PRESIDENT'S MESSAGE
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders for Federated Managed
Growth Fund, a portfolio of Managed Series Trust, for the 12-month period from
December 1, 1997, through November 30, 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, 58.3% of the
fund's $262.1 million in net assets was invested across stocks, including large-
cap value, large-cap growth, small-cap value, small-cap growth, and foreign. The
rest of the portfolio was diversified among U.S. and foreign bonds.*
Over the fund's fiscal year, the fund's Institutional Shares delivered a total
return of 10.56%** through a $0.05 increase in share price, dividends totaling
$0.34 per share and capital gains totaling $0.88 per share. The fund's Select
Shares produced a total return of 9.80%** through a $0.05 increase in share
price, dividends totaling $0.25 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
January 15, 1999
* International 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 investoris shares, when redeemed, may be worth more or less than
their original cost.
INVESTMENT REVIEW
Performance For Twelve Months Ended
November 30, 1998
The 12 month reporting period ended November 30, 1998, was a generally favorable
one for financial assets, although investors suffered through a period of high
volatility in the second half of the period. Federated Managed Growth Fund moved
up with the advance in security prices this year but enjoyed less volatility
than the stock market in the six months ended November 30, 1998. For the 12
month reporting period ended November 30, 1998, an investor in the fund's
Institutional Shares had a total return of 10.56%,* while an investor in the
fund's Select Shares had a total return of 9.80%.* As usual, performance among
asset classes showed wide variation. The U.S. stock market set new all-time
highs in July, but then embarked on a steep, swift decline through August. After
moving in a trading range through early October, the stock market rebounded
strongly through late November. The highest quality portion of the bond market--
U.S. Treasuries--did very well in this period of turbulence as investors around
the world looked for safety and stability. Other sectors of the bond market did
better than the stock market, but not as well as the U.S. Treasury sector in the
last six months of the reporting period.
Asset Allocation as of November 30, 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 November 30, 1998.
* Performance quoted represents past performance and is not indicative of future
results. Investment return and principal value will fluctuate, so that an
investoris shares, when redeemed, may be worth more or less than their
original cost.
<TABLE>
<CAPTION>
Asset Categories As A Percentage of Total Assets
Permitted Percentage as of
Range November 30, 1998
<S> <C> <C>
Asset Category
Bonds(1) 30-50% 41
U.S. Treasury Securities 0-40% 15
Mortgage-Backed
Securities 0-15% 8
Investment Grade
Corporate Bonds 0-15% 8
High Yield Corporate Bonds 0-15% 5
Foreign Bonds 0-15% 5
Equities(1) 50-70% 59
Large Company Stocks 30-50% 41
Small Company Stocks 5-15% 7
Foreign Stocks 5-15% 11
</TABLE>
(1) Bonds convertible into equity securities at a price below the closing price
of the underlying equity securities on November 30, 1998, have been
included under the appropriate equity asset category.
The fund had somewhat below normal allocations to stocks and the higher risk
portions of the bond market entering the late summer period of downside
volatility in the financial markets. In October, with stock prices well below
their all-time highs set in July, fund management added to both stock and high
yield bond positions. These additions helped performance as financial markets
rebounded strongly in the late October-November period. By November 30, 1998,
the fund held only a slightly above normal position in bonds.
Structure of the Bond Portfolio
Within a range of four to six years, the fund's bond duration is set at 4.8
years. This duration is set at a slightly 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, U.S. Treasuries were emphasized for much of the last
12 months. Lower than normal yield advantages offered by corporate bonds over
U.S. Treasuries led fund management to underweight both investment grade and
high yield corporate bonds until November 1998. These underweights helped
performance as investors in late summer were willing to pay an above normal
premium for the safety of U.S. Treasuries, thus making these bonds a very strong
sector of the fixed income market. Once yield relationship returned to
historically normal levels, management added to the investment grade and high
yield corporate areas.
Structure of the Equity Portfolio
In a global equity sell-off, U.S. stocks declined rapidly in late summer. The
size and swiftness of the decline can be at least partially attributed to the
lack of valuation support for stocks versus historical standards. In July,
stocks were richly priced versus their fundamentals. Investors paid much higher
than normal prices for a dollar of earnings or a dollar of plant and equipment.
This willingness on the part of investors to pay high prices reflects optimistic
assessments about future economic conditions, which may well be justified.
However, optimistic investors, sitting on large unrealized gains from a multi-
year bull market, create above normal risk for the market as any change in
sentiment can quickly lead to substantial selling. This is the situation that
prevailed in mid-July prior to the decline.
The Federal Reserve Board's decision to move to an easier monetary policy in the
fall had the desired effect of dramatically restoring confidence. It also led to
a quick rebound in large cap stocks. With stocks back to their mid-July levels,
valuation had re-emerged as a concern. Therefore, the fund had a slightly below
normal stock allocation despite the favorable economic and monetary policy
environment.
The historic tendency of small-cap U.S. stocks to underperform in down markets
led fund management to underweight this sector of the equity market in
September. This move enhanced returns as small cap stocks underperformed large-
cap stocks for the three months ended November 30, 1998.*
* Small-cap stocks have historically experienced greater volatility than stocks
of companies with larger capitalizations.
Federated Managed Growth Fund
(Institutional Shares)
Growth of $25,000 Invested in Federated Managed Growth Fund (Institutional
Shares)
The graph below illustrates the hypothetical investment of $25,000* in the
Federated Managed Growth Fund (Institutional Shares) (the "Fund") from May 25,
1994 (start of performance) to November 30, 1998 compared to the Standard and
Poor's 500 Index (S&P 500)+ and the Managed Growth Indices Blend (MGIB).++
[GRAPHIC]-See Appendix G.
Past performance is not predictive of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost. Mutual funds are not obligations of or
guaranteed by any bank and are not federally insured.
This report must be preceded or accompanied by the Fund's prospectus dated
January 31, 1999, and, together with financial statements contained therein,
constitutes the Fund's annual report.
* The Fund's performance assumes the reinvestment of all dividends and
distributions. The S&P 500 and the MGIB have been adjusted to reflect
reinvestment of dividends on securities in the indices.
+ The S&P 500 is not adjusted to reflect sales charges, expenses, or other
fees that the Securities and Exchange Commission requires to be reflected in
the Fund's performance. This index is unmanaged.
++ The MGIB is a blend of index total returns that represent the Fund's
allocation in the market sectors. The blend is comprised of 33% Standard and
Poor's 500 Index, 9% Russell 2000 Index, 3% Standard and Poor's Utility
Index, 9% Morgan Stanley Capital International Europe Australia Far East
Index, 6% Merrill Lynch 91-Day Treasury Bill Index, 11% Lehman Brothers
Intermediate Treasury Index, 5% Lehman Brothers Long Treasury Index, 6%
Lehman Brothers Mortgage Index, 6% Lehman Brothers Intermediate Corporate
Index, 6% Lehman Brothers Single B Rated Index, and 6% JP Morgan Global
Traded Index Excluding U.S. Each index is reported net of sales charges,
expenses or other fees that the Securities and Exchange Commission requires
to be reflected in a fund's performance. These indices are unmanaged.
Federated Managed Growth Fund
(Select Shares)
Growth of $10,000 Invested in Federated Managed Growth Fund (Select Shares)
The graph below illustrates the hypothetical investment of $10,000* in the
Federated Managed Growth Fund (Select Shares) (the "Fund") from May 25, 1994
(start of performance) to November 30, 1998 compared to the Standard and Poor's
500 Index (S&P 500)+ and the Managed Growth Indices Blend (MGIB).++
[GRAPHIC]-See Appendix H.
Past performance is not predictive of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost. Mutual funds are not obligations of or
guaranteed by any bank and are not federally insured.
This report must be preceded or accompanied by the Fund's prospectus dated
January 31, 1999, and, together with financial statements contained therein,
constitutes the Fund's annual report.
* The Fund's performance assumes the reinvestment of all dividends and
distributions. The S&P 500 and the MGIB have been adjusted to reflect
reinvestment of dividends on securities in the indices.
+ The S&P 500 is not adjusted to reflect sales charges, expenses, or other
fees that the Securities and Exchange Commission requires to be reflected in
the Fund's performance. This index is unmanaged.
++ The MGIB is a blend of index total returns that represent the Fund's
allocation in the market sectors. The blend is comprised of 33% Standard and
Poor's 500 Index, 9% Russell 2000 Index, 3% Standard and Poor's Utility
Index, 9% Morgan Stanley Capital International Europe Australia Far East
Index, 6% Merrill Lynch 91-Day Treasury Bill Index, 11% Lehman Brothers
Intermediate Treasury Index, 5% Lehman Brothers Long Treasury Index, 6%
Lehman Brothers Mortgage Index, 6% Lehman Brothers Intermediate Corporate
Index, 6% Lehman Brothers Single B Rated Index, and 6% JP Morgan Global
Traded Index Excluding U.S. Each index is reported net of sales charges,
expenses or other fees that the Securities and Exchange Commission requires
to be reflected in a fund's performance. These indices are unmanaged.
PORTFOLIO OF INVESTMENTS
Federated Managed Growth Fund
November 30, 1998
<TABLE>
<CAPTION>
Value
in U.S.
Shares Dollars
<C> <S> <C>
*Stocks--58.3%
Large-Company Value Stocks--15.2%
Basic Materials--0.9%
5,800 Air Products & Chemicals, Inc. $ 221,125
27,930 Archer-Daniels-Midland Co. 513,214
4,400 Dow Chemical Co. 428,450
4,700 Du Pont (E.I.) de Nemours & Co. 276,125
4,600 International Paper Co. 199,813
26,000 LTV Corporation 143,000
5,300 Martin Marietta Materials 257,050
8,000 Universal Corp. 281,500
Total 2,320,277
Capital Goods--1.1%
2,006 AMP, Inc.
97,040
5,700 Caterpillar, Inc. 281,794
6,900 Ford Motor Co. 381,225
6,200 General Motors Corp. 434,000
11,200 Ingersoll-Rand Co. 524,300
10,400 Johnson Controls, Inc. 601,900
3,500 Northrop Corp. 284,375
8,200 Parker-Hannifin Corp. 284,950
Total 2,889,584
Communication Services--2.0%
19,186 AT&T Corp. 1,195,528
4,500 Ameritech Corp. 243,563
21,200 Bell Atlantic Corp. 1,179,250
6,900 CBS Corp. 205,706
17,800 GTE Corp. 1,103,600
7,097 (a)MCI Worldcom, Inc. 418,723
15,600 U.S. West, Inc. 971,100
Total 5,317,470
Consumer Cyclicals--0.7%
4,200 Block (H&R), Inc. 399,944
5,800 ITT Industries, Inc. 208,800
26,200 (a)K Mart Corp. 399,550
14,000 Limited, Inc. 405,125
2,300 Penney (J.C.) Co., Inc. 126,500
4,200 Sears, Roebuck & Co. 199,238
Total 1,739,157
Consumer Staples--0.6%
8,600 Kimberly-Clark Corp. 452,575
5,600 (a)King World Productions, Inc. 152,600
13,700 RJR Nabisco Holdings Corp. 394,731
7,100 Rubbermaid, Inc. 234,744
10,200 UST, Inc. 354,450
Total 1,589,100
Energy--1.6%
5,100 Atlantic Richfield Co. 339,150
10,400 (a)BJ Services Co. 143,650
6,700 Chevron Corp. 560,288
21,800 Exxon Corp. 1,636,363
12,500 Occidental Petroleum Corp. 253,125
4,400 Phillips Petroleum Co. 184,800
16,300 Sunoco, Inc. 552,163
2,600 Texaco, Inc. 149,663
16,700 USX-Marathon Group 473,863
Total 4,293,065
Financials--4.3%
1,600 Allmerica Financial Corp. 88,300
17,200 Allstate Corp. 700,900
2,900 American General Corp. 204,269
3,900 American International Group, Inc. 366,600
13,300 Bank One Corp. 682,456
17,018 BankAmerica Corp. 1,109,361
4,500 BankBoston Corp. 187,313
3,500 Bear Stearns Cos., Inc. 147,000
12,300 CIGNA Corp. 957,094
6,900 Chase Manhattan Corp. 437,719
4,750 Citigroup, Inc. 238,391
15,600 First Union Corp. 947,700
6,400 Fleet Financial Group, Inc. 266,800
1,800 General RE Corp. 420,300
7,900 (a)Golden State Bancorp, Inc. 152,075
3,800 Hartford Financial Services Group, Inc. 209,713
6,200 KeyCorp 190,263
3,900 Loews Corp. 390,000
5,600 MBIA, Inc. 362,600
11,850 Marsh & McLennan Cos., Inc. 689,522
5,700 Mellon Bank Corp. 358,744
2,600 Merrill Lynch & Co., Inc. 195,000
6,900 Morgan Stanley, Dean Witter, Discover & Co. 481,275
10,650 Old Republic International Corp. 226,978
3,800 PNC Bank Corp. 195,938
6,600 Torchmark Corp. 250,800
7,100 Washington Federal, Inc. 180,163
13,272 Washington Mutual, Inc. 514,290
Total 11,151,564
Health Care--0.5%
20,400 Pharmacia & Upjohn, Inc. 1,062,075
7,500 United Healthcare Corp. 338,438
Total 1,400,513
Services--0.0%
3,300 Cooper Industries, Inc. 162,113
Technology--1.2%
6,800 Eastman Kodak Co. 493,425
5,700 Electronic Data Systems Corp. 222,300
11,700 First Data Corp. 312,244
6,000 International Business Machines Corp. 990,000
7,200 Raytheon Co., Class A 393,750
18,400 (a)Storage Technology Corp. 644,000
Total 3,055,719
Transportation--0.4%
4,100 (a)AMR Corp. 270,344
10,500 CNF Transporation, Inc. 374,719
11,400 Ryder Systems, Inc. 325,613
Total 970,676
Utilities--1.9%
4,800 Allegheny Energy, Inc. 162,000
6,200 Baltimore Gas & Electric Co. 190,263
8,000 CMS Energy Corp. 390,000
21,800 Coastal Corp. 760,275
7,950 Columbia Energy Group 451,163
4,200 Consolidated Edison Co. 213,413
4,600 Dominion Resources, Inc. 212,463
11,700 Entergy Corp. 342,956
11,700 Houston Industries, Inc. 370,013
18,100 P G & E Corp. 559,969
9,700 Pacificorp 181,875
10,900 Public Service Enterprises Group, Inc. 425,100
11,400 Southern Co. 336,300
7,800 Texas Utilities Co. 347,588
Total 4,943,378
Total Large-Company Value Stocks 39,832,616
Large-Company Growth Stocks--16.2%
Basic Materials--0.3%
3,600 Bemis Co., Inc. 136,125
4,400 Hercules, Inc. 144,650
4,700 Monsanto Co. 212,969
2,600 PPG Industries, Inc. 159,088
Total 652,832
Capital Goods--1.7%
6,200 Allied-Signal, Inc. 272,800
4,000 Avery Dennison Corp. 191,750
4,700 Crown Cork & Seal Co., Inc. 158,625
6,200 Dover Corp. 220,875
24,800 General Electric Co. 2,244,400
4,100 Hillenbrand Industries, Inc. 232,931
7,400 Miller Herman, Inc. 157,250
4,200 (a)SCI Systems, Inc. 204,225
4,100 United Technologies Corp. 439,469
7,030 Waste Management, Inc. 301,411
Total 4,423,736
Communication Services--0.5%
5,200 (a)Airtouch Communications, Inc. 297,375
2,300 (a)Chancellor Media Corp., Class A 86,681
4,500 Cincinnati Bell, Inc. 141,750
2,500 Comcast Corp., Class A 121,250
3,400 (a)Liberty Media Group, Class A 137,063
7,600 (a)MCI Worldcom, Inc. 448,400
2,900 SBC Communications, Inc. 139,019
Total 1,371,538
Consumer Cyclicals--1.6%
3,400 (a)Abercrombie & Fitch Co., Class A 190,400
2,300 (a)Costco Cos., Inc. 144,325
3,800 Dayton-Hudson Corp. 171,000
4,100 Gannett Co., Inc. 264,706
2,700 Gap (The), Inc. 198,619
5,300 Harley Davidson, Inc. 221,606
13,200 Home Depot, Inc. 656,700
4,200 (a)Jones Apparel Group, Inc. 97,388
3,400 Lowe's Cos., Inc. 143,650
9,000 Masco Corp. 259,875
2,700 Maytag Corp. 146,138
4,600 Nordstrom, Inc. 171,350
10,700 Service Corp. International 399,913
3,800 (a)Staples, Inc. 132,763
12,400 TJX Cos., Inc. 317,750
10,300 Wal-Mart Stores, Inc. 775,719
Total 4,291,902
Consumer Staples--3.3%
4,300 Avon Products, Inc. 174,688
7,800 Campbell Soup Co. 445,575
2,100 Cardinal Health, Inc. 144,113
16,300 Coca-Cola Co. 1,142,019
19,700 Dial Corp. 517,125
9,900 Disney (Walt) Co. 318,656
4,700 Dole Food, Inc. 148,638
5,600 Gillette Co. 257,250
3,800 Heinz (H.J.) Co. 221,588
3,500 McDonald's Corp. 245,219
11,300 PepsiCo, Inc. 437,169
23,200 Philip Morris Cos., Inc. 1,297,750
10,600 Procter & Gamble Co. 928,825
4,500 Quaker Oats Co. 276,188
10,600 (a)Safeway, Inc. 559,813
4,400 Sara Lee Corp. 256,850
4,600 Sysco Corp. 123,913
6,200 (a)Tricon Global Restaurants, Inc. 282,488
5,800 UST, Inc. 201,550
10,000 (a)Viacom, Inc., Class A 656,875
1,300 Wrigley (Wm.), Jr. Co. 114,563
Total 8,750,855
Energy--0.1%
5,000 Halliburton Co. 146,875
Financials--1.3%
5,300 American Express Co. 530,331
2,905 Associates First Capital Corp., Class A 226,227
11,700 Citigroup, Inc. 587,194
7,500 Federal National Mortgage Association 545,625
5,100 Household International, Inc. 199,538
16,300 MBNA Corp. 369,806
2,700 MGIC Investment Corp. 118,631
4,600 Providian Financial Corp. 422,338
5,200 Sunamerica, Inc. 412,100
2,900 U.S. Bancorp 106,756
Total 3,518,546
Health Care--3.0%
10,000 Abbott Laboratories 480,000
6,600 American Home Products Corp. 351,450
3,100 (a)Amgen, Inc. 233,275
2,400 Baxter International, Inc. 152,550
24,100 (a)Beverly Enterprises, Inc. 138,575
8,100 Bristol-Myers Squibb Co. 992,756
4,700 Guidant Corp. 403,319
10,600 (a)HEALTHSOUTH Corp. 142,438
9,200 Johnson & Johnson 747,500
5,600 Lilly (Eli) & Co. 502,250
9,900 Merck & Co., Inc. 1,533,263
6,000 Pfizer, Inc. 669,750
6,000 Schering Plough Corp. 638,250
3,800 United Healthcare Corp. 171,475
6,300 (a)Universal Health Services, Inc., Class B 337,838
6,300 Warner-Lambert Co. 475,650
Total 7,970,339
Technology--4.3%
4,800 (a)America Online, Inc. 420,300
6,000 (a)Applied Materials, Inc. 232,500
2,600 (a)Ascend Communications 146,088
6,200 (a)BMC Software, Inc. 316,588
8,500 (a)Cadence Design Systems, Inc. 239,063
15,475 (a)Cisco Systems, Inc. 1,166,428
2,200 (a)Compuware Corp. 136,950
7,400 (a)Dell Computer Corp. 450,013
10,100 (a)EMC Corp. Mass 732,250
4,300 First Data Corp. 114,756
2,200 (a)Gateway 2000, Inc. 123,475
19,200 HBO & Co. 478,800
4,000 Hewlett-Packard Co. 251,000
12,000 Intel Corp. 1,291,500
1,600 International Business Machines Corp. 264,000
3,500 (a)Lexmark Intl. Group, Class A 267,313
11,300 Lucent Technologies, Inc. 972,506
16,400 (a)Microsoft Corp. 2,000,800
6,800 (a)Oracle Corp. 232,900
3,100 (a)PanAmSat Corp. 104,238
6,700 (a)Seagate Technology, Inc. 197,650
5,200 (a)Sun Microsystems, Inc. 385,125
5,300 (a)Tellabs, Inc. 286,531
3,000 Xerox Corp. 322,500
800 (a)Yahoo, Inc. 153,600
Total 11,286,874
Transportation--0.1%
5,000 Burlington Northern Santa Fe 170,000
Total Large-Company Growth Stocks 42,583,497
Small-Company Stocks--2.5%
Basic Materials--0.1%
1,200 Cambrex Corp. 33,600
900 ChemFirst, Inc. 16,988
900 Florida Rock Industries, Inc. 26,381
1,100 Geon Co. 24,475
1,500 (a)Getchell Gold Corp. 24,563
1,900 Glamis Gold Ltd. 4,156
500 (a)Hauser Chemical Research, Inc. 2,313
2,600 (a)Hecla Mining Co. 10,888
500 Lone Star Industries, Inc. 37,844
700 (a)Material Sciences Corp. 6,300
500 (a)McWhorter Technologies, Inc. 11,813
1,300 Mississippi Chemical Corp. 20,475
1,200 (a)Northwestern Steel & Wire Co. 1,575
1,100 OM Group, Inc. 39,806
400 Penford Corporation 6,025
400 Quaker Chemical Corp. 6,875
700 Quanex Corp. 12,556
600 Republic Group, Inc. 10,313
600 Steel Technologies, Inc. 4,988
1,000 Texas Industries, Inc. 28,938
900 (a)WHX Corp. 9,506
Total 340,378
Capital Goods--0.3%
1,300 AMCOL International Corp. 13,813
400 Amcast Industrial Corp. 7,025
400 (a)Astec Industries, Inc. 20,750
1,000 Barnes Group, Inc. 30,938
600 (a)Benchmark Electronics, Inc. 15,000
1,100 Brady (W.H.) Co. 28,325
400 Butler Manufacturing Co. 9,300
700 CTS Corp. 24,675
1,500 (a)Checkpoint System, Inc. 20,156
700 Commercial Metals Corp. 17,719
700 CustomTracks Corp. 6,125
800 Daniel Industries, Inc. 8,750
700 (a)Flow International Corp. 7,525
457 General Electric Co. 41,359
1,500 (a)Griffon Corp. 14,438
900 Harman International Industries, Inc. 38,419
800 Imco Recycling, Inc. 11,950
1,300 (a)Insituform Technologies, Inc., Class A 17,063
400 Insteel Industries, Inc. 2,250
600 (a)Intermagnetics General Corp. 3,863
900 Juno Lighting, Inc. 21,038
1,100 Kaman Corp., Class A 17,875
500 Lawson Products, Inc. 11,500
2,600 (a)Morrison Knudsen Corp. 25,025
900 Myers Industries, Inc. 20,250
300 (a)Nashua Corp. 5,006
700 O'Sullivan Corp. 6,825
2,300 (a)Paxar Corp. 24,150
1,000 RTI International Metals 15,063
900 Reliance Steel & Aluminum Co. 27,563
500 Robbins & Myers, Inc. 10,000
1,100 Smith (A.O.) Corp. 27,363
600 Spartan Motors, Inc. 3,825
600 Standex International Corp. 14,025
1,300 (a)Superior Services, Inc. 23,888
800 Thomas Industries, Inc. 13,800
400 (a)Three-Five Systems, Inc. 4,000
1,100 Wabash National Corp. 20,625
1,200 Watsco, Inc. 21,525
700 Wolverine Tube, Inc. 15,706
Total 668,495
Consumer Cyclicals--0.5%
400 Angelica Corp. 7,275
1,200 (a)Ann Taylor Stores Corp. 39,525
1,300 Apogee Enterprises, Inc. 16,088
1,300 Arctic Cat, Inc. 13,650
1,100 Authentic Fitness Corp. 17,600
700 Baker (J.), Inc. 3,456
1,800 (a)Bombay Co., Inc. 8,888
900 Brown Group, Inc. 16,144
600 (a)Building Materials Holding Corp. 7,388
500 CPI Corp. 10,688
2,500 Casey's General Stores, Inc. 34,688
1,300 Cato Corp., Class A 17,631
500 Chemed Corp. 16,938
1,300 (a)Cone Mills Corp. 5,931
700 (a)Cyrk International, Inc. 6,213
2,700 D. R. Horton, Inc. 50,963
1,200 Delta Woodside Industries, Inc. 6,000
800 (a)Discount Auto Parts, Inc. 19,950
500 Dixie Group, Inc. 3,531
1,100 (a)Dress Barn, Inc. 16,225
1,400 (a)Eagle Hardware & Garden, Inc. 39,463
1,200 (a)Family Golf Centers, Inc. 24,675
1,900 Fedders Corp. 10,569
1,100 (a)Franklin Covey Co. 20,625
600 (a)Galey & Lord, Inc. 6,488
800 (a)Gibson Greetings, Inc. 8,800
200 (a)Global Motorsport Group, Inc. 3,875
600 (a)Gottschalks, Inc. 4,500
1,200 Guilford Mills, Inc. 17,325
400 Haggar Corp. 5,100
1,000 Hancock Fabrics, Inc. 8,438
1,600 (a)Hartmarx Corp. 9,400
600 Huffy Corp. 8,700
1,100 Hughes Supply, Inc. 30,525
500 (a)Insurance Automotive Auctions, Inc. 5,750
2,500 Interface, Inc. 31,250
1,200 Intermet Corp. 16,425
1,400 (a)Jan Bell Marketing, Inc. 6,475
900 Jo-Ann Stores, Inc. 14,175
500 Johnston Industries, Inc. 1,969
1,400 (a)Just For Feet, Inc. 31,675
1,300 Justin Industries, Inc. 16,738
300 K Swiss, Inc., Class A 8,550
1,000 Kellwood Co. 27,000
2,500 La-Z Boy Chair Co. 41,875
400 Lillian Vernon Corp. 6,125
900 M.D.C. Holdings, Inc. 16,538
1,400 Marcus Corp. 21,175
1,400 (a)Michaels Stores, Inc. 25,200
2,200 Oakwood Homes Corp. 32,863
900 OshKosh B'Gosh, Inc., Class A 21,600
400 Oxford Industries, Inc. 11,550
600 (a)Pharmaceutical Marketing Services 6,225
1,300 Phillips Van Heusen Corp. 9,100
1,100 (a)Primark Corp. 27,500
2,500 (a)Prime Hospitality Corp. 21,875
1,100 Russ Berrie & Co., Inc. 24,888
700 Ryland Group, Inc. 18,594
900 (a)Scotts Co. 32,569
1,200 Shopko Stores, Inc. 38,700
500 Skyline Corp. 16,250
600 Standard Motor Products, Inc. 13,688
1,400 Standard Pacific Corp. 13,650
800 Standard Products Co. 14,900
2,300 Stride Rite Corp. 20,413
400 (a)Swiss Army Brands, Inc. 4,150
1,100 (a)TBC Corp. 7,700
800 TJ International, Inc. 18,900
700 Thomas Nelson, Inc. 9,231
600 Thor Industries, Inc. 14,325
1,800 (a)Toll Brothers, Inc. 43,763
600 Toro Co. 15,900
700 (a)U.S. Home Corp. 22,313
1,000 Universal Forest Products, Inc. 19,875
400 Walbro Corp. 3,000
1,100 Winnebago Industries, Inc. 13,200
900 Wynns International, Inc. 19,969
1,700 (a)Zale Corp. 48,663
Total 1,353,529
Consumer Staples--0.3%
1,000 ABM Industries, Inc. 33,313
1,400 Applebee's International, Inc. 28,788
600 (a)Au Bon Pain Co., Inc., Class A 3,750
1,100 Bindley Western Industries, Inc. 42,488
1,800 Bowne & Co., Inc. 30,150
900 (a)Canandaigua Wine Co., Inc., Class A 44,775
500 (a)Carmike Cinemas, Inc., Class A 10,000
1,000 (a)Cheesecake Factory, Inc. 26,000
3,100 Chiquita Brands International 34,875
900 Dames & Moore, Inc. 11,531
2,100 Earthgrains Co. 67,463
1,800 Fleming Cos., Inc. 18,113
1,500 Harland (John H.) Co. 22,875
500 (a)IHOP Corp. 19,875
2,200 (a)Interim Services, Inc. 45,650
400 (a)J & J Snack Foods Corp. 8,350
1,500 (a)Landrys Seafood Restaurants, Inc. 12,188
500 Nash Finch Co. 7,281
400 National Presto Industries, Inc. 16,525
1,300 Norrell Corp. 20,719
1,600 (a)Ralcorp Holdings, Inc. 28,000
1,600 Ruby Tuesday, Inc. 29,800
2,000 (a)Ryan's Family Steak Houses, Inc. 22,750
800 Schweitzer-Mauduit International, Inc. 14,600
1,800 (a)Smithfield Foods, Inc. 47,588
900 (a)Sonic Corp. 17,663
1,100 TCBY Enterprises, Inc. 8,525
700 (a)Taco Cabana, Inc., Class A 4,856
700 (a)Volt Information Science, Inc. 16,319
1,800 (a)World Color Press 53,550
Total 748,360
Energy--0.1%
1,500 (a)Barrett Resources 36,656
1,500 Devon Energy Corp. 49,406
900 (a)HS Resources, Inc. 7,819
1,100 (a)Oceaneering International, Inc. 13,681
1,000 (a)Offshore Logistics, Inc. 12,438
800 (a)Plains Resources, Inc. 14,200
1,000 (a)Pool Energy Services Co. 11,250
2,400 (a)Pride International, Inc. 18,150
1,100 (a)Seitel, Inc. 14,713
1,600 Snyder Oil Corp. 20,600
500 St. Mary Land & Exploration Co. 9,500
Total 208,413
Financials--0.4%
2,100 (a)Amresco, Inc. 15,356
900 Anchor Bancorp Wisconsin, Inc. 18,113
2,600 Astoria Financial Corp. 117,000
700 Banknorth Group, Inc. 23,363
1,500 Capital Re Corp. 29,625
800 Carolina First Corporation 19,950
1,200 Cash America International, Inc. 20,250
2,800 Commercial Federal Corp. 64,225
1,100 Cullen Frost Bankers, Inc. 58,988
1,020 (a)Delphi Financial Group, Inc., Class A 47,621
1,300 Downey Financial Corp. 33,800
1,800 Enhance Financial Services Group, Inc. 52,875
500 Executive Risk, Inc. 27,000
1,400 First Midwest Bancorp, Inc. 54,513
1,700 Fremont General Corp. 85,638
1,800 Frontier Insurance Group, Inc. 25,538
500 JSB Financial, Inc. 26,375
2,500 Keystone Financial, Inc. 80,938
800 Life Re Corp. 75,350
1,100 MAF Bancorp, Inc. 28,188
900 NAC Re Corp. 42,975
1,300 Orion Capital Corp. 46,963
1,400 Selective Insurance Group, Inc. 26,425
1,000 (a)Silicon Valley Bancshares 25,000
1,900 St. Paul Bancorp, Inc. 40,138
1,600 Susquehanna Bankshares, Inc. 35,600
600 Trenwick Group, Inc. 19,050
800 Zenith National Insurance Corp. 19,500
Total 1,160,357
Health Care -- 0.2%
1,000 ADAC Laboratories 26,000
1,200 Alpharma, Inc., Class A 43,200
1,600 (a)American Oncology Resources, Inc. 17,900
600 (a)Circon Corp. 8,738
500 (a)Compdent Corp. 5,219
700 (a)Datascope Corp. 15,488
1,700 (a)Genesis Health Ventures, Inc. 16,256
600 (a)Hologic, Inc. 7,838
1,800 (a)IDEXX Laboratories, Inc. 46,800
2,600 Integrated Health Services, Inc. 29,088
3,400 (a)Mariner Post-Acute Network, Inc. 14,663
900 (a)NCS HealthCare, Inc., Class A 18,225
3,700 (a)Phycor, Inc. 22,663
900 (a)Protein Design Laboratories, Inc. 19,800
1,500 (a)Regeneron Pharmaceuticals, Inc. 12,375
1,500 (a)Roberts Pharmaceutical Corp. 36,750
700 (a)Rural / Metro Corp. 7,175
1,300 (a)Sierra Health Services, Inc. 29,738
1,500 (a)Summit Technology, Inc. 5,813
1,100 (a)Sunrise Medical, Inc. 14,025
500 (a)Syncor International Corp. 12,000
1,600 (a)Universal Health Services, Inc., Class B 85,800
1,200 (a)Vertex Pharmaceuticals, Inc. 28,425
600 Vital Signs, Inc. 10,200
Total 534,179
Technology--0.2%
600 Analogic Corp. 21,300
2,100 (a)Anixter International, Inc. 34,650
1,000 (a)BancTec, Inc. 13,188
1,400 (a)Cable Design Technologies, Class A 25,813
1,100 (a)Coherent, Inc. 13,888
1,300 Dallas Semiconductor Corp. 49,075
700 (a)Digi International, Inc. 9,100
1,100 (a)Exabyte Corp. 8,181
1,100 Gerber Scientific, Inc. 27,844
600 (a)Integrated Circuit System, Inc. 8,625
700 (a)Intervoice, Inc. 17,938
2,600 (a)Komag, Inc. 18,850
800 (a)Marshall Industries 20,800
1,700 Methode Electronics, Inc., Class A 23,163
1,000 (a)Network Equipment Technologies, Inc. 11,125
1,800 (a)PictureTel Corp. 12,825
800 (a)Standard Microsystems Corp. 6,000
800 (a)Symmetricom, Inc. 4,950
1,500 (a)Unitrode Corp. 25,406
500 (a)Wall Data, Inc. 8,625
1,100 (a)Xircom, Inc. 33,206
Total 394,552
Transportation--0.1%
1,700 Air Express International Corp. 37,825
1,500 (a)American Freightways Corp. 13,500
900 (a)Arkansas Best Corp. 5,288
1,700 (a)Fritz Companies, Inc. 16,469
800 Frozen Food Express Industries, Inc. 6,300
1,000 (a)Kirby Corp. 19,875
500 (a)Landstar System, Inc. 20,500
600 (a)M.S. Carriers, Inc. 14,700
1,400 (a)Mesa Air Group, Inc. 11,200
1,000 Pittston Burlington Group 8,688
400 (a)Railtex, Inc. 4,850
2,800 Rollins Truck Leasing Corp. 33,600
1,200 SkyWest, Inc. 32,475
1,300 USFreightways Corp. 34,938
2,300 Werner Enterprises, Inc. 37,806
1,200 (a)Yellow Corp. 19,350
Total 317,364
Utilities--0.3%
400 American States Water Co. 11,300
400 Aquarion Co. 15,025
1,400 Atmos Energy Corp. 42,875
400 (a)Bangor Hydro Electric Co. 4,850
500 Cascade Natural Gas Corp. 9,156
800 Central Hudson Gas & Electric Service 32,350
500 Central VT Public Service Corp. 5,219
700 Cilcorp, Inc. 42,350
1,000 Commonwealth Energy System 38,500
500 Connecticut Energy Corp. 13,969
400 Consumers Water Co. 12,500
1,000 Eastern Utilities Association 24,688
1,400 Energen Corp. 25,200
300 Green Mountain Power Corp. 3,638
900 New Jersey Resources Corp. 35,044
600 Orange & Rockland Utilities, Inc. 33,750
Utilities--0.3%
500 Pennsylvania Enterprises 12,344
1,300 Philadelphia Suburban Corp. 32,906
1,500 Piedmont Natural Gas, Inc. 52,500
1,000 Public Service Co. North Carolina, Inc. 24,313
1,500 Sierra Pacific Resources 54,000
1,400 Southwest Gas Corp. 33,250
1,200 Southwestern Energy Co. 9,000
600 TNP Enterprises, Inc. 22,800
700 United Illuminating Co. 35,131
1,800 United Water Resources, Inc. 37,350
1,800 WICOR, Inc. 39,375
Total 703,383
Total Small-Company Stocks 6,429,010
Small-Company Growth Stocks--2.6%
Basic Materials--0.1%
1,600 (a)Buckeye Technologies Inc. 31,200
1,500 Dekalb Genetics Corp., Class B 149,625
1,700 Delta & Pine Land Co. 64,388
1,000 Lilly Industries, Inc., Class A 18,688
1,200 MacDermid, Inc. 44,250
1,200 (a)Shorewood Packaging Corp. 17,775
1,000 (a)Stillwater Mining Co. 36,563
Total 362,489
Capital Goods--0.4%
1,200 AAR Corp. 30,300
600 (a)Alliant Techsystems, Inc. 45,713
1,700 Applied Power, Inc., Class A 60,563
1,600 Aptargroup, Inc. 44,700
1,000 (a)BE Aerospace, Inc. 23,750
1,600 Baldor Electric Co. 31,900
1,700 Blount International, Inc., Class A 39,313
400 (a)C-COR Electronics, Inc. 5,800
1,100 CLARCOR, Inc. 20,694
600 Castle (A.M.) & Co. 11,550
1,000 (a)Dionex Corp. 31,000
700 (a)Gardner Denver Machy, Inc. 11,113
900 Graco, Inc. 24,975
1,300 (a)Halter Marine Group, Inc. 9,019
500 Harmon Industries, Inc. 12,500
1,900 JLG Industries, Inc. 31,231
700 Kuhlman Corp. 19,513
800 Libbey, Inc. 24,650
600 Lindsay Manufacturing Co. 9,000
800 Manitowoc, Inc. 31,800
1,600 (a)Mueller Industries, Inc. 36,500
600 New Engineers Business Service, Inc. 19,200
800 (a)Oak Industries, Inc. 24,700
1,600 (a)Orbital Sciences Corp. 61,200
700 (a)Plexus Corp. 21,000
900 Regal Beloit Corp. 22,500
600 (a)SPS Technologies, Inc. 34,350
1,900 (a)Sanmina Corp. 94,644
700 (a)Service Experts, Inc. 20,738
700 Technitrol, Inc. 21,131
1,600 Tredegar Industries, Inc. 37,400
1,100 (a)Valence Technology, Inc. 10,450
1,400 (a)Zebra Technologies Co., Class A 46,988
Total 969,885
Consumer Cyclicals--0.5%
1,000 (a)ADVO, Inc. 25,875
3,200 (a)Acxiom Corp. 75,600
600 (a)Ashworth Inc. 3,469
1,600 Breed Technologies, Inc. 10,800
800 (a)Catalina Marketing Corp. 46,600
1,300 Central Parking Corp. 38,188
1,400 (a)Cerner Corp. 36,750
2,100 (a)Champion Enterprises, Inc. 46,856
3,100 (a)DeVRY, Inc. 81,763
1,300 Ethan Allen Interiors, Inc. 51,350
1,100 (a)Footstar, Inc. 26,813
900 G & K Services, Inc., Class A 45,450
3,200 (a)Gentex Corp. 58,800
1,500 (a)Goody's Family Clothing, Inc. 16,875
1,200 (a)HA-LO Industries, Inc. 38,325
1,700 (a)Linens 'N Things, Inc. 52,063
1,500 (a)Mens Wearhouse, Inc. 37,969
1,700 (a)Midway Games, Inc. 17,319
2,300 (a)Mohawk Industries, Inc. 85,819
900 (a)NFO Worldwide, Inc. 11,363
1,600 (a)Nautica Enterprise, Inc. 31,500
900 (a)O'Reilly Automotive, Inc. 40,838
900 (a)Pacific Sunwear of California 13,331
4,300 Pier 1 Imports, Inc. 46,225
600 Pillowtex Corp. 20,250
1,100 Polaris Industries Partners, L.P. 38,363
1,000 (a)Prepaid Legal Services, Inc. 26,000
1,000 Regis Corp. Minnesota 33,500
700 St. John Knits, Inc. 14,000
500 (a)Timberland Co., Class A 20,469
2,000 True North Communications, Inc. 56,250
700 WD 40 Co. 21,700
2,400 (a)Williams-Sonoma, Inc. 70,950
1,900 (a)Wolverine World Wide, Inc. 25,888
Total 1,267,311
Consumer Staples--0.2%
900 (a)CDI Corp. 24,131
800 (a)CEC Entertainment, Inc. 23,700
2,100 CKE Restaurants, Inc. 51,319
400 Coca-Cola Bottling Co. 23,225
600 (a)Consolidated Graphics, Inc. 34,538
900 (a)Consolidated Products, Inc. 18,619
1,700 (a)Foodmaker, Inc. 32,938
700 Merrill Corp. 11,900
3,000 (a)NBTY, Inc. 18,375
800 Natures Sunshine Products, Inc. 12,500
1,400 Owens & Minor, Inc. 23,975
1,500 (a)Patterson Dental Co. 62,438
2,100 Richfood Holdings, Inc. 38,982
1,300 (a)Triarc Companies, Inc., Class A 20,963
600 (a)USA Detergents, Inc. 5,550
1,700 (a)Valassis Communication, Inc. 72,888
1,200 (a)Whole Foods Market, Inc. 55,800
Total 531,841
Energy--0.0%
2,000 (a)Tuboscope Inc. 16,625
Financials--0.4%
1,900 American Bankers Insurance Group, Inc. 86,213
2,700 (a)Americredit Corp. 37,294
1,000 CMAC Investment Corp. 48,250
1,200 Centura Banks, Inc. 81,600
1,000 Commerce Bancorp, Inc. 47,750
1,600 Eaton Vance Corp. 38,900
1,100 Fidelity National Financial, Inc. 36,094
2,500 First American Financial Corp. 76,563
1,300 Firstbank Corp. 35,588
3,200 Firstmerit Corp. 84,000
800 Gallagher (Arthur J.) & Co. 37,100
500 Hilb Rogal & Hamilton Co. 9,469
1,900 Hubco, Inc. 51,300
2,400 Legg Mason, Inc. 71,550
1,700 Mutual Risk Management Ltd. 62,369
800 Premier Bankshares, Inc. 18,700
950 Queens County Bancorp, Inc. 28,500
2,100 Raymond James Financial, Inc. 51,975
800 SEI Corp. 73,800
1,150 Trustco Bank Corp. 32,200
800 U.S. Trust Corp. 54,100
1,900 UST Corp. 47,025
1,900 United Bankshares, Inc. 54,269
Total 1,164,609
Health Care--0.3%
1,000 (a)Access Health, Inc. 35,875
1,300 Ballard Medical Products 28,275
1,000 (a)Barr Laboratories, Inc. 42,250
2,100 (a)Bio-Technology General Corp. 14,175
1,300 (a)Cephalon, Inc. 9,669
700 (a)Cooper Companies, Inc. 14,875
1,100 (a)Cor Therapeutics, Inc. 12,925
2,600 (a)Coventry Health Care Inc. 19,338
600 (a)Curative Technologies, Inc. 17,250
1,100 (a)Enzo Biochem, Inc. 14,506
1,400 (a)Express Scripts, Inc., Class A 77,000
1,000 (a)Immune Response Corp. 13,000
1,200 (a)Incyte Pharmaceuticals, Inc. 37,500
1,300 Invacare Corp. 31,119
1,300 Jones Pharma, Inc. 46,800
1,700 (a)Liposome Co., Inc. 15,406
1,200 (a)Medimmune, Inc. 80,250
1,100 Mentor Corp. 20,350
900 (a)Noven Pharmaceuticals, Inc. 4,781
2,100 (a)Orthodontic Centers of America, Inc. 40,163
1,100 (a)Parexel International Corp. 28,669
700 (a)Pediatrix Medical Group 37,581
1,000 (a)Pharmaceutical Product Development, Inc. 28,625
1,800 (a)Renal Care Group, Inc. 48,375
1,400 (a)Respironics, Inc. 26,425
2,400 (a)Safeskin Corp. 45,600
1,400 (a)Sequus Pharmaceuticals, Inc. 27,650
1,100 (a)Sola International, Inc. 17,463
900 (a)Theratech, Inc. 12,488
1,100 (a)U.S. Bioscience, Inc. 8,319
700 (a)VISX, Inc. 51,013
Total 907,715
Service--0.0%
700 (a)Metro Networks, Inc. 26,600
1,400 (a)Westwood One, Inc. 37,100
Total 63,700
Technology--0.6%
1,900 (a)American Management System, Inc 56,050
1,000 Analysts International Corp. 16,875
2,200 (a)Aspect Telecommunications Corp. 41,663
1,100 (a)Avid Technology, Inc. 26,263
1,500 (a)Billing Concepts Corp. 19,125
1,200 (a)Bisys Group, Inc. 57,750
1,200 (a)Boole & Babbage, Inc. 37,950
2,300 (a)Brightpoint, Inc. 34,500
1,600 (a)Burr Brown Corp. 37,800
1,600 (a)C-Cube Microsystems, Inc. 41,900
2,400 (a)Ciber, Inc. 54,150
2,200 (a)CommScope, Inc. 33,413
900 Computer Task Group, Inc. 24,300
700 (a)Dialogic Corp. 15,750
900 (a)Envoy Corporation 35,888
1,000 (a)Etec Systems, Inc. 32,875
600 Fair Isaac & Co., Inc. 24,150
1,600 (a)General Semiconductor, Inc. 16,200
1,100 (a)HNC Software 36,300
1,900 (a)Harbinger Corp. 16,388
800 Henry Jack & Associates, Inc. 40,200
1,300 (a)Hyperion Solutions, Corp. 42,088
700 Innovex, Inc. 11,200
1,200 Inter-Tel, Inc. 28,800
400 (a)Kronos, Inc. 17,300
700 (a)MICROS Systems Corp. 19,950
1,700 (a)Macromedia, Inc. 47,494
1,000 (a)Medquist, Inc. 30,375
800 (a)Mercury Interactive Corp. 36,700
1,400 National Computer Systems, Inc. 46,025
1,500 National Data Corp. 56,063
1,400 (a)National Instruments Corp. 40,600
1,500 (a)Novellus Systems, Inc. 74,438
1,100 (a)Photronic Labs, Inc. 22,000
1,100 (a)Platinum Software Corp. 11,688
800 (a)Progress Software Corp. 20,300
1,700 (a)Technology Solutions Corp. 15,831
700 Telxon Corp. 18,900
3,200 (a)Vitesse Semiconductor Corp. 114,000
2,300 (a)Whitmann-Hart, Inc. 50,744
500 (a)Whittaker Corp. 6,875
1,900 (a)Xylan Corp. 34,438
Total 1,445,299
Transportation--0.1%
2,900 Comair Holdings, Inc. 88,813
1,100 Expeditors International Washington, Inc. 42,350
1,300 (a)Heartland Express, Inc. 22,263
Total 153,426
Total Small-Company Growth Stocks 6,882,900
Foreign Stocks--11.1%
Australia--0.2%
61,700 Austrim Ltd. 112,818
79,000 Woolworth's Ltd. 277,982
Total 390,800
Finland--0.1%
33,200 Merita A (unitas A) 193,079
4,300 Sampo Insurance Co. Ltd., Class A 147,543
Total 340,622
France--1.9%
4,600 AXA 594,284
1,500 Alcatel Alsthom 198,270
1,200 Atos S.A. 257,330
1,200 Bouygues 223,582
1,500 Cap Gemini Sogeti 219,363
2,800 Credit Commerical De France 240,863
3,400 Eiffage 277,895
2,050 Elf Aquitaine S.A. 255,475
1,600 Groupe Danon BSN S.A. 466,849
680 Guyenne Et Gascogne 295,226
1,000 Peugeot S.A. 158,194
3,450 Rexel S.A. 309,270
4,200 Scor S.A. 268,351
1,580 Simco 139,970
3,600 Societe BIC S.A. 224,636
7,800 Thomson-csf 293,398
2,600 Total S.A.-B 322,189
2,300 Valeo 10,713
1,130 Vivendi 255,428
Total 5,011,286
Germany, Federal Republic of--0.5%
7,000 Bhf-bank 274,397
5,370 Hoechst AG 230,444
6,000 Mannesmann AG 649,002
500 Systeme, Anwendungen, Produkte in der Datevnerarbeitung 226,355
Total 1,380,198
Greece--0.0%
1,580 (a)(f)Panafon S.A.-144A 28,301
Hong Kong--0.2%
87,200 (a)China Telecommunications 173,995
83,000 Henderson Land Development Co. Ltd. 424,487
Total 598,482
Italy--1.5%
11,500 Assicurazioni Generali 429,260
74,000 Autogrill S.P.A. 574,466
94,000 Banca Intesa S.P.A. 524,632
85,000 Banca Nazionale del Lavoro 238,845
2,500 (a)Banca Popolare di Verona 232,177
52,150 Eni 323,347
100,000 Istituto Nazionale delle Assicurazioni 263,730
36,000 Mondadori Ord 452,210
25,500 SAI S.P.A. 286,159
68,700 Telecom Italia S.P.A. 556,430
100,000 (a)Unione Immobiliare S.P.A. 50,007
Total 3,931,263
Japan--2.0%
48,000 Chugai Pharmaceutical Co. 409,481
30,000 Fujitsu Ltd. 346,266
8,000 Honda Motor Co. Ltd. 287,013
17,000 Hosiden Corp. 294,602
41,000 INES Corp. 356,088
33,000 Kirin Brewery Co. Ltd. 342,322
33,000 Kokusai Securities Co. Ltd. 278,304
13,500 Konami Co. 373,661
27,000 Kyushu Matsushita Electric 291,697
9,000 Matsushita Communication 392,289
13,100 Meitec Corp. 308,360
4,500 Orix Corp. 321,064
46,000 Sumitomo Marine & Fire 274,432
4,900 Takefuji 334,091
16,500 Tokyo Electric Power Co. 376,340
57,000 Toshiba Corp. 319,237
Total 5,305,247
Korea, Republic of--0.0%
870 Pohang Iron and Steel Co. Ltd. 48,083
Netherlands--0.4%
1,700 Aegon N.V. 181,862
4,500 (a)Benckiser N.V. 265,875
7,559 KPN N.V. 326,066
1,968 Wolters Kluwer N.V. 375,068
Total 1,148,871
Norway--0.1%
11,000 Tomra Systems ASA 321,002
Philippines--0.0%
50 (a)Filinvest Land, Inc. 4
Singapore--0.2%
20,800 (a)Creative Technology Ltd. 382,079
Spain--0.6%
12,000 Argentaria S.A. 279,321
4,710 Banco Pastor S.A. 293,661
4,950 Banco Popular Espanol 363,491
6,200 (a)Baron de Ley 214,756
3,000 Fomento de Construcciones y Contratas S.A. 178,940
29,000 (a)Prima Immobiliaria S.A. 265,189
Total 1,595,358
Sweden--0.1%
10,300 Telefonaktiebolaget LM Ericsson 286,041
Switzerland--0.7%
208 Alusuisse Lonza Holding AG 262,179
600 Baloise Holdings Ltd. - Registered 558,619
170 Nestle S.A. 353,076
306 Novartis AG - Registered 574,175
250 (a)Swisscom AG 84,151
Total 1,832,200
United Kingdom--2.5%
11,500 Abbey National Bank PLC, London 233,315
19,600 (a)Allied Zurich PLC 279,648
30,000 Amvescap PLC 244,201
15,800 Barclays PLC 358,343
39,936 British Aerospace PLC 343,195
18,154 British Petroleum Co. PLC 283,421
70,000 British-Borneo Petroleum Syndicate PLC 173,192
9,300 CMG PLC 230,405
26,800 (a)Cable & Wireless Communications 238,708
12,500 Capita Group PLC 117,523
18,200 (a)Colt Telecom Group PLC 237,758
15,000 Commercial Union PLC 237,768
34,500 Croda International 141,127
30,821 General Electric Co. PLC 251,901
8,723 Glaxo Wellcome PLC 275,821
40,000 Guardian Royal Exchange PLC 217,727
25,000 Imperial Chemical Industries PLC 232,572
63,000 Lasmo 145,222
18,500 Lloyds TSB Group PLC 257,087
35,500 Misys PLC 250,032
27,600 (f)Norwich Union PLC 193,480
18,800 Prudential Corp. PLC 274,125
33,000 Reed International PLC 259,640
66,200 Sears PLC 236,950
17,742 Smithkline Beecham PLC 217,728
13,450 Zeneca Group 559,064
Total 6,489,953
Total Foreign Stocks 29,089,790
<CAPTION>
Value
Principal in U.S.
Amount Dollars
<S> <C> <C>
*Stocks--continued
*Futures Contracts Collateral--10.7%
$ 26,750,000 United States Treasury Bill, 12/17/1998 $ 26,707,735
1,300,000 United States Treasury Bill, 1/7/1999 1,294,813
Total 28,002,548
Total Stocks (identified cost $159,411,187) 152,820,361
Bonds--42.0%
Treasury--15.9%
(b)Repurchase Agreements and Government
Securities--5.8%
420,000 (c)Morgan Stanley Group, Inc., 4.96%, dated 11/9/1998, due 420,000
12/10/1998
14,830,000 Westdeutsche Landesbank Girozentrale, 5.35%, dated 11/30/1998, 14,830,000
due 12/1/1998
Total (at amortized cost) 15,250,000
United States Treasury Securities--10.1%
9,000,000 United States Treasury Bond, 8.125%, 5/15/2021 12,240,090
4,144,000 United States Treasury Bond, 6.125%, 11/15/2027 4,675,758
1,698,000 United States Treasury Note, 5.75%, 8/15/2003 1,776,414
675,000 United States Treasury Note, 6.25%, 2/15/2003 715,629
6,405,000 United States Treasury Note, 6.50%, 10/15/2006 7,103,722
Total 26,511,613
Total Treasury 41,761,613
Mortgage-Backed Securities--7.8%
Government Agency--7.8%
207,290 Federal Home Loan Mortgage Corp., 8.00%, 5/1/2006 212,667
321,523 Federal Home Loan Mortgage Corp., 6.50%, 10/1/2010 326,649
372,195 Federal Home Loan Mortgage Corp., 8.00%, 10/1/2010 383,711
764,870 Federal Home Loan Mortgage Corp., 6.00%, 7/1/2011 767,257
513,547 Federal Home Loan Mortgage Corp., 6.50%, 5/1/2011 521,733
339,542 Federal Home Loan Mortgage Corp., 7.50%, 7/1/2026 348,985
800,000 Federal Home Loan Mortgage Corp., 6.50%, 11/1/2028 806,000
171,783 Federal Home Loan Mortgage Corp., 7.00%, 8/1/2028 175,325
34,199 Federal Home Loan Mortgage Corp., 7.00%, 9/1/2028 34,904
1,132,301 Federal Home Loan Mortgage Corp., 7.00%, 9/1/2028 1,155,649
1,010,000 Federal National Mortgage Association, 7.00%, 7/1/2010 1,033,674
1,010,000 Federal National Mortgage Association, 6.50%, 11/1/2013 1,024,837
1,087,540 Federal National Mortgage Association, 7.00%, 2/1/2024 1,110,987
434,552 Federal National Mortgage Association, 6.50%, 10/1/2025 437,676
740,189 Federal National Mortgage Association, 6.50%, 10/1/2025 745,511
56,859 Federal National Mortgage Association, 8.50%, 2/1/2025 59,525
661,939 Federal National Mortgage Association, 8.00%, 5/1/2027 685,517
356,577 Federal National Mortgage Association, 6.00%, 7/1/2028 352,009
1,156,420 Federal National Mortgage Association, 6.00%, 9/1/2028 1,141,606
1,492,131 Federal National Mortgage Association, 6.50%, 6/1/2028 1,502,397
487,056 Federal National Mortgage Association, 6.50%, 6/1/2028 490,407
420,000 (d)Federal National Mortgage Association, 7.00%, TBA 428,795
617,423 Government National Mortgage Association, 8.50%, 2/15/2022 656,593
420,326 Government National Mortgage Association, 6.50%, 1/15/2024 425,055
475,217 Government National Mortgage Association, 7.00%, 1/15/2024 486,803
188,025 Government National Mortgage Association, 7.00%, 5/15/2024 192,610
165,725 Government National Mortgage Association, 8.00%, 11/15/2024 172,613
280,239 Government National Mortgage Association, 8.00%, 5/15/2025 291,712
291,730 Government National Mortgage Association, 8.00%, 7/15/2025 303,673
930,782 Government National Mortgage Association 7.00%, 1/15/2028 953,177
3,119,434 Government National Mortgage Association 7.50%, 9/15/2028 3,222,749
Total 20,450,806
High Yield Bonds--5.1%
1,416,949 (e)The High Yield Bond Portfolio 13,390,169
Investment Grade Bonds--7.9%
Aerospace & Defense--0.2%
600,000 McDonnell Douglas Finance, Medium Term Note, 6.375%, 7/15/19999999 603,162
Automobile--0.3%
225,000 Arvin Industries, Inc., Note, 6.75%, 3/15/2008 221,978
450,000 Dana Corp., Note, 7.00%, 3/15/2028 466,610
Total 688,588
Banking--0.6%
100,000 City National Bank, Sub. Note, 6.375%, 1/15/2008 101,683
330,000 (f)Den Danske Bank, Note, 7.40% 6/15/2010 353,615
250,000 National Bank of Canada, Sub. Note, 8.125%, 8/15/2004 271,333
500,000 Santander Finance Issuances, Bank Guarantee, 7.875%, 4/15/20050505 545,615
330,000 (f)Swedbank, Sub., 7.500%, 11/29/2049 326,684
Total 1,598,930
Beverage & Tobacco--0.2%
50,000 Philip Morris Cos., Inc., Deb., 6.00%, 7/15/2001 50,397
450,000 Philip Morris Cos., Inc., Deb., 9.25%, 2/15/2000 469,292
Total 519,689
Cable Television--0.6%
460,000 Continental Cablevision, Sr. Deb., 9.50%, 8/1/2013 550,629
1,000,000 TKR Cable Inc., Deb., 10.50%, 10/30/2007 1,099,170
Total 1,649,799
Chemicals & Plastics--0.2%
500,000 (f)Bayer Corp., Deb., 6.50%, 10/1/2002 516,185
Education--0.2%
500,000 Boston University, 7.625%, 7/15/2097 555,390
Electronics--0.3%
700,000 Anixter Intl., Inc., Company Guarantee, 8.00%, 9/15/2003 744,198
Finance-Retail--0.1%
105,000 Sears Roebuck Acceptance, Medium Term Note, 6.56%, 9/05/2000 106,930
Financial Intermediaries--0.9%
450,000 DLJ, Note, 6.875%, 11/1/2005 462,384
450,000 Green Tree Financial Corp, Sr. Sub. Note, 10.25%, 6/1/2002 488,970
250,000 Lehman Brothers Holdings, Inc., Note, 6.90%, 1/29/2001 252,620
300,000 Lehman Brothers Holdings, Bond, 6.20%, 1/15/2002 297,894
300,000 Lehman Brothers, Inc., Sr. Sub. Note, 7.375%, 1/15/2007 314,121
375,000 Republic New York Corp., Sub. Note, 7.75%, 5/15/2009 426,589
150,000 Salomon, Inc., Note, 7.20%, 2/1/2004 159,155
Total 2,401,733
Forest Products--0.2%
450,000 Quno Corp., Sr. Note, 9.125%, 5/15/2005 486,486
Government Agency--0.3%
840,000 TVA 11/15/2029 849,089
Healthcare--0.2%
400,000 COL HCA Healthcare Corp, Sr. Note, 6.41%, 6/15/2000 396,300
Insurance--0.8%
225,000 Conseco, Inc., Sr. Note, 10.50%, 12/15/2004 255,951
300,000 NAC Re Corp., Note, 8.00%, 6/15/1999 303,819
450,000 Provident Cos., Inc., Bond, 7.405%, 3/15/2038 467,397
250,000 Sunamerica, Inc., Medium Term Note, 7.34%, 8/30/2005 273,310
450,000 Sunamerica, Inc., Sr. Note, 9.00%, 1/15/1999 452,084
250,000 (f)USF&G Cap, 8.312%, 7/1/2046 294,553
Total 2,047,114
Leisure & Entertainment--0.2%
500,000 Viacom, Inc., Sr. Note, 7.75%, 6/1/2005 551,650
Metals & Mining--0.2%
275,000 Barrick Gold Corp., Deb., 7.50%, 5/1/2007 298,158
250,000 Santa Fe Pacific Gold, Note, 8.375%, 7/01/2005 280,838
Total 578,996
Oil & Gas--0.2%
500,000 Occidental Petroleum Corp., Note, 8.50%, 9/15/2004 509,305
Pharmaceutical--0.2%
550,000 American Home Products Corp., Note, 7.70%, 2/15/2000 565,323
Real Estate--0.0%
100,000 SUSA Partnership, L.P., Deb., 7.50%, 12/1/2027 89,386
Retailers--0.4%
400,000 Harcourt General, Sr. Deb., 7.20%, 8/1/2027 381,604
550,000 Sears, Roebuck & Co., Medium Term Note, 7.32%, 4/24/2000 566,478
Total 948,082
Services--0.2%
200,000 Loewen Group Int'l, Sr. Note, 8.25%, 4/15/2003 173,000
450,000 Service Corp. Int'l, Note, 6.50%, 3/15/2008 454,680
Total 627,680
<CAPTION>
Foreign
Currency
Par Amount Value
or Principal in U.S.
Amount Dollars
<S> <C> <C>
Bonds--continued
Investment Grade Bonds--continued
Sovereign--0.2%
$ 500,000 Export-Import Bank Korea, Note, 6.50%, 5/15/2000 $ 475,219
Sovereign Government--0.4%
530,000 Republic of South Africa, Global Bond Deb., 9.625%, 12/15/1999 532,274
535,000 Republic of Colombia, Note, 7.25%, 2/15/2003 463,444
Total 995,718
Surface Transportaition--0.2%
500,000 Trans Ocean Container Corp., Sr. Sub. Note, 12.25%, 7/1/2004 550,875
Technology Services--0.3%
500,000 Dell Computer Corp., Deb., 7.10%, 4/15/2028 518,935
1,820 Microsoft Corp., Conv. Pfd., Series A, $2.196 177,223
180,000 Raytheon Co., 5.70%, 11/01/2003 182,101
Total 878,259
Telecommunications--0.3%
800,000 BellSouth Telecommunications, Note, 6.00%, 6/15/2002 823,624
Total Investment Grade Bonds 20,757,710
Foreign Bonds--5.2%
Australian Dollar--0.2%
405,000 Federal National Mortgage Association, 6.500%, 7/10/2002 268,537
213,000 Qtc-global Notes, Deb., 10.50%, 5/15/2003 162,346
310,000 West Aust T Corp, Local Gov't. Guarantee, 8.00%, 7/15/2003 217,400
Total 648,283
Austrian Schilling--0.5%
5,550,000 Republic of Austria, Deb., 7.625%, 10/18/2004 554,228
915,000 Republic of Austria, Unsub., 6.50%, 1/10/2024 662,158
Total 1,216,386
Belgian Franc--0.0%
2,570,000 Belgian Govt., Bond, 6.50%, 3/31/2005 84,032
Canadian Dollar--0.3%
569,000 Canada Government, Deb., 6.50%, 6/1/2004 400,872
400,000 Ontario Hydro, 9.00%, 6/24/2002 295,638
Total 696,510
<CAPTION>
Foreign Value
Currency in U.S.
Par Amount Dollars
<S> <C> <C>
Bonds--continued
Foreign Bonds--continued
Danish Krone--0.1%
$ 1,200,000 Denmark, 8.00%, 5/15/2003 $ 215,717
Deutsche Mark--0.9%
260,000 Depfa-Bank, 5.50%, 1/15/2013 166,059
730,000 Goldman Sachs Group, LP, Bond, 5.375%, 4/15/2008 426,137
42,000,000 KFW International Finance, 6.00%, 11/29/1999 360,512
500,000 KFW International Finance, Bank Guarantee, 6.75%, 6/20/2005 341,982
400,000 Tennesee Valley Authority - Global Bond, 6.375%, 9/18/2006 268,027
1,050,000 Treuhandanstalt, 7.75%, 10/1/2002 713,204
Total 2,275,921
Greek Drachma--0.2%
181,800,000 Hellenic Republic, FRN, 14.00%, 10/23/2003 648,419
Hungarian Forint--0.0%
25,000,000 Hungary Gov't., Bond, 14.00%, 12/12/2002 110,190
Irish Pound--0.3%
355,000 Irish Government, Deb., 9.00%, 9/01/2006 685,106
Italian Lira--0.7%
265,000,000 BTPS, Bond, 10.50%, 11/1/2000 177,905
425,000,000 BTPS, Deb., 12.00%, 5/18/1999 261,439
1,225,000,000 Buoni Poliennali Del Tes, 9.50%, 1/1/2005 942,944
510,000,000 Buoni Poliennali Del Tes, Deb., 12.00%, 1/01/2002 376,176
Total 1,758,464
Japanese Yen--0.0%
10,000,000 Interamerican Development, Deb., 7.25%, 5/15/2000 89,265
Mexican Peso--0.0%
120,000 Mexican Cetes, 2/11/1999 111,963
Netherlands Guilder--0.3%
285,000 Bank Ned Gemeenten, Bond, 6.375%, 1/4/2006 168,760
400,000 Bank Ned Gemeenten, Bond, 7.75%, 12/20/2004 249,928
220,000 Lkb-global Bd, Bank Guarantee, 6.00%, 1/25/2006 143,300
300,000 Netherlands Government, 6.00%, 1/15/2006 176,780
Total 738,768
New Zealand Dollar--0.0%
205,000 New Zealand Government, 8.00%, 2/15/2001 114,592
<CAPTION>
Foreign Value
Currency in U.S.
Par Amount Dollars
<S> <C> <C>
Bonds--continued
Foreign Bonds--continued
Norwegian Krone--0.3%
$ 1,429,000 NGB 9% 1/31/99, Bond, 9.00%, 1/31/1999 $ 190,983
730,000 Norwegian Government, 5.50%, 5/15/2009 99,056
1,620,000 Norwegian Government, Bond, 7.00%, 5/31/2001 222,938
1,215,000 Norwegian Government, Foreign Government Guarantee, 5.75%, 166,327
11/30/2004
Total 679,304
Polish Zloty--0.1%
730,000 Poland Gov't. Bond, Series 5Y, 12.00%, 2/12/2003 210,234
South African Rand--0.0%
550,000 Republic of South Africa, Bond, 12.50%, 12/21/2006 80,309
Spanish Peseta--0.8%
945,000 Spanish Government, Bond, 5.15%, 7/30/2009 1,130,748
40,000,000 Spanish Government, 10.00%, 2/28/2005 368,512
44,300,000 Spanish Government, Bond, 8.80%, 4/30/2006 397,733
15,030,000 Spanish Government, Deb., 10.10%, 2/28/2001 118,931
Total 2,015,924
Swedish Krona--0.1%
700,000 Sweden, Deb., 13.00%, 6/15/2001 104,806
800,000 Swedish Government, Deb., 9.00%, 4/20/2009 135,698
Total 240,504
United Kingdom Pound--0.4%
366,000 British Gas PLC, 8.875%, 7/8/2008 745,996
145,000 U.K. Treasury, Deb., 8.50%, 12/7/2005 291,309
Total 1,037,305
Total Foreign Bonds 13,657,196
Total Bonds (identified cost $77,899,598) 110,017,494
Total Investments (identified cost $237,310,785)(g) $262,837,855
</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 $28,220,625 at November
30, 1998.
(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 if the creditworthiness of the issuer is
downgraded.
(d) These securities are subject to dollar roll transactions.
(e) The High Yield Bond Portfolio is a diversified portfolio of below investment
grade securities and is a portfolio of Federated Core Trust.
(f) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. At November 30, 1998, these securities
amounted to $1,712,818 which represents 0.7% of net assets.
(g) The cost of investments for federal tax purposes amounts to $237,560,920.
The net unrealized appreciation of investments on a federal tax basis
amounts to $25,276,935 which is comprised of $30,039,212 appreciation and
$4,762,277 depreciation at November 30, 1998.
Note: The categories of investments are shown as a percentage of net assets
($262,101,833) at November 30, 1998.
The following acronyms are used throughout this portfolio:
COL --Collateralized
FRN --Floating Rate Note
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
November 30, 1998
<TABLE>
<S> <C> <C>
Assets:
- ---------------------------------------------------------------------------------------------------------------------
Total investments in securities, at value (identified cost $237,310,785 and tax cost $ 262,837,855
$237,560,920)
- ---------------------------------------------------------------------------------------------------------------------
Cash 3,514
- ---------------------------------------------------------------------------------------------------------------------
Cash denominated in foreign currencies (at identified cost $2,620) 2,601
- ---------------------------------------------------------------------------------------------------------------------
Income receivable 1,398,793
- ---------------------------------------------------------------------------------------------------------------------
Receivable for investments sold 1,987,419
- ---------------------------------------------------------------------------------------------------------------------
Receivable for shares sold 1,007,840
- ---------------------------------------------------------------------------------------------------------------------
Receivable for foreign currency sold 113
- ---------------------------------------------------------------------------------------------------------------------
Deferred organizational costs 11,414
- ---------------------------------------------------------------------------------------------------------------------
Other assets 1,062
- ---------------------------------------------------------------------------------------------------------------------
Total assets 267,250,611
- ---------------------------------------------------------------------------------------------------------------------
Liabilities:
- ---------------------------------------------------------------------------------------------------------------------
Payable for investments purchased $ 2,253,398
- ---------------------------------------------------------------------------------------------------------------------
Payable for shares redeemed 1,627,423
- ---------------------------------------------------------------------------------------------------------------------
Payable for dollar roll transactions 426,810
- ---------------------------------------------------------------------------------------------------------------------
Payable for taxes withheld 4,352
- ---------------------------------------------------------------------------------------------------------------------
Payable for daily variation margin 722,122
- ---------------------------------------------------------------------------------------------------------------------
Accrued expenses 114,673
- ---------------------------------------------------------------------------------------------------------------------
Total liabilities 5,148,778
- ---------------------------------------------------------------------------------------------------------------------
Net Assets for 19,959,287 shares outstanding $ 262,101,833
- ---------------------------------------------------------------------------------------------------------------------
Net Assets Consist of:
- ---------------------------------------------------------------------------------------------------------------------
Paid in capital $ 223,750,493
- ---------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and translation of assets and liabilities
in foreign currency, and futures contracts 28,038,667
- ---------------------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments, foreign currency transactions, and
- ---------------------------------------------------------------------------------------------------------------------
futures contracts 9,339,340
- ---------------------------------------------------------------------------------------------------------------------
Undistributed net investment income 973,333
- ---------------------------------------------------------------------------------------------------------------------
Total Net Assets $ 262,101,833
- ---------------------------------------------------------------------------------------------------------------------
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
- ---------------------------------------------------------------------------------------------------------------------
Institutional Shares:
- ---------------------------------------------------------------------------------------------------------------------
$173,513,631 / 13,199,846 shares outstanding $13.15
- ---------------------------------------------------------------------------------------------------------------------
Select Shares:
- ---------------------------------------------------------------------------------------------------------------------
$88,588,202 / 6,759,441 shares outstanding $13.11
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF OPERATIONS
Federated Managed Growth Fund
Year Ended November 30, 1998
<TABLE>
<S> <C> <C> <C>
Investment Income:
- --------------------------------------------------------------------------------------------------------------------------
Dividends (net of foreign taxes withheld of $63,976) $ 2,376,713
- --------------------------------------------------------------------------------------------------------------------------
Interest (net of dollar roll expense of $49,097) (net of foreign taxes 6,995,640
withheld of $5,717)
- --------------------------------------------------------------------------------------------------------------------------
Total income 9,372,353
- --------------------------------------------------------------------------------------------------------------------------
Expenses:
- --------------------------------------------------------------------------------------------------------------------------
Investment advisory fee $ 1,876,254
- --------------------------------------------------------------------------------------------------------------------------
Administrative personnel and services fee 188,627
- --------------------------------------------------------------------------------------------------------------------------
Custodian fees 81,844
- --------------------------------------------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 170,034
- --------------------------------------------------------------------------------------------------------------------------
Directors'/Trustees' fees 3,880
- --------------------------------------------------------------------------------------------------------------------------
Auditing fees 17,941
- --------------------------------------------------------------------------------------------------------------------------
Legal fees 4,077
- --------------------------------------------------------------------------------------------------------------------------
Portfolio accounting fees 80,049
- --------------------------------------------------------------------------------------------------------------------------
Distribution services fee--Select Shares 607,721
- --------------------------------------------------------------------------------------------------------------------------
Shareholder services fee--Institutional Shares 422,844
- --------------------------------------------------------------------------------------------------------------------------
Shareholder services fee--Select Shares 202,574
- --------------------------------------------------------------------------------------------------------------------------
Share registration costs 34,698
- --------------------------------------------------------------------------------------------------------------------------
Printing and postage 39,224
- --------------------------------------------------------------------------------------------------------------------------
Insurance premiums 3,860
- --------------------------------------------------------------------------------------------------------------------------
Taxes 19
- --------------------------------------------------------------------------------------------------------------------------
Miscellaneous 45,663
- --------------------------------------------------------------------------------------------------------------------------
Total expenses 3,779,309
- --------------------------------------------------------------------------------------------------------------------------
Waivers--
- --------------------------------------------------------------------------------------------------------------------------
Waiver of distribution services fee--Select Shares $ (202,574)
- --------------------------------------------------------------------------------------------------------------------------
Waiver of shareholder services fee--Institutional Shares (338,275)
- --------------------------------------------------------------------------------------------------------------------------
Total waivers (540,849)
- --------------------------------------------------------------------------------------------------------------------------
Net expenses 3,238,460
- --------------------------------------------------------------------------------------------------------------------------
Net investment income 6,133,893
- --------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments, Foreign Currency
Transactions and Futures Contracts:
- --------------------------------------------------------------------------------------------------------------------------
Net realized gain on investments, foreign currency transactions, and futures 9,323,284
contracts
- --------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments, translation of assets
and liabilities in foreign currency, and futures contracts 8,589,516
- --------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments, foreign currency, and 17,912,800
futures contracts
- --------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $ 24,046,693
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF CHANGES IN NET ASSETS
Federated Managed Growth Fund
<TABLE>
<CAPTION>
Year Ended November 30,
- --------------------------------------------------------------------------------------------------------------------
1998 1997
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
- --------------------------------------------------------------------------------------------------------------------
Operations--
- --------------------------------------------------------------------------------------------------------------------
Net investment income $ 6,133,893 $ 6,276,504
- --------------------------------------------------------------------------------------------------------------------
Net realized gain on investments, foreign currency and futures contracts
($12,048,850
- --------------------------------------------------------------------------------------------------------------------
and $16,550,986, respectively, as computed for federal tax purposes) 9,323,284 15,812,213
- --------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments, translation of assets
and liabilities in foreign currency, and futures contracts 8,589,516 5,706,798
- --------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations 24,046,693 27,795,515
- --------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders--
- --------------------------------------------------------------------------------------------------------------------
Distributions from net investment income
- --------------------------------------------------------------------------------------------------------------------
Institutional Shares (4,424,186) (4,729,122)
- --------------------------------------------------------------------------------------------------------------------
Select Shares (1,540,266) (1,781,932)
- --------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains on investments, foreign currency
transactions, and futures contracts
- --------------------------------------------------------------------------------------------------------------------
Institutional Shares (10,981,749) (3,327,990)
- --------------------------------------------------------------------------------------------------------------------
Select Shares (4,961,147) (1,494,754)
- --------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from distributions to shareholders (21,907,348) (11,333,798)
- --------------------------------------------------------------------------------------------------------------------
Share Transactions--
- --------------------------------------------------------------------------------------------------------------------
Proceeds from sale of shares 95,503,988 104,253,170
- --------------------------------------------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 17,037,904 8,122,432
- --------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (88,843,876) (89,036,194)
- --------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from share transactions 23,698,016 23,339,408
- --------------------------------------------------------------------------------------------------------------------
Change in net assets 25,837,361 39,801,125
- --------------------------------------------------------------------------------------------------------------------
Net Assets:
- --------------------------------------------------------------------------------------------------------------------
Beginning of period 236,264,472 196,463,347
- --------------------------------------------------------------------------------------------------------------------
End of period (including undistributed net investment income of
$973,333 and $333,351, respectively)
- --------------------------------------------------------------------------------------------------------------------
$ 262,101,833 $ 236,264,472
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
Federated Managed Growth Fund
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
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 0.35 0.38 0.41 0.40 0.20
- -------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments, foreign currency 0.92 1.19 0.97 1.70 (0.26)
transactions and futures contracts
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.27 1.57 1.38 2.10 (0.06)
- -------------------------------------------------------------------------------------------------------------------------------
Less distributions
- -------------------------------------------------------------------------------------------------------------------------------
Distributions from net investment income (0.34) (0.40) (0.44) (0.40) (0.12)
- -------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain on investments, foreign currency (0.88) (0.30) (0.23) -- --
transactions, and futures contracts
- -------------------------------------------------------------------------------------------------------------------------------
Total distributions (1.22) (0.70) (0.67) (0.40) (0.12)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 13.15 $ 13.10 $ 12.23 $ 11.52 $ 9.82
- -------------------------------------------------------------------------------------------------------------------------------
Total return (b) 10.56% 13.39% 12.54% 21.79% (0.59)%
- -------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets
- -------------------------------------------------------------------------------------------------------------------------------
Expenses 1.07% 1.05% 1.05% 1.00% 0.89%*
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income 2.67% 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) $173,514 $163,519 $136,255 $68,313 $28,973
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover 111% 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.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
FINANCIAL HIGHLIGHTS--SELECT SHARES
Federated Managed Growth Fund
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
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 0.26 0.30 0.36 0.23 0.15
Net realized and unrealized gain (loss) on investments,
foreign currency transactions and futures contracts 0.92 1.18 0.94 1.79 (0.24)
Total from investment operations 1.18 1.48 1.30 2.02 (0.09)
Less distributions
Distributions from net investment income (0.25) (0.32) (0.37) (0.33) (0.10)
Distributions from net realized gain on investments,
foreign currency transactions, and futures contracts (0.88) (0.30) (0.23) -- --
Total distributions (1.13) (0.62) (0.60) (0.33) (0.10)
Net asset value, end of period $ 13.11 $ 13.06 $ 12.20 $ 11.50 $ 9.81
Total return (b) 9.80% 12.56% 11.75% 20.95% (0.90%)
Ratios to average net assets
Expenses 1.77% 1.75% 1.75% 1.75% 1.70%*
Net investment income 2.00% 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) $88,588 $72,746 $60,208 $27,358 $ 2,952
Portfolio turnover 111% 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.
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
Federated Managed Growth Fund
November 30, 1998
Organization
Managed Series Trust (the "Trust") is registered under the Investment Company
Act of 1940, as amended (the "Act") as an open-end, management investment
company. The Trust consists of four portfolios. The financial statements
included herein are only those of Federated Managed Growth Fund (the "Fund"), a
diversified portfolio. The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held. The
investment objective of the Fund is to seek capital appreciation.
The Fund offers two classes of shares: Institutional Shares and Select Shares.
Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
Investment Valuations
Listed equity securities are valued at the last sale price reported on a
national securities exchange. U.S. government securities, listed corporate
bonds, other fixed income and asset-backed securities, and unlisted securities
and private placement securities are generally valued at the mean of the latest
bid and asked price as furnished by an independent pricing service. Short-term
securities are valued at the prices provided by an independent pricing service.
However, short-term securities with remaining maturities of sixty days or less
at the time of purchase may be valued at amortized cost, which approximates fair
market value.
With respect to valuation of foreign securities, trading in foreign countries
may be completed at times which vary from the closing of the New York Stock
Exchange. Therefore, foreign securities are valued at the latest closing price
on the exchange on which they are traded prior to the closing of the New York
Stock Exchange. Foreign securities quoted in foreign currencies are translated
into U.S. dollars at the foreign exchange rate in effect at noon, eastern time,
on the day the value of the foreign security is determined.
Repurchase Agreements
It is the policy of the Fund to require the custodian bank to take possession,
to have legally segregated in the Federal Reserve Book Entry System, or to have
segregated within the custodian bank's vault, all securities held as collateral
under repurchase agreement transactions. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of each
repurchase agreement's collateral to ensure that the value of collateral at
least equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed by
the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the "Trustees").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Fund could receive less than
the repurchase price on the sale of collateral securities.
Investment Income, Expenses and Distributions
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code, as amended
(the "Code"). Dividend income and distributions to shareholders are recorded on
the ex-dividend date.
Income and capital gain distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for mortgage-backed
securities, market discount, foreign currency transactions, non-taxable
dividends, wash sales, and futures. The following reclassifications have been
made to the financial statement.
<TABLE>
<CAPTION>
Increase (Decrease)
Accumulated Net
Paid-in Realized Undistributed Net
Capital Gain/Loss Investment Income
<S> <C> <C>
$(58,265) $(412,276) $470,541
</TABLE>
Net investment income, net realized gains/losses and net assets were not
affected by this reclassification.
Federal Taxes
It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provisions for federal tax are
necessary.
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 November 30, 1998, the Fund had
realized gains of $232,296 on futures contracts. As of November 30, 1998, the
Fund had the following outstanding futures contracts
<TABLE>
<CAPTION>
Unrealized
Contracts to Net Notional Appreciation
Expiration Date Deliver/Receive Position Amount (Depreciation)
<S> <C> <C> <C> <C>
December 1998 25 Russell 2000 $4,906,542 $ 64,083
December 1998 80 S&P 500 Long 1,960,309 2,438,182
$2,502,265
- --------------------------------------------------------------------------------------------------------------
</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 counter-parties
to meet the terms of their commitments and from unanticipated movements in
security prices or foreign exchange rates. The foreign currency transactions are
adjusted by the daily exchange rate of the underlying currency and any gains or
losses are recorded for financial statement purpose as unrealized until the
settlement date.
At November 30, 1998, the Fund had no outstanding forward foreign currency
contracts.
Restricted Securities
Restricted securities are securities that may only be resold upon registration
under federal securities laws or in transactions exempt from such registration.
In some cases, the issuer of restricted securities has agreed to register such
securities for resale, at the issuer's expense either upon demand by the Fund or
in connection with another registered offering of the securities. Many
restricted securities may be resold in the secondary market in transactions
exempt from registration. Such restricted securities may be determined to be
liquid under criteria established by the Board of Trustees. The Fund will not
incur any registration costs upon such resales. The Fund's restricted securities
are valued at the price provided by dealers in the secondary market or, if no
market prices are available, at the fair value as determined by the Fund's
pricing committee.
Additional information on each restricted security held at November 30, 1998 is
as follows:
<TABLE>
<CAPTION>
Security Acquisition Date Acquisition Cost
<S> <C> <C>
Bayer Corp. 5/21/1996-7/1/1997 $493,905
Den Danske Bank 1/7/1998 347,266
Norwich Union 10/20/1998 199,839
Panafon SA 11/20/1998 28,609
Swedbank 1/7/1998 344,642
USF&G Cap 7/3/1997 250,000
</TABLE>
Dollar Roll Transactions
The Fund enters into dollar roll transactions, with respect to mortgage
securities issued by GNMA, FNMA and FHLMC, in which the Fund sells mortgage
securities to financial institutions and simultaneously agrees to accept
substantially similar (same type, coupon and maturity) securities at a later
date at an agreed upon price. Dollar roll transactions 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.
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>
Year Ended November 30,
1998 1997
Institutional Shares Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Shares sold 5,057,393 $ 64,381,325 5,853,857 $ 72,401,751
Shares issued to shareholders in payment 901,670 11,036,443 420,257 5,082,597
of distributions declared
Shares redeemed (5,245,337) (66,680,577) (4,927,672) (60,980,593)
Net change resulting from Institutional 713,726 $ 8,737,191 1,346,442 $ 16,503,755
Shares transactions
</TABLE>
<TABLE>
<CAPTION>
Year Ended November 30,
1998 1997
Select Shares Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Shares sold 2,438,806 $ 31,122,663 2,599,873 $ 31,851,419
Shares issued to shareholders in payment of 491,916 6,001,461 252,195 3,039,835
distributions declared
Shares redeemed (1,742,294) (22,163,299) (2,215,315) (28,055,601)
Net change resulting from Select Shares 1,188,428 $ 14,960,825 636,753 $ 6,835,653
transactions
Net change resulting from share transactions 1,902,154 $ 23,698,016 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 Investment Management 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 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 Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily
net assets of the Fund for the period. The fee paid to FSSC is used to finance
certain services for shareholders and to maintain shareholder accounts. FSSC may
voluntarily choose to waive any portion of its fee. FSSC 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 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.
General
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
Investment Transactions
Purchases and sales of investments, excluding short-term securities, for the
period ended November 30, 1998, were as follows:
<TABLE>
<S> <C>
Purchases $273,696,887
Sales $254,093,660
</TABLE>
Concentration of Credit Risk
The Fund invests in securities of non-U.S. issuers. Although the Fund maintains
a diversified investment portfolio, the political or economic developments
within a particular country or region may have an adverse effect on the ability
of domiciled issuers to meet their obligations. Additionally, political or
economic developments may have an effect on the liquidity and volatility of
portfolio securities and currency holdings.
At November 30, 1998, the diversification of industries for non-U.S. issuers was
as follows:
<TABLE>
<CAPTION>
Percentage of Percentage of
Industry Net Assets Industry Net Assets
<S> <C> <C> <C>
Aerospace & Military Technology 0.2 Industrial Components 0.1
Agency 0.4 Insurance 1.1
Appliances & Household Durables 0.1 Leisure & Tourism 0.2
Automobile 0.2 Machinery & Engineering 0.4
Banking 1.8 Merchandising 0.3
Beverage & Tobacco 0.2 Metals & Mining 0.1
Broadcasting & Publishing 0.4 Metals - Non Ferrous 0.1
Business & Public Services 0.4 Multi-Industry 0.1
Chemicals 0.1 Real Estate 0.2
Construction & Housing 0.4 Recreation, Other Consumer Goods 0.1
Data Processing & Reproduction 0.6 Sovereign 3.6
Electrical & Electronics 0.6 Sovereign Government 1.0
Electronic Components, Instruments 0.2 State/provincial 0.1
Energy Sources 0.6 Telecommunications 0.6
Financial Intermediaries 0.1 Transportation 0.1
Financial Services 0.8 Utilities 0.3
Food & Household Products 0.4 Utilities - Electrical & Gas 0.1
Forest Products 0.2 Wholesale & International Trade 0.1
Health & Personal Care 0.9
</TABLE>
Year 2000 (Unaudited)
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.
Subsequent Event
On January 7, 1999, the sub-adviser, Federated Global Research Corp., changed
its name to Federated Global Investment Management Corp.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
MANAGED SERIES TRUST (FEDERATED MANAGED GROWTH FUND):
We have audited the accompanying statement of assets and liabilities of
Federated Managed Growth Fund (an investment portfolio of Managed Series Trust,
a Massachusetts business trust), including the schedule of portfolio
investments, as of November 30, 1998, the related statement of operations for
the year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and the financial highlights for the periods
presented. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1998, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Federated Managed Growth Fund, an investment portfolio of Managed Series Trust,
as of November 30, 1998, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then
ended, and its financial highlights for the periods presented, in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
January 15, 1999
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 and Secretary
Richard B. Fisher
Vice President
Richard J. Thomas
Treasurer
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 risk, including possible
loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by a fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses and other information.
[LOGO OF FEDERATED INVESTORS]
Federated Managed
Growth Fund
Institutional Shares
Select Shares
Annual Report
to Shareholders
November 30, 1998
Federated Securities Corp., Distributor
Federated Investors, Inc.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
1-800-341-7400
www.federatedinvestors.com
Cusip 56166K503
Cusip 56166K602
G00871-01 (1/99) [RECYCLED PAPER LOGO]
PRESIDENT'S MESSAGE
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders for Federated Managed
Growth and Income Fund, a portfolio of Managed Series Trust, for the 12-month
period from December 1, 1997, through November 30, 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, 62.2% of the
fund's $241.3 million in net assets was invested in bonds, with the remainder
invested in stocks.*
Over the fund's fiscal year, the fund's Institutional Shares delivered a total
return of 11.19%** through a $0.17 increase in share price, dividends totaling
$0.46 per share and capital gains totaling $0.62 per share. The fund's Select
Shares produced a total return of 10.51%** through an $0.18 increase in share
price, dividends totaling $0.38 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
January 15, 1999
* International 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 Twelve Months Ended
November 30, 1998
The 12 month reporting period ended November 30, 1998, was a generally favorable
one for financial assets, although investors suffered through a period of high
volatility in the second half of the period. Federated Managed Growth and Income
Fund moved up with the advance in security prices this year but enjoyed less
volatility than the stock market in the six months ended November 30, 1998. For
the 12 month reporting period ended November 30, 1998, an investor in the fund's
Institutional Shares had a total return of 11.19%,* while an investor in the
fund's Select Shares had a total return of 10.51%.* As usual, performance among
asset classes showed wide variation. The U.S. stock market set new all-time
highs in July, but then embarked on a steep, swift decline through August. After
moving in a trading range through early October, the stock market rebounded
strongly through late November. The highest quality portion of the bond market--
U.S. Treasuries--did very well in this period of turbulence as investors around
the world looked for safety and stability. Other sectors of the bond market did
better than the stock market, but not as well as the U.S. Treasury sector in the
last six months of the reporting period.
Asset Allocation as of November 30, 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 November 30,
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 Assets
Permitted Percentage as of
Asset Category Range November 30, 1998
<S> <C> <C>
Bonds(1) 50-70% 62
U.S. Treasury Securities 0-56% 22
Mortgage-Backed
Securities 0-35% 16
Investment Grade
Corporate Bonds 0-35% 14
High Yield
Corporate Bonds 0-10% 5
Foreign Bonds 0-10% 5
Equities(1) 30-50% 38
Large Company Stocks 22.5-37.5% 29
Utility Stocks 2.5-7.5% 5
Small Company Stocks 0-5% 2
Foreign Stocks 0-5% 2
</TABLE>
(1) Bonds convertible into equity securities at a price below the closing price
of the underlying equity securities on November 30, 1998, have been included
under the appropriate equity asset category.
The fund had somewhat below normal allocations to stocks and the higher risk
portions of the bond market entering the late summer period of downside
volatility in the financial markets. In October, with stock prices well below
their all-time highs set in July, fund management added to both stock and high
yield bond positions. These additions helped performance as financial markets
rebounded strongly in the late October-November period. By November 30, 1998,
the fund held only a slightly above normal position in bonds.
Structure of the Bond Portfolio
Within a range of four to six years, the fund's bond duration is set at 4.8
years. This duration is set at a slightly 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, U.S. Treasuries were emphasized for much of the last
12 months. Lower than normal yield advantages offered by corporate bonds over
U.S. Treasuries led fund management to underweight both investment grade and
high yield corporate bonds until November 1998. These underweights helped
performance as investors in late summer were willing to pay an above normal
premium for the safety of U.S. Treasuries thus making these bonds a very strong
sector of the fixed income market. Once yield relationships returned to
historically normal levels, management added to the mortgage-backed securities,
investment grade corporate, and high yield corporate areas.
Structure of the Equity Portfolio
In a global equity sell-off, U.S. stocks declined rapidly in late summer. The
size and swiftness of the decline can be at least partially attributed to the
lack of valuation support for stocks versus historical standards. In July,
stocks were richly priced versus their fundamentals. Investors paid much higher
than normal prices for a dollar of earnings or a dollar of plant and equipment.
This willingness on the part of investors to pay high prices reflects optimistic
assessments about future economic conditions, which may well be justified.
However, optimistic investors, sitting on large unrealized gains from a multi-
year bull market, create above normal risk for the market as any change in
sentiment can quickly lead to substantial selling. This is the situation that
prevailed in mid-July prior to the decline.
The Federal Reserve Board's decision to move to an easier monetary policy in the
fall had the desired effect of dramatically restoring confidence. It also led to
a quick rebound in large-cap stocks. With stocks back to their mid-July levels,
valuation had re-emerged as a concern. Therefore, the fund had a slightly below
normal stock allocation despite the favorable economic and monetary policy
environment.
FEDERATED MANAGED GROWTH AND INCOME FUND
(Institutional Shares)
Growth of $25,000 Invested in Federated Managed Growth and Income Fund
(Institutional Shares)
The graph below illustrates the hypothetical investment of $25,000* in Federated
Managed Growth and Income Fund (Institutional Shares) (the "Fund") from May 25,
1994 (start of performance) to November 30, 1998, compared to the Lehman
Brothers Government/Corporate Index (LBG/CI)+ and the Managed Growth and Income
Indices Blend (MGIIB).++
[GRAPHIC] - See Appendix A.
Past performance is not predictive of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost. Mutual funds are not obligations of or
guaranteed by any bank and are not federally insured.
This report must be preceded or accompanied by the Fund's prospectus dated
January 31, 1999, and, together with financial statements contained therein,
constitutes the Fund's annual report.
* The Fund's performance assumes the reinvestment of all dividends and
distributions. The LBG/CI and the MGIIB have been adjusted to reflect
reinvestment of dividends on securities in the indices.
+ The LBG/CI is not adjusted to reflect sales charges, expenses, or other fees
that the Securities and Exchange Commission requires to be reflected in the
Fund's performance. This index is unmanaged.
++ The MGIIB is a blend of index total returns that represent the Fund's
allocation in the market sectors. The blend is comprised of 20% Standard and
Poor's 500 Index, 3% Russell 2000 Index, 8% Standard and Poor's Utility Index,
3% Morgan Stanley Capital International Europe Australia Far East Index, 6%
Merrill Lynch 91-Day Treasury Bill Index, 5% Lehman Brothers 1-3 Year
Government Index, 19% Lehman Brothers Intermediate Treasury Index, 15% Lehman
Brothers Mortgage Index, 15% Lehman Brothers Intermediate Corporate Index, 3%
Lehman Brothers Single B Rated Index, and 3% JP Morgan Global Traded Index
Excluding U.S. Each index is reported net of sales charges, expenses or other
fees that the Securities and Exchange Commission requires to be reflected in a
fund's performance. These indices are unmanaged.
FEDERATED MANAGED GROWTH AND INCOME FUND
(Select Shares)
Growth of $10,000 Invested in Federated Managed Growth and Income Fund (Select
Shares)
The graph below illustrates the hypothetical investment of $10,000* in Federated
Managed Growth and Income Fund (Select Shares) (the "Fund") from May 25, 1994
(start of performance) to November 30, 1998, compared to the Lehman Brothers
Government/Corporate Index (LBG/CI)+ and the Managed Growth and Income Indices
Blend (MGIIB).++
[GRAPHIC] - See Appendix B.
Past performance is not predictive of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost. Mutual funds are not obligations of or
guaranteed by any bank and are not federally insured.
This report must be preceded or accompanied by the Fund's prospectus dated
January 31, 1999, and, together with financial statements contained therein,
constitutes the Fund's annual report.
* The Fund's performance assumes the reinvestment of all dividends and
distributions. The LBG/CI and the MGIIB have been adjusted to reflect
reinvestment of dividends on securities in the indices.
+ The LBG/CI is not adjusted to reflect sales charges, expenses, or other fees
that the Securities and Exchange Commission requires to be reflected in the
Fund's performance. This index is unmanaged.
++ The MGIIB is a blend of index total returns that represent the Fund's
allocation in the market sectors. The blend is comprised of 20% Standard and
Poor's 500 Index, 3% Russell 2000 Index, 8% Standard and Poor's Utility Index,
3% Morgan Stanley Capital International Europe Australia Far East Index, 6%
Merrill Lynch 91-Day Treasury Bill Index, 5% Lehman Brothers 1-3 Year
Government Index, 19% Lehman Brothers Intermediate Treasury Index, 15% Lehman
Brothers Mortgage Index, 15% Lehman Brothers Intermediate Corporate Index, 3%
Lehman Brothers Single B Rated Index, and 3% JP Morgan Global Traded Index
Excluding U.S. Each index is reported net of sales charges, expenses or other
fees that the Securities and Exchange Commission requires to be reflected in a
fund's performance. These indices are unmanaged.
PORTFOLIOOFINVESTMENTS
Federated Managed Growth and Income Fund
November 30, 1998
<TABLE>
<CAPTION>
Value
in U.S.
Shares Dollars
<C> <S> <C>
*Stocks--37.9%
Large-Company Value Stocks--12.0%
Basic Materials--0.7%
4,200 Air Products & Chemicals, Inc. $ 160,125
20,475 Archer-Daniels-Midland Co. 376,228
3,300 Dow Chemical Co. 321,337
3,400 Du Pont (E.I.) de Nemours & Co. 199,750
3,400 International Paper Co. 147,687
19,100 LTV Corporation 105,050
3,800 Martin Marietta Materials 184,300
4,800 Universal Corp. 168,900
Total 1,663,377
Capital Goods--0.9%
1,396 AMP, Inc. 67,531
4,200 Caterpillar, Inc. 207,637
2,400 Cooper Industries, Inc. 117,900
5,100 Ford Motor Co. 281,775
4,600 General Motors Corp. 322,000
8,200 Ingersoll-Rand Co. 383,862
7,600 Johnson Controls, Inc. 439,850
2,500 Northrop Corp. 203,125
6,000 Parker-Hannifin Corp. 208,500
Total 2,232,180
Communication Services--1.5%
13,777 AT&T Corp. 858,479
3,300 Ameritech Corp. 178,612
16,200 Bell Atlantic Corp. 901,125
12,900 GTE Corp. 799,800
4,978 (a)MCI Worldcom, Inc. 293,702
11,200 U.S. West, Inc. 697,200
Total 3,728,918
Consumer Cyclicals--0.5%
6,400 Block (H&R), Inc. 287,600
</TABLE>
<TABLE>
<CAPTION>
Value
in U.S.
Shares Dollars
<C> <S> <C>
*Stocks--continued
Large-Company Value Stocks--continued
Consumer Cyclicals--continued
4,200 ITT Industries, Inc. $ 151,200
19,000 (a)K Mart Corp. 289,750
10,000 Limited, Inc. 289,375
1,700 Penney (J.C.) Co., Inc. 93,500
3,100 Sears, Roebuck & Co. 147,056
Total 1,258,481
Consumer Staples--0.5%
6,200 Kimberly-Clark Corp. 326,275
4,100 (a)King World Productions, Inc. 111,725
9,400 RJR Nabisco Holdings Corp. 270,837
5,300 Rubbermaid, Inc. 175,231
7,500 UST, Inc. 260,625
Total 1,144,693
Energy--1.3%
3,600 Atlantic Richfield Co. 239,400
6,600 (a)BJ Services Co. 91,162
4,900 Chevron Corp. 409,762
15,700 Exxon Corp. 1,178,481
9,200 Occidental Petroleum Corp. 186,300
3,200 Phillips Petroleum Co. 134,400
12,100 Sunoco, Inc. 409,887
1,900 Texaco, Inc. 109,369
12,300 USX-Marathon Group, Inc. 349,012
Total 3,107,773
Financials--3.4%
1,300 Allmerica Financial Corp. 71,744
12,704 Allstate Corp. 517,688
2,100 American General Corp. 147,919
2,700 American International Group, Inc. 253,800
9,500 Bank One Corp. 487,469
12,134 BankAmerica Corp. 790,985
3,300 BankBoston Corp. 137,362
2,500 Bear Stearns Cos., Inc. 105,000
</TABLE>
<TABLE>
<CAPTION>
Value
in U.S.
Shares Dollars
<C> <S> <C>
*Stocks--continued
Large-Company Value Stocks--continued
Financials--continued
9,000 CIGNA Corp. $ 700,312
5,100 Chase Manhattan Corp. 323,531
3,500 Citigroup, Inc. 175,656
11,200 First Union Corp. 680,400
4,400 Fleet Financial Group, Inc. 183,425
1,300 General RE Corp. 303,550
5,700 (a)Golden State Bancorp, Inc. 109,725
2,800 Hartford Financial Services Group, Inc. 154,525
4,500 KeyCorp 138,094
2,900 Loews Corp. 290,000
4,100 MBIA, Inc. 265,475
8,550 Marsh & McLennan Cos., Inc. 497,503
4,100 Mellon Bank Corp. 258,044
1,700 Merrill Lynch & Co., Inc. 127,500
6,000 Morgan Stanley, Dean Witter, Discover & Co. 418,500
7,650 Old Republic International Corp. 163,041
2,800 PNC Bank Corp. 144,375
4,700 Torchmark Corp. 178,600
5,000 Washington Federal, Inc. 126,875
9,576 Washington Mutual, Inc. 371,070
Total 8,122,168
Health Care--0.4%
14,900 Pharmacia & Upjohn, Inc. 775,731
5,500 United Healthcare Corp. 248,187
Total 1,023,918
Technology--1.0%
4,400 CBS Corp. 131,175
4,700 Eastman Kodak Co. 341,044
4,200 Electronic Data Systems Corp. 163,800
8,400 First Data Corp. 224,175
4,300 International Business Machines Corp. 709,500
</TABLE>
<TABLE>
<CAPTION>
Value
in U.S.
Shares Dollars
<C> <S> <C>
*Stocks--continued
Large-Company Value Stocks--continued
Technology--continued
5,300 Raytheon Co., Class A $ 289,844
13,400 (a)Storage Technology Corp. 469,000
Total 2,328,538
Transportation--0.3%
3,000 (a)AMR Corp. 197,812
7,800 CNF Transportation, Inc. 278,362
8,300 Ryder Systems, Inc. 237,069
Total 713,243
Utilities--1.5%
3,500 Allegheny Energy, Inc. 118,125
4,500 Baltimore Gas & Electric Co. 138,094
5,900 CMS Energy Corp. 287,625
15,800 Coastal Corp. 551,025
5,850 Columbia Energy Group 331,987
3,100 Consolidated Edison Co. 157,519
3,400 Dominion Resources, Inc. 157,037
8,500 Entergy Corp. 249,156
8,500 Houston Industries, Inc. 268,812
13,300 P G & E Corp. 411,469
7,000 Pacificorp 131,250
8,000 Public Service Enterprises Group, Inc. 312,000
8,400 Southern Co. 247,800
5,600 Texas Utilities Co. 249,550
Total 3,611,449
Total Large-Company Value Stocks 28,934,738
Large-Company Growth Stocks--12.4%
Basic Materials--0.2%
2,700 Bemis Co., Inc. 102,094
3,200 Hercules, Inc. 105,200
2,900 Monsanto Co. 131,406
</TABLE>
<TABLE>
<CAPTION>
Value
in U.S.
Shares Dollars
<C> <S> <C>
*Stocks--continued
Large-Company Growth Stocks--continued
Basic Materials--continued
1,900 PPG Industries, Inc. $ 116,256
Total 454,956
Capital Goods--1.3%
4,400 Allied-Signal, Inc. 193,600
3,000 Avery Dennison Corp. 143,813
3,400 Crown Cork & Seal Co., Inc. 114,750
4,400 Dover Corp. 156,750
17,900 General Electric Co. 1,619,950
2,900 Hillenbrand Industries, Inc. 164,756
5,200 Miller Herman, Inc. 110,500
3,000 (a)SCI Systems, Inc. 145,875
2,900 United Technologies Corp. 310,844
4,810 Waste Management, Inc. 206,229
Total 3,167,067
Communication Services--0.4%
3,300 (a)Airtouch Communications, Inc. 188,719
1,700 (a)Chancellor Media Corp., Class A 64,069
3,200 Cincinnati Bell, Inc. 100,800
1,800 Comcast Corp., Class A 87,300
5,400 (a)MCI Worldcom, Inc. 318,600
1,800 SBC Communications, Inc. 86,288
Total 845,776
Consumer Cyclicals--1.3%
2,400 (a)Abercrombie & Fitch Co., Class A 134,400
1,600 (a)Costco Cos., Inc. 100,400
2,700 Dayton-Hudson Corp. 121,500
2,900 Gannett Co., Inc. 187,231
1,900 Gap (The), Inc. 139,769
4,000 Harley Davidson, Inc. 167,250
9,500 Home Depot, Inc. 472,625
2,900 (a)Jones Apparel Group, Inc. 67,244
2,400 Lowe's Cos., Inc. 101,400
</TABLE>
<TABLE>
<CAPTION>
Value
in U.S.
Shares Dollars
<C> <S> <C>
*Stocks--continued
Large-Company Growth Stocks--continued
Consumer Cyclicals--continued
6,400 Masco Corp. $ 184,800
1,900 Maytag Corp. 102,838
3,300 Nordstrom, Inc. 122,925
7,700 Service Corp. International 287,788
2,700 (a)Staples, Inc. 94,331
8,900 TJX Cos., Inc. 228,063
7,800 Wal-Mart Stores, Inc. 587,438
Total 3,100,002
Consumer Staples--2.5%
2,600 Avon Products, Inc. 105,625
5,600 Campbell Soup Co. 319,900
1,200 Cardinal Health, Inc. 82,350
11,800 Coca-Cola Co. 826,737
14,100 Dial Corp. 370,125
7,200 Disney (Walt) Co. 231,750
3,500 Dole Food, Inc. 110,688
4,200 Gillette Co. 192,938
2,700 Heinz (H.J.) Co. 157,444
2,500 McDonald's Corp. 175,156
7,700 PepsiCo, Inc. 297,894
16,700 Philip Morris Cos., Inc. 934,156
7,600 Procter & Gamble Co. 665,950
3,500 Quaker Oats Co. 214,813
7,600 (a)Safeway, Inc. 401,375
3,200 Sara Lee Corp. 186,800
3,300 Sysco Corp. 88,894
4,600 (a)Tricon Global Restaurants, Inc. 209,588
4,300 UST, Inc. 149,425
4,400 (a)Viacom, Inc., Class A 289,025
1,000 Wrigley (Wm.), Jr. Co. 88,125
Total 6,098,758
</TABLE>
<TABLE>
<CAPTION>
Value
in U.S.
Shares Dollars
<C> <S> <C>
*Stocks--continued
Large-Company Growth Stocks--continued
Energy--0.0%
3,700 Halliburton Co. $ 108,688
Financials--1.0%
3,800 American Express Co. 380,238
2,091 Associates First Capital Corp., Class A 162,837
8,250 Citigroup, Inc. 414,047
5,300 Federal National Mortgage Association 385,575
3,600 Household International, Inc. 140,850
11,375 MBNA Corp. 258,070
1,900 MGIC Investment Corp. 83,481
3,300 Providian Financial Corp. 302,981
3,700 Sunamerica, Inc. 293,225
1,800 U.S. Bancorp 66,262
Total 2,487,566
Health Care--2.4%
7,100 Abbott Laboratories 340,800
4,100 American Home Products Corp. 218,325
2,200 (a)Amgen, Inc. 165,550
1,500 Baxter International, Inc. 95,344
16,700 (a)Beverly Enterprises, Inc. 96,025
6,000 Bristol-Myers Squibb Co. 735,375
3,400 Guidant Corp. 291,763
7,500 (a)HEALTHSOUTH Corp. 100,781
6,500 Johnson & Johnson 528,125
4,000 Lilly (Eli) & Co. 358,750
7,200 Merck & Co., Inc. 1,115,100
4,500 Pfizer, Inc. 502,313
4,400 Schering Plough Corp. 468,050
2,700 United Healthcare Corp. 121,838
4,400 (a)Universal Health Services, Inc., Class B 235,950
3,700 Warner-Lambert Co. 279,350
Total 5,653,439
</TABLE>
<TABLE>
<CAPTION>
Value
in U.S.
Shares Dollars
<C> <S> <C>
*Stocks--continued
Large-Company Growth Stocks--continued
Technology--3.3%
3,400 (a)America Online, Inc. $ 297,712
4,300 (a)Applied Materials, Inc. 166,625
1,800 (a)Ascend Communications 101,137
4,400 (a)BMC Software, Inc. 224,675
6,400 (a)Cadence Design Systems, Inc. 180,000
9,900 (a)Cisco Systems, Inc. 746,212
1,600 (a)Compuware Corp. 99,600
5,000 (a)Dell Computer Corp. 304,062
6,300 EMC Corp. Mass 456,750
3,800 First Data Corp. 101,413
1,600 (a)Gateway 2000, Inc. 89,800
13,600 HBO & Co. 339,150
2,500 Hewlett-Packard Co. 156,875
8,700 Intel Corp. 936,337
1,100 International Business Machines Corp. 181,500
2,700 (a)Lexmark Intl. Group, Class A 206,212
2,100 (a)Liberty Media Group, Class A 84,656
8,000 Lucent Technologies, Inc. 688,500
11,800 (a)Microsoft Corp. 1,439,600
4,900 (a)Oracle Corp. 167,825
2,300 (a)PanAmSat Corp. 77,337
5,100 (a)Seagate Technology, Inc. 150,450
3,800 (a)Sun Microsystems, Inc. 281,437
3,700 (a)Tellabs, Inc. 200,031
1,900 Xerox Corp. 204,250
600 (a)Yahoo, Inc. 115,200
Total 7,997,346
Transportation--0.1%
3,700 Burlington Northern Santa Fe 125,800
Total Large-Company Growth Stocks 30,039,399
</TABLE>
<TABLE>
<CAPTION>
Value
in U.S.
Shares Dollars
<C> <S> <C>
*Stocks--continued
Utility Stocks--5.4%
Electric Utilities: Central--0.5%
14,300 CMS Energy Corp. $ 697,125
17,600 NIPSCO Industries, Inc. 515,900
Total 1,213,025
Electric Utilities: East--0.9%
9,400 BEC Energy 387,750
10,300 DQE, Inc. 422,944
16,000 Peco Energy Co. 642,000
15,400 Potomac Electric Power Co. 401,362
10,700 Public Service Enterprises Group, Inc. 417,300
Total 2,271,356
Electric Utilities: South--2.0%
11,900 Dominion Resources, Inc. 549,631
8,200 Duke Energy Corp. 513,012
9,700 Edison International 266,750
13,400 Entergy Corp. 392,787
9,800 FPL Group, Inc. 600,250
13,100 Houston Industries, Inc. 414,287
9,200 OGE Energy Corp. 257,025
12,400 SCANA Corp. 404,550
9,200 Southern Co. 271,400
14,200 TECO Energy, Inc. 381,625
15,100 Texas Utilities Co. 672,894
Total 4,724,211
Electric Utilities: West--0.6%
10,000 Montana Power Co. 506,875
11,700 P G & E Corp. 361,969
11,600 Pacificorp 217,500
9,700 Puget Sound Energy, Inc. 263,112
Total 1,349,456
Natural Gas Distribution--0.5%
7,300 Consolidated Natural Gas Co. 396,481
13,000 Keyspan Energy Corp. 385,937
</TABLE>
<TABLE>
<CAPTION>
Value
in U.S.
Shares Dollars
<C> <S> <C>
*Stocks--continued
Utility Stocks--continued
Natural Gas Distribution--continued
23,600 MCN Corp. $ 446,925
Total 1,229,343
Oil/Gas Transmission--0.9%%
4,650 Columbus Energy Group 263,887
15,300 El Paso Energy Corp. 522,112
12,500 Enron Corp. 657,031
12,800 Sonat, Inc. 380,000
12,300 Williams Companies, Inc. 354,394
Total 2,177,424
Total Utility Stocks 12,964,815
Foreign Equity--2.4%
Australia--0.0%
12,200 Austrim Ltd 22,308
15,000 Woolworth's Ltd. 52,781
Total 75,089
Finland--0.0%
6,600 Merita A (unitas A) 38,383
850 Sampo Insurance Co. Ltd., Class A 29,165
Total 67,548
France--0.4%
821 AXA 106,067
300 Alcatel Alsthom 39,654
220 Atos SA 47,177
240 Bouygues 44,716
300 Cap Gemini Sogeti 43,873
550 Credit Commerical De France 47,312
670 Eiffage 54,762
310 Elf Aquitaine SA 38,633
330 Groupe Danon BSN SA 96,288
125 Guyenne Et Gascogne 54,269
200 Peugeot SA 31,639
650 REXEL SA 58,268
</TABLE>
<TABLE>
<CAPTION>
Shares in U.S.
or Units Dollars
<S> <C> <C>
*Stocks--continued
Foreign Equity--continued
France--continued
900 Scor SA $ 57,504
360 Simco 31,892
700 Societe BIC SA 43,679
1,500 Thomson-csf 56,423
560 Total SA-B 69,395
400 Valeo 1,863
220 Vivendi 49,729
Total 973,143
Germany, Federal Republic Of--0.1%
1,500 Bhf-bank 58,799
1,050 Hoechst Ag 45,059
1,100 Mannesmann AG 118,984
100 Systeme, Anwendungen, Produkte in der Datevnerarbeitung 45,271
Total 268,113
Greece--0.0%
310 (a)Panafon SA - 144A 5,553
Hong Kong--0.1%
17,000 (a)China Telecommunications 33,921
16,000 Henderson Land Development Co. Ltd. 81,829
Total 115,750
Italy--0.3%
2,200 Assicurazioni Generali 82,119
14,000 Autogrill SPA 108,683
18,000 Banca Intesa S pa 100,461
17,000 Banca Nazionale del Lavoro 47,769
500 (a)Banca Popolare di Verona 46,435
6,400 Eni 39,682
20,000 Istituto Nazionale delle Assicurazioni 52,746
7,500 Mondadori Ord 94,210
5,100 SAI SPA 57,232
13,700 Telecom Italia S pA 110,962
</TABLE>
<TABLE>
<CAPTION>
Value
Shares in U.S.
or Units Dollars
<S> <C> <C>
*Stocks--continued
Foreign Equity--continued
Italy--continued
20,000 (a)Unione Immobiliare S pa $ 10,001
Total 750,300
Japan--0.4%
9,000 Chugai Pharmaceutical Co 76,778
7,000 Fujitsu Ltd. 80,795
1,000 Honda Motor Co. Ltd. 35,877
3,000 Hosiden Corp. 51,989
8,000 INES Corp. 69,481
6,000 Kirin Brewery Co. Ltd. 62,240
6,000 Kokusai Securities Co. Ltd. 50,601
2,500 Konami Co 69,196
6,000 Kyushu Matsushita Electric 64,821
2,000 Matsushita Communication 87,175
2,600 Meitec Corp. 61,201
1,000 Orix Corp 71,347
9,000 Sumitomo Marine & Fire 53,693
1,000 Takefuji 68,182
3,100 Tokyo Electric Power Co. 70,706
11,000 Toshiba Corp. 61,607
Total 1,035,689
Korea, Republic Of--0.0%
870 Pohang Iron and Steel Co. Ltd. 48,083
Netherlands--0.1%
300 Aegon N.V. 32,093
900 (a)Benckiser NV 53,175
1,511 KPN NV 65,179
346 Wolters Kluwer NV 65,942
Total 216,389
Norway--0.0%
2,200 Tomra Systems ASA 64,200
Singapore--0.0%
4,000 (a)Creative Technology Ltd. 73,477
</TABLE>
<TABLE>
<CAPTION>
Value
Shares in U.S.
or Units Dollars
<S> <C> <C>
*Stocks--continued
Foreign Equity--continued
Spain--0.2%
2,400 Argentaria, SA $ 55,864
910 Banco Pastor, SA 56,737
1,010 Banco Popular Espanol 74,167
1,200 (a)Baron de Ley 41,566
600 Fomento de Construcciones y Contratas, SA 35,788
7,100 (a)Prima Immobiliaria, SA 64,926
Total 329,048
Sweden--0.0%
2,000 Telefonaktiebolaget LM Ericsson 55,542
Switzerland--0.2%
41 Alusuisse Lonza Holding AG 51,679
120 Baloise Holdings Ltd.-Reg 111,724
35 Nestle, SA 72,692
58 Novartis AG - REG 108,830
50 (a)Swisscom AG 16,830
Total 361,755
United Kingdom--0.6%
2,300 Abbey National Bank PLC, London 46,671
3,800 (a)Allied Zurich PLC 54,217
5,700 Amvescap PLC 46,398
3,150 Barclays PLC 71,442
10,912 British Aerospace PLC 93,774
3,810 British Petroleum Co. PLC 59,482
14,000 British-Borneo Petroleum Syndicate PLC 34,638
1,800 CMG PLC 44,595
5,200 (a)Cable & Wireless Communications 46,317
2,500 Capita Group PLC 23,505
3,800 (a)Colt Telecom Group PLC 49,642
3,000 Commercial Union PLC 47,554
6,500 Croda International 26,589
6,429 General Electric Co. PLC 52,544
1,828 Glaxo Wellcome PLC 57,801
</TABLE>
<TABLE>
<CAPTION>
Shares,
Units or Value
Principal in U.S.
Amount Dollars
<S> <C> <C>
*Stocks--continued
Foreign Equity--continued
United Kingdom--continued
7,619 Guardian Royal Exchange PLC $ 41,472
5,000 Imperial Chemical Industries PLC 46,514
6,500 Lasmo 14,983
3,600 Lloyds TSB Group P lc 50,028
6,500 Misys PLC 45,780
5,400 (e)Norwich Union PLC 37,855
3,500 Prudential Corp. PLC 51,034
7,000 Reed International P lc 55,075
12,900 Sears plc 46,173
3,328 Smithkline Beecham PLC 40,841
2,540 Zeneca Group 105,578
Total 1,290,502
Total Foreign Equity 5,730,181
*Future Contracts Collateral--5.7%
$12,850,000 United States Treasury Bill, 12/17/1998 12,829,697
1,000,000 United States Treasury Bill, 1/7/1999 996,010
Total 13,825,707
Total Stocks (identified cost $75,533,698) 91,494,839
Bonds--62.2%
Treasury and Government Securities--23.9%
(b)Repurchase Agreements--7.2%
15,945,000 Westdeutsche Landesbank Girozentrale, 5.350%, dated 11/30/1998, due 12/1/1998 15,945,000
1,363,000 (c)Morgan Stanley Group, Inc., 4.960%, dated 11/9/1998, due 12/10/1998 1,363,000
Total 17,308,000
U.S. Treasury Agreements--16.7%
6,005,000 United States Treasury Bond, 6.125%, 11/15/2027 6,775,562
1,100,000 United States Treasury Bond, 7.250%, 5/15/2004 1,233,859
10,495,000 United States Treasury Bond, 8.125%, 5/15/2021 14,273,305
2,170,000 United States Treasury Note, 4.25%, 11/15/2003 2,146,260
2,000,000 United States Treasury Note, 5.625%, 5/15/2008 2,128,640
2,200,000 United States Treasury Note, 6.50%, 10/15/2006 2,439,998
</TABLE>
<TABLE>
<CAPTION>
Principal in U.S.
Amount Dollars
<S> <C> <C>
Bonds--continued
Treasury and Government Securities--continued
U.S. Treasury Agreements--continued
$10,200,000 United States Treasury Note, 6.625%, 5/15/2007 $ 11,454,498
Total 40,452,122
Total Treasury and Government Securities 57,760,122
Mortgage-Backed Securities--15.5%
Government Agency--15.5%
317,403 Federal Home Loan Mortgage Corp., 9.00%, 5/1/2017 335,851
982,952 Federal Home Loan Mortgage Corp., 6.50%, 9/1/2028 990,324
1,314,313 Federal Home Loan Mortgage Corp., 7.00%, 9/1/2028 1,341,414
1,200,000 Federal Home Loan Mortgage Corp., 6.50%, 11/1/2028 1,209,000
472,867 Federal Home Loan Mortgage Corp., 6.50%, 7/1/2028 476,993
175,500 Federal Home Loan Mortgage Corp., 7.00%, 8/1/2028 179,119
37,636 Federal Home Loan Mortgage Corp., 7.00%, 9/1/2028 38,413
936,540 Federal Home Loan Mortgage Corp., 7.00%, 9/1/2028 955,851
490,904 Federal Home Loan Mortgage Corp., 6.50%, 9/1/2028 494,585
2,018,344 Federal Home Loan Mortgage Corp., 6.50, 10/1/2028 2,033,482
235,553 Federal Home Loan Mortgage Corp., 7.50%, 5/1/2024 242,177
766,394 Federal Home Loan Mortgage Corp., 7.50%, 12/1/2022 788,910
176,393 Federal Home Loan Mortgage Corp., 7.00%, 7/1/2024 180,142
1,198,748 Federal Home Loan Mortgage Corp., 7.50%, 6/1/2026 1,232,086
188,668 Federal Home Loan Mortgage Corp., 8.00%, 11/1/2009 194,506
1,379,678 Federal Home Loan Mortgage Corp., 6.50%, 3/1/2011 1,401,670
934,039 Federal Home Loan Mortgage Corp., 7.00%, 7/1/2013 955,055
396,998 Federal Home Loan Mortgage Corp., 6.50%, 5/1/2011 403,326
357,595 Federal National Mortgage Association, 7.00%, 7/1/2024 365,305
1,009,999 Federal National Mortgage Association, 7.00%, 3/1/2012 1,033,038
56,859 Federal National Mortgage Association, 8.50%, 2/1/2025 59,525
714,305 Federal National Mortgage Association, 6.50%, 9/1/2025 719,441
447,285 Federal National Mortgage Association, 6.50%, 7/1/2026 450,501
1,957,322 Federal National Mortgage Association, 8.00%, 5/1/2027 2,027,042
339,122 Federal National Mortgage Association, 7.50%, 12/1/2027 348,658
845,724 Federal National Mortgage Association, 6.50%, 3/1/2028 851,543
985,891 Federal National Mortgage Association, 6.00%, 7/1/2028 973,262
424,312 Federal National Mortgage Association, 7.50%, 6/1/2028 436,243
</TABLE>
<TABLE>
<CAPTION>
Principal in U.S.
Amount Dollars
<S> <C> <C>
Bonds--continued
MortageBacked Securities--continued
Government Agency--continued
$1,311,556 Federal National Mortgage Association, 6.00%, 7/1/2028 $ 1,294,755
1,369,681 Federal National Mortgage Association, 7.50%, 8/1/2028 1,408,197
2,430,000 Federal National Mortgage Association, 6.00%, 11/1/2013 2,432,284
1,363,000 (d)Federal National Mortgage Association, TBA, 7.00%, 1,391,541
942,120 Government National Mortgage Association, 8.50%, 10/15/2022 1,001,888
738,053 Government National Mortgage Association, 6.50%, 1/15/2024 746,356
583,204 Government National Mortgage Association, 8.00%, 11/15/2024 607,442
61,031 Government National Mortgage Association, 9.50%, 12/15/2025 66,238
185,325 Government National Mortgage Association, 7.00%, 8/15/2024 189,843
2,459,240 Government National Mortgage Association, 7.00%, 10/15/2027 2,518,410
1,564,885 Government National Mortgage Association, 7.50%, 12/15/2027 1,616,714
499,820 Government National Mortgage Association, 7.00%, 2/15/2028 511,846
594,317 Government National Mortgage Association, 7.50%, 9/15/2028 614,000
912,334 Government National Mortgage Association, 7.00%, 11/15/2024 934,577
1,333,855 Government National Mortgage Association, 8.00%, 9/15/2017 1,403,109
Total Mortgage-Backed Securities 37,454,662
Investment Grade Bonds--12.9%
Aerospace & Defense--0.3%
350,000 McDonnell Douglas Finance, Medium Term Note, 6.375%, 7/15/1999 351,845
250,000 McDonnell Douglas Finance, Note, 9.40%, 10/15/2001 257,188
Total 609,033
Automobile--0.6%
825,000 Arvin Industries, Inc., Note, 6.75%, 3/15/2008 813,920
600,000 Dana Corp., Note, 7.00%, 3/15/2028 622,146
Total 1,436,066
Banking--1.2%
100,000 City National Bank, Sub. Note, 6.375%, 1/15/2008 101,683
250,000 Crestar Financial Corp, Sub. Note, 8.75%, 11/15/2004 288,963
400,000 (e)Den Danske Bank, Note, 7.40% 6/15/2010 428,624
300,000 National Bank of Canada, Sub. Note, 8.125%, 8/15/2004 325,599
285,000 PNC Funding Corp, Sub. Note, 6.875%, 7/15/2007 306,198
500,000 Republic New York Corp., Sub. Note, 7.75%, 5/15/2009 568,785
</TABLE>
<TABLE>
<CAPTION>
Principal in U.S.
Amount Dollars
<S> <C> <C>
Bonds--continued
Investment Grade Bonds--continued
Banking--continued
$400,000 Santander Finance Issuances, Bank Guarantee, 7.875%, 4/15/2005 $ 436,492
400,000 (e)Swedbank, Sub., 11/29/2049 395,980
Total 2,852,324
Beverage & Tobacco--0.2%
150,000 Philip Morris Cos., Inc., Deb., 6.00%, 7/15/2001 151,190
350,000 Phillip Morris Cos., Inc., Deb., 9.25%, 2/15/2000 365,005
Total 516,195
Cable Television--0.6%
350,000 Continental Cablevision, Sr. Note, 8.50%, 9/15/2001 373,748
1,000,000 TKR Cable Inc., Deb., 10.50%, 10/30/2007 1,099,170
Total 1,472,918
Chemicals & Plastics--0.2%
450,000 (e)Bayer Corp., Deb., 6.50%, 10/1/2002 464,567
Ecological Services & Equipment--0.3%
350,000 USA Waste Services, Inc., Note, 6.125%, 7/15/2001 354,921
275,000 Waste Management, Deb., 8.75%, 5/1/2018 313,049
Total 667,970
Education--0.2%
375,000 Boston University, 7.625%, 7/15/2097 416,543
Electronics--0.4%
700,000 Anixter Intl., Inc., Company Guarantee, 8.00%, 9/15/2003 744,198
300,000 Harris Corp, Deb., 10.375%, 12/1/2018 317,145
Total 1,061,343
Finance-Automotive--0.4%
700,000 Ford Motor Credit Corp., Unsub., 6.875%, 6/05/2001 717,325
350,000 GMAC, Medium Term Note, 7.50%, 5/25/2000 360,801
Total 1,078,126
Finance-Retail--0.1%
150,000 Household Finance, Deb., 6.45%, 2/1/2009 153,810
200,000 Sears Roebuck Acceptance, Medium Term Note, 6.56%, 9/05/2000 203,676
Total 357,486
Financial Intermediaries--1.8%
1,000,000 Bear Stearns Cos., Inc., Sr. Note, 6.75%, 5/1/2001 1,017,950
</TABLE>
<TABLE>
<CAPTION>
Value
Principal in U.S.
Amount Dollars
<S> <C> <C>
Bonds--continued
Investment Grade Bonds--continued
Financial Intermediaries--continued
$400,000 DLJ, Note, 6.875%, 11/1/2005 $ 411,008
400,000 Green Tree Financial Corp, Sr. Sub. Note, 10.25%, 6/1/2002 434,640
400,000 Lehman Brothers Hldgs Inc, Note, 6.90%, 1/29/2001 404,192
300,000 Lehman Brothers Holding, Bond, 6.20%, 1/15/2002 297,894
300,000 Lehman Brothers, Inc., Sr. Sub. Note, 7.375%, 1/15/2007 314,121
250,000 PaineWebber Group, Inc., Medium Term Note, 6.34%, 2/15/2000 250,617
505,000 Salomon, Inc., 7.00%, 5/15/2000 514,368
225,000 Salomon, Inc., Note, 7.20%, 2/1/2004 238,732
343,060 (e) World Financial, Pass Thru Cert., Series 96 WFP-B, 6.91%, 9/1/2013 346,892
Total 4,230,414
Forest Products--0.3%
650,000 Quno Corp., Sr. Note, 9.125%, 5/15/2005 702,702
Healthcare--0.2%
600,000 COL HCA Hlthcare Corp, Sr. Note, 6.41%, 6/15/2000 594,450
Insurance--1.4%
250,000 AFC Capital Trust I, Bond, 8.207%, 2/3/2027 286,515
350,000 Conseco, Inc., Sr. Note, 10.50%, 12/15/2004 398,146
845,000 Continental Corp, Note, 8.25%, 4/15/1999 852,630
350,000 NAC Re Corp, Note, 8.00%, 6/15/1999 354,456
600,000 Provident Cos., Inc., Bond, 7.405%, 3/15/2038 623,196
250,000 Sunamerica Inc, Medium Term Note, 7.34%, 8/30/2005 273,310
425,000 Sunamerica, Inc., Sr. Note, 9.00%, 1/15/1999 426,968
250,000 USF&G Corp., Company Guarantee, 8.47%, 1/10/2027 282,750
Total 3,497,971
Leisure & Entertainment--0.2%
350,000 Viacom, Inc., Sr. Note, 7.75%, 6/1/2005 386,155
Metals & Mining--0.3%
150,000 Barrick Gold Corp., Deb., 7.50%, 5/1/2007 162,632
450,000 Santa Fe Pacific Gold, Note, 8.375%, 7/01/2005 505,508
Total 668,140
</TABLE>
<TABLE>
<CAPTION>
Value
Principal in U.S.
Amount Dollars
<S> <C> <C>
Bonds--continued
Investment Grade Bonds--continued
Oil & Gas--0.1%
$250,000 Occidental Petroleum Corp., Note, 8.50%, 9/15/2004 $ 254,653
Pharmaceutical--0.3%
750,000 American Home Products Corp., Note, 7.70%, 2/15/2000 770,895
Real Estate--0.3%
800,000 SUSA Partnership, LP, Deb., 7.50%, 12/1/2027 715,088
Retailers--0.7%
450,000 Harcourt General, Sr. Deb., 7.20%, 8/1/2027 429,305
400,000 May Department Stores, Deb., 8.125%, 8/15/2035 452,576
750,000 Sears, Roebuck & Co., Medium Term Note, 7.32%, 4/24/2000 772,470
Total 1,654,351
Services--1.1%
800,000 BellSouth Telecommunicat, Note, 6.00%, 6/15/2002 823,624
250,000 Loewen Group Int'l, Sr. Note, 8.25%, 4/15/2003 216,250
970,000 Raytheon Co., 5.70%, 11/01/2003 981,320
600,000 Service Corp. Int'l, Note, 6.50%, 3/15/2008 606,240
Total 2,627,434
Sovereign--0.2%
400,000 Export-Import Bank Korea, Note, 6.50%, 5/15/2000 380,175
Sovereign Government --0.6%
360,000 Quebec, Province of, Deb., 9.125%, 8/22/2001 392,166
750,000 Republic Of South Africa, Global Bond Deb., 9.625%, 12/15/1999 753,218
400,000 Republic of Colombia, Note, 7.25%, 2/15/2003 346,500
Total 1,491,884
Surface Transportation--0.1%
225,000 Trans Ocean Container Corp., Sr. Sub. Note, 12.25%, 7/1/2004 247,894
Technology Services--0.6%
500,000 Dell Computer Corp., Deb., 7.10%, 4/15/2028 518,935
9,728 Microsoft Corp., Conv. Pfd., Series A, $2.196 947,264
Total 1,466,199
</TABLE>
<TABLE>
<CAPTION>
Value
Principal in U.S.
Amount Dollars
<S> <C> <C>
Bonds--continued
Investment Grade Bonds--continued
Utilities--0.2%
$200,000 Duke Power Co., 1st Mtg. Note, 7.00%, 9/1/2005 $ 205,614
250,000 Enersis, SA, Note, 7.40%, 12/1/2016 217,713
Total 423,327
Total Investment Grade Bonds 31,044,303
High Yield Bonds--5.1%
1,300,112 (f)The High Yield Bond Portfolio 12,286,063
Foreign Bonds--4.8%
Australia--0.1%
128,000 Qtc-global Notes, Deb., 10.5%, 5/15/2003 97,560
25,000 West Aust T Corp, Local Government Guarantee, 8.00%, 7/15/2003 17,532
Total 115,092
Austria--0.4%
4,350,000 Republic Of Austria, Deb., 7.625%, 10/18/2004 434,395
730,000 Republic of Austria, Unsub., 6.50%, 1/10/2024 528,279
Total 962,674
Belgium--0.1%
2,112,000 Belgian Govt., Bond, 6.50%, 3/31/2005 69,056
6,000,000 Belgium Kingdom, 7.75%, 10/15/2004 206,419
Total 275,475
Canada--0.2%
290,000 Canada Government, Deb., 6.50%, 6/1/2004 204,311
375,000 Ontario Hydro, 9.00%, 6/24/2002 277,161
Total 481,472
Denmark--0.2%
1,844,000 Denmark - Bullet, Bond, 8.00%, 3/15/2006 351,444
1,200,000 Denmark, 8.00%, 5/15/2003 215,717
Total 567,161
France--0.0%
500 France O.A.T., Bond, 7.50%, 4/25/2005 699
Germany, Federal Republic Of--0.9%
450,000 Depfa-Bank, 5.50%, 1/15/2013 287,409
188,000 Deutschland Republic, Deb., 6.25%, 1/4/2024 133,094
</TABLE>
<TABLE>
<CAPTION>
Value
Principal in U.S.
Amount Dollars
<S> <C> <C>
Bonds--continued
Foreign Bonds--continued
Germany, Federal Republic Of--continued
$33,000,000 KFW International Finance, 6.00%, 11/29/1999 $ 283,259
350,000 KFW International Finance, Bank Guarantee, 6.75%, 6/20/2005 239,387
1,100,000 Treuhandanstalt, 7.75%, 10/1/2002 747,166
744,000 Treuhandanstalt, Foreign Gov't. Guarantee, 6.875%, 6/11/2003 497,813
Total 2,188,128
Greece--0.1%
34,000,000 Hellenic Republic, FRN 10/23/2003 121,266
Hungary--0.0%
19,600,000 Hungary Govt., Bond, 14.00%, 12/12/2002 86,389
Ireland--0.1%
120,000 Irish Government, Deb., 9.00%, 9/01/2006 231,585
Italy--0.5%
110,000,000 BTPS, Bond, 10.50%, 11/1/2000 73,847
520,000,000 BTPS, Deb., 12.00%, 5/18/1999 319,878
1,040,000,000 Buoni Poliennali Del Tes, 9.50%, 1/1/2005 800,540
90,000,000 Buoni Poliennali Del Tes, Deb., 12.00%, 1/01/2002 66,384
Total 1,260,649
Japan--0.2%
42,000,000 Interamerican Development, Deb., 7.25%, 5/15/2000 374,911
Mexico--0.0%
95,000 Mexican Cetes, 2/11/1999 88,637
Netherlands--0.3%
70,000 Bank Ned Gemeenten, Bond, 6.375%, 1/4/2006 41,450
30,000 Bank Ned Gemeenten, Bond, 7.75%, 12/20/2004 18,745
90,000 Lkb-global Bd, Bank Guarantee, 6.00%, 1/25/2006 58,622
700,000 Netherlands Government, 5.75%, 1/15/2004 400,957
210,000 Netherlands Government, 6.00%, 1/15/2006 123,746
Total 643,520
New Zealand--0.0%
143,000 New Zealand Government, 8.00%, 2/15/2001 79,935
Norway--0.1%
800,000 NGB Bond, 9.00%, 1/31/1999 106,918
</TABLE>
<TABLE>
<CAPTION>
Value
Principal in U.S.
Amount Dollars
<S> <C> <C>
Bonds--continued
Foreign Bonds--continued
Norway--continued
$585,000 Norwegian Government, 5.50%, 5/15/2009 $ 79,380
630,000 Norwegian Government, Bond, 7.00%, 5/31/2001 86,698
473,000 Norwegian Government, Foreign Government Guarantee, 5.75%, 11/30/2004 64,751
Total 337,747
Poland--0.1%
585,000 Poland Government, Bond, Series 5Y, 12.00%, 2/12/2003 168,475
South Africa--0.0%
440,000 Republic of South Africa, Bond, 12.50%, 12/21/2006 64,247
Spain--0.6%
645,000 Spanish Government, Bond, 5.15%, 7/30/2009 771,780
40,000,000 Spanish Government, 10.00%, 2/28/2005 368,512
34,600,000 Spanish Government, Bond, 8.80%, 4/30/2006 310,645
6,480,000 Spanish Government, Deb., 10.10%, 2/28/2001 51,276
Total 1,502,213
Sweden--0.2%
2,300,000 Sweden, 6.00%, 2/9/2005 310,342
600,000 Sweden, Deb., 13.00%, 6/15/2001 89,833
800,000 Swedish Government, Deb., 9.00%, 4/20/2009 135,698
Total 535,873
United Kingdom--0.5%
127,000 British Gas PLC, 8.875%, 7/8/2008 258,857
108,000 U.K. Treasury, Deb., 8.50%, 12/7/2005 216,975
365,000 UK Conversion, 9.00%, 3/3/2000 625,770
Total 1,101,602
United States--0.2%
315,000 Federal National Mortgage Association, 6.50%, 7/10/2002 208,862
140,000 Goldman Sachs Group, LP, Bond, 5.375%, 4/15/2008 81,725
</TABLE>
<TABLE>
<CAPTION>
Value
Principal in U.S.
Amount Dollars
<S> <C> <C>
Bonds--continued
Foreign Bonds--continued
United States--continued
$280,000 Tennesee Valley Authority - Global Bond, 6.375%, 9/18/2006 $ 187,667
Total 478,254
Total Foreign Bonds 11,666,004
Total Bonds (identified cost $147,474,835) 150,211,154
Total Investments (identified cost $223,008,533)(g) $241,705,993
</TABLE>
* The Fund purchases index futures contracts to efficiently manage cash flows
resulting from 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 $13,872,975 at November 30, 1998.
(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) This security is subject to dollar roll transactions.
(e) Denotes a restricted security. At November 30, 1998, these securities
amounted to $1,539,060 which represents 0.66% of total net assets.
(f) The High Yield Bond Portfolio is a diversified portfolio of below
investment grade bonds and is a portfolio of Federated Core Trust.
(g) The cost of investments for federal tax purposes amounts to $223,048,465.
The net unrealized appreciation of investments on a federal tax basis
amounts to $18,657,528 which is comprised of $21,840,442 appreciation and
$3,142,982 depreciation at November 30, 1998.
Note: The categories of investments are shown as a percentage of net assets
($241,307,570) at November 30, 1998.
The following acronyms are used throughout this portfolio:
COL --Collateralized
FRN --Floating Rate Note
LP --Limited Partnership
MBIA --Municipal Bond Investors Assurance
PLC --Public Limited Company
PP --Principal Payment
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 and Income Fund
November 30, 1998
<TABLE>
<CAPTION>
Assets:
<S> <C> <C>
Total investments in securities, at value (identified cost
$223,008,533 and tax cost $223,048,465) $241,705,993
Cash 841,601
Cash denominated in foreign currency (identified cost $412) 410
Income receivable 1,500,501
Receivable for investments sold 706,983
Receivable for shares sold 287,344
Net receivable for foreign currency exchange contracts 42
Deferred organizational costs 11,186
Other assets 1,100
Total assets 245,055,160
Liabilities:
Payable for investments purchased $ 1,581,308
Payable for shares redeemed 332,697
Income distribution payable 40
Payable for dollar roll transactions 1,385,100
Payable for taxes withheld 1,010
Payable for daily variation margin 334,675
Accrued expenses 112,760
Total liabilities 3,747,590
Net Assets for 19,867,530 shares outstanding $241,307,570
Net Assets Consist of:
Paid in capital $212,238,245
Net unrealized appreciation of investments, translation of assets and liabilities in foreign currency
and futures contracts 19,504,381
Accumulated net realized gain on investments, foreign currency transactions and futures contracts 8,433,677
Undistributed net investment income 1,131,267
Total Net Assets $241,307,570
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
Institutional Shares:
$178,520,884 / 14,693,879 shares outstanding $12.15
Select Shares:
$62,786,686 / 5,173,651 shares outstanding $12.14
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF OPERATIONS
Federated Managed Growth and Income Fund
Year Ended November 30, 1998
<TABLE>
<CAPTION>
Investment Income:
<S> <C> <C> <C>
Dividends (net of foreign taxes withheld of $11,364) $ 2,025,290
Interest (net of dollar roll expense of $206,006 and net foreign taxes withheld of $3,255) 9,001,652
Total income 11,026,942
Expenses:
Investment advisory fee $ 1,704,532
Administrative personnel and services fee 171,362
Custodian fees 48,832
Transfer and dividend disbursing agent fees and expenses 196,391
Directors'/Trustees' fees 4,557
Auditing fees 17,942
Legal fees 3,335
Portfolio accounting fees 76,219
Distribution services fee--Select Shares 410,611
Shareholder services fee--Institutional Shares 431,307
Shareholder services fee--Select Shares 136,870
Share registration costs 39,936
Printing and postage 37,317
Insurance premiums 4,503
Taxes 19
Miscellaneous 44,109
Total expenses 3,327,842
Waivers --
Waiver of distribution services fee--Select Shares $ (136,870)
Waiver of shareholder services fee--Institutional Shares (345,046)
Total waivers (481,916)
Net expenses 2,845,926
Net investment income 8,181,016
Realized and Unrealized Gain (Loss) on Investments and Foreign Currency:
Net realized gain on investments, foreign currency transactions and futures contracts 8,450,467
Net change in unrealized appreciation of investments and translation of assets and liabilities in foreign
currency and futures contracts 6,894,559
Net realized and unrealized gain on investments, foreign currency and futures contracts 15,345,026
Change in net assets resulting from operations $23,526,042
</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>
Year Ended November 30,
1998 1997
<S> <C> <C>
Increase (Decrease) in Net Assets:
Operations--
Net investment income $ 8,181,016 $ 8,398,796
Net realized gain on investments and foreign currency transactions ($9,275,785 and
$11,034,226, respectively, as computed for federal tax purposes) 8,450,467 10,949,153
Net change in unrealized appreciation of investments and translation of assets and
liabilities in foreign currency and futures contracts 6,894,559 2,187,689
Change in net assets resulting from operations 23,526,042 21,535,638
Distributions to Shareholders--
Distributions from net investment income
Institutional Shares (6,641,933) (6,945,797)
Select Shares (1,703,959) (1,683,717)
Distributions from net realized gains on investments, foreign currency transactions
and futures contracts
Institutional Shares (8,553,202) (1,660,283)
Select Shares (2,485,155) (461,933)
Change in net assets resulting from distributions to shareholders (19,384,249) (10,751,730)
Share Transactions--
Proceeds from sale of shares 77,810,850 70,870,478
Net asset value of shares issued to shareholders in payment of distributions declared 12,827,257 6,401,094
Cost of shares redeemed (65,699,127) (76,711,981)
Change in net assets resulting from share transactions 24,938,980 559,591
Change in net assets 29,080,773 11,343,499
Net Assets:
Beginning of period 212,226,797 200,883,298
End of period (including undistributed net investment income of $1,131,267
and $1,323,881, respectively) $241,307,570 $212,226,797
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SHARES
Federated Managed Growth & Income Fund
<TABLE>
<CAPTION>
(For a share outstanding throughout each period)
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 0.44 0.49 0.50 0.50 0.25
Net realized and unrealized gain (loss) on investments,
foreign currency and futures contracts 0.81 0.74 0.41 1.28 (0.25)
Total from investment operations 1.25 1.23 0.91 1.78 0.00
Less distributions
Distributions from net investment income (0.46) (0.50) (0.52) (0.49) (0.15)
Distributions from net realized gain on investments,
foreign currency transactions and futures contracts (0.62) (0.12) (0.16) -- --
Total distributions (1.08) (0.62) (0.68) (0.49) (0.15)
Net asset value, end of period $ 12.15 $ 11.98 $ 11.37 $ 11.14 $ 9.85
Total return (b) 11.19% 11.25% 8.54% 18.51% 0.02%
Ratios to average net assets
Expenses 1.08% 1.05% 1.05% 1.00% 0.88%*
Net investment income 3.77% 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) $178,521 $164,728 $156,635 $103,715 $43,793
Portfolio turnover 117% 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.
(See Notes which are an integral part of the Financial Statements)
FINANCIAL HIGHLIGHTS -- SELECT SHARES
Federated Managed Growth & Income Fund
<TABLE>
<CAPTION>
(For a share outstanding throughout each period)
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 0.37 0.40 0.43 0.37 0.21
Net realized and unrealized gain (loss) on investments,
foreign currency, and futures contracts 0.81 0.74 0.41 1.34 (0.25)
Total from investment operations 1.18 1.14 0.84 1.71 (0.04)
Less distributions
Distributions from net investment income (0.38) (0.42) (0.44) (0.42) (0.13)
Distributions from net realized gain on investments,
foreign currency transactions and futures contracts (0.62) (0.12) (0.16) -- --
Total distributions (1.00) (0.54) (0.60) (0.42) (0.13)
Net asset value, end of period $ 12.14 $ 11.96 $ 11.36 $ 11.12 $ 9.83
Total return (b) 10.51% 10.41% 7.92% 17.76% (0.40)%
Ratios to average net assets
Expenses 1.78% 1.75% 1.75% 1.75% 1.64%*
Net investment income 3.07% 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) $62,787 $47,499 $44,248 $24,787 $ 3,697
Portfolio turnover 117% 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.
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
Federated Managed Growth and Income Fund
November 30, 1998
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 valued at the prices furnished by an idependent 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 cities 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 theterms
of the repurchase agreement. Accordingly, the Fund could receive less than the
repurchase price on the sale of collateralsecurities.
Investment Income, Expenses and Distributions
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code, as amended
(the "Code"). Dividend income and distributions to shareholders are recorded on
the ex-dividend date.
Income and capital gain distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for mortgage-backed
securities, market discount, foreign currency transactions, non-taxable
dividends, wash sales, and futures. The following reclassifications have been
made to the financial statements.
Increase (Decrease)
Accumulated Net Undistributed Net
Paid-In Capital Realized Gain/Loss Investment Income
$(37,230) $64,968 $(27,738)
Net investment income, net realized gains/losses and net assets were not
affected by this reclassification.
Federal Taxes
It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provisions for federal tax are
necessary.
However, federal taxes may be imposed on the Fund upon the disposition of
certain investments in passive foreign investment companies. Withholding taxes
on foreign interest and dividends have been provided for in accordance with the
Fund's understanding of the applicable country's tax rules and rates.
When-Issued and Delayed Delivery Transactions
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
Futures Contracts
The Fund purchases stock index futures contracts to manage cashflows, enhance
yield, and to potentially reduce transaction costs. Upon entering into a stock
index futures contract with a broker, the Fund is required to deposit in a
segregated account a specified amount of cash or U.S. government securities.
Futures contracts are valued daily and unrealized gains or losses are recorded
in a "variation margin" account. Daily, the Fund receives from or pays to the
broker a specified amount of cash based upon changes in the variation margin
account. When a contract is closed, the Fund recognizes a realized gain or loss.
Futures contracts have market risks, including the risk that the change in the
value of the contract may not correlate with changes in the value of the
underlying securities. For the period ended November 30, 1998, the Fund had
realized loss of $148,274 on future contracts.
At November 30, 1998, the Fund had outstanding futures contracts as set forth
below:
<TABLE>
<CAPTION>
Unrealized
Contracts to Net Notional Appreciation
Expiration Date Deliver/Receive Position Amount (Depreciation)
<S> <C> <C> <C> <C>
December 1998 32 S&P 500 Long $8,558,986 $741,014
December 1998 23 Russell 2000 Long 4,513,915 59,060
$800,074
</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. Risks may
arise upon entering these transactions from the potential inability of counter-
parts to meet the terms of their commitments and from unanticipated movements in
security prices or foreign exchange rates. The foreign currency transactions are
adjusted by the daily exchange rate of the underlying currency and any gains or
losses are recorded for financial statement purposes as unrealized until the
settlement date. At November 30, 1998, the Fund had no outstanding forward
foreign currency 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 November 30, 1998 is
as follows:
<TABLE>
<CAPTION>
Security Acquisition Date Acquisition Cost
<S> <C> <C>
Bayer Corp., Deb. 03/26/96-04/17/96 $444,985
Den Danske Bank, Note 01/07/98 420,928
Norwich Union PLC 06/16/97-10/21/98 39,099
Panafon SA 11/24/98 5,613
Swedbank, Sub. 01/07/98 417,748
World Financial, Pass Thru Cert. 11/19/96-1/7/98 352,555
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:
Year Ended Ended November 30,
1998 1997
Institutional Shares Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Shares sold 4,601,113 $ 54,040,432 4,487,267 $ 51,304,428
Shares issued to shareholders in payment of distributions declared 793,142 9,082,092 400,790 4,522,191
Shares redeemed (4,451,572) (52,304,895) (4,916,395) (56,006,233)
Net change resulting from Institutional share transactions 942,683 $ 10,817,629 (28,338) $ (179,614)
Year Ended November 30,
1998 1997
Select Shares Shares Amount Shares Amount
Shares sold 2,018,630 $ 23,770,418 1,716,458 $ 19,566,050
Shares issued to shareholders in payment of distributions declared 326,837 3,745,165 166,372 1,878,903
Shares redeemed (1,141,885) (13,394,232) (1,808,151) (20,705,748)
Net change resulting from Select share transactions 1,203,582 $ 14,121,351 74,679 $ 739,205
Net change resulting from share transactions 2,146,265 $ 24,938,980 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 Advisor 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 Investment Management 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 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 Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily
net assets of the Fund for the period. The fee paid to FSSC is used to finance
certain services for shareholders and to maintain shareholder accounts. FSSC may
voluntarily choose to waive any portion of its fee. FSSC 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 Federated Management.
The Fund reimbursed the Advisor 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, 1998, the Fund expensed $11,186
of organizational expenses.
General
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
Investment Transactions
Purchases and sales of investments, excluding short-term securities, for the
period ended November 30, 1998, were as follows:
Purchases $260,224,013
Sales $243,401,191
Concentration of Credit Risk
The Fund invests in securities of non-U.S. issuers. Although the Fund maintains
a diversified investment portfolio, the political or economic developments
within a particular country or region may have an adverse effect on the ability
of domiciled issuers to meet their obligations. Additionally, political or
economic developments may have an effect on the liquidity and volatility of
portfolio securities and currency holdings.
At November 30, 1998, the diversification of industries for non-U.S. issuers was
as follows:
<TABLE>
<CAPTION>
Percent of Percent of
Industry Net Assets Industry Net Assets
<S> <C> <C> <C>
Aerospace & Military Technology 0.1 Industrial Components 0.0
Agency 0.6 Insurance 0.3
Appliances & Household Durables 0.0 Leisure & Tourism 0.1
Automobile 0.0 Machinery & Engineering 0.1
Banking 1.0 Merchandising 0.1
Beverage & Tobacco 0.0 Metals & Mining 0.1
Broadcasting & Publishing 0.1 Metals--Non Ferrous 0.0
Business & Public Services 0.1 Metals--Steel 0.0
Chemicals 0.0 Multi-Industry 0.0
Construction & Housing 0.1 Real Estate 0.1
Data Processing & Reproduction 0.1 Recreation, Other Consumer Goods 0.0
Electrical & Electronics 0.1 Sovereign 3.3
Electrical Components, Instruments 0.0 Sovereign Government 1.1
Energy Sources 0.1 State/Provincial 0.0
Financial Intermediaries 0.1 Supranational 0.2
Financial Services 0.2 Telecommunications 0.1
Food & Household Products 0.1 Utilities 0.1
Forest Products 0.3 Utilities--Electric & Gas 0.0
Health & Personal Care 0.2 Wholesale & International Trade 0.0
Year 2000 (Unaudited)
</TABLE>
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.
Subsequent Event
On January 7, 1999, the sub-adviser, Federated Global Research Corp., changed
its name to Federated Global Investment Management Corp.
Report of Independent Public Accountants
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF MANAGED SERIES TRUST (FEDERATED
MANAGED GROWTH ANDINCOMEFUND):
We have audited the accompanying statement of assets and liabilities of
Federated Managed Growth and Income Fund (an investment portfolio of Managed
Series Trust, a Massachusetts business trust), including the schedule of
portfolio investments, as of November 30, 1998, the related statement of
operations for the year then ended, the statement of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
the periods presented. These financial statements and financial highlights are
the responsibility of the Trust's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1998, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Federated Managed Growth and Income Fund, an investment portfolio of Managed
Series Trust, as of November 30, 1998, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended, and its financial highlights for the periods presented, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
January 15, 1999
[FEDERATED LOGO]
Federated Managed
Growth and
Income Fund
Institutional Shares
Select Shares
Annual Report
to Shareholders
November 30, 1998
Federated Securities Corp., Distributor
Federated Investors, Inc.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
1-800-341-7400
www.federated.investors.com
Cusip 56166K305
Cusip 56166K404
G00872-01 (1/99) [RECYCLED PAPER LOGO]
PRESIDENT'S MESSAGE
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders for Federated Managed
Income Fund, a portfolio of Managed Series Trust, for the 12-month period from
December 1, 1997, through November 30, 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,
approximately 80% of the fund's $127.6 million in net assets was invested across
a broad range of U.S. and foreign government and corporate bonds.* The remainder
of the portfolio was invested across U.S. stocks.
Over the fund's fiscal year, the fund's Institutional Shares delivered a total
return of 10.06%** through a $0.36 increase in share price, dividends totaling
$0.55 per share and capital gains totaling $0.13 per share. The fund's Select
Shares produced a total return of 9.29%** through a $0.36 increase in share
price, dividends totaling $0.48 per share and capital gains totaling $0.13 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,
/s/ Glen R. Johnson
Glen R. Johnson
President
January 15, 1999
* International 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 Twelve Months
Ended November 30, 1998
The 12 month reporting period ended November 30, 1998, was generally favorable
for financial assets, although investors suffered through a period of high
volatility in the second half of the period. Federated Managed Income Fund moved
up with the advance in security prices this year but enjoyed less volatility
than the stock market in the six months ended November 30, 1998. For the 12
month reporting period ended November 30, 1998, an investor in the fund's
Institutional Shares had a total return of 10.06%,* while an investor in the
fund's Select Shares had a total return of 9.29%.* As usual, performance among
asset classes showed wide variation. The U.S. stock market set new all-time
highs in July, but then embarked on a steep, swift decline through August. After
moving in a trading range through early October, the stock market rebounded
strongly through late November. The highest quality portion of the bond market--
U.S. Treasuries--did very well in this period of turbulence as investors around
the world looked for safety and stability. Other sectors of the bond market did
better than the stock market, but not as well as the U.S. Treasury sector in the
last six months of the reporting period.
Asset Allocation as of November 30, 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 November 30, 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 Assets
<TABLE>
<CAPTION>
Permitted Percentage as of
Asset Category Range November 30, 1998
<S> <C> <C>
Bonds(1) 70 -90% 82
U.S. Treasury Securities 0 -72% 32
Mortgage-Backed
Securities 0 -45% 22
Investment Grade
Corporate Bonds 0 -45% 19
High Yield Corporate
Bonds 0 -10% 5
Foreign Bonds 0 -10% 4
Equities(1) 10 -30% 18
Large Company Stocks 7.5-22.5% 14
Utility Stocks 2.5- 7.5% 4
</TABLE>
(1) Bonds convertible into equity securities at a price below the closing price
of the underlying equity securities on November 30, 1998, have been included
under the appropriate equity asset category.
The fund had somewhat below normal allocations to stocks and the higher risk
portions of the bond market entering the late summer period of downside
volatility in the financial markets. In October, with stock prices well below
their all-time highs set in July, fund management added to both stock and high
yield bond positions. These additions helped performance as financial markets
rebounded strongly in the late October-November period. By November 30, 1998,
the fund held only a slightly above normal position in bonds.
Structure of the Bond Portfolio
Within a range of four to six years, the fund's bond duration is set at 4.8
years. This duration is set at a slightly 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, U.S. Treasuries were emphasized for much of the last
12 months. Lower than normal yield advantages offered by corporate bonds over
U.S. Treasuries led fund management to underweight both investment grade and
high yield corporate bonds until November 1998. These underweights helped
performance as investors in late summer were willing to pay an above normal
premium for the safety of U.S. Treasuries thus making these bonds a very strong
sector of the fixed income market. Once yield relationships returned to
historically normal levels, management added to the mortgage-backed securities,
investment grade corporate and high yield corporate areas.
Structure of the Equity Portfolio
In a global equity sell-off, U.S. stocks declined rapidly in late summer. The
size and swiftness of the decline can be at least partially attributed to the
lack of valuation support for stocks versus historical standards. In July,
stocks were richly priced versus their fundamentals. Investors paid much higher
than normal prices for a dollar of earnings or a dollar of plant and equipment.
This willingness on the part of investors to pay high prices reflects optimistic
assessments about future economic conditions, which may well be justified.
However, optimistic investors, sitting on large unrealized gains from a multi-
year bull market, create above normal risk for the market as any change in
sentiment can quickly lead to substantial selling. This is the situation that
prevailed in mid-July prior to the decline.
The Federal Reserve Board's decision to move to an easier monetary policy in the
fall had the desired effect of dramatically restoring confidence. It also led to
a quick rebound in large cap stocks. With stocks back to their mid-July levels,
valuation had re-emerged as a concern. Therefore, the fund had a slightly below
normal stock allocation despite the favorable economic and monetary policy
environment.
Federated Managed Income Fund
(Institutional Shares)
Growth of $25,000 Invested in Federated Managed Income Fund (Institutional
Shares)
The graph below illustrates the hypothetical investment of $25,000* in Federated
Managed Income Fund (Institutional Shares) (the "Fund") from May 25, 1994 (start
of performance) to November 30, 1998, compared to the Lehman Brothers
Government/Corporate Index (LBG/CI)+ and the Managed Income Indices Blend
(MIIB).++
[GRAPHIC] - See Appendix E.
Past performance is not predictive of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost. Mutual funds are not obligations of or
guaranteed by any bank and are not federally insured.
This report must be preceded or accompanied by the Fund's prospectus dated
January 31, 1999, and, together with financial statements contained therein,
constitutes the Fund's annual report.
* The Fund's performance assumes the reinvestment of all dividends and
distributions. The LBG/CI and the MIIB have been adjusted to reflect
reinvestment of dividends on securities in the indices.
+ The LBG/CI is not adjusted to reflect sales charges, expenses, or other fees
that the Securities and Exchange Commission requires to be reflected in the
Fund's performance. This index is unmanaged.
++ The MIIB is a blend of index total returns that represent the Fund's
allocation in the market sectors. The blend is comprised of 9% Standard and
Poor's 500 Index, 1% Russell 2000 Index, 5% Standard and Poor's Utility Index,
1% Morgan Stanley Capital International Europe Australia Far East Index, 29%
Merrill Lynch 91-Day Treasury Bill Index, 7% Lehman Brothers 1-3 Year
Government Index, 20% Lehman Brothers Mortgage Index, 20% Lehman Brothers
Intermediate Corporate Index, 4% Lehman Brothers Single B Rated Index, and 4%
JP Morgan Global Traded Index Excluding U.S. Each index is reported net of
sales charges, expenses or other fees that the Securities and Exchange
Commission requires to be reflected in a fund's performance. These indices are
unmanaged.
Federated Managed Income Fund
(Select Shares)
Growth of $10,000 Invested in Federated Managed Income Fund (Select Shares)
The graph below illustrates the hypothetical investment of $10,000* in Federated
Managed Income Fund (Select Shares) (the "Fund") from May 25, 1994 (start of
performance) to November 30, 1998, compared to the Lehman Brothers
Government/Corporate Index (LBG/CI)+ and the Managed Income Indices Blend
(MIIB).++
[GRAPHIC] - See Appendix F.
Past performance is not predictive of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost. Mutual funds are not obligations of or
guaranteed by any bank and are not federally insured.
This report must be preceded or accompanied by the Fund's prospectus dated
January 31, 1999, and, together with financial statements contained therein,
constitutes the Fund's annual report.
* The Fund's performance assumes the reinvestment of all dividends and
distributions. The LBG/CI and the MIIB have been adjusted to reflect
reinvestment of dividends on securities in the indices.
+ The LBG/CI is not adjusted to reflect sales charges, expenses, or other fees
that the Securities and Exchange Commission requires to be reflected in the
Fund's performance. This index is unmanaged.
++ The MIIB is a blend of index total returns that represent the Fund's
allocation in the market sectors. The blend is comprised of 9% Standard and
Poor's 500 Index, 1% Russell 2000 Index, 5% Standard and Poor's Utility Index,
1% Morgan Stanley Capital International Europe Australia Far East Index, 29%
Merrill Lynch 91-Day Treasury Bill Index, 7% Lehman Brothers 1-3 Year
Government Index, 20% Lehman Brothers Mortgage Index, 20% Lehman Brothers
Intermediate Corporate Index, 4% Lehman Brothers Single B Rated Index, and 4%
JP Morgan Global Traded Index Excluding U.S. Each index is reported net of
sales charges, expenses or other fees that the Securities and Exchange
Commission requires to be reflected in a fund's performance. These indices are
unmanaged.
PORTFOLIO OF INVESTMENTS
Federated Managed Income Fund
November 30, 1998
<TABLE>
<CAPTION>
Value in U.S.
Shares Dollars
<S> <C> <C>
*Stocks--17.6%
Large Company Stocks--4.2%
Basic Materials--0.2%
800 Air Products & Chemicals, Inc. $ 30,500
3,885 Archer-Daniels-Midland Co. 71,387
600 Dow Chemical Co. 58,425
700 Du Pont (E.I.) de Nemours & Co. 41,125
600 International Paper Co. 26,063
3,600 LTV Corporation 19,800
600 Martin Marietta Materials 29,100
900 Universal Corp. 31,669
Total 308,069
Capital Goods--0.3%
262 AMP, Inc. 12,674
900 Caterpillar, Inc. 44,494
900 Ford Motor Co. 49,725
900 General Motors Corp. 63,000
1,400 Ingersoll-Rand Co. 65,538
1,400 Johnson Controls, Inc. 81,025
500 Northrop Corp. 40,625
1,100 Parker-Hannifin Corp. 38,225
Total 395,306
Communication Services--0.6%
2,460 AT&T Corp. 153,289
600 Ameritech Corp. 32,475
3,400 Bell Atlantic Corp. 189,125
800 CBS Corp. 23,850
2,400 GTE Corp. 148,800
970 (a)MCI Worldcom, Inc. 57,230
2,000 U.S. West, Inc. 124,500
Total 729,269
Consumer Cyclicals--0.2%
1,200 Block (H&R), Inc. 53,925
800 ITT Industries, Inc. 28,800
3,600 (a)K Mart Corp. 54,900
2,000 Limited, Inc. 57,875
300 Penney (J.C.) Co., Inc. 16,500
500 Sears, Roebuck & Co. 23,719
Total 235,719
Consumer Staples--0.2%
1,100 Kimberly-Clark Corp. 57,887
700 (a)King World Productions, Inc. 19,075
2,100 RJR Nabisco Holdings Corp. 60,506
1,000 Rubbermaid, Inc. 33,062
1,400 UST, Inc. 48,650
Total 219,180
Energy--0.5%
700 Atlantic Richfield Co. 46,550
1,400 (a)BJ Services Co. 19,338
900 Chevron Corp. 75,263
2,800 Exxon Corp. 210,175
1,700 Occidental Petroleum Corp. 34,425
600 Phillips Petroleum Co. 25,200
2,300 Sunoco, Inc. 77,913
400 Texaco, Inc. 23,025
2,300 USX-Marathon Group 65,263
Total 577,152
Financials--1.1%
300 Allmerica Financial Corp. 16,556
2,296 Allstate Corp. 93,562
500 American General Corp. 35,219
450 American International Group, Inc. 42,300
1,700 Bank One Corp. 87,231
2,065 BankAmerica Corp. 134,612
600 BankBoston Corp. 24,975
400 Bear Stearns Cos., Inc. 16,800
1,800 CIGNA Corp. 140,063
900 Chase Manhattan Corp. 57,094
750 Citigroup, Inc. 37,641
2,000 First Union Corp. 121,500
800 Fleet Financial Group, Inc. 33,350
200 General RE Corp. 46,700
900 (a)Golden State Bancorp, Inc. 17,325
600 Hartford Financial Services Group, Inc. 33,113
900 KeyCorp 27,619
500 Loews Corp. 50,000
800 MBIA, Inc. 51,800
1,650 Marsh & McLennan Cos., Inc. 96,009
700 Mellon Bank Corp. 44,056
200 Merrill Lynch & Co., Inc. 15,000
700 Morgan Stanley, Dean Witter, Discover & Co. 48,825
1,200 Old Republic International Corp. 25,575
500 PNC Bank Corp. 25,781
800 Torchmark Corp. 30,400
1 Waddell & Reed Financial, Inc., Class A 12
1 Waddell & Reed Financial, Inc., Class B 22
900 Washington Federal, Inc. 22,838
1,512 Washington Mutual, Inc. 58,590
Total 1,434,568
Health Care--0.2%
2,800 Pharmacia & Upjohn, Inc. 145,775
1,000 United Healthcare Corp. 45,125
Total 190,900
Producer Manufacturer--0.0%
400 Cooper Industries, Inc. 19,650
Technology--0.3%
900 Eastman Kodak Co. 65,306
900 Electronic Data Systems Corp. 35,100
1,500 First Data Corp. 40,031
900 International Business Machines Corp. 148,500
1,000 Raytheon Co., Class A 54,688
2,600 (a)Storage Technology Corp. 91,000
Total 434,625
Transportation--0.1%
600 (a)AMR Corp. 39,562
1,500 CNF Transporation, Inc. 53,531
1,600 Ryder Systems, Inc. 45,700
Total 138,793
Utilities--0.5%
600 Allegheny Energy, Inc. 20,250
900 Baltimore Gas & Electric Co. 27,619
1,100 CMS Energy Corp. 53,625
2,800 Coastal Corp. 97,650
1,050 Columbia Energy Group 59,588
700 Consolidated Edison Co. 35,569
700 Dominion Resources, Inc. 32,331
1,700 Entergy Corp. 49,831
1,700 Houston Industries, Inc. 53,763
2,500 P G & E Corp. 77,344
1,300 Pacificorp 24,375
1,500 Public Service Enterprises Group, Inc. 58,500
1,800 Southern Co. 53,100
1,000 Texas Utilities Co. 44,563
Total 688,108
Total Large Company Stocks 5,371,339
Large Company Growth Stocks--4.3%
Basic Materials--0.1%
500 Bemis Co., Inc. 18,906
600 Hercules, Inc. 19,725
600 Monsanto Co. 27,187
300 PPG Industries, Inc. 18,356
Total 84,174
Capital Goods--0.5%
800 Allied-Signal, Inc. 35,200
500 Avery Dennison Corp. 23,969
600 Crown Cork & Seal Co., Inc. 20,250
800 Dover Corp. 28,500
3,500 General Electric Co. 316,750
500 Hillenbrand Industries, Inc. 28,406
1,000 Miller Herman, Inc. 21,250
500 (a)SCI Systems, Inc. 24,312
500 United Technologies Corp. 53,594
1,010 Waste Management, Inc. 43,304
Total 595,535
Communication Services--0.1%
700 (a)Airtouch Communications, Inc. 40,031
300 (a)Chancellor Media Corp., Class A 11,306
600 Cincinnati Bell, Inc. 18,900
300 Comcast Corp., Class A 14,550
400 (a)Liberty Media Group, Class A 16,125
1,100 (a)MCI Worldcom, Inc. 64,900
400 SBC Communications, Inc. 19,175
Total 184,987
Consumer Cyclicals--0.4%
500 (a)Abercrombie & Fitch Co., Class A 28,000
300 (a)Costco Cos., Inc. 18,825
500 Dayton-Hudson Corp. 22,500
500 Gannett Co., Inc. 32,281
400 Gap (The), Inc. 29,425
700 Harley Davidson, Inc. 29,268
1,600 Home Depot, Inc. 79,600
500 (a)Jones Apparel Group, Inc. 11,594
500 Lowe's Cos., Inc. 21,125
1,200 Masco Corp. 34,650
400 Maytag Corp. 21,650
600 Nordstrom, Inc. 22,350
1,400 Service Corp. International 52,325
500 (a)Staples, Inc. 17,469
1,600 TJX Cos., Inc. 41,000
1,300 Wal-Mart Stores, Inc. 97,906
Total 559,968
Consumer Staples--0.9%
500 Avon Products, Inc. 20,312
1,000 Campbell Soup Co. 57,125
300 Cardinal Health, Inc. 20,587
2,200 Coca-Cola Co. 154,137
2,500 Dial Corp. 65,625
1,200 Disney (Walt) Co. 38,625
600 Dole Food, Inc. 18,975
800 Gillette Co. 36,750
500 Heinz (H.J.) Co. 29,156
500 McDonald's Corp. 35,031
1,600 PepsiCo, Inc. 61,900
3,000 Philip Morris Cos., Inc. 167,812
1,400 Procter & Gamble Co. 122,675
600 Quaker Oats Co. 36,825
1,400 (a)Safeway, Inc. 73,937
600 Sara Lee Corp. 35,025
600 Sysco Corp. 16,162
760 (a)Tricon Global Restaurants, Inc. 34,627
700 UST, Inc. 24,325
1,200 (a)Viacom, Inc., Class A 78,825
100 Wrigley (Wm.), Jr. Co. 8,812
Total 1,137,248
Energy--0.0%
600 Halliburton Co. 17,625
Financials--0.3%
700 American Express Co. 70,044
357 Associates First Capital Corp., Class A 27,801
1,400 Citigroup, Inc. 70,262
1,000 Federal National Mortgage Association 72,750
600 Household International, Inc. 23,475
1,800 MBNA Corp. 40,837
300 MGIC Investment Corp. 13,181
600 Providian Financial Corp. 55,087
700 Sunamerica, Inc. 55,475
400 U.S. Bancorp 14,725
Total 443,637
Health Care--0.9%
1,600 Abbott Laboratories 76,800
800 American Home Products Corp. 42,600
400 (a)Amgen, Inc. 30,100
400 Baxter International, Inc. 25,425
3,100 (a)Beverly Enterprises, Inc. 17,825
1,200 Bristol-Myers Squibb Co. 147,075
600 Guidant Corp. 51,487
1,300 (a)HEALTHSOUTH Corp. 17,469
1,200 Johnson & Johnson 97,500
700 Lilly (Eli) & Co. 62,781
1,400 Merck & Co., Inc. 216,825
900 Pfizer, Inc. 100,462
800 Schering Plough Corp. 85,100
500 United Healthcare Corp. 22,562
800 (a)Universal Health Services, Inc., Class B 42,900
700 Warner-Lambert Co. 52,850
Total 1,089,761
Technology--1.1%
600 (a)America Online, Inc. 52,537
700 (a)Applied Materials, Inc. 27,125
400 (a)Ascend Communications 22,475
800 (a)BMC Software, Inc. 40,850
1,100 (a)Cadence Design Systems, Inc. 30,937
1,950 (a)Cisco Systems, Inc. 146,981
300 (a)Compuware Corp. 18,675
1,000 (a)Dell Computer Corp. 60,812
1,200 (a)EMC Corp. 87,000
500 First Data Corp. 13,344
300 (a)Gateway 2000, Inc. 16,837
2,400 HBO & Co. 59,850
500 Hewlett-Packard Co. 31,375
1,600 Intel Corp. 172,200
200 International Business Machines Corp. 33,000
400 (a)Lexmark Intl. Group, Class A 30,550
1,600 Lucent Technologies, Inc. 137,700
2,200 (a)Microsoft Corp. 268,400
900 (a)Oracle Corp. 30,825
400 (a)PanAmSat Corp. 13,450
800 (a)Seagate Technology, Inc. 23,600
600 (a)Sun Microsystems, Inc. 44,437
600 (a)Tellabs, Inc. 32,438
400 Xerox Corp. 43,000
100 (a)Yahoo, Inc. 19,200
Total 1,457,598
Transportation--0.0%
700 Burlington Northern Santa Fe 23,800
Total Large Company Growth Stocks 5,594,333
Utility Stocks--4.3%
Electric Utilities: Central--0.4%
6,100 CMS Energy Corp. 297,375
7,600 NIPSCO Industries, Inc. 222,775
Total 520,150
Electric Utilities: East--0.8%
4,000 BEC Energy 165,000
4,400 DQE, Inc. 180,675
6,900 Peco Energy Co. 276,863
6,600 Potomac Electric Power Co. 172,013
4,600 Public Service Enterprises Group, Inc. 179,400
Total 973,951
Electric Utilities: South--1.5%
5,100 Dominion Resources, Inc. 235,556
3,500 Duke Energy Corp. 218,969
5,700 Entergy Corp. 167,081
4,200 FPL Group, Inc. 257,250
5,600 Houston Industries, Inc. 177,100
3,900 OGE Energy Corp. 108,956
5,300 SCANA Corp. 172,913
4,000 Southern Co. 118,000
6,100 TECO Energy, Inc. 163,938
6,500 Texas Utilities Co. 289,656
Total 1,909,419
Electric Utilities: West--0.5%
4,100 Edison International 112,750
4,300 Montana Power Co. 217,956
5,000 P G & E Corp. 154,688
5,000 Pacificorp 93,750
4,200 Puget Sound Energy, Inc. 113,925
Total 693,069
Natural Gas Distribution--0.4%
3,100 Consolidated Natural Gas Co. 168,369
5,600 Keyspan Energy Corp. 166,250
10,100 MCN Corp. 191,269
Total 525,888
Oil/Gas Transmission--0.7%
1,950 Columbia Energy Group 110,663
6,600 El Paso Energy Corp. 225,225
5,400 Enron Corp. 283,838
5,500 Sonat, Inc. 163,281
<CAPTION>
Shares or
Principal Value in U.S.
Amount Dollars
<S> <C> <C>
*Stocks--continued
Utility Stocks--continued
Oil/Gas Transmission--continued
5,300 Williams Companies, Inc. $ 152,706
Total 935,713
Total Utility Stocks 5,558,190
*Future Contracts Collateral--4.7%
600,000 United States Treasury Bill, 1/7/1999 597,606
5,400,000 United States Treasury Bill, 12/17/1998 5,391,468
Total Future Contracts Collateral 5,989,074
Total Stocks (identified cost $20,898,300) 22,512,936
Bonds--82.9%
Treasury and Government Securities--34.4%
U.S. Treasury--27.0%
$ 3,243,000 United States Treasury Bond, 6.125%, 11/15/2027 3,659,142
8,000,000 United States Treasury Bond, 7.25%, 5/15/2004 8,973,520
7,505,000 United States Treasury Bond, 8.125%, 5/15/2021 10,206,875
1,420,000 United States Treasury Note, 4.25%, 11/15/2003 1,404,465
2,000,000 United States Treasury Note, 6.50%, 10/15/2006 2,218,180
7,179,000 United States Treasury Note, 6.625%, 5/15/2007 8,061,945
Total 34,524,127
(b)Repurchase Agreements--7.4%
1,767,000 (c)Morgan Stanley Group, Inc., 4.96%, dated 11/9/1998, 1,767,000
due 12/10/1998
7,630,000 Westdeutsche Landesbank Girozentrale, 5.35%, dated 7,630,000
11/30/1998, due 12/1/1998
Total (at amortized cost) 9,397,000
Total Treasury and Government Securities 43,921,127
Mortgage-Backed Securities--21.5%
Government Agency--21.5%
1,340,823 Federal Home Loan Mortgage Corp., 6.00%, 3/1/2013 1,342,915
902,097 Federal Home Loan Mortgage Corp., 6.50%, 3/1/2011 916,476
182,109 Federal Home Loan Mortgage Corp., 6.50%, 5/1/2011 185,012
992,830 Federal Home Loan Mortgage Corp., 6.50%, 7/1/2013 1,008,030
1,313,000 Federal Home Loan Mortgage Corp., 6.50%, 11/1/2028 1,322,847
1,010,000 Federal Home Loan Mortgage Corp., 7.00%, 12/1/2011 1,032,725
176,393 Federal Home Loan Mortgage Corp., 7.00%, 7/1/2024 180,142
<CAPTION>
Principal Value in U.S.
Amount Dollars
<S> <C> <C>
Bonds--continued
Mortgage-Backed Securities--continued
Government Agency--continued
$ 787,899 Federal Home Loan Mortgage Corp., 7.00%, 10/1/2027 $ 804,145
244,885 Federal Home Loan Mortgage Corp., 7.00%, 12/1/2027 249,935
243,047 Federal Home Loan Mortgage Corp., 7.00%, 1/1/2028 248,059
296,623 Federal Home Loan Mortgage Corp., 7.50%, 5/1/2024 304,964
632,481 Federal Home Loan Mortgage Corp., 7.50%, 7/1/2026 650,070
188,352 Federal Home Loan Mortgage Corp., 8.00%, 9/1/2010 194,179
73,086 Federal Home Loan Mortgage Corp., 9.50%, 4/1/2021 78,180
990,000 Federal National Mortgage Association, 6.00%, 4/1/2013 990,931
1,184 Federal National Mortgage Association, 6.00%, 9/1/2028 1,169
1,570,588 Federal National Mortgage Association, 6.00%, 9/1/2028 1,550,469
573,658 Federal National Mortgage Association, 6.50%, 2/1/2028 577,783
756,019 Federal National Mortgage Association, 6.50%, 2/1/2026 761,455
450,595 Federal National Mortgage Association, 6.50%, 3/1/2028 453,695
617,875 Federal National Mortgage Association, 6.50%, 3/1/2028 622,126
994,754 Federal National Mortgage Association, 6.50%, 6/1/2028 1,001,598
974,110 Federal National Mortgage Association, 6.50%, 6/1/2028 980,812
358,260 Federal National Mortgage Association, 7.00%, 7/1/2024 365,984
913,121 Federal National Mortgage Association, 7.50%, 8/1/2028 938,798
314,025 Federal National Mortgage Association, 7.50%, 8/1/2028 322,855
895,640 Federal National Mortgage Association, 7.50%, 9/1/2028 920,826
132,061 Federal National Mortgage Association, 8.00%, 7/1/2023 137,179
836,133 Federal National Mortgage Association, 8.00%, 5/1/2027 865,916
56,859 Federal National Mortgage Association, 8.50%, 2/1/2025 59,525
170,622 Federal National Mortgage Association, 9.00%, 2/1/2025 180,219
1,767,000 (d)Federal National Mortgage Association TBA, 7.00% 1,804,001
705,224 Government National Mortgage Association, 7.00%, 722,417
10/15/2023
570,434 Government National Mortgage Association, 7.00%, 584,341
7/15/2024
999,731 Government National Mortgage Association, 7.00%, 1,023,785
6/15/2028
989,125 Government National Mortgage Association, 7.00%, 1,012,923
10/15/2028
2,015,007 Government National Mortgage Association, 7.50%, 2,081,744
9/15/2028
601,801 Government National Mortgage Association, 8.00%, 627,378
6/15/2022
254,153 Government National Mortgage Association, 8.50%, 269,720
10/15/2024
Total Mortgage-Backed Securities 27,375,328
691,919 (e)The High Yield Bond Portfolio 6,538,631
Investment Grade Bonds--17.7%
Aerospace & Defense--1.1%
250,000 McDonnell Douglas Finance, Medium Term Note, 6.375%, 251,318
7/15/1999
250,000 McDonnell Douglas Finance, Note, 9.40%, 10/15/2001 257,188
850,000 Raytheon Co., 5.70%, 11/01/2003 859,920
Total 1,368,426
Automobile--0.3%
400,000 Dana Corp., Note, 7.00%, 3/15/2028 414,764
Banking--2.0%
100,000 City National Bank, Sub. Note, 6.375%, 1/15/2008 101,683
470,000 (f)Den Danske Bank, Note, 7.40% 6/15/2010 503,633
200,000 National Bank of Canada, Sub. Note, 8.125%, 8/15/2004 217,066
285,000 PNC Funding Corp, Sub. Note, 6.875%, 7/15/2007 306,198
500,000 Republic New York Corp., Sub. Note, 7.75%, 5/15/2009 568,785
350,000 Santander Finance Issuances, Bank Guarantee, 7.875%, 381,931
4/15/2005
470,000 (f)Swedbank, Sub., 7.500% 11/29/2049 465,277
Total 2,544,573
Beverage & Tobacco--0.3%
100,000 Philip Morris Cos., Inc., Deb., 6.00%, 7/15/2001 100,793
100,000 Philip Morris, Deb., 8.625%, 3/1/1999 100,820
200,000 Philip Morris Cos., Inc., Deb., 9.25%, 2/15/2000 208,574
Total 410,187
Cable Television--0.9%
1,000,000 TKR Cable Inc., Deb., 10.50%, 10/30/2007 1,099,170
Chemicals & Plastics--0.3%
350,000 (f)Bayer Corp., Deb., 6.50%, 10/1/2002 361,330
Ecological Services & Equipment--0.2%
250,000 USA Waste Services, Inc., Note, 6.125%, 7/15/2001 253,515
Education--0.3%
300,000 Boston University, 7.625%, 7/15/2097 333,234
Electronics--0.8%
700,000 Anixter Intl., Inc., Company Guarantee, 8.00%, 744,198
9/15/2003
200,000 Harris Corp, Deb., 10.375%, 12/1/2018 211,430
Total 955,628
Finance - Automotive--0.1%
165,000 GMAC, Medium Term Note, 7.50%, 5/25/2000 170,092
Finance - Retail--0.4%
250,000 Household Finance, Deb., 6.45%, 2/1/2009 256,350
300,000 Sears Roebuck Acceptance, Medium Term Note, 6.56%, 305,514
9/05/2000
Total 561,864
Financial Intermediaries--2.1%
1,000,000 Bear Stearns Cos., Inc., Sr. Note, 6.75%, 5/1/2001 1,017,950
250,000 Green Tree Financial Corp., Sr. Sub. Note, 10.25%, 271,650
6/1/2002
725,000 Lehman Brothers Holdings, Inc., Note, 6.90%, 1/29/2001 732,598
175,000 Lehman Brothers Holdings, Inc., Bond, 6.20%, 1/15/2002 173,772
325,000 Lehman Brothers, Inc., Sr. Sub. Note, 7.375%, 1/15/2007 340,298
100,000 Salomon, Inc., Note, 7.20%, 2/1/2004 106,103
Total 2,642,371
Forest Products--0.3%
400,000 Quno Corp., Sr. Note, 9.125%, 5/15/2005 432,432
Healthcare--0.8%
1,000,000 COL HCA Healthcare Corp., Sr. Note, 6.41%, 6/15/2000 990,750
Insurance--2.0%
250,000 AFC Capital Trust I, Bond, 8.21%, 2/3/2027 286,515
350,000 Conseco, Inc., Sr. Note, 10.50%, 12/15/2004 398,146
515,000 Continental Corp., Note, 8.25%, 4/15/1999 519,650
250,000 Delphi Funding L.L.C., 9.31% Capital Securities, 277,423
Series A
165,000 NAC Re Corp., Note, 8.00%, 6/15/1999 167,100
400,000 Provident Cos., Inc., Bond, 7.405%, 3/15/2038 415,464
250,000 Sunamerica Inc., Medium Term Note, 7.34%, 8/30/2005 273,310
250,000 USF&G Corp., Company Guarantee, 8.47%, 1/10/2027 282,750
Total 2,620,358
Metals & Mining--0.6%
725,000 Barrick Gold Corp., Deb., 7.50%, 5/1/2007 786,052
Oil & Gas--0.1%
175,000 Occidental Petroleum Corp., Note, 8.50%, 9/15/2004 178,257
Pharmaceutical--0.6%
700,000 American Home Products Corp., Note, 7.70%, 2/15/2000 719,502
<CAPTION>
Principal
Amount
or Foreign
Currency Value in U.S
Par Amount Dollars
<S> <C> <C>
Bonds--continued
Investment Grade Bonds--continued
Real Estate--0.7%
$ 1,000,000 SUSA Partnership, L.P., Deb., 7.50%, 12/1/2027 $ 893,860
Retailers--0.4%
350,000 Harcourt General, Sr. Deb., 7.20%, 8/1/2027 333,904
200,000 Sears, Roebuck & Co., Medium Term Note, 7.32%, 205,992
4/24/2000
Total 539,896
Services--0.5%
250,000 Loewen Group Int'l., Sr. Note, 8.25%, 4/15/2003 216,250
400,000 Service Corp. Int'l., Note, 6.50%, 3/15/2008 404,160
Total 620,410
Sovereign Government--0.5%
400,000 Republic of South Africa, Global Bond Deb., 9.625%, 401,716
12/15/1999
250,000 Republic of Colombia, Note, 7.25%, 2/15/2003 216,563
Total 618,279
Surface Transportation--0.3%
300,000 Trans Ocean Container Corp., Sr. Sub. Note, 12.25%, 330,525
7/1/2004
Technology Services--1.1%
500,000 Dell Computer Corp., Deb., 7.10%, 4/15/2028 518,935
8,646 Microsoft Corp., Conv. Pfd., Series A, $2.196 841,904
Total 1,360,839
Telecommunications & Cellular--0.6%
800,000 BellSouth Telecommunications, Note, 6.00%, 6/15/2002 823,624
Utilities--0.4%
300,000 Duke Power Co., First Mortgage Note, 7.00%, 9/1/2005 308,421
250,000 Enersis S.A., Note, 7.40%, 12/1/2016 217,713
Total 526,134
Total Investment Grade Bonds 22,556,072
Foreign Bonds--4.2%
Australian Dollar--0.1%
165,000 Federal National Mortgage Association, 6.50%, 7/10/2002 109,404
74,000 Queensland TreasGlobal Notes, Deb., 10.50%, 5/15/2003 56,402
<CAPTION>
Foreign
Currency Value in U.S.
Par Amount Dollars
<S> <C>
Bonds--continued
Foreign Bonds--continued
Australian Dollar--continued
$ 25,000 West Australia Treas. Corp., Local Gov't. Guarantee, $ 17,532
8.00%, 7/15/2003
Total 183,338
Austrian Schilling--0.3%
1,500,000 Republic of Austria, Deb., 7.625%, 10/18/2004 149,791
245,000 Republic of Austria, Unsub., 6.50%, 1/10/2024 177,299
Total 327,090
Belgium Franc--0.1%
514,000 Belgian Govt., Bond, 6.50%, 3/31/2005 16,806
2,000,000 Belgium Kingdom, 7.75%, 10/15/2004 68,806
Total 85,612
Canadian Dollar--0.2%
167,000 Canada Government, Deb., 6.50%, 6/1/2004 117,655
200,000 Ontario Hydro, 9.00%, 6/24/2002 147,819
Total 265,474
Danish Krone--0.2%
898,000 Denmark - Bullet, Bond, 8.00%, 3/15/2006 171,148
600,000 Denmark, 8.00%, 5/15/2003 107,859
Total 279,007
Deutsche Mark--1.1%
195,000 Depfa-Bank, 5.50%, 1/15/2013 124,544
79,000 Deutschland Republic, Deb., 6.25%, 1/4/2024 55,928
40,000 Goldman Sachs Group, LP, Bond, 5.375%, 4/15/2008 23,350
38,000,000 KFW International Finance, 6.00%, 11/29/1999 326,177
100,000 KFW International Finance, Bank Guarantee, 6.75%, 68,396
6/20/2005
700,000 Treuhandanstalt, 7.75%, 10/1/2002 475,469
408,000 Treuhandanstalt, Foreign Gov't. Guarantee, 6.875%, 272,994
6/11/2003
Total 1,346,858
Greek Drachma--0.0%
11,400,000 Hellenic Republic, FRN 10/23/2003 40,660
Hungarian Forint--0.0%
6,700,000 Hungary Gov't., Bond, 14.00%, 12/12/2002 29,531
Irish Pound--0.1%
45,000 Irish Government, Deb., 9.00%, 9/01/2006 86,844
Italian Lira--0.4%
80,000,000 BTPS, Bond, 10.50%, 11/1/2000 53,708
95,000,000 BTPS, Deb., 12.00%, 5/18/1999 58,439
480,000,000 Buoni Poliennali Del Tes, 9.50%, 1/1/2005 369,484
60,000,000 Buoni Poliennali Del Tes, Deb., 12.00%, 1/01/2002 44,257
Total 525,888
Japanese Yen--0.1%
10,000,000 Interamerican Development, Deb., 7.25%, 5/15/2000 89,265
Mexican Peso--0.0%
30,000 Mexican Cetes, 2/11/1999 27,991
Netherlands Guilder--0.3%
40,000 Bank Ned Gemeenten, Bond, 6.375%, 1/4/2006 23,686
30,000 Bank Ned Gemeenten, Bond, 7.75%, 12/20/2004 18,745
60,000 LKB-Global Bd, Bank Guarantee, 6.00%, 1/25/2006 39,082
350,000 Netherlands Government, 5.75%, 1/15/2004 200,478
60,000 Netherlands Government, 6.00%, 1/15/2006 35,356
Total 317,347
New Zealand Dollar--0.0%
41,000 New Zealand Government, 8.00%, 2/15/2001 22,918
Norwegian Krone--0.1%
330,000 NGB, Bond, 9.00%, 1/31/1999 44,104
195,000 Norwegian Government, 5.50%, 5/15/2009 26,460
420,000 Norwegian Government, Bond, 7.00%, 5/31/2001 57,799
315,000 Norwegian Govt., Foreign Gov't. Guarantee, 5.75%, 43,122
11/30/2004
Total 171,485
Polish Zloty--0.0%
195,000 Poland Gov't. Bond, Series 5Y, 12.00%, 2/12/2003 56,158
South African Rand--0.0%
145,000 Republic of South Africa, Bond, 12.50%, 12/21/2006 21,172
Spanish Peseta--0.5%
20,000,000 Spanish Government, 10.00%, 2/28/2005 184,256
270,000 Spanish Government, Bond, 5.15%, 7/30/2009 323,071
15,700,000 Spanish Government, Bond, 8.80%, 4/30/2006 140,957
4,950,000 Spanish Government, Deb., 10.10%, 2/28/2001 39,169
Total 687,453
Swedish Krona--0.2%
900,000 Sweden, 6.00%, 2/9/2005 121,438
200,000 Sweden, Deb., 13.00%, 6/15/2001 29,944
800,000 Swedish Government, Deb., 9.00%, 4/20/2009 135,698
Total 287,080
United Kingdom Pound--0.4%
80,000 British Gas PLC, 8.875%, 7/8/2008 163,059
29,000 U.K. Treasury, Deb., 8.50%, 12/7/2005 58,262
175,000 U.K. Conversion, 9.00%, 3/3/2000 300,026
Total 521,347
Total Foreign Bonds 5,372,518
Total Bonds (identified cost $102,009,435) 105,763,676
Total Investments (identified cost $122,907,735)(g) $128,276,622
</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 $6,103,125 at November 30, 1998.
(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 if the creditworthiness of the issuer is
downgraded.
(d) These securities are subject to dollar roll transactions.
(e) The High Yield Portfolio is a diversified portfolio of below investment
grade bonds and is a portfolio of Federated Core Trust.
(f) Denotes a restricted security which is subjected to restrictions on resale
under Federal Securities laws. At November 30, 1998, these securities amounted
to $1,330,240 which represents 1.0% of net assets.
(g) The cost of investments for federal tax purposes amounts to $122,910,844.
The net unrealized appreciation of investments on a federal tax basis
amounts to $5,365,768 which is comprised of $6,527,716 appreciation and
$1,161,948 depreciation at November 30, 1998.
Note: The categories of investments are shown as a percentage of net assets
($127,613,959) at November 30, 1998.
The following acronyms are used throughout this portfolio:
COL --Collateralized
FRN --Floating Rate Note
LP --Limited Partnership
MBIA --Municipal Bond Investors Assurance
PLC --Public Limited Company
PP --Principal Payment
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 Income Fund
November 30, 1998
<TABLE>
<S> <C> <C>
Assets:
Total investments in securities, at value (identified cost $122,907,735 and tax cost $122,910,844) $128,276,612
Cash 16,094
Income receivable 935,561
Receivable for investments sold 585,157
Receivable for shares sold 463,595
Deferred organizational costs 11,773
Other assets 1,039
Total assets 130,289,831
Liabilities:
Payable for investments purchased $1,534,011
Payable for shares redeemed 64,314
Payable for dollar roll transactions 830,246
Payable for taxes withheld 68
Payable for daily variation margin 166,425
Accrued expenses 80,808
Total liabilities 2,675,872
Net Assets for 11,465,683 shares outstanding $127,613,959
Net Assets Consist of:
Paid in capital $118,618,009
Net unrealized appreciation of investments, translation of assets and liabilities in foreign currency and
futures contracts 6,030,135
Accumulated net realized gain on investments, foreign currency transactions and futures contracts 2,911,754
Undistributed net investment income 54,061
Total Net Assets $127,613,959
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
Institutional Shares:
$81,421,157 / 7,316,417 shares outstanding $11.13
Select Shares:
$46,192,802 / 4,149,266 shares outstanding $11.13
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF OPERATIONS
Federated Managed Income Fund
Year Ended November 30, 1998
<TABLE>
<S> <C> <C> <C>
Investment Income:
Dividends (net of foreign taxes withheld of $30) $ 709,300
Interest (net of dollar roll expense of $126,612) (net of foreign taxes withheld 6,211,253
of $1,039)
Total income 6,920,553
Expenses:
Investment advisory fee $ 880,363
Administrative personnel and services fee 155,001
Custodian fees 18,952
Transfer and dividend disbursing agent fees and expenses 120,411
Directors'/Trustees' fees 2,894
Auditing fees 17,941
Legal fees 4,081
Portfolio accounting fees 58,482
Distribution services fee--Select Shares 309,985
Shareholder services fee--Institutional Shares 190,126
Shareholder services fee--Select Shares 103,328
Share registration costs 36,702
Printing and postage 32,273
Insurance premiums 3,530
Miscellaneous 49,714
Total expenses 1,983,783
Waivers and reimbursements--
Waiver of investment advisory fee $(494,803)
Waiver of distribution services fee--Select Shares (103,328)
Waiver of shareholder services fee--Institutional Shares (152,101)
Total waivers (750,232)
Net expenses 1,233,551
Net investment income 5,687,002
Realized and Unrealized Gain (Loss) on Investments and Foreign Currency:
Net realized gain on investments and foreign currency transactions, and futures 2,934,091
contracts
Net change in unrealized appreciation of investments and translation of assets and 2,267,518
liabilities in foreign currency, and futures contracts
Net realized and unrealized gain on investments and foreign 5,201,609
currency, and futures contracts
Change in net assets resulting from operations $10,888,611
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF CHANGES IN NET ASSETS
Federated Managed Income Fund
<TABLE>
<CAPTION>
Year Ended November 30,
1998 1997
<S> <C> <C>
Increase (Decrease) in Net Assets:
Operations--
Net investment income $ 5,687,002 $ 5,071,578
Net realized gain on investments, foreign currency transactions and futures contracts
($3,585,572 and $1,326,866, net gains respectively, as computed for federal tax
purposes) 2,934,091 1,301,274
Net change in unrealized appreciation of investments, translation of assets and
liabilities in foreign currency and futures contracts 2,267,518 1,480,118
Change in net assets resulting from operations 10,888,611 7,852,970
Distributions to Shareholders--
Distributions from net investment income
Institutional Shares (3,861,664) (3,897,404)
Select Shares (1,805,745) (1,379,778)
Distributions from net realized gains on investments, foreign currency transactions
and futures contracts
Institutional Shares (868,541) (457,124)
Select Shares (458,242) (172,678)
Change in net assets resulting from distributions to shareholders (6,994,19) (5,906,984)
Share Transactions--
Proceeds from sale of shares 50,306,550 42,602,074
Net asset value of shares issued to shareholders in payment of distributions declared 3,766,809 2,996,006
Cost of shares redeemed (38,019,640) (32,459,813)
Change in net assets resulting from share transactions 16,053,719 13,138,267
Change in net assets 19,948,138 15,084,253
Net Assets:
Beginning of period 107,665,821 92,581,568
End of period (including undistributed net investment
income of $54,061 and $26,225, respectively) $127,613,959 $107,665,821
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
Federated Managed Income Fund
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
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 0.55 0.60 0.59 0.62 0.31
Net realized and unrealized gain (loss) on investments, 0.49 0.30 0.12 0.78 (0.25)
foreign currency tranactions and futures contracts
Total from investment operations 1.04 0.90 0.71 1.40 0.06
Less distributions
Distributions from net investment income (0.55) (0.62) (0.62) (0.62) (0.30)
Distributions from net realized gain on investments, (0.13) (0.07) (0.07) -- --
foreign currency transactions, and futures contracts
Total distributions (0.68) (0.69) (0.69) (0.62) (0.30)
Net asset value, end of period $ 11.13 $ 10.77 $ 10.56 $ 10.54 $ 9.76
Total return (b) 10.06% 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 5.09% 5.63% 5.72% 6.26% 6.02%*
Expense waiver/reimbursement (c) 0.62% 0.70% 0.80% 1.06% 1.01%*
Supplemental data
Net assets, end of period (000 omitted) $81,421 $71,058 $67,122 $50,852 $34,692
Portfolio turnover 122% 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 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.
(See Notes which are an integral part of the Financial Statements)
FINANCIAL HIGHLIGHTS--SELECT SHARES
Federated Managed Income Fund
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
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 0.48 0.51 0.53 0.48 0.28
Net realized and unrealized gain (loss) on investments, 0.49 0.31 0.10 0.83 (0.25)
foreign currency transactions and futures contracts
Total from investment operations 0.97 0.82 0.63 1.31 0.03
Less distributions
Distributions from net investment income (0.48) (0.54) (0.54) (0.54) (0.26)
Distributions from net realized gain on investments, (0.13) (0.07) (0.07) -- --
foreign currency transactions and futures contracts
Total distributions (0.61) (0.61) (0.61) (0.54) (0.26)
Net asset value, end of period $ 11.13 $ 10.77 $ 10.56 $ 10.54 $ 9.77
Total return (b) 9.29% 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 4.39% 4.93% 5.02% 5.56% 5.24%*
Expense waiver/reimbursement (c) 0.67% 0.75% 0.85% 1.06% 1.26%*
Supplemental data
Net assets, end of period (000 omitted) $46,193 $36,608 $25,459 $13,927 $ 3,198
Portfolio turnover 122% 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.
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
Federated Managed Income Fund
November 30, 1998
Organization
Managed Series Trust (the "Trust") is registered under the Investment Company
Act of 1940, as amended (the "Act") as an open-end, management investment
company. The Trust consists of four portfolios. The financial statements
included herein are only those of Federated Managed Income Fund (the "Fund"), a
diversified portfolio. The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held. The
investment objective of the Fund is to seek current income.
The Fund offers two classes of shares: Institutional Shares and Select Shares.
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 cities may
be completed at times which vary from the closing of the New York Stock
Exchange. Therefore, foreign securities are valued at the latest closing price
on the exchange on which they are traded prior to the closing of the New York
Stock Exchange. Foreign securities quoted in foreign currencies are translated
into U.S. Dollars at the foreign exchange rate in effect at noon, eastern time,
on the day the value of the foreign security is determined.
Repurchase Agreements
It is the policy of the Fund to require the custodian bank to take possession,
to have legally segregated in the Federal Reserve Book Entry System, or to have
segregated within the custodian bank's vault, all securities held as collateral
under repurchase agreement transactions. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of each
repurchase agreement's collateral to ensure that the value of collateral at
least equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed by
the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the "Trustees").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Fund could receive less than
the repurchase price on the sale of collateral securities.
Investment Income, Expenses and Distributions
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code, as amended
(the "Code"). Dividend income and distributions to shareholders are recorded on
the ex-dividend date.
Income and capital gain distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for mortgage-backed
securities, market discount, foreign currency transactions, non-taxable
dividends, wash sales, and futures. The following reclassifications have been
made to the financial statements.
<TABLE>
<CAPTION>
Increase (Decrease)
Accumulated Net Undistributed Net
Paid-In Capital Realized Gain/Loss Investment Income
<S> <C> <C>
$(7,711) $(532) $8,243
</TABLE>
Net investment income, net realized gains/losses and net assets were not
affected by this reclassification.
Federal Taxes
It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provisions for federal tax are
necessary.
However, federal taxes may be imposed on the Fund upon the disposition of
certain investments in passive foreign investment companies. Withholding taxes
on foreign interest and dividends have been provided for in accordance with the
Fund's understanding of the applicable country's tax rules and rates.
When-Issued and Delayed Delivery Transactions
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
Futures Contracts
The Fund purchases stock index futures contracts to manage cashflows, enhance
yield, and to potentially reduce transaction costs. Upon entering into a stock
index futures contract with a broker, the Fund is required to deposit in a
segregated account a specified amount of cash or U.S. government securities.
Futures contracts are valued daily and unrealized gains or losses are recorded
in a "variation margin" account. Daily, the Fund receives from or pays to the
broker a specified amount of cash based upon changes in the variation margin
account. When a contract is closed, the Fund recognizes a realized gain or loss.
Futures contracts have market risks, including the risk that the change in the
value of the contract may not correlate with changes in the value of the
underlying securities. For the period ended November 30, 1998, the Fund had
realized losses of $814,253. At November 30, 1998, the Fund had outstanding
futures contracts as set forth below:
<TABLE>
<CAPTION>
Contracts to Net Notional Unrealized
Expiration Date Receive Position Amount Appreciation
<S> <C> <C> <C> <C>
December 1998 21 S&P 500 Long $5,445,167 $657,958
</TABLE>
Forward Commitments
The Fund may enter into forward commitments for the delayed delivery of
securities which are based upon financial indices at a fixed price at a future
date. Risks may arise upon entering these contracts from the potential inability
of counterparts to meet the terms of their contracts and from unanticipated
movements in security prices. The Fund had no forward foreign currency exchange
contracts outstanding at November 30, 1998
Foreign Currency Translation
The accounting records of the Fund are maintained in U.S. dollars. All assets
and liabilities denominated in foreign currencies ("FC") are translated into
U.S. dollars based on the rate of exchange of such currencies against U.S.
dollars on the date of valuation. Purchases and sales of securities, income and
expenses are translated at the rate of exchange quoted on the respective date
that such transactions are recorded. Differences between income and expense
amounts recorded and collected or paid are adjusted when reported by the
custodian bank. The Fund does not isolate that portion of the results of
operations resulting from changes in foreign exchange rates on investments from
the fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss from
investments.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
FCs, currency gains or losses realized between the trade and settlement dates on
securities transactions, the difference between the amounts of dividends,
interest, and foreign withholding taxes recorded on the Fund's books, and the
U.S. dollar equivalent of the amounts actually received or paid. Net unrealized
foreign exchange gains and losses arise from changes in the value of assets and
liabilities other than investments in securities at fiscal year end, resulting
from changes in the exchange rate.
Restricted Securities
Restricted securities are securities that may only be resold upon registration
under federal securities laws or in transactions exempt from such registration.
In some cases, the issuer of restricted securities has agreed to register such
securities for resale, at the issuer's expense either upon demand by the Fund or
in connection with another registered offering of the securities. Many
restricted securities may be resold in the secondary market in transactions
exempt from registration. Such restricted securities may be determined to be
liquid under criteria established by the Board of Trustees. The Fund will not
incur any registration costs upon such resales. The Fund's restricted securities
are valued at the price provided by dealers in the secondary market or, if no
market prices are available, at the fair value as determined by the Fund's
pricing committee.
Additional information on each restricted security held at November 30, 1998 is
as follows:
<TABLE>
<CAPTION>
Security Acquisition Date Acquisition Cost
<S> <C> <C>
Bayer Corp. 3/21/1996-4/17/1996 $345,302
Den Danske Bank 1/7/1998 497,199
Swedbank 1/7/1998 497,806
</TABLE>
Dollar Roll Transactions
The Fund enters into dollar roll transactions, with respect to mortgage
securities issued by GNMA, FNMA and FHLMC, in which the Fund sells mortgage
securities to financial institutions and simultaneously agrees to accept
substantially similar (same type, coupon and maturity) securities at a later
date at an agreed upon price. Dollar roll transactions 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.
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>
Year Ended November 30,
1998 1997
Institutional Shares Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Shares sold 2,994,554 $ 32,643,234 2,242,410 $ 23,562,794
Shares issued to shareholders in payment of distributions declared 223,280 2,420,840 185,324 1,941,234
Shares redeemed (2,496,345) (27,198,765) (2,190,519) (22,927,532)
Net change resulting from Institutional Share transactions 721,489 $ 7,865,309 237,215 $ 2,576,496
<CAPTION>
Year Ended November 30,
1998 1997
Select Shares Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Shares sold 1,622,667 $ 17,663,316 1,793,074 $19,039,280
Shares issued to shareholders in payment of distributions declared 124,219 1,345,969 100,754 1,054,772
Shares redeemed (995,122) (10,820,875) (907,794) (9,532,281)
Net change resulting from Select Share transactions 751,764 $ 8,188,410 986,034 $10,561,771
Net change resulting from share transactions 1,473,253 $ 16,053,719 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 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 Investment Management 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 Funds's Select
Shares. The Plan provides that the Fund may incur distribution expenses of up to
0.75% of average net assets, annually, to compensate FSC. The distributor may
voluntarily choose to waive any portion of its fee. The distributor can modify
or terminate this voluntary waiver at any time at its sole discretion.
Shareholder Services Fee
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services ("FSS"), the Fund will pay FSS up to 0.25% of average daily net assets
of the Fund shares for the period. The fee paid to FSS is used to finance
certain services for shareholders and to maintain shareholder accounts. FSS may
voluntarily choose to waive any portion of its fee. FSS can modify or terminate
this voluntary waiver at any time at its sole discretion.
Transfer and Dividend Disbursing Agent Fees and Expenses
FServ, through its subsidiary, Federated Shareholder Services Company ("FSSC")
serves as transfer and dividend disbursing agent for the Fund. The fee paid to
FSSC is based on the size, type, and number of accounts and transactions made by
shareholders.
Portfolio Accounting Fees
FServ maintains the 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 agreed to reimburse 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.
General
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
Investment Transactions
Purchases and sales of investments, excluding short-term securities, for the
period ended November 30, 1998, were as follows:
<TABLE>
<S> <C>
Purchases $150,146,639
Sales $133,694,341
</TABLE>
Concentration of Credit Risk
The Fund invests in securities of non-U.S. issuers. Although the Fund maintains
a diversified investment portfolio, the political or economic developments
within a particular country or region may have an adverse effect on the ability
of domiciled issuers to meet their obligations. Additionally, political or
economic developments may have an effect on the liquidity and volatility of
portfolio securities and currency holdings.
At November 30, 1998, the diversification of industries for non-U.S. issuers was
as follows:
<TABLE>
<CAPTION>
Percent of
Industry Net Assets
<S> <C>
Agency 0.5
Banking 8.0
Financial intermediaries 3.6
Forest Products 0.3
Metals & Mining 0.6
Sovereign 2.7
Sovereign Government 0.9
Supranational 0.1
Utilities 0.5
</TABLE>
Year 2000 (Unaudited)
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.
Subsequent Event
On January 7, 1999, the sub-adviser, Federated Global Research Corp., changed
its name to Federated Global Investment Management Corp.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
MANAGED SERIES TRUST (FEDERATED MANAGED INCOME FUND):
We have audited the accompanying statement of assets and liabilities of
Federated Managed Income Fund (an investment portfolio of Managed Series Trust,
a Massachusetts business trust), including the schedule of portfolio
investments, as of November 30, 1998, the related statement of operations for
the year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and the financial highlights for the periods
presented. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1998, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Federated Managed Income Fund, an investment portfolio of Managed Series Trust,
as of November 30, 1998, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then
ended, and its financial highlights for the periods presented, in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
January 15, 1999
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 and Secretary
Richard B. Fisher
Vice President
Richard J. Thomas
Treasurer
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 risk, including possible
loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by a fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses and other information.
[FEDERATED INVESTORS]
Federated
Managed
Income Fund
Institutional Shares
Select Shares
Annual Report
to Shareholders
November 30, 1998
Federated Securities Corp., Distributor
Federated Investors, Inc.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
1-800-341-7400
www.federatedinvestors.com
Cusip 56166K107
Cusip 56166K206
G00873-01 [RECYCLED PAPER LOGO]
PRESIDENT'S MESSAGE
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders of Federated Managed
Aggressive Growth Fund for the 12-month period from December 1, 1997, through
November 30, 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, 77.5% of
the fund's $150.5 million in net assets was invested across stocks, including
large-cap value, large-cap growth, small-cap value, small-cap growth, and
foreign stocks. The rest of the portfolio consisted of U.S. and foreign bonds.*
Over the fund's fiscal year, the fund's Institutional Shares delivered a total
return of 11.34%** through a share price increase of $0.54, dividends totaling
$0.22 per share, and capital gains totaling $0.69 per share. The fund's Select
Shares produced a total return of 10.58%** through a share price increase of
$0.54, dividends totaling $0.13 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
January 15, 1999
* International 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 Twelve Months
Ended November 30, 1998
The 12 month reporting period ended November 30, 1998, was a generally favorable
one for financial assets, although investors suffered through a period of high
volatility in the second half of the period. Federated Managed Aggressive Growth
Fund moved up with the advance in security prices this year but enjoyed less
volatility than the stock market in the six months ended November 30, 1998. For
the 12 month reporting period ended November 30, 1998, an investor in the fund's
Institutional Shares had a total return of 11.34%,* while an investor in the
fund's Select Shares had a total return of 10.58%.* As usual, performance among
asset classes showed wide variation. The U.S. stock market set new all-time
highs in July, but then embarked on a steep, swift decline through August. After
moving in a trading range through early October, the stock market rebounded
strongly through late November. The highest quality portion of the bond market--
U.S. Treasuries--did very well in this period of turbulence as investors around
the world looked for safety and stability. Other sectors of the bond market did
better than the stock market, but not as well as the U.S. Treasury sector in the
last six months of the reporting period.
Asset Allocation as of November 30, 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 November 30,
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 Assets
<TABLE>
<CAPTION>
Permitted Percentage as of
Asset Category Range November 30, 1998
<S> <C> <C>
Equities(1) 70-90% 79
Large Company Stocks 40-60% 53
Small Company Stocks 10-20% 12
Foreign Stocks 10-20% 14
Bonds(1) 10-30% 21
U.S. Treasury Securities 0-20% 11
Mortgage-Backed
Securities 0-10% 0
Investment Grade
Corporate Bonds 0-10% 0
High Yield
Corporate Bonds 0-10% 5
Foreign Bonds 0-10% 5
</TABLE>
(1) Bonds convertible into equity securities at a price below the closing price
of the underlying equity securities on November 30, 1998, have been included
under the appropriate equity asset category.
The fund had somewhat below normal allocations to stocks and the higher risk
portions of the bond market entering the late summer period of downside
volatility in the financial markets. In October, with stock prices well below
their all-time highs set in July, fund management added to both stock and high
yield bond positions. These additions helped performance as financial markets
rebounded strongly in the late October-November period. By November 30, 1998,
the fund held only a slightly above normal position in bonds.
Structure of the Bond Portfolio
Within a range of four to six years, the fund's bond duration is set at 4.8
years. This duration is set at a slightly 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, U.S. Treasuries were emphasized for much of the last
12 months. Lower than normal yield advantages offered by corporate bonds over
U.S. Treasuries led fund management to underweight both investment grade and
high yield corporate bonds until November 1998. These underweights helped
performance as investors in late summer were willing to pay an above normal
premium for the safety of U.S. Treasuries thus making these bonds a very strong
sector of the fixed income market. Once yield relationships returned to
historically normal levels, management added to the high yield corporate area.
Structure of the Equity Portfolio
In a global equity sell-off, U.S. stocks declined rapidly in late summer. The
size and swiftness of the decline can be at least partially attributed to the
lack of valuation support for stocks versus historical standards. In July,
stocks were richly priced versus their fundamentals. Investors paid much higher
than normal prices for a dollar of earnings or a dollar of plant and equipment.
This willingness on the part of investors to pay high prices reflects optimistic
assessments about future economic conditions, which may well be justified.
However, optimistic investors, sitting on large unrealized gains from a multi-
year bull market, create above normal risk for the market as any change in
sentiment can quickly lead to substantial selling. This is the situation that
prevailed in mid-July prior to the decline.
The Federal Reserve Board's decision to move to an easier monetary policy in the
fall had the desired effect of dramatically restoring confidence. It also led to
a quick rebound in large cap stocks. With stocks back to their mid-July levels,
valuation had re-emerged as a concern. Therefore, the fund had a slightly below
normal stock allocation despite the favorable economic and monetary policy
environment.
The historic tendency of small cap U.S. stocks to underperform in down markets
led fund management to underweight this sector of the equity market in
September. This move enhanced returns as small-cap stocks underperformed large-
cap stocks for the three months ended November 30, 1998.
Federated Managed Aggressive Growth Fund
(Institutional Shares)
Growth of $25,000 Invested in Federated Managed Aggressive Growth Fund
(Institutional Shares)
The graph below illustrates the hypothetical investment of $25,000* in the
Federated Managed Aggressive Growth Fund (Institutional Shares) (the "Fund")
from May 25, 1994 (start of performance) to November 30, 1998, compared to the
Standard and Poor's 500 Index (S&P 500)+ and the Managed Aggressive Growth
Indices Blend (MAGIB).++
[GRAPHIC] - See Appendix C.
Past performance is not predictive of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost. Mutual funds are not obligations of or
guaranteed by any bank and are not federally insured.
This report must be preceded or accompanied by the Fund's prospectus dated
January 31, 1999, and, together with financial statements contained therein,
constitutes the Fund's annual report.
* The Fund's performance assumes the reinvestment of all dividends and
distributions. The S&P 500 and the MAGIB have been adjusted to reflect
reinvestment of dividends on securities in the indices.
+ The S&P 500 is not adjusted to reflect sales charges, expenses, or other
fees that the Securities and Exchange Commission requires to be reflected in
the Fund's performance. This index is unmanaged.
++ The MAGIB is a blend of index total returns that represent the Fund's
allocation in the market sectors. The blend is comprised of 40% Standard and
Poor's 500 Index, 16% Russell 2000 Index, 16% Morgan Stanley Capital
International Europe Australia Far East Index, 8% Merrill Lynch 91-Day
Treasury Bill Index, 1% Lehman Brothers Intermediate Treasury Index, 5% Lehman
Brothers Long Treasury Index, 3% Lehman Brothers Mortgage Index, 3% Lehman
Brothers Intermediate Corporate Index, 4% Lehman Brothers Single B Rated
Index, and 4% JP Morgan Global Traded Index Excluding U.S. Each index is
reported net of sales charges, expenses or other fees that the Securities and
Exchange Commission requires to be reflected in a fund's performance. These
indices are unmanaged.
Federated Managed Aggressive Growth Fund
(Select Shares)
Growth of $10,000 Invested in Federated Managed Aggressive Growth Fund (Select
Shares)
The graph below illustrates the hypothetical investment of $10,000* in the
Federated Managed Aggressive Growth Fund (Select Shares) (the "Fund") from May
25, 1994 (start of performance) to November 30, 1998 compared to the Standard
and Poor's 500 Index (S&P 500)+ and the Managed Aggressive Growth Indices Blend
(MAGIB).++
[GRAPHIC] - See Appendix D.
Past performance is not predictive of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost. Mutual funds are not obligations of or
guaranteed by any bank and are not federally insured.
This report must be preceded or accompanied by the Fund's prospectus dated
January 31, 1999, and, together with financial statements contained therein,
constitutes the Fund's annual report.
* The Fund's performance assumes the reinvestment of all dividends and
distributions. The S&P 500 and the MAGIB have been adjusted to reflect
reinvestment of dividends on securities in the indices.
+ The S&P 500 is not adjusted to reflect sales charges, expenses, or other
fees that the Securities and Exchange Commission requires to be reflected in
the Fund's performance. This index is unmanaged.
++ The MAGIB is a blend of index total returns that represent the Fund's
allocation in the market sectors. The blend is comprised of 40% Standard and
Poor's 500 Index, 16% Russell 2000 Index, 16% Morgan Stanley Capital
International Europe Australia Far East Index, 8% Merrill Lynch 91-Day
Treasury Bill Index, 1% Lehman Brothers Intermediate Treasury Index, 5% Lehman
Brothers Long Treasury Index, 3% Lehman Brothers Mortgage Index, 3% Lehman
Brothers Intermediate Corporate Index, 4% Lehman Brothers Single B Rated
Index, and 4% JP Morgan Global Traded Index Excluding U.S. Each index is
reported net of sales charges, expenses or other fees that the Securities and
Exchange Commission requires to be reflected in a fund's performance. These
indices are unmanaged.
PORTFOLIO OF INVESTMENTS
Federated Managed Aggressive Growth Fund
November 30, 1998
<TABLE>
<CAPTION>
Value in U.S.
Shares Dollars
<S> <C> <C>
*Stocks--77.5%
Large-Cap Value Stocks--19.6%
Basic Materials--1.1%
<S> <C> <C>
4,800 Air Products & Chemicals, Inc. $ 183,000
21,735 Archer-Daniels-Midland Co. 399,381
3,400 Dow Chemical Co. 331,075
1,400 Du Pont (E.I.) de Nemours & Co. 82,250
3,400 International Paper Co. 147,688
18,900 LTV Corporation 103,950
3,500 Martin Marietta Materials 169,750
4,800 Universal Corp. 168,900
Total 1,585,994
Capital Goods--1.1%
1,396 AMP, Inc. 67,532
4,200 Caterpillar, Inc. 207,638
2,400 Cooper Industries, Inc. 117,900
8,100 Ingersoll-Rand Co. 379,181
8,000 Johnson Controls, Inc. 463,000
2,600 Northrop Corp. 211,250
5,900 Parker-Hannifin Corp. 205,025
Total 1,651,526
Communication Services--2.6%
14,377 AT&T Corp. 895,867
3,300 Ameritech Corp. 178,613
17,200 Bell Atlantic Corp. 956,750
13,400 GTE Corp. 830,800
5,778 (a)MCI Worldcom, Inc. 340,902
11,800 U.S. West, Inc. 734,550
Total 3,937,482
Consumer Cyclicals--1.1%
3,200 Block (H&R), Inc. 143,800
5,300 Ford Motor Co. 292,825
4,800 General Motors Corp. 336,000
3,900 ITT Industries, Inc. 140,400
19,500 (a)K Mart Corp. 297,375
8,000 Limited, Inc. 231,500
1,700 Penney (J.C.) Co., Inc. 93,500
3,100 Sears, Roebuck & Co. 147,056
Total 1,682,456
Consumer Staples--0.9%
5,000 CBS Corp. 149,063
6,400 Kimberly-Clark Corp. 336,800
4,100 (a)King World Productions, Inc. 111,725
10,400 RJR Nabisco Holdings Corp. 299,650
5,400 Rubbermaid, Inc. 178,538
7,700 UST, Inc. 267,575
Total 1,343,351
Energy--2.2%
3,800 Atlantic Richfield Co. 252,700
7,800 (a)BJ Services Co. 107,738
5,100 Chevron Corp. 426,488
16,500 Exxon Corp. 1,238,531
10,000 Occidental Petroleum Corp. 202,500
3,200 Phillips Petroleum Co. 134,400
12,600 Sunoco, Inc. 426,825
2,000 Texaco, Inc. 115,125
12,800 USX-Marathon Group, Inc. 363,200
Total 3,267,507
Financials--5.6%
1,400 Allmerica Financial Corp. 77,263
12,400 Allstate Corp. 505,300
2,000 American General Corp. 140,875
2,625 American International Group, Inc. 246,750
10,000 Bank One Corp. 513,125
12,194 BankAmerica Corp. 794,896
3,400 BankBoston Corp. 141,525
2,600 Bear Stearns Cos., Inc. 109,200
9,600 CIGNA Corp. 747,000
5,300 Chase Manhattan Corp. 336,219
11,550 Citigroup, Inc. 579,665
11,800 First Union Corp. 716,850
4,600 Fleet Financial Group, Inc. 191,763
1,400 General RE Corp. 326,900
5,300 (a)Golden State Bancorp, Inc. 102,025
2,800 Hartford Financial Services Group, Inc. 154,525
4,400 KeyCorp 135,025
3,000 Loews Corp. 300,000
4,200 MBIA, Inc. 271,950
8,250 Marsh & McLennan Cos., Inc. 480,047
3,800 Mellon Bank Corp. 239,163
1,000 Merrill Lynch & Co., Inc. 75,000
4,300 Morgan Stanley, Dean Witter, Discover & Co. 299,925
6,900 Old Republic International Corp. 147,056
2,800 PNC Bank Corp. 144,375
4,100 Torchmark Corp. 155,800
5,300 Washington Federal, Inc. 134,488
8,400 Washington Mutual, Inc. 325,500
Total 8,392,210
Health Care--0.7%
14,800 Pharmacia & Upjohn, Inc. 770,525
5,500 United Healthcare Corp. 248,188
Total 1,018,713
Technology--1.5%
5,100 Eastman Kodak Co. 370,069
4,200 Electronic Data Systems Corp. 163,800
8,800 First Data Corp. 234,850
4,500 International Business Machines Corp. 742,500
5,400 Raytheon Co., Class A 295,313
14,000 (a)Storage Technology Corp. 490,000
Total 2,296,532
Transportation--0.4%
2,900 (a)AMR Corp. 191,219
8,100 CNF Transporation, Inc. 289,069
8,700 Ryder Systems, Inc. 248,494
Total 728,782
Utilities--2.4%
3,600 Allegheny Energy, Inc. 121,500
4,400 Baltimore Gas & Electric Co. 135,025
6,100 CMS Energy Corp. 297,375
15,600 Coastal Corp. 544,050
6,150 Columbia Energy Group 349,013
3,000 Consolidated Edison Co. 152,438
3,300 Dominion Resources, Inc. 152,419
8,700 Entergy Corp. 255,019
8,700 Houston Industries, Inc. 275,138
13,200 P G & E Corp. 408,375
7,000 Pacificorp 131,250
8,300 Public Service Enterprises Group, Inc. 323,700
8,400 Southern Co. 247,800
5,900 Texas Utilities Co. 262,919
Total 3,656,021
Total Large-Cap Value Stocks 29,560,574
Small-Cap Value Stocks--4.8%
Basic Materials--0.2%
1,300 Cambrex Corp. 36,400
1,000 ChemFirst, Inc. 18,875
1,000 Florida Rock Industries, Inc. 29,313
1,300 Geon Co. 28,925
1,700 (a)Getchell Gold Corp. 27,838
2,100 Glamis Gold Ltd. 4,594
600 (a)Hauser Chemical Research, Inc. 2,775
3,000 (a)Hecla Mining Co. 12,563
600 Lone Star Industries, Inc. 45,413
800 (a)Material Sciences Corp. 7,200
600 (a)McWhorter Technologies, Inc. 14,175
1,500 Mississippi Chemical Corp. 23,625
1,300 (a)Northwestern Steel & Wire Co. 1,706
1,300 OM Group, Inc. 47,044
400 Penford Corporation 6,025
500 Quaker Chemical Corp. 8,594
800 Quanex Corp. 14,350
600 Republic Group, Inc. 10,313
600 Steel Technologies, Inc. 4,988
1,200 Texas Industries, Inc. 34,725
1,000 (a)WHX Corp. 10,563
Total 390,004
Capital Goods--0.5%
1,500 AMCOL International Corp. 15,938
500 Amcast Industrial Corp. 8,781
500 (a)Astec Industries, Inc. 25,938
1,100 Barnes Group, Inc. 34,031
600 (a)Benchmark Electronics, Inc. 15,000
1,200 Brady (W.H.) Co. 30,900
400 Butler Manufacturing Co. 9,300
700 CTS Corp. 24,675
1,800 (a)Checkpoint System, Inc. 24,188
800 Commercial Metals Corp. 20,250
800 CustomTracks Corp. 7,000
1,000 Daniel Industries, Inc. 10,938
800 (a)Flow International Corp. 8,600
508 General Electric Co. 45,974
1,700 (a)Griffon Corp. 16,363
1,000 Harman International Industries, Inc. 42,688
900 Imco Recycling, Inc. 13,444
1,500 (a)Insituform Technologies, Inc., Class A 19,688
500 Insteel Industries, Inc. 2,813
700 (a)Intermagnetics General Corp. 4,506
1,000 Juno Lighting, Inc. 23,375
1,300 Kaman Corp., Class A 21,125
600 Lawson Products, Inc. 13,800
2,900 (a)Morrison Knudsen Corp. 27,913
1,000 Myers Industries, Inc. 22,500
400 (a)Nashua Corp. 6,675
800 O'Sullivan Corp. 7,800
2,700 (a)Paxar Corp. 28,350
1,100 RTI International Metals 16,569
1,000 Reliance Steel & Aluminum Co. 30,625
600 Robbins & Myers, Inc. 12,000
1,300 Smith (A.O.) Corp. 32,338
700 Spartan Motors, Inc. 4,463
700 Standex International Corp. 16,363
1,500 (a)Superior Services, Inc. 27,563
900 Thomas Industries, Inc. 15,525
400 (a)Three-Five Systems, Inc. 4,000
1,300 Wabash National Corp. 24,375
1,300 Watsco, Inc. 23,319
800 (a)Wolverine Tube, Inc. 17,950
Total 757,643
Consumer Cyclicals--1.0%
500 Angelica Corp. 9,094
1,400 (a)Ann Taylor Stores Corp. 46,113
1,500 Apogee Enterprises, Inc. 18,563
1,500 Arctic Cat, Inc. 15,750
1,200 Authentic Fitness Corp. 19,200
800 Baker (J.), Inc. 3,950
2,100 (a)Bombay Co., Inc. 10,369
1,000 Brown Group, Inc. 17,938
700 (a)Building Materials Holding Corp. 8,619
500 CPI Corp. 10,688
2,900 Casey's General Stores, Inc. 40,238
1,500 Cato Corp., Class A 20,344
500 Chemed Corp. 16,938
1,400 (a)Cone Mills Corp. 6,388
800 (a)Cyrk International, Inc. 7,100
3,000 D. R. Horton, Inc. 56,625
1,300 Delta Woodside Industries, Inc. 6,500
900 (a)Discount Auto Parts, Inc. 22,444
600 Dixie Group, Inc. 4,238
1,300 (a)Dress Barn, Inc. 19,175
1,600 (a)Eagle Hardware & Garden, Inc. 45,100
1,400 (a)Family Golf Centers, Inc. 28,788
2,100 Fedders Corp. 11,681
1,200 (a)Franklin Covey Co. 22,500
600 (a)Galey & Lord, Inc. 6,488
900 (a)Gibson Greetings, Inc. 9,900
300 (a)Global Motorsport Group, Inc. 5,813
700 (a)Gottschalks, Inc. 5,250
1,400 Guilford Mills, Inc. 20,213
500 Haggar Corp. 6,375
1,100 Hancock Fabrics, Inc. 9,281
1,900 (a)Hartmarx Corp. 11,163
700 Huffy Corp. 10,150
1,300 Hughes Supply, Inc. 36,075
600 (a)Insurance Automotive Auctions, Inc. 6,900
2,900 Interface, Inc. 36,250
1,400 Intermet Corp. 19,163
1,600 (a)Jan Bell Marketing, Inc. 7,400
1,000 Jo-Ann Stores, Inc. 15,750
600 Johnston Industries, Inc. 2,363
1,600 (a)Just For Feet, Inc. 36,200
1,400 Justin Industries, Inc. 18,025
300 K Swiss, Inc., Class A 8,550
1,200 Kellwood Co. 32,400
2,900 La-Z Boy Chair Co. 48,575
500 Lillian Vernon Corp. 7,656
1,000 M.D.C. Holdings, Inc. 18,375
1,600 Marcus Corp. 24,200
1,600 (a)Michaels Stores, Inc. 28,800
2,500 Oakwood Homes Corp. 37,344
1,000 OshKosh B'Gosh, Inc., Class A 24,000
500 Oxford Industries, Inc. 14,438
700 (a)Pharmaceutical Marketing Services 7,263
1,500 Phillips Van Heusen Corp. 10,500
1,200 (a)Primark Corp. 30,000
2,900 (a)Prime Hospitality Corp. 25,375
1,200 Russ Berrie & Co., Inc. 27,150
800 Ryland Group, Inc. 21,250
1,000 (a)Scotts Co. 36,188
1,400 Shopko Stores, Inc. 45,150
500 Skyline Corp. 16,250
700 Standard Motor Products, Inc. 15,969
1,600 Standard Pacific Corp. 15,600
900 Standard Products Co. 16,763
2,600 Stride Rite Corp. 23,075
400 (a)Swiss Army Brands, Inc. 4,150
1,300 (a)TBC Corp. 9,100
900 TJ International, Inc. 21,263
800 Thomas Nelson, Inc. 10,550
700 Thor Industries, Inc. 16,713
2,000 (a)Toll Brothers, Inc. 48,625
700 Toro Co. 18,550
700 (a)U.S. Home Corp. 22,313
1,100 Universal Forest Products, Inc. 21,863
500 Walbro Corp. 3,750
1,300 Winnebago Industries, Inc. 15,600
1,000 Wynns International, Inc. 22,188
2,000 (a)Zale Corp. 57,250
Total 1,537,888
Consumer Staples--0.6%
1,200 ABM Industries, Inc. 39,975
1,700 Applebee's International, Inc. 34,956
700 (a)Au Bon Pain Co., Inc., Class A 4,375
1,200 Bindley Western Industries, Inc. 46,350
2,000 Bowne & Co., Inc. 33,500
1,000 (a)Canandaigua Wine Co., Inc., Class A 49,750
600 (a)Carmike Cinemas, Inc., Class A 12,000
1,100 (a)Cheesecake Factory, Inc. 28,600
3,600 Chiquita Brands International 40,500
1,000 Dames & Moore, Inc. 12,813
2,300 Earthgrains Co. 73,888
2,100 Fleming Cos., Inc. 21,131
1,700 Harland (John H.) Co. 25,925
500 (a)IHOP Corp. 19,875
2,600 (a)Interim Services, Inc. 53,950
500 (a)J & J Snack Foods Corp. 10,438
1,700 (a)Landrys Seafood Restaurants, Inc. 13,813
600 Nash Finch Co. 8,738
400 National Presto Industries, Inc. 16,525
1,500 Norrell Corp. 23,906
1,800 (a)Ralcorp Holdings, Inc. 31,500
1,800 Ruby Tuesday, Inc. 33,525
2,300 (a)Ryan's Family Steak Houses, Inc. 26,163
900 Schweitzer-Mauduit International, Inc. 16,425
2,000 (a)Smithfield Foods, Inc. 52,875
1,000 (a)Sonic Corp. 19,625
1,300 TCBY Enterprises, Inc. 10,075
800 (a)Taco Cabana, Inc., Class A 5,550
800 (a)Volt Information Science, Inc. 18,650
2,100 (a)World Color Press 62,475
Total 847,871
Energy--0.2%
1,700 (a)Barrett Resources 41,544
1,800 Devon Energy Corp. 59,288
1,000 (a)HS Resources, Inc. 8,688
1,300 (a)Oceaneering International, Inc. 16,169
1,200 (a)Offshore Logistics, Inc. 14,925
900 (a)Plains Resources, Inc. 15,975
1,100 (a)Pool Energy Services Co. 12,375
2,700 (a)Pride International, Inc. 20,419
1,200 (a)Seitel, Inc. 16,050
1,800 Snyder Oil Corp. 23,175
600 St. Mary Land & Exploration Co. 11,400
Total 240,008
Financials--0.9%
2,400 (a)Amresco, Inc. 17,550
1,000 Anchor Bancorp Wisconsin, Inc. 20,125
3,000 Astoria Financial Corp. 134,905
800 Banknorth Group, Inc. 26,700
1,700 Capital Re Corp. 33,575
1,000 Carolina First Corporation 24,938
1,400 Cash America International, Inc. 23,625
3,200 Commercial Federal Corp. 73,400
1,200 Cullen Frost Bankers, Inc. 64,350
1,122 (a)Delphi Financial Group, Inc., Class A 52,383
1,500 Downey Financial Corp. 39,000
2,000 Enhance Financial Services Group, Inc. 58,750
600 Executive Risk, Inc. 32,400
1,600 First Midwest Bancorp, Inc. 62,300
1,900 Fremont General Corp. 95,713
2,000 Frontier Insurance Group, Inc. 28,375
500 JSB Financial, Inc. 26,375
2,800 Keystone Financial, Inc. 90,650
900 Life Re Corp. 84,769
1,200 MAF Bancorp, Inc. 30,750
1,000 NAC Re Corp. 47,750
1,500 Orion Capital Corp. 54,188
1,600 Selective Insurance Group, Inc. 30,200
1,100 (a)Silicon Valley Bancshares 27,500
2,200 St. Paul Bancorp, Inc. 46,475
1,800 Susquehanna Bankshares, Inc. 40,050
700 Trenwick Group, Inc. 22,225
900 Zenith National Insurance Corp. 21,938
Total 1,310,959
Health Care--0.4%
1,100 ADAC Laboratories 28,600
1,400 Alpharma, Inc., Class A 50,400
1,800 (a)American Oncology Resources, Inc. 20,138
700 (a)Circon Corp. 10,194
600 (a)Compdent Corp. 6,263
800 (a)Datascope Corp. 17,700
1,900 (a)Genesis Health Ventures, Inc. 18,169
700 (a)Hologic, Inc. 9,144
2,100 (a)IDEXX Laboratories, Inc. 54,600
2,900 Integrated Health Services, Inc. 32,444
3,900 (a)Mariner Post-Acute Network, Inc. 16,819
1,100 (a)NCS HealthCare, Inc., Class A 22,275
4,300 (a)Phycor, Inc. 26,338
1,000 (a)Protein Design Laboratories, Inc. 22,000
1,700 (a)Regeneron Pharmaceuticals, Inc. 14,025
1,700 (a)Roberts Pharmaceutical Corp. 41,650
800 (a)Rural / Metro Corp. 8,200
1,500 (a)Sierra Health Services, Inc. 34,313
1,700 (a)Summit Technology, Inc. 6,588
1,200 (a)Sunrise Medical, Inc. 15,300
600 (a)Syncor International Corp. 14,400
1,800 (a)Universal Health Services, Inc., Class B 96,525
1,400 (a)Vertex Pharmaceuticals, Inc. 33,163
700 Vital Signs, Inc. 11,900
Total 611,148
Technology--0.3%
700 Analogic Corp. 24,850
2,400 (a)Anixter International, Inc. 39,600
1,100 (a)BancTec, Inc. 14,506
1,600 (a)Cable Design Technologies, Class A 29,500
1,300 (a)Coherent, Inc. 16,413
1,500 Dallas Semiconductor Corp. 56,625
800 (a)Digi International, Inc. 10,400
1,200 (a)Exabyte Corp. 8,925
1,200 Gerber Scientific, Inc. 30,375
700 (a)Integrated Circuit System, Inc. 10,063
800 (a)Intervoice, Inc. 20,500
2,900 (a)Komag, Inc. 21,025
900 (a)Marshall Industries 23,400
1,900 Methode Electronics, Inc., Class A 25,888
1,200 (a)Network Equipment Technologies, Inc. 13,350
2,100 (a)PictureTel Corp. 14,963
900 (a)Standard Microsystems Corp. 6,750
900 (a)Symmetricom, Inc. 5,569
1,700 (a)Unitrode Corp. 28,794
500 (a)Wall Data, Inc. 8,625
1,300 (a)Xircom, Inc. 39,244
Total 449,365
Transportation--0.2%
1,900 Air Express International Corp. 42,275
1,700 (a)American Freightways Corp. 15,300
1,100 (a)Arkansas Best Corp. 6,463
2,000 (a)Fritz Companies, Inc. 19,375
900 Frozen Food Express Industries, Inc. 7,088
1,200 (a)Kirby Corp. 23,850
600 (a)Landstar System, Inc. 24,600
700 (a)M.S. Carriers, Inc. 17,150
1,500 (a)Mesa Air Group, Inc. 12,000
1,100 Pittston Burlington Group 9,556
500 (a)Railtex, Inc. 6,063
3,200 Rollins Truck Leasing Corp. 38,400
1,300 SkyWest, Inc. 35,181
1,400 USFreightways Corp. 37,625
2,600 Werner Enterprises, Inc. 42,738
1,400 (a)Yellow Corp. 22,575
Total 360,239
Utilities--0.5%
500 American States Water Co. 14,125
400 Aquarion Co. 15,025
1,600 Atmos Energy Corp. 49,000
400 (a)Bangor Hydro Electric Co. 4,850
600 Cascade Natural Gas Corp. 10,988
900 Central Hudson Gas & Electric Service 36,394
600 Central VT Public Service Corp. 6,263
700 Cilcorp, Inc. 42,350
1,200 Commonwealth Energy System 46,200
600 Connecticut Energy Corp. 16,763
500 Consumers Water Co. 15,625
1,100 Eastern Utilities Association 27,156
1,600 Energen Corp. 28,800
300 Green Mountain Power Corp. 3,638
1,000 New Jersey Resources Corp. 38,938
700 Orange & Rockland Utilities, Inc. 39,375
500 Pennsylvania Enterprises 12,344
1,500 Philadelphia Suburban Corp. 37,969
1,700 Piedmont Natural Gas, Inc. 59,500
1,100 Public Service Co. North Carolina, Inc. 26,744
1,700 Sierra Pacific Resources 61,200
1,600 Southwest Gas Corp. 38,000
1,400 Southwestern Energy Co. 10,500
700 TNP Enterprises, Inc. 26,600
800 United Illuminating Co. 40,150
2,000 United Water Resources, Inc. 41,500
2,000 WICOR, Inc. 43,750
Total 793,747
Total Small-Cap Value Stocks 7,298,872
Large-Cap Growth Stocks--21.8%
Basic Materials--0.4%
3,000 Bemis Co., Inc. 113,438
2,100 Du Pont (E.I.) de Nemours & Co. 123,375
3,200 Hercules, Inc. 105,200
3,400 Monsanto Co. 154,063
1,900 PPG Industries, Inc. 116,256
Total 612,332
Capital Goods--2.2%
4,600 Allied-Signal, Inc. 202,400
3,000 Avery Dennison Corp. 143,813
3,200 Crown Cork & Seal Co., Inc. 108,000
5,100 Dover Corp. 181,688
19,300 General Electric Co. 1,746,659
3,300 Hillenbrand Industries, Inc. 187,481
5,500 Miller Herman, Inc. 116,875
2,100 (a)SCI Systems, Inc. 102,113
3,300 United Technologies Corp. 353,719
4,812 Waste Management, Inc. 206,315
Total 3,349,063
Communication Services--0.5%
4,000 (a)Airtouch Communications, Inc. 228,750
3,500 Cincinnati Bell, Inc. 110,250
5,900 (a)MCI Worldcom, Inc. 348,100
2,100 SBC Communications, Inc. 100,669
Total 787,769
Consumer Cyclicals--2.3%
2,600 (a)Abercrombie & Fitch Co., Class A 145,600
3,400 Block (H&R), Inc. 152,788
1,800 (a)Costco Cos., Inc. 112,950
2,900 Dayton-Hudson Corp. 130,500
2,900 Gannett Co., Inc. 187,231
2,100 Gap (The), Inc. 154,481
3,500 Harley Davidson, Inc. 146,344
9,300 Home Depot, Inc. 462,675
2,700 (a)Jones Apparel Group, Inc. 62,606
2,600 Lowe's Cos., Inc. 109,850
7,400 Masco Corp. 213,675
2,100 Maytag Corp. 113,663
3,500 Nordstrom, Inc. 130,375
8,900 Service Corp. International 332,638
2,900 (a)Staples, Inc. 101,319
10,200 TJX Cos., Inc. 261,375
8,600 Wal-Mart Stores, Inc. 647,688
Total 3,465,758
Consumer Staples--4.6%
3,100 Avon Products, Inc. 125,938
6,400 Campbell Soup Co. 365,600
1,500 Cardinal Health, Inc. 102,938
13,000 Coca-Cola Co. 910,813
16,200 Dial Corp. 425,250
7,500 Disney (Walt) Co. 241,406
3,500 Dole Food, Inc. 110,688
4,200 Gillette Co. 192,938
3,000 Heinz (H.J.) Co. 174,938
2,700 McDonald's Corp. 189,169
9,200 PepsiCo, Inc. 355,925
18,000 Philip Morris Cos., Inc. 1,006,875
8,300 Procter & Gamble Co. 727,288
3,300 Quaker Oats Co. 202,538
8,700 (a)Safeway, Inc. 459,469
3,700 Sara Lee Corp. 215,988
3,500 Sysco Corp. 94,281
5,100 (a)Tricon Global Restaurants, Inc. 232,369
4,100 UST, Inc. 142,475
7,800 (a)Viacom, Inc., Class A 512,363
1,500 Wrigley (Wm.), Jr. Co. 132,188
Total 6,921,437
Energy--0.1%
3,300 Halliburton Co. 96,938
Financials--1.6%
4,400 American Express Co. 440,275
2,243 Associates First Capital Corp., Class A 174,674
5,700 Federal National Mortgage Association 414,675
3,600 Household International, Inc. 140,850
11,000 MBNA Corp. 249,563
2,000 MGIC Investment Corp. 87,875
3,500 Providian Financial Corp. 321,344
4,300 Sunamerica, Inc. 340,775
2,100 U.S. Bancorp 77,306
Total 2,447,337
Health Care--4.0%
8,900 Abbott Laboratories 427,200
5,000 American Home Products Corp. 266,250
2,300 (a)Amgen, Inc. 173,075
1,800 Baxter International, Inc. 114,413
19,500 (a)Beverly Enterprises, Inc. 112,125
6,300 Bristol-Myers Squibb Co. 772,144
3,300 Guidant Corp. 283,181
7,700 (a)HEALTHSOUTH Corp. 103,469
7,200 Johnson & Johnson 585,000
4,000 Lilly (Eli) & Co. 358,750
8,000 Merck & Co., Inc. 1,239,000
4,300 Pfizer, Inc. 479,988
4,300 Schering Plough Corp. 457,413
3,100 United Healthcare Corp. 139,888
4,500 (a)Universal Health Services, Inc., Class B 241,313
4,500 Warner-Lambert Co. 339,750
Total 6,092,959
Services--0.2%
1,600 (a)Chancellor Media Corp., Class A 60,300
1,900 Comcast Corp., Class A 92,150
2,500 (a)Liberty Media Group, Class A 100,781
Total 253,231
Technology--5.8%
3,400 (a)America Online, Inc. 297,713
4,300 (a)Applied Materials, Inc. 166,625
2,000 (a)Ascend Communications 112,375
5,100 (a)BMC Software, Inc. 260,419
6,400 (a)Cadence Design Systems, Inc. 180,000
12,625 (a)Cisco Systems, Inc. 951,609
1,700 (a)Compuware Corp. 105,825
6,200 (a)Dell Computer Corp. 377,038
8,400 (a)EMC Corp. Mass 609,000
3,400 First Data Corp. 90,738
1,700 (a)Gateway 2000, Inc. 95,413
13,800 HBO & Co. 344,138
3,200 Hewlett-Packard Co. 200,800
9,100 Intel Corp. 979,388
1,100 International Business Machines Corp. 181,500
2,400 (a)Lexmark Intl. Group, Class A 183,300
8,100 Lucent Technologies, Inc. 697,106
13,000 (a)Microsoft Corp. 1,586,000
5,300 (a)Oracle Corp. 181,525
2,300 (a)PanAmSat Corp. 77,338
4,600 (a)Seagate Technology, Inc. 135,700
4,500 (a)Sun Microsystems, Inc. 333,281
3,600 (a)Tellabs, Inc. 194,625
2,200 Xerox Corp. 236,500
600 (a)Yahoo, Inc. 115,200
Total 8,693,156
Transportation--0.1%
3,700 Burlington Northern Santa Fe 125,800
Total Large-Cap Growth Stocks 32,645,780
Small-Cap Growth Stocks--5.2%
Basic Materials--0.3%
1,900 (a)Buckeye Technologies Inc. 37,050
1,800 Dekalb Genetics Corp., Class B 179,550
1,900 Delta & Pine Land Co. 71,963
1,200 Lilly Industries, Inc., Class A 22,425
1,300 MacDermid, Inc. 47,938
1,400 (a)Shorewood Packaging Corp. 20,738
1,100 (a)Stillwater Mining Co. 40,219
Total 419,883
Capital Goods--0.7%
1,400 AAR Corp. 35,350
600 (a)Alliant Techsystems, Inc. 45,713
1,900 Applied Power, Inc., Class A 67,688
1,800 Aptargroup, Inc. 50,288
1,200 (a)BE Aerospace, Inc. 28,500
1,900 Baldor Electric Co. 37,881
1,900 Blount International, Inc., Class A 43,938
500 (a)C-COR Electronics, Inc. 7,250
1,200 CLARCOR, Inc. 22,575
700 Castle (A.M.) & Co. 13,475
1,100 (a)Dionex Corp. 34,100
800 (a)Gardner Denver Machy, Inc. 12,700
1,000 Graco, Inc. 27,750
1,500 (a)Halter Marine Group, Inc. 10,406
500 Harmon Industries, Inc. 12,500
2,200 JLG Industries, Inc. 36,163
800 Kuhlman Corp. 22,300
900 Libbey, Inc. 27,731
700 Lindsay Manufacturing Co. 10,500
900 Manitowoc, Inc. 35,775
1,800 (a)Mueller Industries, Inc. 41,063
700 New Engineers Business Service, Inc. 22,400
900 (a)Oak Industries, Inc. 27,788
1,900 (a)Orbital Sciences Corp. 72,675
700 (a)Plexus Corp. 21,000
1,100 Regal Beloit Corp. 27,500
600 (a)SPS Technologies, Inc. 34,350
2,100 (a)Sanmina Corp. 104,606
800 (a)Service Experts, Inc. 23,700
800 Technitrol, Inc. 24,150
1,800 Tredegar Industries, Inc. 42,075
1,300 (a)Valence Technology, Inc. 12,350
1,600 (a)Zebra Technologies Co., Class A 53,700
Total 1,089,940
Consumer Cyclicals--1.0%
1,100 (a)ADVO, Inc. 28,463
3,700 (a)Acxiom Corp. 87,413
700 (a)Ashworth Inc. 4,047
1,900 Breed Technologies, Inc. 12,825
900 (a)Catalina Marketing Corp. 52,425
1,500 Central Parking Corp. 44,063
1,700 (a)Cerner Corp. 44,625
2,400 (a)Champion Enterprises, Inc. 53,550
3,500 (a)DeVRY, Inc. 92,313
1,500 Ethan Allen Interiors, Inc. 59,250
1,200 (a)Footstar, Inc. 29,250
1,000 G & K Services, Inc., Class A 50,500
3,600 (a)Gentex Corp. 66,150
1,700 (a)Goody's Family Clothing, Inc. 19,125
1,400 (a)HA-LO Industries, Inc. 44,713
2,000 (a)Linens `N Things, Inc. 61,250
1,700 (a)Mens Wearhouse, Inc. 43,031
1,900 (a)Midway Games, Inc. 19,356
2,600 (a)Mohawk Industries, Inc. 97,013
1,100 (a)NFO Worldwide, Inc. 13,888
1,900 (a)Nautica Enterprise, Inc. 37,406
1,100 (a)O'Reilly Automotive, Inc. 49,913
1,100 (a)Pacific Sunwear of California 16,294
5,000 Pier 1 Imports, Inc. 53,750
700 Pillowtex Corp. 23,625
1,300 Polaris Industries Partners, L.P. 45,338
1,100 (a)Prepaid Legal Services, Inc. 28,600
1,200 Regis Corp. Minnesota 40,200
800 St. John Knits, Inc. 16,000
600 (a)Timberland Co., Class A 24,563
2,300 True North Communications, Inc. 64,688
800 WD 40 Co. 24,800
2,800 (a)Williams-Sonoma, Inc. 82,775
2,200 Wolverine World Wide, Inc. 29,975
Total 1,461,177
Consumer Staples--0.4%
1,000 (a)CDI Corp. 26,813
900 (a)CEC Entertainment, Inc. 26,663
2,400 CKE Restaurants, Inc. 58,650
400 Coca-Cola Bottling Co. 23,225
700 (a)Consolidated Graphics, Inc. 40,294
1,100 (a)Consolidated Products, Inc. 22,756
2,000 (a)Foodmaker, Inc. 38,750
800 Merrill Corp. 13,600
3,400 (a)NBTY, Inc. 20,825
900 Natures Sunshine Products, Inc. 14,063
1,600 Owens & Minor, Inc. 27,400
1,700 (a)Patterson Dental Co. 70,763
2,400 Richfood Holdings, Inc. 44,550
1,500 (a)Triarc Companies, Inc., Class A 24,188
700 (a)USA Detergents, Inc. 6,475
2,000 (a)Valassis Communication, Inc. 85,750
1,300 (a)Whole Foods Market, Inc. 60,450
Total 605,215
Energy--0.0%
2,300 (a)Tuboscope Inc. 19,119
Financials--0.9%
2,200 American Bankers Insurance Group, Inc. 99,825
3,100 (a)Americredit Corp. 42,819
1,100 CMAC Investment Corp. 53,075
1,300 Centura Banks, Inc. 88,400
1,100 Commerce Bancorp, Inc. 52,525
1,800 Eaton Vance Corp. 43,763
1,300 Fidelity National Financial, Inc. 42,656
2,900 First American Financial Corp. 88,813
1,500 Firstbank Corp. 41,063
3,600 Firstmerit Corp. 94,500
900 Gallagher (Arthur J.) & Co. 41,738
600 Hilb Rogal & Hamilton Co. 11,363
2,200 Hubco, Inc. 59,400
2,800 Legg Mason, Inc. 83,475
2,000 Mutual Risk Management Ltd. 73,375
900 Premier Bankshares, Inc. 21,038
1,150 Queens County Bancorp, Inc. 34,500
2,400 Raymond James Financial, Inc. 59,400
900 SEI Corp. 83,025
1,380 Trustco Bank Corp. 38,640
1,000 U.S. Trust Corp. 67,625
2,100 UST Corp. 51,975
2,200 United Bankshares, Inc. 62,838
Total 1,335,831
Health Care--0.7%
1,200 (a)Access Health, Inc. 43,050
1,500 Ballard Medical Products 32,625
1,100 (a)Barr Laboratories, Inc. 46,475
2,400 (a)Bio-Technology General Corp. 16,200
1,400 (a)Cephalon, Inc. 10,413
800 (a)Cooper Companies, Inc. 17,000
1,200 (a)Cor Therapeutics, Inc. 14,100
3,000 (a)Coventry Health Care Inc. 22,313
600 (a)Curative Technologies, Inc. 17,250
1,200 (a)Enzo Biochem, Inc. 15,825
1,700 (a)Express Scripts, Inc., Class A 93,500
1,200 (a)Immune Response Corp. 15,600
1,300 (a)Incyte Pharmaceuticals, Inc. 40,625
1,500 Invacare Corp. 35,906
1,400 Jones Pharma, Inc. 50,400
1,900 (a)Liposome Co., Inc. 17,219
1,300 (a)Medimmune, Inc. 86,938
1,300 Mentor Corp. 24,050
1,100 (a)Noven Pharmaceuticals, Inc. 5,844
2,400 (a)Orthodontic Centers of America, Inc. 45,900
1,200 (a)Parexel International Corp. 31,275
800 (a)Pediatrix Medical Group 42,950
1,200 (a)Pharmaceutical Product Development, Inc. 34,350
2,000 (a)Renal Care Group, Inc. 53,750
1,600 (a)Respironics, Inc. 30,200
2,700 (a)Safeskin Corp. 51,300
1,600 (a)Sequus Pharmaceuticals, Inc. 31,600
1,300 (a)Sola International, Inc. 20,638
1,100 (a)Theratech, Inc. 15,263
1,200 (a)U.S. Bioscience, Inc. 9,075
800 (a)VISX, Inc. 58,300
Total 1,029,934
Services--0.0%
800 (a)Metro Networks, Inc. 30,400
1,600 (a)Westwood One, Inc. 42,400
Total 72,800
Technology--1.1%
2,100 (a)American Management System, Inc 61,950
1,100 Analysts International Corp. 18,563
2,500 (a)Aspect Telecommunications Corp. 47,344
1,300 (a)Avid Technology, Inc. 31,038
1,700 (a)Billing Concepts Corp. 21,675
1,300 (a)Bisys Group, Inc. 62,563
1,400 (a)Boole & Babbage, Inc. 44,275
2,600 (a)Brightpoint, Inc. 39,000
1,900 (a)Burr Brown Corp. 44,888
1,900 (a)C-Cube Microsystems, Inc. 49,756
2,700 (a)Ciber, Inc. 60,919
2,500 (a)CommScope, Inc. 37,969
1,000 Computer Task Group, Inc. 27,000
800 (a)Dialogic Corp. 18,000
1,100 (a)Envoy Corporation 43,863
1,100 (a)Etec Systems, Inc. 36,163
700 Fair Isaac & Co., Inc. 28,175
1,900 (a)General Semiconductor, Inc. 19,238
1,300 (a)HNC Software 42,900
2,100 (a)Harbinger Corp. 18,113
1,000 Henry Jack & Associates, Inc. 50,250
1,500 (a)Hyperion solutions, Corp. 48,563
700 Innovex, Inc. 11,200
1,400 Inter-Tel, Inc. 33,600
400 (a)Kronos, Inc. 17,300
800 (a)MICROS Systems Corp. 22,800
2,000 (a)Macromedia, Inc. 55,875
1,200 (a)Medquist, Inc. 36,450
900 (a)Mercury Interactive Corp. 41,288
1,600 National Computer Systems, Inc. 52,600
1,700 National Data Corp. 63,538
1,700 (a)National Instruments Corp. 49,300
1,700 (a)Novellus Systems, Inc. 84,363
1,200 (a)Photronic Labs, Inc. 24,000
1,300 (a)Platinum Software Corp. 13,813
900 (a)Progress Software Corp. 22,838
2,000 (a)Technology Solutions Corp. 18,625
800 Telxon Corp. 21,600
3,700 (a)Vitesse Semiconductor Corp. 131,813
2,600 (a)Whitmann-Hart, Inc. 57,363
600 (a)Whittaker Corp. 8,250
2,200 (a)Xylan Corp. 39,875
Total 1,658,696
Transportation--0.1%
3,400 Comair Holdings, Inc. 104,125
1,200 Expeditors International Washington, Inc. 46,200
1,500 (a)Heartland Express, Inc. 25,688
Total 176,013
Total Small-Cap Growth Stocks 7,868,608
Foreign Equity--13.7%
Australia--0.2%
40,200 Austrim Ltd 73,506
55,000 Woolworth's Ltd. 193,532
Total 267,038
Finland--0.2%
23,700 Merita A (unitas A) 137,831
3,050 Sampo Insurance Co. Ltd., Class A 104,653
Total 242,484
France--2.4%
2,628 AXA 339,517
1,100 Alcatel Alsthom 145,398
800 Atos SA 171,553
860 Bouygues 160,233
1,000 Cap Gemini Sogeti 146,242
2,000 Credit Commerical De France 172,045
2,400 Eiffage 196,161
1,470 Elf Aquitaine SA 183,194
1,000 Groupe Danon BSN SA 291,781
480 Guyenne Et Gascogne 208,395
750 Peugeot Sa 118,646
2,450 Rexel SA 219,627
4,670 Scor SA 298,380
1,080 Simco 95,676
2,600 Societe BIC SA 162,237
7,000 Thomson-csf 263,306
2,061 Total SA-B 255,397
1,600 Valeo 7,453
800 Vivendi 180,834
Total 3,616,075
Germany, Federal Republic Of--0.6%
5,500 Bhf-bank 215,597
3,830 Hoechst AG 164,357
3,890 Mannesmann AG 420,770
400 Systeme, Anwendungen, Produkte in der Datevnerarbeitung 181,084
Total 981,808
Greece--0.0%
1,120 (a)(b)Panafon SA - 144A 20,062
Hong Kong--0.3%
62,000 (a)China Telecommunications 123,712
58,000 Henderson Land Development Co. Ltd. 296,629
Total 420,341
Italy--1.8%
7,900 Assicurazioni Generali 294,883
52,000 Autogrill SPA 403,679
62,000 Banca Intesa SPA 346,034
60,000 Banca Nazionale del Lavoro 168,596
2,000 (a)Banca Popolare di Verona 185,742
30,300 Eni 187,870
70,000 Istituto Nazionale delle Assicurazioni 184,611
25,000 Mondadori Ord 314,035
20,500 SAI SPA 230,049
51,500 Telecom Italia SPA 417,120
70,000 (a)Unione Immobiliare SPA 35,005
Total 2,767,624
Japan--2.5%
34,000 Chugai Pharmaceutical Co 290,049
20,000 Fujitsu Ltd. 230,844
5,000 Honda Motor Co. Ltd. 179,383
12,000 Hosiden Corp 207,955
28,000 INES Corp. 243,182
23,000 Kirin Brewery Co. Ltd. 238,588
23,000 Kokusai Securities Co. Ltd. 193,969
9,500 Konami Co 262,946
19,000 Kyushu Matsushita Electric 205,268
7,000 Matsushita Communication 305,114
9,300 Meitec Corp. 218,912
3,200 Orix Corp 228,312
33,000 Sumitomo Marine & Fire 196,875
3,500 Takefuji 238,636
11,600 Tokyo Electric Power Co. 264,578
40,000 Toshiba Corp. 224,026
Total 3,728,637
Korea, Republic Of--0.0%
870 Pohang Iron and Steel Co. Ltd. 48,083
Malaysia--0.0%
1,000 Malayan United Industries Bhd 193
Netherlands--0.6%
1,200 Aegon N.V. 128,373
3,150 (a)Benckiser NV 186,113
5,342 KPN NV 230,433
1,510 Wolters Kluwer NV 287,781
Total 832,700
Norway--0.2%
8,000 Tomra Systems ASA 233,456
Singapore--0.2%
14,800 (a)Creative Technology Ltd. 271,864
Spain--0.7%
8,400 Argentaria SA 195,525
3,240 Banco Pastor SA 202,009
3,600 Banco Popular Espanol 264,357
4,400 (a)Baron de Ley 152,407
2,100 Fomento de Construcciones y Contratas SA 125,258
17,500 (a)Prima Immobiliaria SA 160,028
Total 1,099,584
Sweden--0.1%
7,300 Telefonaktiebolaget LM Ericsson 202,728
Switzerland--0.9%
147 Alusuisse Lonza Holding AG 185,290
420 Baloise Holdings Ltd.-Reg 391,033
165 Nestle SA 342,691
183 Novartis AG - REG 343,379
200 (a)Swisscom AG 67,321
Total 1,329,714
United Kingdom--3.0%
8,200 Abbey National Bank PLC, London 166,363
14,200 (a)Allied Zurich PLC 202,602
21,000 Amvescap PLC 170,941
11,300 Barclays PLC 256,283
30,260 British Aerospace PLC 260,043
12,373 British Petroleum Co. PLC 193,168
54,000 British-Borneo Petroleum Syndicate PLC 133,605
6,600 CMG PLC 163,513
18,900 (a)Cable & Wireless Communications 168,343
9,000 Capita Group PLC 84,617
13,000 (a)Colt Telecom Group PLC 169,827
9,000 Commercial Union PLC 142,661
24,000 Croda International 98,175
18,513 General Electric Co. PLC 151,307
6,649 Glaxo Wellcome PLC 210,241
29,523 Guardian Royal Exchange PLC 160,699
17,500 Imperial Chemical Industries PLC 162,801
44,000 Lasmo 101,425
13,100 Lloyds TSB Group PLC 182,046
26,000 Misys PLC 183,122
19,600 (b)Norwich Union PLC 137,399
13,500 Prudential Corp. PLC 196,845
21,000 Reed International PLC 165,225
47,100 Sears PLC 168,585
12,600 Smithkline Beecham PLC 154,626
<CAPTION>
Shares or
Principal
Amount or
Foreign
Currency Value in U.S.
Par Amount Dollars
<S> <C> <C>
*Stocks--continued
Foreign Equity--continued
United Kingdom--continued
8,720 Zeneca Group $ 362,457
Total 4,546,919
Total Foreign Stocks 20,609,310
*Futures Contracts Collateral--12.4%
$ 100,000 United States Treasury Bill, 1/7/1999 99,601
18,600,000 United States Treasury Bill, 12/17/1998 18,570,612
Total 18,670,213
Total Stocks (identified cost $89,675,039) 116,653,357
Bonds--22.1%
Treasury and Government Securities--12.1%
(c)Repurchase Agreement--6.1%
9,175,000 Westdeutsche Landesbank Girozentrale, 5.350%, dated 11/30/1998,
due 12/1/1998 (at amortized cost) 9,175,000
United States Treasury Securities--6.0%
4,150,000 United States Treasury Bond, 8.125%, 5/15/2021 5,644,042
2,800,000 United States Treasury Note, 6.375%, 8/15/2002 2,962,848
405,000 United States Treasury Note, 6.500%, 10/15/2006 449,181
Total 9,056,071
Total Treasury and Government Securities 18,231,071
High Yield Bonds--5.1%
810,824 The High Yield Bond Portfolio 7,662,284
Foreign Bonds--4.9%
Australian Dollar--0.2%
85,000 Qtc-global Notes, Deb., 10.5%, 5/15/2003 64,786
260,000 West Aust T Corp, Local Gov't. Guarantee, 8%, 7/15/2003 182,335
Total 247,121
Austrian Mark--0.5%
3,600,000 Republic of Austria, Deb., 7.625%, 10/18/2004 359,499
610,000 Republic of Austria, Unsub., 6.5%, 1/10/2024 441,439
Total 800,938
<CAPTION>
Foreign
Currency Value in U.S.
Par Amount Dollars
<S> <C> <C>
Bonds--continued
Foreign Bonds--continued
Belgian Franc--0.0%
514,000 Belgian Govt., Bond, 6.500%, 3/31/2005 $ 16,806
Canadian Dollar--0.3%
204,000 Canada Government, Deb., 6.500%, 6/1/2004 143,722
405,000 Ontario Hydro, 9.000%, 6/24/2002 299,333
Total 443,055
Danish Krone--0.3%
1,927,000 Denmark - Bullet, Bond, 8.000%, 3/15/2006 367,262
500,000 Denmark, 8.000%, 5/15/2003 89,882
Total 457,144
Deutsche Mark--0.7%
195,000 Depfa-Bank, 5.500%, 1/15/2013 124,544
20,000,000 KFW International Finance, 6.000%, 11/29/1999 171,672
150,000 KFW International Finance, Bank Guarantee, 6.750%, 6/20/2005 102,595
435,000 Treuhandanstalt, 7.750%, 10/1/2002 295,470
500,000 Treuhandanstalt, Foreign Gov't. Guarantee, 6.875%, 6/11/2003 334,552
Total 1,028,833
Greek Mark--0.1%
22,800,000 Hellenic Republic, FRN 10/23/2003 81,320
Hungarian Forint --0.0%
16,200,000 Hungary Govt, Bond, 14.000%, 12/12/2002 71,403
Irish Pound--0.1%
80,000 Irish Government, Deb., 9.000%, 9/01/2006 154,390
Italian Lira--0.6%
150,000,000 Btps, Bond, 10.500%, 11/1/2000 100,701
215,000,000 Btps, Deb., 12.000%, 5/18/1999 132,257
380,000,000 Buoni Poliennali Del Tes, 9.500%, 1/1/2005 292,505
440,000,000 Buoni Poliennali Del Tes, Deb., 12.000%, 1/01/2002 324,544
Total 850,007
Japanese Yen--0.2%
28,000,000 Interamerican Development Bank, Deb., 7.000%, 12/27/2000 258,198
11,000,000 Interamerican Development, Deb., 7.250%, 5/15/2000 98,191
Total 356,389
Mexican Peso--0.1%
80,000 Mexican Cetes, 2/11/1999 74,642
Netherlands Guilder--0.3%
255,000 Bank Ned Gemeenten, Bond, 6.375%, 1/4/2006 150,996
340,000 Bk Ned Gemeenten, Bond, 7.750%, 12/20/2004 212,439
130,000 Lkb-global Bd, Bank Guarantee, 6.000%, 1/25/2006 84,677
90,000 Netherlands Government, 6.000%, 1/15/2006 53,034
Total 501,146
New Zealand Dollar--0.0%
61,000 New Zealand Government, 8.00%, 2/15/2001 34,098
Norwegian Krone--0.2%
641,000 NGB Bond, 9.000%, 1/31/1999 85,668
490,000 Norwegian Government, 5.500%, 5/15/2009 66,489
330,000 Norwegian Government, Bond, 7.000%, 5/31/2001 45,413
247,000 Norwegian Government, Foreign Government Guarantee, 5.750%, 11/30/2004 33,813
Total 231,383
Polish Zloty--0.1%
490,000 Poland Govt Bond, Bond, Series 5Y, 12.000%, 2/12/2003 141,116
South African Rand--0.0%
365,000 Republic of South Africa, Bond, 12.500%, 12/21/2006 53,296
Spanish Peseta--0.7%
440,000 Spanish Govt. Bond 5.150%, 7/30/2009 526,486
16,000,000 Spanish Government, 10.000%, 2/28/2005 147,405
31,900,000 Spanish Govt. Bond, 8.000%, 4/30/2006 286,404
8,540,000 Spanish Govt., Deb., 10.100%, 2/28/2001 67,576
Total 1,027,871
Swedish Krona--0.1%
800,000 Sweden, 6.000%, 2/9/2005 107,945
500,000 Sweden, Deb., 13.000%, 6/15/2001 74,861
Total 182,806
United Kingdom Pound--0.3%
187,000 British Gas Plc, 8.875%, 7/8/2008 381,151
<CAPTION>
Foreign
Currency
Par Amount
or Principal Value in U.S.
Amount Dollars
<S> <C> <C>
Bonds--continued
Foreign Bonds--continued
United Kingdom Pound--continued
$ 38,000 U.K. Treasury, Deb., 8.500%, 12/7/2005 $ 76,343
Total 457,494
United States Dollars--0.1%
115,000 Federal National Mortgage Association, 6.500%, 7/10/2002 76,251
90,000 Goldman Sachs Group, LP, Bond, 5.375%, 4/15/2008 52,537
120,000 Tennesee Valley Authority - Global Bond, 6.375%, 9/18/2006 80,430
Total 209,218
Total Foreign Bonds 7,420,476
Total Bonds (identified cost $43,448,050) 33,313,831
Total Investments (identified cost $133,123,089)(d) $ 149,967,188
</TABLE>
* The Fund purchases index futures contracts to efficiently manage cash flows
resulting from shareholder purchases and redemptions, dividends and capital
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 $18,966,750 at November 30, 1998.
(a) Non-income producing security.
(b) Denotes a restricted security which is subjected to restrictions on resale
under Federal Securities laws. At November 30, 1998, these securities amounted
to $157,461 which represents 0.1% of net assets.
(c) 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.
(d) The cost of investments for federal tax purposes amounts to $133,359,314.
The net unrealized appreciation of investments on a federal tax basis amounts
to $16,607,874 which is comprised of $20,082,874 appreciation and $3,475,000
depreciation at November 30, 1998.
Note: The categories of investments are shown as a percentage of net assets
($150,520,448) at November 30, 1998.
The following acronyms are used throughout this portfolio:
FRN --Floating Rate Note
LP --Limited Partnership
MBIA --Municipal Bond Investors Assurance
PLC --Public Limited Company
SA --Support Agreement
SPA --Standby Purchase Agreement
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF ASSETS AND LIABILITIES
Federated Managed Aggressive Growth Fund
November 30, 1998
<TABLE>
<CAPTION>
Assets:
<S> <C> <C>
Total investments in securities, at value (identified cost $133,123,089 and tax cost $133,359,314) $149,967,188
Cash 1,547
Cash denominated in foreign currency (identified cost $1,570) 1,559
Income receivable 538,725
Receivable for investments sold 557,600
Receivable for shares sold 1,003,410
Net receivable for foreign currency exchange contract sold 72
Deferred organizational costs 11,404
Other assets 832
Total assets 152,082,337
Liabilities:
Payable for investments purchased $762,310
Payable for shares redeemed 208,209
Payable for taxes withheld 3,197
Payable for daily variation margin 487,415
Accrued expenses 100,758
Total liabilities 1,561,889
Net Assets for 10,665,457 shares outstanding $150,520,448
Net Assets Consist of:
Paid in capital $126,137,129
Net unrealized appreciation of investments and translation of assets and liabilities in foreign currency 18,653,315
Accumulated net realized gain on investments and foreign currency transactions 5,635,193
Undistributed net investment income 94,811
Total Net Assets $150,520,448
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
Institutional Shares:
$88,113,257 / 6,239,786 shares outstanding $14.12
Select Shares:
$62,407,191 / 4,425,671 shares outstanding $14.10
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF OPERATIONS
Federated Managed Aggressive Growth Fund
Year Ended November 30, 1998
<TABLE>
<S> <C> <C> <C>
Investment Income:
Dividends (net of foreign taxes withheld of $46,617) $ 1,642,709
Interest (net of foreign taxes withheld of $3,884) 2,251,575
Total income 3,894,284
Expenses:
Investment advisory fee $1,048,670
Administrative personnel and services fee 155,001
Custodian fees 62,064
Transfer and dividend disbursing agent fees and expenses 170,598
Directors'/Trustees' fees 4,014
Auditing fees 18,007
Legal fees 4,014
Portfolio accounting fees 65,937
Distribution services fee--Select Shares 406,320
Shareholder services fee--Institutional Shares 214,116
Shareholder services fee--Select Shares 135,440
Share registration costs 46,709
Printing and postage 50,030
Insurance premiums 4,017
Taxes 3,033
Miscellaneous 45,687
Total expenses 2,433,657
Waivers--
Waiver of investment advisory fee $(176,779)
Waiver of distribution services fee--Select Shares (135,440)
Waiver of shareholder services fee--Institutional Shares (171,293)
Total waivers (483,512)
Net expenses 1,950,145
Net investment income 1,944,139
Realized and Unrealized Gain (Loss) on Investments, Foreign Currency and
Future Contracts:
Net realized gain on investments, foreign currency transactions and 6,242,566
futures contracts
Net change in unrealized appreciation of investments,translation of 6,099,080
assets and liabilities in foreign currency and futures contracts
Net realized and unrealized gain on investments, foreign currency 12,241,646
transactions and futures contracts
Change in net assets resulting from operations $14,185,785
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF CHANGES IN NET ASSETS
Federated Managed Aggressive Growth Fund
<TABLE>
<CAPTION>
Year Ended November 30,
1998 1997
<S> <C> <C>
Increase (Decrease) in Net Assets:
Operations--
Net investment income $ 1,944,139 $ 1,910,498
Net realized gain on investments, foreign currency transactions and futures contracts
($7,626,184 and $6,480,249, respectively, as computed for federal tax purposes) 6,142,566 6,131,980
Net change in unrealized appreciation of investments, translation of
assets and liabilities in foreign currency transactions and futures contracts 6,099,080 5,658,166
Change in net assets resulting from operations 14,185,785 13,700,644
Distributions to Shareholders--
Distributions from net investment income
Institutional Shares (1,356,572) (1,427,543)
Select Shares (480,406) (678,606)
Distributions from net realized gains on investments, foreign currency transactions and
futures contracts
Institutional Shares (3,897,324) (1,462,069)
Select Shares (2,343,704) (920,615)
Change in net assets resulting from distributions to shareholders (8,078,006) (4,488,833)
Share Transactions--
Proceeds from sale of shares 59,338,862 65,432,150
Net asset value of shares issued to shareholders in payment of distributions declared 7,109,318 3,820,798
Cost of shares redeemed (43,820,551) (37,784,914)
Change in net assets resulting from share transactions 22,627,629 31,468,034
Change in net assets 28,735,408 40,679,845
Net Assets:
Beginning of period 121,785,040 81,105,195
End of period (including undistributed net investment income of $94,811 at November 30,1998) $150,520,448 $121,785,040
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FINANCIAL HIGHLIGHTS-- INSTITUTIONAL SHARES
Federated Managed Aggressive Growth Fund
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
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 0.23 0.30 0.33 0.35 0.17
Net realized and unrealized gain (loss)
on investments, foreign currency transactions and
futures contracts 1.22 1.43 1.24 1.77 (0.25)
Total from investment operations 1.45 1.73 1.57 2.12 (0.08)
Less distributions
Distributions from net investment income (0.22) (0.31) (0.38) (0.33) (0.10)
Distributions from net realized gain on investments,
foreign currency transactions and futures contracts (0.69) (0.36) (0.26) (0.02) --
Total distributions (0.91) (0.67) (0.64) (0.35) (0.10)
Net asset value, end of period $ 14.12 $ 13.58 $ 12.52 $ 11.59 $ 9.82
Total return (b) 11.34% 14.40% 14.13% 21.96% (0.87%)
Ratios to average net assets
Expenses 1.12% 1.05% 1.05% 1.00% 0.89%*
Net investment income 1.66% 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) $88,113 $76,271 $49,715 $25,611 $15,696
Portfolio turnover 123% 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 January 27, 1994, the
Fund had no investment activity.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(d) The adviser waived $6,858 of the investment advisory fee, which represents
0.11% of average net assets, to comply with certain state expense limitations.
The remainder of the waiver/reimbursement was voluntary. This expense decrease
is reflected in both the expense and net investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
FINANCIAL HIGHLIGHTS -- SELECT SHARES
Federated Managed Aggressive Growth Fund
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
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 0.15 0.18 0.28 0.17 0.13
Net realized and unrealized gain 1.21 1.46 1.19 1.89 (0.25)
(loss) on investments, foreign currency transactions
and futures contracts
Total from investment operations 1.36 1.64 1.47 2.06 (0.12)
Less distributions
Distributions from net investment income (0.13) (0.22) (0.30) (0.25) (0.08)
Distributions from net realized gain on investments, (0.69) (0.36) (0.26) (0.02) --
foreign currency transactions and futures contracts
Total distributions (0.82) (0.58) (0.56) (0.27) (0.08)
Net asset value, end of period $ 14.10 $ 13.56 $ 12.50 $ 11.59 $ 9.80
Total return (b) 10.58% 13.66% 13.22% 21.36% (1.20%)
Ratios to average net assets
Expenses 1.82% 1.75% 1.75% 1.75% 1.64%*
Net investment income 0.96% 1.29% 2.26% 2.65% 2.67%*
Expense waiver/reimbursement (c) 0.38% 0.57% 0.93% 1.71% 1.97%*(d)
Supplemental data
Net assets, end of period (000 omitted) $66,407 $45,514 $31,390 $12,342 $ 1,673
Portfolio turnover 123% 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 January 27, 1994, the
Fund had no investment activity.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(d) The adviser waived $6,858 of the investment advisory fee, which represents
0.11% of average net assets, to comply with certain state expense limitations.
The remainder of the waiver/reimbursement was voluntary. This expense decrease
is reflected in both the expense and net investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
Federated Managed Aggressive Growth Fund
November 30, 1998
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 cities may
be completed at times which vary from the closing of the New York Stock
Exchange. Therefore, foreign securities are valued at the latest closing price
on the exchange on which they are traded prior to the closing of the New York
Stock Exchange. Foreign securities quoted in foreign currencies are translated
into U.S. dollars at the foreign exchange rate in effect at noon, eastern time,
on the day the value of the foreign security is determined.
Repurchase Agreements
It is the policy of the Fund to require the custodian bank to take possession,
to have legally segregated in the Federal Reserve Book Entry System, or to have
segregated within the custodian bank's vault, all securities held as collateral
under repurchase agreement transactions. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of each
repurchase agreement's collateral to ensure that the value of collateral at
least equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/
dealers, which are deemed by the Fund's adviser to be creditworthy pursuant to
the guidelines and/or standards reviewed or established by the Board of Trustees
(the "Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral securities.
Investment Income, Expenses and Distributions
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code, as amended
(the "Code"). Dividend income and distributions to shareholders are recorded on
the
ex-dividend date.
Income and gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for foreign currency
transactions and passive foreign investment company transactions. The following
reclassifications have been made to the financial statements.
<TABLE>
<CAPTION>
Increase (Decrease)
Accumulated
Accumulated Net Distributions in Excess
Realized Gain/Loss of Net Investment Income Paid-In Capital
<S> <C> <C>
$(416,609) $139,282 $277,327
</TABLE>
Net investment income, net realized gains/losses, and net assets were not
affected by this reclassification.
Federal Taxes
It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provisions for federal tax are
necessary.
However, federal taxes may be imposed on the Fund upon the disposition of
certain investments in passive foreign investment companies. Withholding taxes
on foreign interest and dividends have been provided for in accordance with the
Fund's understanding of the applicable county'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 November 30, 1998, the Fund had
realized gains of $165,335 on future contracts.
At November 30, 1998, the Fund had outstanding futures contracts as set forth
below:
<TABLE>
<CAPTION>
Contracts to Net Notional Unrealized
Expiration Date Deliver/Receive Position Amount Appreciation
<S> <C> <C> <C> <C>
December 1998 55 S&P 500 Index Futures Long $14,692,218 $1,255,773
December 1998 15 Russell 2000 Index Future Long 2,982,375 36,384
$1,292,157
</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 counter-parties
to meet the terms of their commitments and from unanticipated movements in
security prices or foreign exchange rates. The foreign currency transactions are
adjusted by the daily exchange rate of the underlying currency and any gains or
losses are recorded for financial statement purpose as unrealized until the
settlement date.
At November 30, 1998, the Fund had no outstanding forward foreign currency
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.
Restricted Securities
Restricted securities are securities that may only be resold upon registration
under federal securities laws or in transactions exempt from such registration.
In some cases, the issuer of restricted securities has agreed to register such
securities for resale, at the issuer's expense either upon demand by the Fund or
in connection with another registered offering of the securities. Many
restricted securities may be resold in the secondary market in transactions
exempt from registration. Such restricted securities may be determined to be
liquid under criteria established by the Board of Trustees. The Fund will not
incur any registration costs upon such resales. The Fund's restricted securities
are valued at the price provided by dealers in the secondary market or, if no
market prices are available, at the fair value as determined by the Fund's
pricing committee.
Additional information on each restricted security held at November 30, 1998 is
as follows:
<TABLE>
<CAPTION>
Security Acquisition Date Acquisition Cost
<S> <C> <C>
Norwich Union PLC 6/16/97-10/20/98 141,915
Panafon SA 11/20/98 20,280
</TABLE>
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and revenues reported in the
financial statements. Actual results could differ from those estimated.
Other
Investment transactions are accounted for on the trade date.
Shares of Beneficial Interest
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. Transactions in shares were as follows:
<TABLE>
<CAPTION>
Year Ended November 30,
1998 1997
Institutional Shares Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Shares sold 2,569,836 $ 34,985,268 3,204,660 $ 41,207,438
Shares issued to shareholders in payment of distributions declared 345,374 4,473,527 189,433 2,352,593
Shares redeemed (2,291,789) (31,303,549) (1,748,701) (22,354,908)
Net change resulting from Institutional share transactions 623,421 $ 8,155,246 1,645,392 $ 21,205,123
</TABLE>
<TABLE>
<CAPTION>
Year Ended November 30,
1998 1997
Select Shares Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Shares sold 1,786,848 $ 24,353,594 1,899,443 $ 24,224,712
Shares issued to shareholders in payment of distributions declared 204,251 2,635,791 118,629 1,468,205
Shares redeemed (921,602) (12,517,002) (1,173,146) (15,430,006)
Net change resulting from Select share transactions 1,069,497 $ 14,472,382 844,926 $ 10,262,911
Net change resulting from share transactions 1,692,918 $ 22,627,629 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 Investment Management Corp. (the "Sub-Adviser"), theSub-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 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
distribution 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 Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily
net assets of the Fund for the period. The fee paid to FSSC is used to finance
certain services for shareholders and to maintain shareholder accounts. FSSC may
voluntarily choose to waive any portion of its fee. FSSC 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 effective date.
General
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
Investment Transactions
Purchases and sales of investments, excluding short-term securities, for the
period ended November 30, 1998, were as follows:
<TABLE>
<S> <C>
Purchases $179,086,340
Sales $157,827,674
</TABLE>
Concentration of Credit Risk
The Fund invests in securities of non-U.S. issuers. Although the Fund maintains
a diversified investment portfolio, the political or economic developments
within a particular country or region may have an adverse effect on the ability
of domiciled issuers to meet their obligations. Additionally, political or
economic developments may have an effect on the liquidity and volatility of
portfolio securities and currency holdings.
At November 30, 1998, the diversification of industries for non-U.S. issuers,
was as follows:
<TABLE>
<CAPTION>
Percentage Percentage
Industry of Net Assets Industry of Net Assets
<S> <C> <C> <C>
Aerospace & Military Technology 0.3% Industrial Components 0.1%
Agency 0.4 Insurance 1.8
Appliances & Household Durables 0.1 Leisure & Tourism 0.3
Automobile 0.6 Machinery & Engineering 0.4
Banking 1.7 Merchandising 0.4
Beverage & Tobacco 0.3 Metals--Non Ferrous 0.1
Broadcasting & Publishing 0.3 Metals--Steel 0.0
Business & Public Services 0.5 Multi-Industry 0.1
Chemicals 0.2 Publishing--Newspapers 0.2
Construction & Housing 0.4 Real Estate 0.3
Data Processing & Reproduction 0.7 Recreation, Other Consumer Goods 0.1
Electrical & Electronics 0.7 Sovereign 2.7
Electronic Components, Instruments 0.2 Sovereign Government 0.8
Energy Sources 0.7 State/Provincial 0.0
Financial (Diversified) 0.0 Supranational 0.2
Financial Intermediaries 0.1 Telecommunications 0.8
Financial Services 0.9 Utilities 0.3
Food & Household Products 0.5 Utilities--Electrical & Gas 0.2
Gold/Precious Metals Mining 0.0 Wholesale & International Trade 0.1
Health & Personal Care 1.0
</TABLE>
Year 2000 (Unaudited)
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.
Subsequent Event
On January 7, 1999, the sub-adviser, Federated Global Research Corp., changed
its name to Federated Global Investment Management Corp.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF
TRUSTEES OF MANAGED SERIES TRUST (FEDERATED MANAGED AGGRESSIVE GROWTH FUND):
We have audited the accompanying statement of assets and liabilities of
Federated Managed Aggressive Growth Fund (an investment portfolio of Managed
Series Trust, a Massachusetts business trust), including the schedule of
portfolio investments, as of November 30, 1998, the related statement of
operations for the year then ended, the statement of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
the periods presented. These financial statements and financial highlights are
the responsibility of the Trust's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1998, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Federated Managed Aggressive Growth Fund, an investment portfolio of Managed
Series Trust, as November 30, 1998, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended, and its financial highlights for the periods presented, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
January 15, 1999
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 and Secretary
Richard B. Fisher
Vice President
Richard J. Thomas
Treasurer
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 risk, including possible
loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by a fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses and other information.
[LOGO OF FEDERATED INVESTORS]
Federated Managed
Aggressive
Growth Fund
Institutional Shares
Select Shares
Annual Report
to Shareholders
November 30, 1998
Federated Securities Corp., Distributor
Federated Investors, Inc.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
1-800-341-7400
www.federatedinvestors.com
Cusip 56166K701
Cusip 56166K800
G00769-01 (1/99) [RECYCLED LOGO]
APPENDIX
A. The graphic representation here displayed consists of a boxed legend in the
top left indicating the components of the corresponding line graph. Federated
Managed Growth and Income Fund (Institutional Shares) (the "Fund") is
represented by a solid black line. The Lehman Brothers Government/Corporate
Index (LBG/CI) is represented by a dotted line. Managed Growth and Income
Indices Blend (MGIIB) is represented by a series of dashes. The line graph is a
visual representation of a comparison of a change in value of a hypothetical
$25,000 investment in the Fund, the LBG/CI, and the MGIIB. The "x" axis reflects
computation periods from 5/25/94 to 11/30/98. The "y" axis reflects the cost of
investment in $5,000 increments ranging from $20,000 to $45,000. The right
margin reflects the ending value of the hypothetical investment in the Fund as
compared to the LBG/CI and the MGIIB; the ending values are $39,787, $37,007,
and $42,427, respectively. Below the legend are the one-year and Start of
Performance (5/25/94) Average Annual Total Returns for the for the period ended
November 30, 1998; the Average Annual Total Returns are 11.19% and 10.83%,
respectively.
B. The graphic representation here displayed consists of a boxed legend in the
top left indicating the components of the corresponding line graph. Federated
Managed Growth and Income Fund (Select Shares) (the "Fund") is represented by a
solid black line. The Lehman Brothers Government/Corporate Index (LBG/CI) is
represented by a dotted line. Managed Growth and Income Indices Blend (MGIIB) is
represented by a series of dashes. The line graph is a visual representation of
a comparison of a change in value of a hypothetical $10,000 investment in the
Fund, the LBG/CI, and the MGIIB. The "x" axis reflects computation periods from
5/25/94 to 11/30/98. The "y" axis reflects the cost of investment in $2,000
increments ranging from $8,000 to $18,000. The right margin reflects the ending
value of the hypothetical investment in the Fund as compared to the LBG/CI and
the MGIIB; the ending values are $15,444, $14,803, and $16,971, respectively.
Below the legend are the one-year and Start of Performance (5/25/94) Average
Annual Total Returns for the for the period ended November 30, 1998; the Average
Annual Total Returns are 10.51% and 10.09%, respectively.
Federated Managed Aggressive Growth Fund (is shares)
C. The graphic representation here displayed consists of a boxed legend in the
top left indicating the components of the corresponding line graph. Federated
Managed Aggressive Growth Fund (Institutional Shares) (the "Fund") is
represented by a solid black line. The Standard and Poor's 500 (S&P 500) is
represented by a dotted line. Managed Aggressive Growth Indices Blend (MAGIB) is
represented by a series of dashes. The line graph is a visual representation of
a comparison of a change in value of a hypothetical $25,000 investment in the
Fund, the S&P 500, and the MAGIB. The "x" axis reflects computation periods from
5/25/94 to 11/30/98. The "y" axis reflects the cost of investment in $10,000
increments ranging from $20,000 to $80,000. The right margin reflects the ending
value of the hypothetical investment in the Fund as compared to the S&P 500 and
the MAGIB; the ending values are $43,938, $70,448, and $48,958, respectively.
Below the legend are the one-year and Start of Performance (5/25/94) Average
Annual Total Returns for the for the period ended November 30, 1998; the Average
Annual Total Returns are 11.34% and 13.29%, respectively.
Federated Managed Aggressive Growth Fund (select shares)
D. The graphic representation here displayed consists of a boxed legend in the
top left indicating the components of the corresponding line graph. Federated
Managed Aggressive Growth Fund (Select Shares) (the "Fund") is represented by a
solid black line. The Standard and Poor's 500 (S&P 500) is represented by a
dotted line. Managed Aggressive Growth Indices Blend (MAGIB) is represented by a
series of dashes. The line graph is a visual representation of a comparison of a
change in value of a hypothetical $10,000 investment in the Fund, the S&P 500,
and the MAGIB. The "x" axis reflects computation periods from 5/25/94 to
11/30/98. The "y" axis reflects the cost of investment in $3,000 increments
ranging from $9,000 to $30,000. The right margin reflects the ending value of
the hypothetical investment in the Fund as compared to the S&P 500 and the
MAGIB; the ending values are $17,180, $28,179, and $19,600, respectively. Below
the legend are the one-year and Start of Performance (5/25/94) Average Annual
Total Returns for the for the period ended November 30, 1998; the Average Annual
Total Returns are 10.58% and 12.54%, respectively.
E. The graphic representation here displayed consists of a boxed legend in the
top left indicating the components of the corresponding line graph. Federated
Managed Income Fund (Institutional Shares) (the "Fund") is represented by a
solid black line. The Lehman Brothers Government/Corporate Index (LBG/CI) is
represented by a dotted line. The Managed Income Indices Blend (MIIB) is
represented by a series of dashes. The line graph is a visual representation of
a comparison of a change in value of a hypothetical $25,000 investment in the
Fund, the LBG/CI, and the MIIB. The "x" axis reflects computation periods from
5/25/94 to 11/30/98. The "y" axis reflects the cost of investment in $5,000
increments ranging from $20,000 to $40,000. The right margin reflects the ending
value of the hypothetical investment in the Fund as compared to the LBG/CI and
the MIIB; the ending values are $37,007, $36,976, and $37,879, respectively.
Below the legend are the one-year and Start of Performance (5/25/94) Average
Annual Total Returns for the for the period ended November 30, 1998; the Average
Annual Total Returns are 10.06% and 9.05%, respectively.
F. The graphic representation here displayed consists of a boxed legend in the
top left indicating the components of the corresponding line graph. Federated
Managed Income Fund (Select Shares) (the "Fund") is represented by a solid black
line. The Lehman Brothers Government/Corporate Index (LBG/CI) is represented by
a dotted line. The Managed Income Indices Blend (MIIB) is represented by a
series of dashes. The line graph is a visual representation of a comparison of a
change in value of a hypothetical $10,000 investment in the Fund, the LBG/CI,
and the MIIB. The "x" axis reflects computation periods from 5/25/94 to
11/30/98. The "y" axis reflects the cost of investment in $2,000 increments
ranging from $8,000 to $16,000. The right margin reflects the ending value of
the hypothetical investment in the Fund as compared to the LBG/CI and the MIIB;
the ending values are $14,320, $14,803, and $15,151, respectively. Below the
legend are the one-year and Start of Performance (5/25/94) Average Annual Total
Returns for the for the period ended November 30, 1998; the Average Annual Total
Returns are 9.29% and 8.27%, respectively.
G. The graphic representation here displayed consists of a boxed legend in the
top left indicating the components of the corresponding line graph. Federated
Managed Growth Fund (Institutional Shares) (the "Fund") is represented by a
solid black line. The Standard and Poor's 500 (S&P 500) is represented by a
dotted line. Managed Growth Indices Blend (MGIB) is represented by a series of
dashes. The line graph is a visual representation of a comparison of a change in
value of a hypothetical $25,000 investment in the Fund, the S&P 500, and the
MGIB. The "x" axis reflects computation periods from 5/25/94 to 11/30/98. The
"y" axis reflects the cost of investment in $10,000 increments ranging from
$20,000 to $80,000. The right margin reflects the ending value of the
hypothetical investment in the Fund as compared to the S&P 500 and the MGIB; the
ending values are $42,703, $70,448, and $46,806, respectively. Below the legend
are the one-year and Start of Performance (5/25/94) Average Annual Total Returns
for the for the period ended November 30, 1998; the Average Annual Total Returns
are 10.56% and 12.58%, respectively.
H. The graphic representation here displayed consists of a boxed legend in the
top left indicating the components of the corresponding line graph. Federated
Managed Growth Fund (Select Shares) (the "Fund") is represented by a solid black
line. The Standard and Poor's 500 (S&P 500) is represented by a dotted line.
Managed Growth Indices Blend (MGIB) is represented by a series of dashes. The
line graph is a visual representation of a comparison of a change in value of a
hypothetical $10,000 investment in the Fund, the S&P 500, and the MGIB. The "x"
axis reflects computation periods from 5/25/94 to 11/30/98. The "y" axis
reflects the cost of investment in $5,000 increments ranging from $9,000 to
$29,000. The right margin reflects the ending value of the hypothetical
investment in the Fund as compared to the S&P 500 and the MGIB; the ending
values are $16,554, $28,179, and $18,723, respectively. Below the legend are the
one-year and Start of Performance (5/25/94) Average Annual Total Returns for the
for the period ended November 30, 1998; the Average Annual Total Returns are
9.80% and 11.80%, respectively.
