032
750,000 Sears, Roebuck & Co., Medium Term Note, 7.320%, 4/24/2000 768,375
Total 1,673,256
Services--0.4%
250,000 Loewen Group Int'l, Sr. Note, 8.250%, 4/15/2003 265,845
600,000 Service Corp. Int'l, Note, 6.500%, 3/15/2008 605,472
Total 871,317
Sovereign--0.2%
400,000 Export-Import Bank Korea, Note, 6.500%, 5/15/2000 373,723
Sovereign Government--0.7%
360,000 Quebec, Province of, Deb., 9.125%, 8/22/2001 389,700
750,000 Republic Of South Africa, Global Bond Deb., 9.625%, 12/15/1999 780,465
400,000 Republic of Colombia, Note, 7.250%, 2/15/2003 383,500
Total 1,553,665
Surface Transportation--0.1%
225,000 Trans Ocean Container Corp., Sr. Sub. Note, 12.250%, 7/1/2004 254,009
Federated Managed Growth And Income Fund
Principal
Amount or
Foreign Value
Currency Par in U.S.
Amount Dollars
Bonds--continued
Investment Grade Bonds--continued
Technology Services--0.2%
$ 4,600 Microsoft Corp., Conv. Pfd., Series A, $2.196 $ 429,525
Utilities--0.3%
200,000 Duke Power Co., 1st Mtg. Note, 7.000%, 9/1/2005 205,854
250,000 Enersis SA, Note, 7.400%, 12/1/2016 246,790
200,000 Gulf States Util, FMB, 6.750%, 10/1/1998 200,416
Total 653,060
Total Investment Grade Bonds 24,765,547
High Yield Bonds--2.9%
673,574 (f)The High Yield Bond Portfolio 6,675,120
Foreign Bonds--5.1%
Australian Dollar--0.1%
315,000 Federal National Mortgage Association, 6.500%, 7/10/2002 205,406
128,000 Queensland Treas-Global, Local Government Guarantee, Deb., 10.500%, 5/15/2003 97,875
25,000 West Aust T Corp, Local Government Guarantee, 8.000%, 7/15/2003 17,543
Total 320,824
Belgian Franc--0.1%
2,112,000 Belgian Govt., Bond, 6.500%, 3/31/2005 62,952
6,000,000 Belgium Kingdom, 7.750%, 10/15/2004 189,312
Total 252,264
Canadian Dollar--0.3%
290,000 Canada Government, Deb., 6.500%, 6/1/2004 211,535
375,000 Ontario Hydro, 9.000%, 6/24/2002 290,857
254,000 Ontario Hydro, Bond, 7.750%, 11/3/2005 198,421
Total 700,813
Danish Krone--0.2%
1,844,000 Denmark--Bullet, Bond, 8.000%, 3/15/2006 322,664
1,200,000 Denmark, 8.000%, 5/15/2003 201,327
Total 523,991
Federated Managed Growth And Income Fund
Foreign Value
Currency Par in U.S.
Amount Dollars
Bonds--continued
Foreign Bonds--continued
French Franc--0.0%
500 France O.A.T., BOND, 7.500%, 4/25/2005 $ 639
Deutsche Mark--1.4%
137,000 DG-HYPBK 5.750%, 1/22/2007 80,776
450,000 Depfa-Bank, 5.500%, 1/15/2013 257,352
188,000 Deutschland Republic, Deb., 6.250%, 1/4/2024 117,315
562,000 European Investment Bank, 5.000%, 4/15/2008 618,376
350,000 KFW International Finance, Bank Guarantee, 6.750%, 6/20/2005 217,861
730,000 Republic of Austria, Unsub., 6.500%, 1/10/2024 462,732
280,000 Tennessee Valley Authority--Global Bond, 6.375%, 9/18/2006 171,131
1,100,000 Treuhandanstalt, 7.750%, 10/1/2002 694,802
744,000 Treuhandanstalt, Foreign Gov't. Guarantee, 6.875%, 6/11/2003 459,889
Total 3,080,234
Greek Drachma--0.3%
130,000,000 Hellenic Republic, Bond, 8.800%, 6/19/2007 452,600
34,000,000 Hellenic Republic, FRN 10/23/2003 112,850
Total 565,450
Hungarian Forint--0.0%
19,600,000 Hungary Govt, Bond, 14.000%, 12/12/2002 86,264
Italian Lira--0.5%
110,000,000 Btps, Bond, 10.500%, 11/1/2000 70,905
520,000,000 Btps, Deb., 12.000%, 5/18/1999 314,928
1,040,000,000 Buoni Poliennali Del Tes, 9.500%, 1/1/2005 740,542
90,000,000 Buoni Poliennali Del Tes, Deb., 12.000%, 1/01/2002 63,256
Total 1,189,631
Japanese Yen--0.5%
65,000,000 Export-IMPORT BANK JAPAN, 4.375%, 10/1/2003 548,433
42,000,000 INTERAMERICAN DEVELOPMENT, DEB., 7.250%, 5/15/2000 342,535
33,000,000 KFW INTERNATIONAL FINANCE, 6.000%, 11/29/1999 257,823
Total 1,148,791
Mexican Peso--0.0%
95,000 Mexican Cetes, 2/11/1999 93,384
Federated Managed Growth And Income Fund
Foreign Value
Currency Par in U.S.
Amount Dollars
Bonds--continued
Foreign Bonds--continued
Netherlands Guilder--0.3%
70,000 Bank Ned Gemeenten, Bond, 6.375%, 1/4/2006 $ 37,906
30,000 Bank Ned Gemeenten, Bond, 7.750%, 12/20/2004 17,275
90,000 LKB-GLOBAL BOND, BANK GUARANTEE, 6.000%, 1/25/2006 53,720
700,000 NETHERLANDS GOVERNMENT, 5.750%, 1/15/2004 367,917
210,000 NETHERLANDS GOVERNMENT, 6.000%, 1/15/2006 112,516
Total 589,334
New Zealand Dollar--0.1%
143,000 New Zealand Government, 8.000%, 2/15/2001 78,290
105,000 New Zealand Government, Bond, 8.000%, 7/15/1998 56,220
Total 134,510
Norwegian Krone--0.2%
800,000 NGB Bond, 9.000%, 1/31/1999 108,848
585,000 Norwegian Government, 5.500%, 5/15/2009 77,196
630,000 Norwegian Government, Bond, 7.000%, 5/31/2001 87,566
473,000 Norwegian Govt., Foreign Gov't. Guarantee, 5.750%, 11/30/2004 63,817
Total 337,427
Polish Zloty--0.1%
585,000 Poland Govt Bond, 12.000%, 6/12/2003 139,505
South African Rand--0.0%
440,000 Republic of South Africa, Bond, 12.500%, 12/21/2006 79,000
Spanish Peseta--0.3%
40,000,000 Spanish Government, 10.000%, 2/28/2005 340,561
34,600,000 Spanish Govt, Bond, 8.800%, 4/30/2006 284,585
6,480,000 Spanish Govt., Deb., 10.100%, 2/28/2001 48,937
Total 674,083
Swedish Krona--0.2%
1,000,000 Stadshypotekskas, Foreign Gov't. Guarantee, Series 1551, 7.500%, 3/17/1999 130,341
2,300,000 Sweden, 6.000%, 2/9/2005 311,575
600,000 Sweden, Deb., 13.000%, 6/15/2001 94,319
Total 536,235
Federated Managed Growth And Income Fund
Foreign Value
Currency Par in U.S.
Amount Dollars
Bonds--continued
Foreign Bonds--continued
United Kingdom Pound--0.5%
127,000 British Gas PLC, 8.875%, 7/8/2008 $ 242,303
108,000 UK TREASURY, DEB., 8.500%, 12/7/2005 204,840
365,000 UK CONVERSION, 9.000%, 3/3/2000 618,511
Total 1,065,654
Total Foreign Bonds 11,518,033
Total Bonds (identified cost $144,570,145) 146,534,046
Total Investments (identified cost $213,762,031) (g) $232,008,959
</TABLE>
* The Fund purchases index futures contracts to efficiently manage cash flows
resulting from shareholder purchases and redemptions, dividends and capital
gain payments to shareholders and corporate actions while maintaining
exposure to the index and to minimize trading costs. The underlying face
amount, at value, of open futures contracts is $7,362,900 at May 31, 1998,
which represents 3.2% of net assets. Taking into consideration these open
index futures contracts, the Fund's effective total exposure to stocks is
40.8%, and the increased total exposure to small company stocks is 5.8%.
(a) Non-income producing security.
(b) 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.
(c) 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.
(d) These securities are subject to dollar roll transactions.
(e) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. At May 31, 1998, these securities amounted to
$1,651,169 which represents 0.7% of total net assets.
(f) The High Yield Bond Portfolio is a diversified portfolio of below investment
grade bonds.
(g) The cost of investments for federal tax purposes amounts to $213,762,031.
The net unrealized appreciation of investments on a federal tax basis
amounts to $18,246,928 which is comprised of $21,061,878 appreciation and
$2,814,950 depreciation at May 31, 1998.
Note: The categories of investments are shown as a percentage of net assets
($227,376,942) at May 31, 1998.
The following acronyms are used throughout this portfolio: ADR --American
Depositary Receipt FRN --Floating Rate Note GDR --Global Depository Receipt LP
- --Limited Partnership PLC --Public Limited Company SA --Support Agreement SPA
- --Standby Purchase Agreement TBA --To Be Announced
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF ASSETS AND LIABILITIES
Federated Managed Growth and Income Fund
May 31, 1998 (unaudited)
<TABLE>
<CAPTION>
Assets:
<S> <C> <C>
Total investments in securities, at value (identified and tax cost $213,762,031) $232,008,959
Cash 2,565,951
Cash denominated in foreign currencies (at identified cost $121,867) 121,126
Income receivable 1,616,641
Receivable for investments sold 1,582,279
Receivable for shares sold 191,399
Net receivable for foreign currency exchange contracts purchased and sold 116
Deferred organizational costs 22,234
Other assets 14,312
Total assets 238,123,017
Liabilities:
Payable for investments purchased $ 8,061,242
Payable for dollar roll transactions 2,549,627
Payable for taxes withheld 4,655
Payable for daily variation margin 66,825
Accrued expenses 63,726
Total liabilities 10,746,075
Net Assets for 19,121,130 shares outstanding $227,376,942
Net Assets Consist of:
Paid in capital $203,283,566 Net unrealized appreciation of investments and
translation of assets and liabilities in foreign currency 17,999,990 Accumulated
net realized gain on investments, foreign currency transactions, and futures
contracts 4,940,736 Undistributed net investment income 1,152,650
Total Net Assets $227,376,942
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
Institutional Shares:
$172,376,447 O 14,492,256 shares outstanding $11.89
Select Shares:
$55,000,495 O 4,628,874 shares outstanding $11.88
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF OPERATIONS
Federated Managed Growth and Income Fund
Six Months Ended May 31, 1998 (unaudited)
<TABLE>
<CAPTION>
Investment Income:
<S> <C> <C> <C>
Dividends (net of foreign taxes withheld of $7,249) $ 887,391
Interest (net of dollar roll expense of $79,766 and foreign taxes
withheld of $3,054) 4,428,361
Total income 5,315,752
Expenses:
Investment advisory fee $ 829,959
Administrative personnel and services fee 83,439
Custodian fees 38,462
Transfer and dividend disbursing agent fees and expenses 65,432
Directors'/Trustees' fees 2,608
Auditing fees 9,709
Legal fees 2,003
Portfolio accounting fees 38,385
Distribution services fee--Select Shares 190,760
Shareholder services fee--Institutional Shares 213,067
Shareholder services fee--Select Shares 63,587
Share registration costs 20,891
Printing and postage 25,905
Insurance premiums 2,124
Taxes 1,705
Miscellaneous 9,859
Total expenses 1,597,895
Waivers--
Waiver of distribution services fee--Select Shares $ (63,587)
Waiver of shareholder services fee--Institutional Shares (170,453)
Total waivers (234,040)
Net expenses 1,363,855
Net investment income 3,951,897
Realized and Unrealized Gain (Loss) on Investments and Foreign Currency:
Net realized gain on investments and foreign currency transactions 5,022,493 Net
change in unrealized appreciation of investments and translation of assets and
liabilities in foreign currency 5,390,168
Net realized and unrealized gain on investments and foreign currency 10,412,661
Change in net assets resulting from operations $14,364,558
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF CHANGES IN NET ASSETS
Federated Managed Growth and Income Fund
<TABLE>
<CAPTION>
Six Months
Ended
(unaudited) Year Ended
May 31, November 30,
1998 1997
<S> <C> <C>
Increase (Decrease) in Net Assets:
Operations--
Net investment income $ 3,951,897 $ 8,398,796
Net realized gain on investments and foreign currency transactions
($5,046,135 and $11,034,226, respectively, as computed for federal tax purposes) 5,022,493 10,949,153
Net change in unrealized appreciation of investments and translation of
assets and liabilities in foreign currency 5,390,168 2,187,689
Change in net assets resulting from operations 14,364,558 21,535,638
Distributions to Shareholders--
Distributions from net investment income
Institutional Shares (3,325,457) (6,945,797)
Select Shares (797,671) (1,683,717)
Distributions from net realized gains on investments and foreign currency transactions
Institutional Shares (8,553,201) (1,660,283)
Select Shares (2,485,155) (461,933)
Change in net assets resulting from distributions to shareholders (15,161,484) (10,751,730)
Share Transactions--
Proceeds from sale of shares 39,814,014 70,870,478
Net asset value of shares issued to shareholders in payment of distributions declared 10,197,397 6,401,094
Cost of shares redeemed (34,064,340) (76,711,981)
Change in net assets resulting from share transactions 15,947,071 559,591
Change in net assets 15,150,145 11,343,499
Net Assets:
Beginning of period 212,226,797 200,883,298
End of period (including undistributed net investment income of
$1,152,650 and $1,323,881, respectively) $227,376,942 $212,226,797
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
(For a share outstanding throughout each period)
Six Months
Ended
(unaudited)
May 31, Year Ended November 30,
1998 1997 1996 1995 1994(a)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.98 $ 11.37 $ 11.14 $ 9.85 $ 10.00
Income from investment operations
Net investment income 0.22 0.49 0.50 0.50 0.25
Net realized and unrealized gain (loss) on investments and
foreign currency 0.54 0.74 0.41 1.28 (0.25)
Total from investment operations 0.76 1.23 0.91 1.78 0.00
Less distributions
Distributions from net investment income (0.23) (0.50) (0.52) (0.49) (0.15)
Distributions from net realized gain on investments and foreign
currency transactions (0.62) (0.12) (0.16) -- --
Total distributions (0.85) (0.62) (0.68) (0.49) (0.15)
Net asset value, end of period $ 11.89 $ 11.98 $ 11.37 $ 11.14 $ 9.85
Total return (b) 6.74% 11.25% 8.54% 18.51% 0.02%
Ratios to average net assets
Expenses 1.07%* 1.05% 1.05% 1.00% 0.88%*
Net investment income 3.73%* 4.27% 4.72% 5.10% 5.07%*
Expense waiver/reimbursement (c) 0.20%* 0.25% 0.31% 0.55% 0.59%*
Supplemental data
Net assets, end of period (000 omitted) $172,376 $164,728 $156,635 $103,715 $43,793
Average commission rate paid (d) $ 0.0271 $ 0.0078 $ 0.0043 -- --
Portfolio turnover 53% 130% 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.
(d) Represents total commissions paid on portfolio securities divided by total
portfolio shares purchased or sold on which commissions were charged.
(See Notes which are an integral part of the Financial Statements)
FINANCIAL HIGHLIGHTS--SELECT SHARES
<TABLE>
<CAPTION>
(For a share outstanding throughout each period)
Six Months
Ended
(unaudited)
May 31, Year Ended November 30,
1998 1997 1996 1995 1994(a)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.96 $ 11.36 $ 11.12 $ 9.83 $ 10.00
Income from investment operations
Net investment income 0.18 0.40 0.43 0.37 0.21
Net realized and unrealized gain (loss) on investments and
foreign currency 0.55 0.74 0.41 1.34 (0.25)
Total from investment operations 0.73 1.14 0.84 1.71 (0.04)
Less distributions
Distributions from net investment income (0.19) (0.42) (0.44) (0.42) (0.13)
Distributions from net realized gain on investments and foreign
currency transactions (0.62) (0.12) (0.16) -- --
Total distributions (0.81) (0.54) (0.60) (0.42) (0.13)
Net asset value, end of period $ 11.88 $ 11.96 $ 11.36 $ 11.12 $ 9.83
Total return (b) 6.45% 10.41% 7.92% 17.76% (0.40%)
Ratios to average net assets
Expenses 1.77%* 1.75% 1.75% 1.75% 1.64%*
Net investment income 3.04%* 3.51% 4.02% 4.37% 4.33%*
Expense waiver/reimbursement (c) 0.25%* 0.30% 0.36% 0.55% 0.84%*
Supplemental data
Net assets, end of period (000 omitted) $55,000 $47,499 $44,248 $24,787 $ 3,697
Average commission rate paid (d) $0.0271 $0.0078 $0.0043 -- --
Portfolio turnover 53% 130% 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.
(d) Represents total commissions paid on portfolio securities divided by total
portfolio shares purchased or sold on which commissions were charged.
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
Federated Managed Growth and Income Fund
May 31, 1998 (unaudited)
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"). 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.
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
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. Listed equity securities are valued
at the last sale price reported on a national securities exchange. Short-term
securities are valued at the prices provided by an independent pricing service.
However, short-term securities with remaining maturities of sixty days or less
at the time of purchase may be valued at amortized cost, which approximates fair
market value. Investments in other open-end regulated investment companies are
valued at net asset 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.
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.
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 May 31, 1998, the Fund had realized
gains/losses of $289,893 on future contracts.
At May 31, 1998, the Fund had outstanding futures contracts as set forth below:
Contracts to Unrealized
Expiration Date Deliver/Receive Position Depreciation
June 1998 27 S&P 500 Index Long $246,671
Foreign Exchange Contracts
The Fund may enter into foreign currency commitments for the delayed delivery of
securities or foreign currency exchange transactions. The Fund may enter into
foreign currency contract transactions to protect assets against adverse changes
in foreign currency exchange rates or exchange control regulations. Purchased
contracts are used to acquire exposure to foreign currencies; whereas, 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-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 May 31, 1998, the Fund had outstanding
foreign currency commitments as set forth below:
<TABLE>
<CAPTION>
Foreign Currency Unrealized
Settlement Units to In Exchange Contracts at Gain
Contracts Purchased: Date Deliver/Receive For Value (Loss)
<S> <C> <C> <C> <C> <C>
Netherlands Guilder 6/2/98 $ 7,572 $ 13,772 $ 13,710 $ 62
Contracts Sold:
Danish Krone 6/3/98 296,109 43,676 43,559 (117)
Pound Sterling 6/3/98 18,503 30,169 30,221 52
Mexican Peso 6/1/98 1,049,609 119,003 119,003 --
Swedish Krona 6/2/98 576,161 73,396 73,515 119
Net Gain on Foreign Exchange Contracts: $ 116
</TABLE>
Foreign Currency Translation
The accounting records of the Fund are maintained in U.S. dollars. All assets
and liabilities denominated in foreign currencies ("FC") are translated into
U.S. dollars based on the rate of exchange of such currencies against U.S.
dollars on the date of valuation. Purchases and sales of securities, income and
expenses are translated at the rate of exchange quoted on the respective date
that such transactions are recorded. Differences between income and expense
amounts recorded and collected or paid are adjusted when reported by the
custodian bank. The Fund does not isolate that portion of the results of
operations resulting from changes in foreign exchange rates on investments from
the fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss from
investments.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
FCs, currency gains or losses realized between the trade and settlement dates on
securities transactions, the difference between the amounts of dividends,
interest, and foreign withholding taxes recorded on the Fund's books, and the
U.S. dollar equivalent of the amounts actually received or paid. Net unrealized
foreign exchange gains and losses arise from changes in the value of assets and
liabilities other than investments in securities at fiscal year end, resulting
from changes in the exchange rate.
Dollar Roll Transactions
The Fund enters into dollar roll transactions, with respect to mortgage
securities issued by GNMA, FNMA and FHLMC, in which the Fund sells mortgage
securities to financial institutions and simultaneously agrees to accept
substantially similar (same type, coupon and maturity) securities at a later
date at an agreed upon price. Dollar roll transactions involve "to be announced"
securities and are treated as short-term financing arrangements which will not
exceed twelve months. The Fund will use the proceeds generated from the
transactions to invest in short-term investments, which may enhance the Fund's
current yield and total return.
Restricted Securities
Restricted securities are securities that may only be resold upon registration
under federal securities laws or in transactions exempt from such registration.
In some cases, the issuer of restricted securities has agreed to register such
securities for resale, at the issuer's expense either upon demand by the Fund or
in connection with another registered offering of the securities. Many
restricted securities may be resold in the secondary market in transactions
exempt from registration. Such restricted securities may be determined to be
liquid under criteria established by the Trustees. The Fund will not incur any
registration costs upon such resales. The Fund's restricted securities are
valued at the price provided by dealers in the secondary market or, if no market
prices are available, at the fair value as determined by the Fund's pricing
committee.
Additional information on each restricted security held at May 31, 1998 is as
follows:
<TABLE>
<CAPTION>
Security Acquisition Date Acquisition Cost
<S> <C> <C>
Bayer Corp. 3/21/96-4/17/96 $444,986
Den Danske Bank 1/7/98 420,928
Swedbank 1/7/98 417,748
World Financial 11/18/96-1/7/98 350,891
Use of Estimates
</TABLE>
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.
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.
<TABLE>
<CAPTION>
Transactions in capital stock were as follows:
Six Months Ended Year Ended
May 31, 1998 November 30, 1997
Institutional Shares Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Shares sold 2,420,588 $ 28,222,747 4,487,267 $ 51,304,428
Shares issued to shareholders in payment of distributions declared 635,987 7,248,536 400,790 4,522,191
Shares redeemed (2,315,515) (27,193,491) (4,916,395) (56,006,233)
Net change resulting from Institutional Share transactions 741,060 $ 8,277,792 (28,338) $ (179,614)
Select Shares
Shares sold 986,945 $ 11,591,267 1,716,458 $ 19,566,050
Shares issued to shareholders in payment of distributions declared 258,570 2,948,861 166,372 1,878,903
Shares redeemed (586,710) (6,870,849) (1,808,151) (20,705,748)
Net change resulting from Select Share transactions 658,805 $ 7,669,279 74,679 $ 739,205
Net change resulting from share transactions 1,399,865 $ 15,947,071 46,341 $ 559,591
</TABLE>
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, Inc. 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 daily net assets of the Select Shares annually, to compensate FSC. The
distributor may voluntarily choose to waive any portion of its fee. The
distributor can modify or terminate this voluntary waiver at any time at its
sole discretion.
Shareholder Services Fee
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services ("FSS"), the Fund will pay FSS up to 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 $86,568 were borne initially by the Adviser. The Fund
has reimbursed the Adviser for these expenses. These expenses have been deferred
and are being amortized over the five year period following the Fund's effective
date. For the period ended May 31, 1998, the Fund expensed $40,828 of
organizational expenses.
General
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
Year 2000
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
Investment Transactions
Purchases and sales of investments, excluding short-term securities, for the
period ended May 31, 1998, were as follows:
Purchases $115,670,079
Sales $109,497,932
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 May 31, 1998, the diversification of industries was as follows:
<TABLE>
<CAPTION>
Percent of Percent of
Industry Net Asset Industry Net Asset
<S> <C> <C> <C>
Aerospace & Military Technology 0.1 Insurance 0.2
Agency 0.7 Machinery & Engineering 0.1
Automobile 0.0 Merchandising 0.1
Banking 1.1 Metals & Mining 0.1
Beverage & Tobacco 0.0 Metals--Steel 0.0
Broadcasting & Publishing 0.0 Miscellaneous Materials & Commodities 0.0
Chemicals 0.1 Publishing 0.0
Construction & Housing 0.0 Real Estate 0.1
Data Processing & Reproduction 0.1 Recreation, Other Consumer Goods 0.0
Electrical & Electronics 0.1 Sovereign 3.2
Electric Components, Instruments 0.0 Sovereign Government 1.0
Energy Equipment & Services 0.0 State/Provincial 0.0
Energy Sources 0.1 Supranational 0.4
Finance 0.0 Technology 0.0
Financial Intermediaries 0.2 Telecommunications 0.3
Financial Services 0.1 Utilities 0.1
Food & Household Products 0.1 Utilities--Electrical &Gas 0.1
Forest Products 0.3 Wholesale & International Trade 0.0
Health &Personal Care 0.2
</TABLE>
TRUSTEES
John F. Donahue
Thomas G. Bigley
John T. Conroy, Jr.
William J. Copeland
James E. Dowd, Esq.
Lawrence D. Ellis, M.D.
Edward L. Flaherty, Jr., Esq.
Glen R. Johnson
Peter E. Madden
John E. Murray, Jr., J.D., S.J.D.
Wesley W. Posvar
Marjorie P. Smuts
OFFICERS
John F. Donahue
Chairman
Glen R. Johnson
President
J. Christopher Donahue
Executive Vice President
Edward C. Gonzales
Executive Vice President
John W. McGonigle
Executive Vice President, Treasurer, and Secretary
Richard B. Fisher
Vice President
Karen M. Brownlee
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectuses which contain facts
concerning its objective and policies, management fees, expenses and other
information.
[LOGO]
Federated Managed
Growth and
Income Fund
Institutional Shares
Select Shares
Federated Securities Corp., Distributor
Federated Investors, Inc.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
1-800-341-7400
www.federatedinvestors.com
Semi-Annual Report
to Shareholders
May 31, 1998
Cusip 56166K305
Cusip 56166K404
G00516-01 (7/98) [RECYCLED LOGO]
PRESIDENT'S MESSAGE
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders for Federated
Managed Income Fund for the six-month period from December 1, 1997 through May
31, 1998. Included in this report is an investment review, followed by a
complete listing of the fund's holdings, financial statements and highlights.
In pursuit of its investment objective, the fund invests in a well-diversified
portfolio that focuses on bonds. At the end of the reporting period, 89.5% of
the fund's $117.6-million in net assets were invested across a range of U.S. and
foreign government and corporate bonds.* The remainder of the portfolio was
invested across U.S. stocks.
During the first half of the fund's fiscal year, the fund's Institutional Shares
delivered a total return of 5.07%** through dividends totaling $0.28 per share,
capital gains totaling $0.13 per share, and a net asset value increase of $0.12
per share. The fund's Select Shares produced a total return of 4.70%** through
dividends totaling $0.25 per share, capital gains totaling $0.13 per share and a
net asset value increase of $0.12 per share.
Thank you for pursuing your financial goals through the high level of
diversification and professional management of Federated Managed Income Fund. As
always, we invite your comments and suggestions.
Sincerely,
Glen R. Johnson
President
July 15, 1998
* Foreign investing involves special risks including currency risk, increased
volatility of foreign securities, and differences in auditing and other
financial standards.
** Performance quoted represents past performance and is not indicative of
future results. Investment return and principal value will fluctuate, so
that an investor's shares, when redeemed, may be worth more or less than
their original cost.
INVESTMENT REVIEW
Performance For Six Months Ended May 31, 1998
The six month reporting period ended May 31, 1998 was a generally favorable one
for financial assets, and Federated Managed Income Fund participated in the
advance. For the six months ended May 31, 1998, an investor in the fund's
Institutional Shares had a total return of 5.07%,* while an investor in the
fund's Select Shares had a total return of 4.70%.* In the U.S., the strength in
the stock market was primarily in large company stocks as shares in utility
companies had solid but more moderate returns. The bond market also delivered
solid single digit returns as interest rates fell during the reporting period in
response to an expected recession in Asia's developing economies.
Asset Allocation as of May 31, 1998
Federated Managed Income Fund operates on an investment philosophy that, over
time, an investor with a diversified portfolio will achieve better returns with
the same risk, or the same returns with lower risk, than an investor in a single
asset category. Therefore, to ensure proper diversification of its portfolio,
the fund's investment policies require management to allocate the portfolio
among as many as seven asset categories and limit the weight of each asset
category. In allocating the fund's portfolio among asset categories, fund
management analyzes the relative value offered by each category under prevailing
market conditions. Fund management seeks to improve the fund's performance by
weighting most heavily the asset categories that management believes will
provide the best relative value. The following table shows the allocation of the
portfolio among different asset categories at May 31, 1998.
* Performance quoted represents past performance and is not indicative of future
results. Investment return and principal value will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
Asset Categories as a Percentage of Total Net Assets
<TABLE>
<CAPTION>
Permitted Percentage as of
Asset Category Range May 31, 1998
<S> <C> <C>
Bonds (1) 50-70 89.5
U.S. Treasury Securities 0-56 51.3
Mortgage-Backed
Securities 0-35 18.2
Investment Grade
Corporate Bonds 0-35 12.4
High Yield Corporate Bonds 0-10 3.2
Foreign Bonds 0-10 4.4
Equities (1) 30-50 14.4
Large Company Stocks 22.5-37.5 9.8
Utility Stocks 2.5-7.5 4.6
</TABLE>
(1) Bonds convertible into equity securities at a price below the closing price
of the underlying equity securities on May 31, 1998 have been included under
the appropriate equity asset category.
The U.S. has enjoyed seven years of economic expansion which has driven
corporate profits strongly upward. The accompanying bull market in stocks has
pushed stock prices up even faster than earnings. However, this favorable price
movement in stocks has created a valuation problem for U.S. stocks. Relative to
historical measures of value, U.S. stocks are richly priced. This implies that
long-term returns from these price levels are likely to be moderate. Moreover,
stretched valuation levels for stocks make the bond market look more attractive.
Offsetting the valuation factors which favor bonds, the U.S. economy appears to
be in solid shape with good growth and low inflation. Moreover, U.S. monetary
policy appears supportive of further price gains in financial assets. Thus, fund
management moved equity exposure up during the reporting period to normal levels
in response to this favorable near-term environment for equities.
Structure of the Bond Portfolio
Within the range of four to six years, the fund's bond duration is set at 4.5
years. This duration is set at a somewhat below average level in recognition
that the current economic cycle is one of the longest in post-war history and
late stages of business cycles are often unfavorable environments for bonds.
Therefore a somewhat conservative bond position is appropriate due to cyclical
concerns despite the favorable secular or longer-term outlook for bonds.
Within the bond portfolio, mortgage-backed securities were kept at normal levels
as their yield advantage was offset by the prospect of increased interest rate
volatility which usually causes mortgage-backed securities to underperform
comparable U.S. Treasurys. Lower than normal yield advantages offered by
corporate bonds over U.S. Treasurys led fund management to underweight both
investment grade and high yield corporate bonds.
Structure of the Equity Portfolio
Equity exposure was increased in the portfolio, primarily in the large company
stock area. Other areas of the stock market such as utilities appear more
reasonably valued than U.S. large company stocks.
However, the economic cycle appears to favor large company stocks. This economic
expansion has lasted seven years, substantially longer than the average U.S.
economic expansion. In the late stages of economic expansions, interest rates
usually rise putting pressure on utility stocks. Thus, fund management held
weights in utility stocks near neutral levels despite their valuation advantage.
PORTFOLIO OF INVESTMENTS
Federated Managed Income Fund
May 31, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
in U.S.
Shares Dollars
<C> <S> <C>
*Stocks--14.4%
Large Company Growth Stocks--4.9%
Basic Industry--0.2%
400 Air Products & Chemicals, Inc. $ 34,800
500 Avery Dennison Corp. 25,906
500 Bemis Co., Inc. 21,094
1,100 Crown Cork & Seal Co., Inc. 57,063
600 Hercules, Inc. 26,438
600 Monsanto Co. 33,225
Total 198,526
Consumer Durables--0.0%
700 Harley Davidson, Inc. 25,025
Consumer Non-Durables--0.7%
1,000 Campbell Soup Co. 54,500
1,900 Coca-Cola Co. 148,912
2,500 Dial Corp. 62,031
400 Gillette Co. 46,850
900 (a)Jones Apparel Group, Inc. 57,038
1,600 PepsiCo, Inc. 65,300
3,000 Philip Morris Cos., Inc. 112,124
1,100 Procter & Gamble Co. 92,331
600 Quaker Oats Co. 34,613
600 Sara Lee Corp. 35,325
700 UST, Inc. 18,638
1,000 Wolverine World Wide, Inc. 24,688
1,100 Wrigley (William), Jr. Co. 105,875
Total 858,225
Energy Minerals--0.1%
900 Diamond Offshore Drilling, Inc. 43,031
1,200 (a)Global Marine, Inc. 26,775
600 Halliburton Co. 28,425
Total 98,231
</TABLE>
Federated Managed Income Fund
<TABLE>
<CAPTION>
Value
in U.S.
Shares Dollars
<C> <S> <C>
Stocks--continued
Large Company Growth Stocks--continued
Finance--0.5%
700 American Express Co. $ 71,838
1,300 Block (H&R), Inc. 57,200
1,500 (a)Catellus Development Corp. 27,844
1,200 Conseco, Inc. 55,950
1,000 Federal National Mortgage Association 59,875
200 Household International, Inc. 27,063
2,600 MBNA Corp. 82,388
300 MGIC Investment Corp. 17,981
400 Marsh & McLennan Cos., Inc. 35,025
800 Morgan Stanley, Dean Witter, Discover & Co. 62,450
700 Sunamerica, Inc. 34,038
1,400 Travelers Group, Inc. 85,400
Total 617,052
Health Care--1.1%
2,100 Abbott Laboratories 155,793
3,100 (a)Beverly Enterprises, Inc. 44,369
2,400 Bristol-Myers Squibb Co. 258,000
500 (a)Centocor, Inc. 19,500
1,500 (a)Chiron Corp. 27,094
600 Guidant Corp. 38,663
1,200 HBO & Co. 69,263
1,300 (a)HEALTHSOUTH Corp. 36,888
1,200 Johnson & Johnson 82,875
700 Lilly (Eli) & Co. 43,006
1,500 Merck & Co., Inc. 175,593
900 Pfizer, Inc. 94,331
900 (a)Quintiles Transnational Corp. 43,763
800 Schering Plough Corp. 66,950
500 United Healthcare Corp. 32,000
800 (a)Universal Health Services, Inc., Class B 44,000
1,500 Warner-Lambert Co. 95,719
Total 1,327,807
</TABLE>
Federated Managed Income Fund
<TABLE>
<CAPTION>
Value
in U.S.
Shares Dollars
<C> <S> <C>
Stocks--continued
Large Company Growth Stocks--continued
Producer Manufacturing--0.4%
400 Allied-Signal, Inc. $ 17,100
800 Dover Corp. 30,000
900 (a)EVI, Inc. 45,506
2,500 General Electric Co. 208,437
900 (a)Lexmark Intl. Group, Class A 49,950
600 Masco Corp. 33,750
1,000 Miller Herman, Inc. 27,688
600 Precision Castparts Corp. 34,575
Total 447,006
Retail Trade--0.5%
1,600 (a)General Nutrition Cos., Inc. 50,500
800 Home Depot, Inc. 62,850
1,400 (a)Safeway, Inc. 51,013
1,600 TJX Cos., Inc. 74,800
5,700 Wal-Mart Stores, Inc. 314,568
Total 553,731
Services--0.4%
900 (a)Cendant Corp. 19,519
700 (a)Chancellor Media Corp., Class A 29,269
400 Disney (Walt) Co. 45,250
500 Gannett Co., Inc. 32,969
800 (a)Liberty Media Group, Class A 26,400
500 McDonald's Corp. 32,813
1,400 Service Corp. International 57,225
3,560 (a)Tricon Global Restaurants, Inc. 110,582
1,200 (a)Viacom, Inc., Class A 66,075
800 (a)Viacom, Inc., Class B 44,000
Total 464,102
Technology--0.9%
800 (a)America Online, Inc. 66,650
700 (a)Applied Materials, Inc. 22,400
1,600 (a)BMC Software, Inc. 73,700
</TABLE>
Federated Managed Income Fund
<TABLE>
<CAPTION>
Value
in U.S.
Shares Dollars
<C> <S> <C>
Stocks--continued
Large Company Growth Stocks--continued
Technology--continued
1,200 (a)Cabletron Systems, Inc. $ 15,450
1,100 (a)Cadence Design Systems, Inc. 38,775
1,100 (a)Cisco Systems, Inc. 83,188
500 Computer Associates International, Inc. 26,250
1,200 (a)EMC Corp. Mass 49,725
1,600 First Data Corp. 53,200
500 Hillenbrand Industries, Inc. 30,875
1,300 Intel Corp. 92,869
1,000 Lucent Technologies, Inc. 70,938
2,200 (a)Microsoft Corp. 186,587
900 (a)Peoplesoft, Inc. 39,319
900 (a)SCI Systems, Inc. 30,713
1,900 (a)Seagate Technology, Inc. 43,938
1,100 (a)Sun Microsystems, Inc. 44,069
600 (a)Tellabs, Inc. 41,231
500 United Technologies Corp. 47,000
Total 1,056,877
Utilities--0.1%
1,300 (a)Airtouch Communications, Inc. 61,913
600 (a)PanAmSat Corp. 32,775
700 (a)Teleport Communications Group, Inc., Class A 39,156
1,100 (a)WorldCom, Inc. 50,050
Total 183,894
Total Large Company Growth Stocks 5,830,476
Large Company Value Stocks--4.9%
Basic Industry--0.1%
3,700 Archer-Daniels-Midland Co. 69,838
600 Dow Chemical Co. 58,125
3,600 LTV Corporation 39,375
600 Martin Marietta Materials 27,600
Total 194,938
</TABLE>
Federated Managed Income Fund
<TABLE>
<CAPTION>
Value
in U.S.
Shares Dollars
<C> <S> <C>
Stocks--continued
Large Company Value Stocks--continued
Consumer Durables--0.2%
900 Eastman Kodak Co. $ 64,238
600 Ford Motor Co. 31,125
900 General Motors Corp. 64,744
2,000 Rubbermaid, Inc. 65,250
Total 225,357
Consumer Non-Durables--0.2%
800 BestFoods 45,150
1,100 Kimberly-Clark Corp. 54,519
2,100 RJR Nabisco Holdings Corp. 59,194
1,400 UST, Inc. 37,275
900 Universal Corp. 33,806
Total 229,944
Energy Minerals--0.6%
700 Atlantic Richfield Co. 55,213
1,400 (a)BJ Services Co. 45,763
900 Chevron Corp. 71,888
2,800 Exxon Corp. 197,400
1,700 Occidental Petroleum Corp. 46,963
2,300 Sun Co., Inc. 97,750
1,300 Texaco, Inc. 75,075
2,300 USX-Marathon Group 80,500
Total 670,552
Finance--1.4%
900 Ahmanson (H.F.) & Co. 68,625
1,100 Allmerica Financial Corp. 68,956
1,148 Allstate Corp. 108,055
300 American International Group, Inc. 37,144
157 Associates First Capital Corp., Class A 11,764
1,700 Banc One Corp. 93,713
700 Bank of New York Co., Inc. 42,788
500 BankAmerica Corp. 41,344
300 Bankers Trust New York Corp. 37,050
</TABLE>
Federated Managed Income Fund
<TABLE>
<CAPTION>
Value
in U.S.
Shares Dollars
<C> <S> <C>
Stocks--continued
Large Company Value Stocks--continued
Finance--continued
1,100 Bear Stearns Cos., Inc. $ 59,675
1,200 Block (H&R), Inc. 52,800
1,800 CIGNA Corp. 123,300
300 Chase Manhattan Corp. 40,781
300 Citicorp 44,738
1,100 Equitable Companies Inc. 75,763
2,000 First Union Corp. 110,624
400 Fleet Financial Group, Inc. 32,800
200 General RE Corp. 43,975
900 (a)Golden State Bancorp, Inc. 34,481
800 MBIA, Inc. 59,650
700 Marsh & McLennan Cos., Inc. 61,294
700 Mellon Bank Corp. 47,206
600 Merrill Lynch & Co., Inc. 53,700
1,100 Morgan Stanley, Dean Witter, Discover & Co. 85,869
1,500 NationsBank Corp. 113,624
1,200 Old Republic International Corp. 34,200
800 Torchmark Corp. 34,300
900 Washington Federal, Inc. 25,031
Total 1,643,250
Health Care--0.3%
2,800 Pharmacia & Upjohn, Inc. 123,724
3,000 U.S. Surgical Corp. 119,249
1,000 United Healthcare Corp. 64,000
Total 306,973
Producer Manufacturing--0.3%
3,100 ITT Industries, Inc. 114,312
2,000 Ingersoll-Rand Co. 90,125
1,400 Johnson Controls, Inc. 83,300
500 Loews Corp. 45,375
1,100 Parker-Hannifin Corp. 45,169
Total 378,281
</TABLE>
Federated Managed Income Fund
<TABLE>
<CAPTION>
Value
in U.S.
Shares Dollars
<C> <S> <C>
Stocks--continued
Large Company Value Stocks--continued
Retail Trade--0.1%
3,600 (a)K Mart Corp. $ 69,750
2,000 Limited, Inc. 66,500
Total 136,250
Services--0.2%
800 CBS Corp. 25,400
2,400 Readers Digest Association, Inc., Class A 68,400
3,600 Waste Management, Inc. 117,000
Total 210,800
Technology--0.4%
1,500 AMP, Inc. 57,000
1,500 First Data Corp. 49,875
600 International Business Machines Corp. 70,425
500 Northrop Corp. 53,594
6,700 (a)Novell, Inc. 70,350
1,000 Raytheon Co., Class A 53,313
1,300 (a)Storage Technology Corp. 109,038
Total 463,595
Transportation--0.1%
1,500 CNF Transportation, Inc. 61,594
1,600 Ryder Systems, Inc. 54,500
1,400 Southwest Airlines Co. 37,363
Total 153,457
Utilities--1.0%
1,000 AT&T Corp. 60,875
1,400 Bell Atlantic Corp. 128,275
1,100 CMS Energy Corp. 47,919
1,400 Coastal Corp. 98,700
700 Columbia Gas System, Inc. 59,063
5,800 Entergy Corp. 152,612
1,800 GTE Corp. 104,962
2,200 Houston Industries, Inc. 62,975
2,700 MCI Communications Corp. 144,365
</TABLE>
Federated Managed Income Fund
<TABLE>
<CAPTION>
Value
in U.S.
Shares Dollars
<S> <C> <C>
Stocks--continued
Large Company Value Stocks--continued
Utilities--continued
2,500 P G & E Corp. $ 78,750
1,300 Pacificorp 29,981
1,500 Public Service Enterprises Group, Inc. 49,594
1,000 Texas Utilities Co. 39,500
2,000 U.S. West, Inc. 101,500
Total 1,159,071
Total Large Company Value Stocks 5,772,468
Utility Stocks--4.6%
Electric Utilities: Central--0.8%
2,600 Ameren Corp. 101,724
6,500 CMS Energy Corp. 283,155
4,300 Cinergy Corp. 138,943
8,700 DPL, Inc. 150,074
8,800 NIPSCO Industries, Inc. 236,500
Total 910,396
Electric Utilities: East--0.2%
4,800 DQE, Inc. 157,800
3,500 Public Service Enterprises Group, Inc. 115,718
Total 273,518
Electric Utilities: South--1.4%
2,500 Dominion Resources, Inc. 99,219
4,800 Duke Energy Corp. 276,600
5,600 Entergy Corp. 147,350
4,500 FPL Group, Inc. 276,468
6,100 Houston Industries, Inc. 174,612
3,600 SCANA Corp. 103,724
8,600 Southern Co. 228,437
5,800 TECO Energy, Inc. 151,887
6,300 Texas Utilities Co. 248,850
Total 1,707,147
Electric Utilities: West--0.8%
3,500 Montana Power Co. 126,874
</TABLE>
Federated Managed Income Fund
<TABLE>
<CAPTION>
Shares or Value
Principal in U.S.
Amount Dollars
<S> <C> <C>
Stocks--continued
Utility Stocks--continued
Electric Utilities: West--continued
2,200 New Century Energies, Inc. $ 101,200
5,200 P G & E Corp. 163,800
8,600 Pacificorp 198,337
5,200 Pinnacle West Capital Corp. 233,674
3,600 Puget Sound Energy, Inc. 94,050
Total 917,935
Natural Gas Distribution--0.5%
2,600 Consolidated Natural Gas Co. 147,062
6,700 MCN Corp. 241,200
4,300 Pacific Enterprises 163,669
Total 551,931
Oil/Gas Transmission--0.9%
1,300 Columbia Gas System, Inc. 109,687
7,000 El Paso Natural Gas 270,375
5,400 Enron Corp. 270,675
3,400 Sonat, Inc. 133,238
7,400 Williams Companies, Inc. 240,038
Total 1,024,013
Total Utility Stocks 5,384,940
Total Stocks (identified cost $14,088,305) 16,987,884
Bonds--89.5%
Treasury and Government Securities--51.3%
U.S. Treasury--39.9%
$6,400,000 United States Treasury Bill, 6/18/1998 6,388,096
1,500,000 United States Treasury Bill, 6/25/1998 1,495,860
1,243,000 United States Treasury Bond, 6.125%, 11/15/2027 1,299,134
3,055,000 United States Treasury Bond, 8.125%, 5/15/2021 3,896,683
6,060,000 United States Treasury Note, 7.250%, 5/15/2004 6,556,496
11,698,000 United States Treasury Note, 5.750%, 8/15/2003 11,790,648
1,000,000 United States Treasury Note, 5.875%, 2/15/2004 1,014,540
7,125,000 United States Treasury Note, 6.500%, 10/15/2006 7,510,391
6,529,000 United States Treasury Note, 6.625%, 5/15/2007 6,957,107
Total 46,908,955
</TABLE>
Federated Managed Income Fund
<TABLE>
<CAPTION>
Value
Principal in U.S.
Amount Dollars
<C> <S> <C>
Bonds--continued
Treasury and Government Securities--continued
(b)Repurchase Agreements--11.4%
$1,377,000 (c)Goldman Sachs Group, LP, 5.480%, dated 4/17/1998, due 6/10/1998 $ 1,377,000
1,377,000 (c)Goldman Sachs Group, LP, 5.480%, dated 4/17/1998, due 6/10/1998 1,377,000
3,117,000 (c)Goldman Sachs Group, LP, 5.490%, dated 5/6/1998, due 6/10/1998 3,117,000
7,590,000 BT Securities Corp., 5.570%, dated 5/29/1998, due 6/1/1998 7,590,000
Total (at amortized cost) 13,461,000
Total Treasury and Government Securities 60,369,955
Mortgage-Backed Securities--18.2%
Government Agency--18.2%
90,597 Federal Home Loan Mortgage Corp., 9.500%, 4/1/2021 97,533
361,801 Federal Home Loan Mortgage Corp., 7.500%, 5/1/2024 373,783
205,189 Federal Home Loan Mortgage Corp., 7.000%, 7/1/2024 209,869
706,847 Federal Home Loan Mortgage Corp., 7.500%, 7/1/2026 727,169
1,014,460 Federal Home Loan Mortgage Corp., 6.500%, 3/1/2011 1,022,383
234,930 Federal Home Loan Mortgage Corp., 8.000%, 9/1/2010 242,786
598,059 Federal Home Loan Mortgage Corp., 7.000%, 4/1/2009 611,144
202,258 Federal Home Loan Mortgage Corp., 6.500%, 5/1/2011 203,838
825,776 Federal Home Loan Mortgage Corp., 7.500%, 7/1/2011 851,062
2,950,410 Federal Home Loan Mortgage Corp., 6.000%, 3/1/2013 2,919,076
1,377,000 (d)Federal Home Loan Mortgage Corp. TBA, 7.000% 1,399,638
407,009 Federal National Mortgage Association, 7.000%, 7/1/2024 415,149
446,535 Federal National Mortgage Association, 7.500%, 10/1/2011 459,793
262,133 Federal National Mortgage Association, 9.000%, 2/1/2025 278,435
88,004 Federal National Mortgage Association, 8.500%, 2/1/2025 92,321
156,521 Federal National Mortgage Association, 8.000%, 7/1/2023 163,565
838,590 Federal National Mortgage Association, 6.500%, 2/1/2026 835,974
717,478 Federal National Mortgage Association, 7.000%, 8/1/2011 731,828
1,019,158 Federal National Mortgage Association, 8.000%, 5/1/2027 1,060,302
618,148 Federal National Mortgage Association, 6.500%, 2/1/2028 614,284
453,737 Federal National Mortgage Association, 6.500%, 3/1/2028 450,901
621,479 Federal National Mortgage Association, 6.500%, 3/1/2028 617,595
Federal National Mortgage Association, 6.500%, 7/10/2002 107,594
1,767,000 (d)Federal National Mortgage Association TBA, 7.000% 1,792,392
</TABLE>
Federated Managed Income Fund
<TABLE>
<CAPTION>
Value
Principal in U.S.
Amount Dollars
<S> <C> <C>
Bonds--continued
Mortgage-Backed Securities--continued
Government Agency--continued
$1,350,000 (d)Federal National Mortgage Association TBA, 7.500% $ 1,389,663
817,218 Government National Mortgage Association, 8.000%, 6/15/2022 851,950
769,394 Government National Mortgage Association, 7.000%, 10/15/2023 783,581
557,899 Government National Mortgage Association, 7.500%, 12/15/2027 574,809
279,111 Government National Mortgage Association, 8.500%, 10/15/2024 294,987
574,908 Government National Mortgage Association, 7.000%, 7/15/2024 585,509
621,382 Government National Mortgage Association, 8.000%, 12/15/2012 644,100
Total Mortgage-Backed Securities 21,403,013
High Yield Bonds--3.2%
375,460 (e)The High Yield Bond Portfolio 3,720,809
Investment Grade Bonds--12.4%
Aerospace & Defense--0.4%
250,000 McDonnell Douglas Finance, Medium Term Note, 6.375%, 7/15/1999 251,753
250,000 McDonnell Douglas Finance, Note, 9.400%, 10/15/2001 263,125
Total 514,878
Automotive--0.3%
400,000 Dana Corp., Note, 7.000%, 3/15/2028 408,772
Banking--1.7%
100,000 City National Bank, Sub. Note, 6.375%, 1/15/2008 99,459
470,000 (f)Den Danske Bank, Note, 7.400% 6/15/2010 494,412
200,000 National Bank of Canada, Sub. Note, 8.125%, 8/15/2004 218,234
285,000 PNC Funding Corp, Sub. Note, 6.875%, 7/15/2007 295,619
350,000 Santander Finance Issuances, Bank Guarantee, 7.875%, 4/15/2005 377,559
70,000 (f)Swedbank, Sub., 7.500% 11/29/2049 484,537
Total 1,969,820
Beverage & Tobacco--0.3%
100,000 Philip Morris Cos., Inc., Deb., 6.000%, 7/15/2001 98,845
100,000 Philip Morris, Deb., 8.625%, 3/1/1999 101,883
200,000 Philip Morris Cos., Inc., Deb., 9.250%, 2/15/2000 209,722
Total 410,450
Broadcast Radio & TV--0.2%
175,000 SCI Television, Sr. Secured Note, 11.000%, 6/30/2005 177,534
</TABLE>
Federated Managed Income Fund
<TABLE>
<CAPTION>
Value
Principal in U.S.
Amount Dollars
<S> <C> <C>
Bonds--continued
Investment Grade Bonds--continued
Cable Television--0.9%
$1,000,000 TKR Cable Inc., 10.500%, 10/30/2007 $1,108,630
Chemicals & Plastics--0.3%
350,000 (f)Bayer Corp., Deb., 6.500%, 10/1/2002 357,893
Education--0.3%
300,000 Boston University, 7.625%, 7/15/2097 346,582
Electronics--0.2%
200,000 Harris Corp, Deb., 10.375%, 12/1/2018 214,284
Finance--Automotive--0.1%
165,000 GMAC, Medium Term Note, 7.500%, 5/25/2000 169,891
Finance--Retail--0.2%
250,000 Household Finance, Deb., 6.450%, 2/1/2009 249,373
Financial Intermediaries--1.4%
250,000 Green Tree Financial Corp, Sr. Sub. Note, 10.250%, 6/1/2002 278,278
725,000 Lehman Brothers Holdings, Inc., Note, 6.900%, 1/29/2001 738,819
175,000 Lehman Brothers Holdings, Inc., Bond, 6.200%, 1/15/2002 175,152
325,000 Lehman Brothers, Inc., Sr. Sub. Note, 7.375%, 1/15/2007 344,871
100,000 Salomon, Inc., Note, 7.200%, 2/1/2004 104,441
Total 1,641,561
Forest Products--0.4%
400,000 Quno Corp., Sr. Note, 9.125%, 5/15/2005 436,656
Insurance--2.2%
250,000 AFC Capital Trust I, Bond, 8.207%, 2/3/2027 285,805
350,000 Conseco, Inc., Sr. Note, 10.500%, 12/15/2004 421,197
515,000 Continental Corp, Note, 8.250%, 4/15/1999 525,285
250,000 Delphi Funding L.L.C., 9.310% Capital Securities, Series A 281,225
165,000 NAC Re Corp, Note, 8.000%, 6/15/1999 168,414
400,000 Provident Cos., Inc., Bond, 7.405%, 3/15/2038 415,503
250,000 Sunamerica Inc, Medium Term Note, 7.340%, 8/30/2005 266,596
250,000 USF&G Corp., Company Guarantee, 8.470%, 1/10/2027 283,998
Total 2,648,023
Metals & Mining--0.2%
225,000 Barrick Gold Corp., Deb., 7.500%, 5/1/2007 239,423
</TABLE>
Federated Managed Income Fund
<TABLE>
<CAPTION>
Principal
Amount or
Foreign Value
Currency in U.S.
Par Amount Dollars
<S> <C> <C>
Bonds--continued
Investment Grade Bonds--continued
Oil & Gas--0.2%
$250,000 USX Corp., Note, 6.375%, 7/15/1998 $250,545
Pharmaceutical--0.2%
200,000 American Home Products Corp., Note, 7.700%, 2/15/2000 205,722
Retailers--0.5%
350,000 Harcourt General, Sr. Deb., 7.200%, 8/1/2027 355,327
200,000 Sears, Roebuck & Co., Medium Term Note, 7.320%, 4/24/2000 204,900
Total 560,227
Services--0.6%
250,000 Loewen Group Int'l, Sr. Note, 8.250%, 4/15/2003 265,845
400,000 Service Corp. Int'l, Note, 6.500%, 3/15/2008 403,648
Total 669,493
Sovereign Government--0.6%
400,000 Republic of South Africa, Global Bond Deb., 9.625%, 12/15/1999 416,248
250,000 Republic of Colombia, Note, 7.250%, 2/15/2003 239,688
Total 655,936
Surface Transportation--0.3%
300,000 Trans Ocean Container Corp., Sr. Sub. Note, 12.250%, 7/1/2004 338,679
Technology Services--0.2%
2,200 Microsoft Corp., Conv. Pfd., Series A, $2.196 205,425
Utilities--0.7%
300,000 Duke Power Co., First Mortgage Note, 7.000%, 9/1/2005 308,781
250,000 Enersis S.A., Note, 7.400%, 12/1/2016 246,790
300,000 Gulf States Utility, FMB, 6.750%, 10/1/1998 300,624
Total 856,195
Total Investment Grade Bonds 14,635,992
Foreign Bonds--4.4%
Australian Dollar--0.1%
74,000 Queensland TreasGlobal Notes, Deb., 10.500%, 5/15/2003 56,584
25,000 West Aust T Corp, Local Gov't. Guarantee, 8.000%, 7/15/2003 17,543
Total 74,127
</TABLE>
Federated Managed Income Fund
<TABLE>
<CAPTION>
Foreign Value
Currency in U.S.
Par Amount Dollars
<S> <C> <C>
Bonds--continued
Foreign Bonds--continued
Austrian Mark--0.1%
245,000 Republic of Austria, Unsub., 6.500%, 1/10/2024 $ 155,301
Belgium Franc--0.1%
514,000 Belgian Gov't., Bond, 6.500%, 3/31/2005 15,321
2,000,000 Belgium Kingdom, 7.750%, 10/15/2004 63,104
Total 78,425
Canadian Dollar--0.3%
167,000 Canadian Government, Deb., 6.500%, 6/1/2004 121,815
200,000 Ontario Hydro, 9.000%, 6/24/2002 155,124
91,000 Ontario Hydro, Bond, 7.750%, 11/3/2005 71,088
Total 348,027
Danish Krone--0.2%
898,000 Denmark--Bullet, Bond, 8.000%, 3/15/2006 157,132
600,000 Denmark, 8.000%, 5/15/2003 100,663
Total 257,795
Deutsche Mark--1.3%
45,000 DG-HYPBK 5.750%, 1/22/2007 26,532
195,000 Depfa-Bank, 5.500%, 1/15/2013 111,519
79,000 Deutschland Republic, Deb., 6.250%, 1/4/2024 49,297
234,000 European Investment Bank, 5.000%, 4/15/2008 257,473
38,000,000 KFW International Finance, 6.000%, 11/29/1999 296,888
100,000 KFW International Finance, Bank Guarantee, 6.750%, 6/20/2005 62,246
700,000 Treuhandanstalt, 7.750%, 10/1/2002 442,147
408,000 Treuhandanstalt, Foreign Gov't. Guarantee, 6.875%, 6/11/2003 252,197
Total 1,498,299
Greek Drachma--0.2%
45,000,000 Hellenic Republic, Bond, 8.800%, 6/19/2007 156,669
11,400,000 Hellenic Republic, FRN 10/23/2003 37,838
Total 194,507
Hungarian Forint--0.0%
6,700,000 Hungary Govt, Bond, 14.000%, 12/12/2002 29,488
Italian Lira--0.4%
80,000,000 Btps, Bond, 10.500%, 11/1/2000 51,568
</TABLE>
Federated Managed Income Fund
<TABLE>
<CAPTION>
Foreign Value
Currency in U.S.
Par Amount Dollars
<S> <C> <C>
Bonds--continued
Foreign Bonds--continued
Italian Lira--continued
95,000,000 Btps, Deb., 12.000%, 5/18/1999 $ 57,535
480,000,000 Buoni Poliennali Del Tes, 9.500%, 1/1/2005 341,788
60,000,000 Buoni Poliennali Del Tes, Deb., 12.000%, 1/01/2002 42,171
Total 493,062
Japanese Yen--0.2%
24,000,000 Export-Import Bank Japan, 4.375%, 10/1/2003 202,498
10,000,000 Interamerican Development, Deb., 7.250%, 5/15/2000 81,556
Total 284,054
Mexican Peso--0.0%
30,000 Mexican Cetes, 2/11/1999 29,490
Netherlands Guilder--0.2%
40,000 Bank Ned Gemeenten, Bond, 6.375%, 1/4/2006 21,660
30,000 Bank Ned Gemeenten, Bond, 7.750%, 12/20/2004 17,275
60,000 LKB-Global Bd, Bank Guarantee, 6.000%, 1/25/2006 35,813
350,000 Netherlands Government, 5.750%, 1/15/2004 183,959
60,000 Netherlands Government, 6.000%, 1/15/2006 32,147
Total 290,854
New Zealand Dollar--0.1%
41,000 New Zealand Government, 8.000%, 2/15/2001 22,447
70,000 New Zealand Government, Bond, 8.000%, 7/15/1998 37,480
Total 59,927
Norwegian Krone--0.2%
330,000 NGB 9% 1/31/99, Bond, 9.000%, 1/31/1999 44,900
195,000 Norwegian Government, 5.500%, 5/15/2009 25,732
420,000 Norwegian Government, Bond, 7.000%, 5/31/2001 58,377
315,000 Norwegian Gov't., Foreign Gov't. Guarantee, 5.750%, 11/30/2004 42,499
Total 171,508
Polish Zloty--0.0%
195,000 Poland Govt Bond, 12.000%, 6/12/2003 46,502
South African Rand--0.0%
145,000 Republic of South Africa, Bond, 12.500%, 12/21/2006 26,034
</TABLE>
Federated Managed Income Fund
<TABLE>
<CAPTION>
Foreign Value
Currency in U.S.
Par Amount Dollars
<S> <C> <C>
Bonds--continued
Foreign Bonds--continued
Spanish Peseta--0.3%
20,000,000 Spanish Government, 10.000%, 2/28/2005 $ 170,280
15,700,000 Spanish Gov't., Bond, 8.800%, 4/30/2006 129,133
4,950,000 Spanish Gov't., Deb., 10.100%, 2/28/2001 37,382
Total 336,795
Swedish Krona--0.3%
1,000,000 Stadshypotekskas, Foreign Gov't. Guarantee, Series 1551, 7.500%, 3/17/1999 130,341
900,000 Sweden, 6.000%, 2/9/2005 121,921
200,000 Sweden, Deb., 13.000%, 6/15/2001 31,440
Total 283,702
United Kingdom Pound--0.4%
80,000 British Gas PLC, 8.875%, 7/8/2008 152,632
29,000 U.K. Treasury, Deb., 8.500%, 12/7/2005 55,003
175,000 UK Conversion, 9.000%, 3/3/2000 296,546
Total 504,181
Total Foreign Bonds 5,162,078
Total Bonds (identified cost $103,568,872) 105,291,847
Total Investments (identified cost $117,657,177)(g) $122,279,731
</TABLE>
* The Fund purchases index futures contracts to efficiently manage cash flows
resulting from shareholder purchases and redemptions, dividends and capital
gain payments to shareholders and corporate actions while maintaining
exposure to the index and to minimize trading costs. The underlying face
amount, at value, of open index futures contracts is $7,362,900 at May 31,
1998, which represents 6.3% of net assets. Taking into consideration these
open index futures contracts, the Fund's effective total exposure to stocks
is 20.7%.
(a) Non-income producing security.
(b) 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.
(c) 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.
(d) These securities are subject to dollar roll transactions.
(e) The High Yield Bond Portfolio is a diversified portfolio of below investment
grade bonds.
(f) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. At May 31, 1998, these securities amounted to
$1,336,842 which represents 1.1% of total net assets.
(g) The cost of investments for federal tax purposes amounts to $117,657,177.
The net unrealized appreciation of investments on a federal tax basis
amounts to $4,622,554 which is comprised of $5,509,507 appreciation and
$886,953 depreciation at May 31, 1998.
Note: The categories of investments are shown as a percentage of net assets
($117,672,760) at May 31, 1998.
The following acronyms are used throughout this portfolio:
FRN --Floating Rate Note
LP --Limited Partnership
PLC --Public Limited Company
TBA --To Be Announced
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF ASSETS AND LIABILITIES
Federated Managed Income Fund
May 31, 1998 (unaudited)
<TABLE>
<CAPTION>
Assets:
<S> <C> <C>
Total investments in securities, at value (identified and tax cost $117,657,177) $122,279,731
Cash 23,644
Cash denominated in foreign currencies (identified cost $60,624) 60,295
Income receivable 1,218,471
Receivable for investments sold 56,187
Receivable for shares sold 135,246
Deferred organizational costs 23,374
Other assets 13,489
Total assets 123,810,437
Liabilities:
Payable for investments purchased $ 1,456,864
Payable for dollar roll transactions 4,568,720
Payable for taxes withheld 954
Payable for daily variation margin 67,386
Accrued expenses 43,753
Total liabilities 6,137,677
Net Assets for 10,809,886 shares outstanding $117,672,760 Net Assets Consist of:
Paid in capital $111,428,401 Net unrealized appreciation of investments and
translation of assets and liabilities in foreign currency 4,465,146 Accumulated
net realized gain on investments and foreign currency transactions 1,816,033
Distributions in excess of net investment income (36,820)
Total Net Assets $117,672,760
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
Institutional Shares:
$76,115,539 O 6,992,115 shares outstanding $10.89
Select Shares:
$41,557,221 O 3,817,771 shares outstanding $10.89
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF OPERATIONS
Federated Managed Income Fund
Six Months Ended May 31, 1998 (unaudited)
<TABLE>
<CAPTION>
Investment Income:
<S> <C>
Dividends $ 298,852
Interest (net of dollar roll expense of $41,465 and
foreign taxes withheld of $930) 3,036,388
Total income 3,335,240
Expenses:
Investment advisory fee $ 439,539
Administrative personnel and services fee 77,288
Custodian fees 1,330
Transfer and dividend disbursing agent fees and expenses 53,342
Directors'/Trustees' fees 2,003
Auditing fees 8,616
Legal fees 2,303
Portfolio accounting fees 31,470
Distribution services fee--Select Shares 146,709
Shareholder services fee--Institutional Shares 91,380
Shareholder services fee--Select Shares 48,903
Share registration costs 11,271
Printing and postage 17,915
Insurance premiums 1,578
Taxes 1,700
Miscellaneous 14,613
Total expenses 949,960
Waivers--
Waiver of investment advisory fee $ (239,649)
Waiver of distribution services fee--Select Shares (48,903)
Waiver of shareholder services
fee--Institutional Shares (73,104)
Total waivers (361,656)
Net expenses 588,304
Net investment income 2,746,936
Realized and Unrealized Gain on Investments and Foreign Currency:
Net realized gain on investments and foreign currency transactions 1,837,838
Net change in unrealized appreciation of investments and translation of assets
and liabilities in foreign currency 702,529
Net realized and unrealized gain on investments and foreign currency 2,540,367
Change in net assets resulting from operations $5,287,303
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF CHANGES IN NET ASSETS
Federated Managed Income Fund
<TABLE>
<CAPTION>
Six Months
Ended
(unaudited) Year Ended
May 31, 1998 November 30, 1997
<S> <C> <C>
Increase (Decrease) in Net Assets:
Operations--
Net investment income $ 2,746,936 $ 5,071,578
Net realized gain on investments and foreign currency transactions
($1,837,838 and $1,326,866, respectively, as computed for federal tax purposes) 1,837,838 1,301,274
Net change in unrealized appreciation/depreciation of investments
and translation of assets and liabilities in foreign currency 702,529 1,480,118
Change in net assets resulting from operations 5,287,303 7,852,970
Distributions to Shareholders--
Distributions from net investment income
Institutional Shares (1,919,635) (3,897,404)
Select Shares (890,346) (1,379,778)
Distributions from net realized gains on investments
and foreign currency transactions
Institutional Shares (868,541) (457,124)
Select Shares (458,242) (172,678)
Change in net assets resulting from distributions to shareholders (4,136,764) (5,906,984)
Share Transactions--
Proceeds from sale of shares 25,156,115 42,602,074
Net asset value of shares issued to shareholders
in payment of distributions declared 2,493,707 2,996,006
Cost of shares redeemed (18,793,422) (32,459,813)
Change in net assets resulting from share transactions 8,856,400 13,138,267
Change in net assets 10,006,939 15,084,253
Net Assets:
Beginning of period 107,665,821 92,581,568
End of period (including undistributed net investment income of $0
and $26,225, respectively) $117,672,760 $107,665,821
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Financial Highlights--Institutional Shares
<TABLE>
<CAPTION>
(For a share outstanding throughout each period)
Six Months
Ended
(unaudited)
May 31, Year Ended November 30,
1998 1997 1996 1995 1994(a)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.77 $ 10.56 $ 10.54 $ 9.76 $ 10.00
Income from investment operations
Net investment income 0.27 0.60 0.59 0.62 0.31
Net realized and unrealized gain (loss) on investments
and foreign currency 0.26 0.30 0.12 0.78 (0.25)
Total from investment operations 0.53 0.90 0.71 1.40 0.06
Less distributions
Distributions from net investment income (0.28) (0.62) (0.62) (0.62) (0.30)
Distributions from net realized gain on investments
and foreign currency transactions (0.13) (0.07) (0.07) -- --
Total distributions (0.41) (0.69) (0.69) (0.62) (0.30)
Net asset value, end of period $ 10.89 $ 10.77 $ 10.56 $ 10.54 $ 9.76
Total return (b) 5.07% 8.88% 6.98% 14.74% 0.55%
Ratios to average net assets
Expenses 0.80%* 0.80% 0.80% 0.75% 0.67%*
Net investment income 5.14%* 5.63% 5.72% 6.26% 6.02%*
Expense waiver/reimbursement (c) 0.59%* 0.70% 0.80% 1.06% 1.01%*
Supplemental data
Net assets, end of period (000 omitted) $76,116 $71,058 $67,122 $50,852 $34,692
Average commission rate paid (d) $0.0568 $0.0053 $0.0003 -- --
Portfolio turnover 50% 99% 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 fund'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.
(d) Represents total commissions paid on portfolio securities divided by total
portfolio shares purchased or sold on which commissions were charged.
(See Notes which are an integral part of the Financial Statements)
Financial Highlights--Select Shares
<TABLE>
<CAPTION>
(For a share outstanding throughout each period)
Six Months
Ended
(unaudited)
May 31, Year Ended November 30,
1998 1997 1996 1995 1994(a)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.77 $ 10.56 $ 10.54 $ 9.77 $ 10.00
Income from investment operations
Net investment income 0.25 0.51 0.53 0.48 0.28
Net realized and unrealized gain (loss) on investments
and foreign currency 0.25 0.31 0.10 0.83 (0.25)
Total from investment operations 0.50 0.82 0.63 1.31 0.03
Less distributions
Distributions from net investment income (0.25) (0.54) (0.54) (0.54) (0.26)
Distributions from net realized gain on investments
and foreign currency transactions (0.13) (0.07) (0.07) -- --
Total distributions (0.38) (0.61) (0.61) (0.54) (0.26)
Net asset value, end of period $ 10.89 $ 10.77 $ 10.56 $ 10.54 $ 9.77
Total return (b) 4.70% 8.14% 6.23% 13.76% 0.26%
Ratios to average net assets
Expenses 1.50%* 1.50% 1.50% 1.50% 1.42%*
Net investment income 4.44%* 4.93% 5.02% 5.56% 5.24%*
Expense waiver/reimbursement (c) 0.64%* 0.75% 0.85% 1.06% 1.26%*
Supplemental data
Net assets, end of period (000 omitted) $41,557 $36,608 $25,459 $13,927 $ 3,198
Average commission rate paid (d) $0.0568 $0.0053 $0.0003 -- --
Portfolio turnover 50% 99% 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 fund'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.
(d) Represents total commissions paid on portfolio securities divided by total
portfolio shares purchased or sold on which commissions were charged.
(See Notes which are an integral part of the Financial Statements)
Notes to Financial Statements
Federated Managed Income Fund
May 31, 1998 (unaudited)
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").
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.
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
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. Listed equity securities are valued
at the last sale price reported on a national securities exchange. Short-term
securities are valued at the prices provided by an independent pricing service.
However, short-term securities with remaining maturities of sixty days or less
at the time of purchase may be valued at amortized cost, which approximates fair
market value. Investments in other open-end regulated investment companies are
valued at net asset 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.
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.
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 May 31, 1998, the Fund had realized
gains on future contracts of $145,573.
At May 31, 1998, the Fund had outstanding futures contracts as set forth below:
<TABLE>
<CAPTION>
Contracts to Unrealized
Expiration Date Deliver/Receive Position Depreciation
<S> <C> <C> <C>
June 1998 27 S&P 500 Index Long $155,762
</TABLE>
Foreign Exchange Contracts
The Fund may enter into foreign currency commitments for the delayed delivery of
securities or foreign currency exchange transactions. The Fund may enter into
foreign currency contract transactions to protect assets against adverse changes
in foreign currency exchange rates or exchange control regulations. Purchased
contracts are used to acquire exposure to foreign currencies; whereas, 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-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. As of May 31, 1998, the Fund had no
outstanding foreign exchange contracts.
Foreign Currency Translation
The accounting records of the Fund are maintained in U.S. dollars. All assets
and liabilities denominated in foreign currencies ("FC") are translated into
U.S. dollars based on the rate of exchange of such currencies against U.S.
dollars on the date of valuation. Purchases and sales of securities, income and
expenses are translated at the rate of exchange quoted on the respective date
that such transactions are recorded. Differences between income and expense
amounts recorded and collected or paid are adjusted when reported by the
custodian bank. The Fund does not isolate that portion of the results of
operations resulting from changes in foreign exchange rates on investments from
the fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss from
investments.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
FCs, currency gains or losses realized between the trade and settlement dates on
securities transactions, the difference between the amounts of dividends,
interest, and foreign withholding taxes recorded on the Fund's books, and the
U.S. dollar equivalent of the amounts actually received or paid. Net unrealized
foreign exchange gains and losses arise from changes in the value of assets and
liabilities other than investments in securities at fiscal year end, resulting
from changes in the exchange rate.
Dollar Roll Transactions
The Fund enters into dollar roll transactions, with respect to mortgage
securities issued by GNMA, FNMA and FHLMC, in which the Fund sells mortgage
securities to financial institutions and simultaneously agrees to accept
substantially similar (same type, coupon and maturity) securities at a later
date at an agreed upon price. Dollar roll transactions involve "to be announced"
securities and are treated as short-term financing arrangements which will not
exceed twelve months. The Fund will use the proceeds generated from the
transactions to invest in short-term investments, which may enhance the Fund's
current yield and total return.
Restricted Securities
Restricted securities are securities that may only be resold upon registration
under federal securities laws or in transactions exempt from such registration.
In some cases, the issuer of restricted securities has agreed to register such
securities for resale, at the issuer's expense either upon demand by the Fund or
in connection with another registered offering of the securities. Many
restricted securities may be resold in the secondary market in transactions
exempt from registration. Such restricted securities may be determined to be
liquid under criteria established by the Trustees. The Fund will not incur any
registration costs upon such resales. The Fund's restricted securities are
valued at the price provided by dealers in the secondary market or, if no market
prices are available, at the fair value as determined by the Fund's pricing
committee.
Additional information on each restricted security held at May 31, 1998 is as
follows:
<TABLE>
<CAPTION>
Fund
Security Acquisition Date Acquisition Cost
<S> <C> <C>
Bayer Corp. 3/21/96-4/17/96 $345,302
Den Danske Bank 1/7/98 494,590
Swedbank 1/7/98 490,854
Use of Estimates
</TABLE>
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.
<TABLE>
<CAPTION>
Shares of Beneficial Interest
Six Months Ended
(unaudited) Year Ended
May 31, 1998 November 30, 1997
Institutional Shares Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Shares sold 1,468,066 $ 15,915,425 2,242,410 $ 23,562,794
Shares issued to shareholders in payment of distributions declared 146,424 1,579,004 185,324 1,941,234
Shares redeemed (1,217,303) (13,191,303) (2,190,519) (22,927,532)
Net change resulting from Institutional Share transactions 397,187 $ 4,303,126 237,215 $ 2,576,496
Select Shares
Shares sold 852,652 $ 9,240,690 1,793,074 $ 19,039,280
Shares issued to shareholders in payment of distributions declared 84,868 914,703 100,754 1,054,772
Shares redeemed (517,251) (5,602,119) (907,794) (9,532,281)
Net change resulting from Select Share transactions 420,269 $ 4,553,274 986,034 $ 10,561,771
Net change resulting from share transactions 817,456 $ 8,856,400 1,223,249 $ 13,138,267
</TABLE>
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 of 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, Inc. 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, 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 $91,334 were borne initially by the Adviser. The Fund
has reimbursed the Adviser for these expenses. These expenses have been deferred
and are being amortized over the five year period following the Fund's effective
date. For the period ended May 31, 1998, the Fund expensed $42,971 of
organizational expenses.
General
Certain of the Officers and Trustees of the Fund are Officers and Directors or
Trustees of the above companies.
Year 2000
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
Investment Transactions
Purchases and sales of investments, excluding short-term securities, for the
period ended May 31, 1998, were as follows:
Purchases $53,125,660
Sales $51,686,274
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 May 31, 1998, the diversification of industries was as follows:
Percent of
Industry Net Assets
Agency 0.7%
Banking 1.4%
Financial Intermediaries 0.3%
Forest Products 0.4%
Metals & Mining 0.2%
Sovereign 2.6%
Sovereign Government 0.9%
State/Provincial 0.0%
Supranational 0.3%
Utilities 0.1%
Trustees
John F. Donahue
Thomas G. Bigley
John T. Conroy, Jr.
William J. Copeland
James E. Dowd, Esq.
Lawrence D. Ellis, M.D.
Edward L. Flaherty, Jr., Esq.
Glen R. Johnson
Peter E. Madden
John E. Murray, Jr., J.D., S.J.D.
Wesley W. Posvar
Marjorie P. Smuts
Officers
John F. Donahue
Chairman
Glen R. Johnson
President
J. Christopher Donahue
Executive Vice President
Edward C. Gonzales
Executive Vice President
John W. McGonigle
Executive Vice President, Treasurer, and Secretary
Richard B. Fisher
Vice President
Karen M. Brownlee
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectuses which contain facts
concerning its objective and policies, management fees, expenses and other
information.
[LOGO]
Federated
Managed
Income Fund
Institutional Shares
Select Shares
Federated Securites Corp., Ditributor
Federated Investors, Inc.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
1-800-341-7400
www.federatedinvestors.com
Semi-Annual Report
to Shareholders
May 31, 1998
Cusip 56166K107
Cusip 56166K206
G00517-01 (7/98)
